Autocracy In Small Steps

Autocracy In Small Steps

Note: Make an effort not to read this commentary as either praise for or criticism of liberal or conservative partisans; it is written to help us understand how to defend our democracy.

1860: The Disunited States

History may record the contemporary fragility of American unity and democracy as greater than any since the 1850s, the decade that preceded the secession of the southern states and set the stage for the Civil War. In 1858 Lincoln’s foremost concern was the partisan divide over slavery fueled by emotions and economic concerns. In his famous "House Divided" speech, he stated “A house divided against itself cannot stand ..." Lincoln strongly believed Americans should pledge their allegiance to the union first above any political party. Two years later Abraham Lincoln was elected president and 11 states succeeded and formed the Confederate States of America. The confederacy ended four years later crushed by the loss of the Civil War. The country reunited but the strife of slavery and racial tension continued. Reuniting the Union did little to alter the sentiment that white-skinned people were superior to people of color.

Racial Tension Persists

By the 1930s inequality between Afro-Americans and the "white" population was so great that the federal government could secretly authorize using Afro-Americans as laboratory subjects in a dangerous Alabama research project: The Tuskegee Study.

From 1932 through 1972, the United States Public health Service (USPHS) and the Centers for Disease Control (CDC) pretended to "treat" black men in Alabama between the ages of 25 and 60 for "bad blood," a local term used to describe many ailments, including syphilis, anemia, and fatigue. Black men, mostly descendants of slaves, were tricked into participating in life-threatening "experiments in nature." Unknown to the participants, the Tuskegee Study was a devious means of studying untreated syphilis. When the study ended, 128 participants had died from syphilis. This tragic abuse continues to contribute to racial tension and black American distrust of medical science: the Pew Research Center reports that 44% of black Americans would not get a coronavirus vaccine if it were available today compared to 25% of Hispanic and white adults.

Government Becomes the Problem

While racial tension persisted, other grievances activated a number of social movements that bonded liberals to the Democratic Party. The two decades following 1960 featured the civil rights movement, the Vietnam War protests, the anti-establishment counterculture movement, the women's rights movement, the gay rights movement, and the environmental movement. Liberals viewed the government as a problem solver but that invited more constraints on freedoms which became an important part of the conservative agenda.

At the same time, free-market economic and social policies promoting less regulation and fewer and individual liberties attracted conservatives to the Republican Party. The New Christian Right coupled with the Republican Party, enhancing their political clout to promote anti-abortion and anti-LGBTQ movements, and to counter the decline in religious authority.

In the 1980s Ronald Reagan, a highly popular president, provided momentum to conservative causes by launching the anti-government movement. Reagan proclaimed in his 1981 inaugural address, "In this present crisis, the government is not the solution to our problems; government is the problem." Reagan advocated restricting regulation, reducing taxes, limiting government spending, and promoting free markets. However, his free-market stance did not extend to international trade. Instead, he initiated a "nationalist" movement that became an integral part of Trump's administration more than two decades later.

Trump's Tactics

Trump's authoritarian tactics were taken from the playbook created by Newt Gingrich. In 1995 Gingrich became Speaker of the House where he demonstrated the power of authoritarian tactics complete with name-calling, conspiracy theories, and unrestrained obstructionism (before Gingrich became a congressman, he revealed his political demeanor when he addressed young activists at West Georgia College stating "One of the great problems we have in the Republican Party is that we don’t encourage you to be nasty.")

Trump's personality was perfectly suited to adopt Gingrich's tactics. As Trump prepares to vacate the White House his fantasy of becoming the world's most powerful strongman makes him increasingly desperate even after he failed to overturn the nation's election laws by filing and losing more than 50 lawsuits and losing a last-ditch appeal to the Supreme Court. But, he lives in Trumpland where he believes he can get what he wants if he never gives up. We certainly have not seen the end of his quest to become America's autocrat.

Trump will leave the White House littered with vestiges of the most authoritarian government the United States has ever experienced. In four years Trump brought our nation closer to an autocracy than any other president in history. A look at how and why it happened hints at what may be ahead and what we can do to stop it.

Our Democracy Needs An Upgraded Foundation

Trump didn't move our country towards autocracy by debating fiscal policy, abortion, rights to worship, tax rates, or other traditional disputed policy differences between liberal and conservative opinions. He did it by adeptly exploiting the widening gap between the powerful elite and the neglected rank and file American workers.

The "checks and balances" mandated by the Constitution are susceptible to failure when the powers of the Legislative and Judicial branches of government are misappropriated by the Executive branch. Trump has: taken the majority of the Senate hostage, approved the appointment of nearly a quarter of all federal judges and three of nine Supreme Court judges, effectively recruited the Department of Justice (led by the "now-retired" Attorney General William Barr) to do his bidding violating a constitutional requirement to represent the citizens of the United States rather than the president.

Although the Founding Fathers understood this problem and established elaborate safeguards. They didn’t foresee pervasive digital communications capable of magnifying confirmation bias.

We Are Predisposed To Manipulation

Confirmation bias is an innate human characteristic. Evolution favored timely appropriate reactions over energy-depleting and time-consuming searches for evidence. "If it ain't broke, don't fix it" allowed us to survive where other species failed.

We have an affinity to confirm things we believe and we reject contrary information or opinions conserving the time and effort required to verify the underlying evidence. Our attitudes and opinions are rewarded with social acceptance when those around us share our views. But there are occasions when it is dangerous to avoid knowing more of the evidence underlying our biases: for example, rejecting without evidence vaccinations that impede the spread of harmful, even deadly, diseases.

Two decades ago, Andrew Wakefield, a British gastroenterologist, noted that eight children exhibited symptoms of autism one month after receiving an MMR (measles, mumps, and rubella) vaccine. Apophenia (of which confirmation bias is a subdivision) led him to postulate that the vaccine caused autism. Subsequent attempts to confirm that conclusion have failed; no recent research supports any link between vaccines and autism.

However, 45% of Americans polled in January of this year believe vaccines do cause autism. If a mother tells a friend a vaccine caused her child's autism, her opinion is baseless. If her friend repeats that to a neighbor who also believes it, then the neighbor's opinion also is baseless. The false belief is reinforced by apophenia when other parents note that their child also became autistic following vaccination. The more the belief is repeated, the more widespread is the belief that vaccines cause autism. This confirmation bias is held by nearly half the nation's adults. Of course, there are other reasons certain individuals should avoid specific vaccines but autism is not one of them.

Part of the blame for our propensity to engage in confirmation bias is embedded in our bodies. Confirmation bias releases dopamine, a powerful neurotransmitter that makes us feel good. Dopamine is released when we are having sex or eating our favorite food (and when one retaliates against a grievance which may explain why Trump rages on Twitter). Studies have demonstrated we also experience a rush of dopamine when socially engaging in shared opinions regardless of whether they are well-founded or baseless.

Confirmation Bias and Our Emotions

The 18th-century philosopher, David Hume proposed that humans are more influenced by their passions and emotions than by rationality. Hume proposed that we emotionally attach to an idea then rationalize it rather than the reverse. 

No wonder confirmation bias in the hands of an authoritarian is a powerful tool that can manipulate masses of people. Scientific American explained Trump’s 2016 victory using neuroscience. "...our brain provides two different mechanisms of decision-making; one is conscious and deliberative, and the other is automatic, driven by emotion and especially by fear. Trump’s strategy does not target the neural circuitry of reason in the cerebral cortex; it provokes the limbic system.” The article goes on to state, "Trump continues to use the same strategy of appealing to the brain’s threat-detection circuitry and emotion-based decision process to attract votes and vilify opponents."

However, we can become more impervious to manipulation, and make better decisions, simply by becoming more aware of what we don't know.

Two researchers, Steven Sloman (Brown University) and Philip Fernbach (University of Colorado), authors of "The Knowledge Illusion: Why We Never Think Alone," state that strong feelings do not emerge from a deep understanding; they emerge from emotions. Without deep understanding, our decisions often are flawed but can be improved. Even becoming aware of what we don't know can moderate poorly supported opinions created by confirmation bias." The authors provide an example based on a 2012 study.

"Should there be a single-payer healthcare system? Or merit-based pay for teachers? Participants were asked to rate their positions depending on how strongly they agreed or disagreed with the proposals. Next, they were instructed to explain, in as much detail as they could, the impacts of implementing each one. Most people at this point ran into trouble. Asked once again to rate their views, they ratcheted down the intensity, so that they either agreed or disagreed less vehemently."

Trump's Penchant For Autocracy

As has happened in a growing number of countries, a strongman, even a wealthy strongman, can be appealing to the neglected populace. Trump instinctively knew this and energized his audiences at rallies with promises to dislodge the elite politicians and make the country as great as it was before Washington politicians gave the educated and the wealthy all the spoils.

Trump wears a different cloak for each occasion. Prior to his first run for president, at various times he was registered as either a Democrat or Independent. Before announcing his candidacy, he registered as a Republican and switched from pro-choice to pro-life in part to attract evangelical Christian support without which he would not have been elected. Wall Street heard Trump's message that lower taxes would boost profits of corporations and investors, workers heard how migrant workers would be stopped from stealing jobs, Evangelicals heard they were under siege and Trump would protect them, farmers and sportsmen heard that Democrats would be stopped from forcing them to give up their guns.

Splitting the Nation

These messages are described by INSEAD, one of the top two business schools in the world, as the "splitting" strategy used by dictators to enhance their power. They magnify out-group threats and fuel in-group passions. Trump effectively split the nation into two emotionally charged groups by combining large portions of the Republican Party with loosely organized disaffected groups to establish a base consisting of half the nation's population. He demonized the other half of the population by characterizing them as socialists bent on replacing freedoms with regulations and restricting the disaffected groups' constitutional rights.

Trump energized his newly assembled base by promising to remake America and bring back the factories that once supported neglected workers. He promised to stop immigrants from displacing local workers and to deport undocumented workers. Trump promised to resolve other complaints of his new base. Made in China was replacing made in America on store shelves. Globalization improved opportunities for white-collar college-educated workers and the elite but left many of Trump’s supporters feeling disenfranchised.

Despite Trump’s personal shortcomings, including his obsession with self-importance, his brazen behavior, his unrelenting need for admiration, his intolerance for disloyalty, and his inherent lack of empathy or remorse, he recruited staunch support from the ranks of registered Republicans using threats and intimidation. The media portrays Republican members of Congress as fearing the wrath of Trump but congressional Republicans were as equally motivated by the carrot as by the stick.

The Republican Party has lost the popular vote in seven of the last eight last presidential elections. Frustrated moderate Republicans had, beginning with Reagan and magnified by Gingrich, developed a more combative approach to advance their agenda. With Trump at the controls, they realized their agenda could be more quickly achieved by politicizing the Justice Department, the Homeland Security Department, the State Department, and the intelligence community. They accepted demonizing the press as the enemy of the people and labeling liberals as socialists or communists. They were silenced by demands for absolute loyalty and shared Trump's hostility towards anyone considering "crossing the aisle."

How a Dictator Does It

Trump followed the dictator’s playbook and took control of public information outlets. More than any previous president he pressured friendly media outlets to echo his messages and insulate his supportive audiences from the vilified "mainstream media." He had the advantage of greatly expanding his reach using digital technologies, most notably Twitter. He effectively dominated daily political conversations by treating his bully pulpit as a reality TV show. Any information critical of Trump or his opinions was labeled "fake news" and countered with "facts" that he created by scripting reality.

Trump normalized lies, alternative versions of reality, vicious retaliation against critics, fabricated statistics, and denials of actions caught on tape. He succeeded because he mastered the art of partisan persuasion amplified with broadcast and social media combined with repetition. The more often people hear something the more they will remember it. The more often a lie is repeated the "truer" it becomes. Psychologists call this "the illusion of truth" effect.

But research has shown that repetition alone doesn’t normally override one’s knowledge (as opposed to opinion) so the propaganda tactic is most effective if coupled with confirmation bias. If Trump and his campaign repeat "Democrats want socialism" frequently enough, it becomes a true mantra among his followers, most of whom don’t know the definition of socialism. If Trump lies by repetitively declaring "the Democrats fraudulently stole the election," repetition makes it ring true and confirmation bias reinforces it. After the Electoral College certified the election of Biden, more than one-third of Republicans believed Trump lost (whether those opinions are strategic or are the result of confirmation bias is not known.)

Trump uses word tricks to impart desire and emotions to his statements. For example, he borrows the transactional language of salesmen to make baseless statements sound trustworthy --"believe me"-- "many people are saying." He uses name-calling to create positive or negative associations --"Crooked Hillary" -- "Shifty Schiff" -- "Slow Joe." And he speaks in fragments frequently departing from one subject to insert another before stating the implied evidence leaving his followers to fill in the blanks with their own interpretations that substitute emotions for evidence.

Most importantly Trump circumvents normal barriers by disregarding laws, precedent, protocol, and evidence that might prevent him from "winning." As he has done most of his life in business, he relies on lawyers, accountants, and other professional allies to employ technicalities to route money to himself, avoid taxes, and otherwise avoid the inconvenient requirements that the rest of us are obligated to accept. The potential consequence of that behavior is now Trump's worst nightmare.

All of the above should alert us to the next attempt to replace democracy with autocracy. That next attempt may be Trump again but the advice applies to any president who has autocratic aspirations. If all else fails, the ultimate weapon used by dictators is to use violence to overthrow resistant regimes.

The scenario may go something like this. In the style of a reality TV show, Trump will continue to play the role of president in the "shadow White House" (likely in Florida) where he gathers his wealthy congregation and diverts as much attention as possible from the imposter President Biden. He will hold rallies on occasions when Biden attracts national attention (e.g., his inauguration) and will make "presidential" announcements. He will ridicule Biden and his Cabinet highlighting fake failures...you get the picture...

Violence would begin when Trump's "militia" stops "standing by" and swarms the streets. This version of events is, for now, a made-for-TV reality show. It is fiction of course. Let's hope the real dog whistles remain silent. I write this in jest but we can't ignore that democracies in other countries fell to violence.

Trump Doesn't Shoulder All The Blame

Attributing the blame to Trump misses half the reason he was able to bring our country so close to autocracy. If we don't examine the missing half we risk repeating the experience perhaps irrevocably. You likely guessed the other half of the blame belongs to us collectively. We voted him in, then out, but with very narrow margins. And we voted in all the Republican Congress members who were needed to consolidate Trump's power. The last four years highlight how vulnerable our populace is to autocratic rule by a skilled manipulator; we narrowly escaped this time.

To repeat Hume’s belief, we make decisions based more on emotion than rationality. When governments cater to the fortunate few at the top of the socio-economic ladder neglecting the majority of people, it is not difficult to corral the anger of the oppressed. Two lines from ”Born in the USA" captures the essence of those we leave behind.

I'm ten years burning down the road

Nowhere to run ain't got nowhere to go

A significant portion of Trump's supporters will remain loyal -- especially those who "ain't got nowhere to go” -- and those who reap personal benefits from the support of Trump and his base. However, our Constitution demands we uphold the institutions that protect its democratic ideals and avoid an autocracy like the one we battled for our independence. We came close to joining Russia and Hungary, two countries that replaced democracies with autocracies by sanctioning rigged elections. Let's not repeat our mistakes.

Choose Higher Priorities Over Politics

We can begin by prioritizing higher humanitarian, cultural, and religious values over politics. 

A member of our extended family who supported Trump in both the 2016 and 2020 elections posted the following on Facebook when the recent election results indicated Trump had lost. It is an admirable example for all of us to keep in mind wherever we stand on the political spectrum.

”Good morning everyone.

Anyone who knows me know my political views. That being said, I want to state the following.

We, as a people, need to heal. This election has concluded..., and the next few weeks are probably going to be ugly. Continuing to belittle, degrade, and attack others is not the answer. We can, as one nation, choose to fall or choose to rise. Now.. right now is when we need to decide. Regardless of who won, this decision was before us. This election was only the catalyst of issues that we’ve had for a long time.

Be kind to others, work hard, and together we will be an amazing nation again.

Thank you.“

Police Violence: Causes and Solutions

      

Police Violence: Causes and Solutions

Evolution produced Homo sapiens with a propensity for tribal behavior. Tribal assaults, wars, and intergroup conflicts have been a feature of human interactions throughout our history. Most recently, conflicts between the police and the people they are hired to protect (most prominently, members of black communities) are under public scrutiny. Understanding how humans got to this point will provide insights into its causes and solutions.

A persistent theme throughout human history is the quest to advance our understanding of nature's laws, a quest that will not end until humans or their descendence are extinguished; there will always be unknown relationships we are compelled to explore and understand. Recent conflicts in the news led me to explore the origins of conflicts between Homo sapiens for promising approaches to police reforms.

Homo Sapiens undoubtedly developed their obsession with cause and effect hoping to avoid harm from mysterious sources. For tens of thousands of years, Homo sapiens observed and feared unanticipated disasters not knowing how or why they occurred. A hurricane destroys everything in sight, a volcano explodes, an unseen disease kills members of a family, all with no obvious cause. Primitive humans around the world sought answers from shamans or their equivalent who were believed to have access to spirits that could control or explain the unknown causes and even cure diseases (the placebo effect presumably worked as well then as it does now).

While shamans were consulted to ease tensions by communicating with spirits, they couldn't give people the ability to read minds; humans successfully evolved surviving conflicts of all flavors by associating with trusted companions and being wary of strangers bearing unknown risks and intentions. 

Conflict is rooted in stress and fear. Andrew Huberman, a Stanford neurobiology professor, states that the human brain is "...mostly a stress-reactive machine. Its primary job is to keep us alive, which is why it’s so easy to flip people into fear all the time.” An important survival reaction is triggered by a small almond-shaped structure sitting deep in our brain performing many functions one of which is to act as a "watchdog" always on the alert for threats. When something frightening happens, the amygdala issues an exaggerated response that triggers the feeling of fright we all have experienced. The initial emotional reaction is moderated by a more reasoned assessment of the situation in our prefrontal cortex. 

Evolution drove primates to transition from solitary nocturnal foraging to diurnal gathering and hunting of food. Exposed during daylight in the plains and jungles of Africa without sharp claws or large teeth required special survival skills. Evolution separated humans from other primates to become the most advanced species on earth despite their weaponless physique; they succeeded because their brains developed advanced abilities to understand cause and effect and use that ability to survive and thrive.

The drive to exploit cause and effect created the printing press, the industrial revolution, and the technologies we use today to navigate roads anywhere in the world and observe the earth from space. The human compulsion to understand cause and effect is never-ending (contrary to the famous satirical quote from Charles Duell, who in 1899 was rumored to suggest closing the US patent office he headed because "...everything that can be invented has been invented)".

The amygdala also promotes prejudice and a natural tendency to revert to tribal behavior, asserts Dr. Bobby Azarian, a Cognitive Neuroscientist. The emotional response triggered by the amygdala is moderated by the prefrontal cortex acting as the "watchdog's handler." However, if the prefrontal cortex is impaired, the watchdog can become dangerous.

Non-human primates employ simple forms of cause and effect such as the ability to use a tool to accomplish a task but they lacked a human's ability to reason how and why the cause brings about the effect. Humans have a unique capacity to make logical connections to find the unseen rules governing the way things work. I imagine primitive humans watered a plant and it became green. They observed rain turning plants green. An epiphany leads to agriculture which begets villages.

LiveScience reports that when subjects are exposed to an unfamiliar face the amygdala becomes very active but settles down with repeated exposures to the same face. A Havard publication describes a study that suggests humans (perhaps unconsciously) fear diseases transmitted by unfamiliar persons. When separated populations are exposed to outsiders, novel contagious organisms often cause illnesses that can kill large numbers of indigenous people. It is not unreasonable to hypothesize that evolution instilled in humans a wariness of intermingling with unfamiliar people fearing bad intentions or harm from correlating disease with a visit by strangers.

Subsequent studies found that human brains process visual images of same-race faces differently from other-race faces and may contribute to implicit racial bias (IRB). Jennifer Eberhardt at Stanford University studied the neurological foundation behind the phrase "they all look alike" when members of one race view images of individuals of a different race (though the effect typically can be diminished with exposure). People may strongly believe they have no racial bias but IRB can lurk in the primitive, reactive parts of the brain. Members of outgroups are typically viewed with responses ranging from vigilance to fear. 

Police reform is front-page news due to conflicts between blacks and police. The problem is frequently blamed on inadequate vetting or training of police. Others blame racial bias or disproportionate exposure to criminal behavior.
Corrective measures have had little impact on solving the problem in part because the focus has been on the "effect" half cause and effect rather than on the "cause" half. 

For example, existing police recruitment and selection processes seek individuals who have exceptional emotional control expecting the trait will reduce violent confrontations. Such emotional control is governed by the prefrontal cortex of the brain. A number of recent studies using brain scans demonstrate that individuals with what researchers call "high emotion-regulation" (strong emotional control in normal circumstances) tend to lack an ability to control their emotions in "high state testosterone levels" (surges of testosterone caused by the most challenging social encounters). Brain scans using fMRI indicated that when a person with high emotion-regulation is confronted with a challenging social encounter, as happened with George Floyd, the prefrontal cortex has diminished control over the amygdala, the watchdog is suddenly off-leash.

The single insight -- keep the amygdala watchdog on a leash -- has had widespread positive impacts on police interactions in many communities. More than a decade ago Problem-Oriented Policing (POP) was implemented in my community of San Diego and elsewhere. POP concentrates on improving community relationships in areas where crime is concentrated. This approach has had a significant effect on reducing crime and violent police conflicts by reducing the tension in previously challenging social encounters. While POP wasn't designed to directly alter the recruitment of police, it did reduce conflict overreaction by both police and the offenders.

Dr. Enerhardt With Oakland Police

Important improvements have been made in a handful of police departments elsewhere across the nation from modifying recruitment and training procedures using what has been learned about the underlying causes of police violence as it relates to the unseen workings of the human brain. Both POP and IRB emphasizes the benefits of investigating the causes behind the effects.

Dr. Eberhardt employed both concepts consulting with the Oakland, California police to help reduce racial bias and crime. Deputy Chief LeRonne Armstrong commented “We’ve paid many consultants over the years to come in and do studies, but they’d leave us with their findings and would walk away. Dr. Eberhardt’s team decided to stay on and help us through that process … and that’s why we got so much buy-in from our officers.”

We tend to solve our problems by attempting to alter effects rather than asking how causes might lead to more effective solutions. Researching the causes of violence that reside in the human brain, and the brain's intrinsic plasticity can help us more effectively reform police recruitment and training.

Life After Lockdown

  

PANDEMIC

Lost Lives: An Alternative Perspective

We judge the success of countries and states battling the COVID-19 disease by numbers of cases and deaths. But some researchers say we may be looking through the wrong end of the telescope. One country, Sweden, has 100 times New Zealand's death rate per capita but a number of research scientists are beginning to think Sweden may, in the long run, achieve herd immunity losing fewer lives than countries that sacrificed their social life and economy to quell the spread of the disease. 

The media has focused on the enemy we most fear, the coronavirus. The less-publicized enemy is the devastation caused by a strict lockdown. People die from social isolation and the stresses of a devastated economy. 

No one knows how many lives the second enemy has taken but a subjective estimate can be conceptualized from the list of reported excess deaths from lockdown: Suicide, substance abuse, missed chemotherapy appointments (down 50%), reduced cancer screenings (down 75%), domestic violence, and the list goes on. 

The World Health Organization (WHO) surveyed 155 countries to determine the extent of excess deaths from neglecting non-communicable diseases (NCDs) due to lockdowns. WHO reported the following. 

"More than half of the nations reported that services for NCDs have been partially or completely disrupted, while two-thirds said rehabilitation services were affected.

Meanwhile, a staggering 94 per cent of countries have had to partially or fully re-assign health ministry staff working on NCDs to support COVID-19 response.

Screening campaigns - for breast and cervical cancer, for example - were also postponed in more than half of countries."

Eventually, we will have statistical evidence of short and long term death rates both with and without lockdown. In the meantime, Dr. Michael Levitt provides some insight using mathematical models giving us food for thought.

Levitt readily acknowledges he is not an epidemiologist, he is a biophysicist and a professor of structural biology at Stanford University. His mathematical modeling however extends well beyond biology. More generally, he employs mathematical models to decode and better understand what we observe when something is too complicated to disentangle from what is known about a system. His mathematical skills helped him win a Nobel Prize in Chemistry in 2013.

Levitt did not set out to compare deaths due to lockdown versus allowing herd immunity to run its natural course. He started by recording daily COVID cases in January of the pandemic in China. On January 31 he noticed that there were 46 new deaths compared to 42 the day before (consistent with exponential growth). He soon recognized that the disease initially increases exponentially, then the exponential growth begins to slowly decline towards zero where the curve representing the total number of cases flattens. He then predicted China's COVID-19 cases would peak at 80,000 cases and decline thereafter. (On June 2nd China appears to have peaked at 84,102 cases and is declining, a remarkably accurate prediction.)  This pattern seemed to be consistent whether a country locked down or remained open. He applied his model to other countries including New Zealand. 



New Zealand acted "hard and early" in the words of the Prime Minister and brought the pandemic to a stop by locking down and isolating from the rest of the world. Each day the exponential growth rate declined linearly towards zero (the blue line in the graph)  at which point the curve flattens (black line) and the new cases quickly die out. Levitt later came to two conclusions. The pandemic will be over sooner than predicted and the herd immunity threshold is substantially lower than the 60% or so estimated by epidemiologists.

For a more technical understanding of Levitt's models and a discussion of his tentative predictions, view his three short video talks in order - (one, two, three).

Regarding the question whether a strict lockdown or a rapid opening loses more lives, Levitt did conclude in a recent interview expressing his current opinion: "There is no doubt in my mind that when we come to look back on this, the damage done by lockdowns will exceed any saving of lives by a huge factor."

The jury is still out on the issue but the prospect that Levitt is right cannot be ruled out. There is much we don't know about the disease but it is time to focus on how to relax lockdown restrictions while carefully navigating a path to a reasonably safe economic and social recovery. 

Whos Afraid Of The Big Bad Wolf

Whos Afraid Of The Big Bad Wolf

Preface

In a matter of weeks, the world's economies were hobbled by a microscopic foe named SARS-CoV2, more commonly called Covid-19. Unlike The Great Depression and The Great Recession, the current economic turmoil had no preceding economic conditions that created a bubble waiting to burst. The uncertain course of a novel virus, the unpredictable political environment, and the unprecedented social disruptions have triggered the most diverse economic forecasts I have witnessed in my half-century experience as an economist.  Harvard Business Review surveyed 28 institutions that publish economic forecasts. The most optimistic saw the U.S. economy declining 8.2% this year and the most pessimistic forecast saw a 65% decline. All 28 forecasts expected an upturn by year-end.

What follows is a synoptic sample of a wide range of economic outlooks I collected from other authors plus my view of what realistically could happen if we successfully navigate the gauntlet of conflicting global and domestic political agendas. 

The Good, The Bad, And The Ugly

The good. Our economy was healthy for the last several years except for the hangover from The Great Recession which created extraordinary national debt. However, we are well insolated from a national debt spiral; we have near-zero interest federal rates, virtually no inflation, and an arsenal of fiscal and monetary tools to prevent another Great Depression. In addition, the US dollar is, and likely will remain, the world's most stable and widely used currency. U.S. Treasury securities are considered by other countries to be the safest investment available during periods of economic turmoil. The pending recession should be minor and resolve by early 2021. 

The bad. The International Monetary Fund estimates the global debt/GDP ratio will increase from 77% to 94% as a result of the pandemic. The increase will reach the tipping point, a point where investors become concerned about the prospects of one or more countries defaulting on their national debt greatly increasing their interest rates. This will reduce global economic growth and initially damage emerging countries.

As economic problems increase in more developed countries and global trade tensions escalate, tipping points as viewed by countries like China and Japan that hold large portfolios of the U.S. government debt will begin to sell their holdings of U.S. Treasury securities. This will increase our domestic interest rates and in turn cause personal credit card, business, and mortgage interest rates to increase. Residential home prices will decline and foreclosures will precipitate a liquidity crisis reminiscent of the Great Recession. Overall rising interest rates will discourage private investment and dampen economic growth.

The Federal Reserve Board (the Fed) will attempt to tame the rise in interest rates by quantitative easing to stimulate the economy. The money supply will be increased by auctioning U.S. Treasury securities on the open market pushing interest rates even higher. The capital stock will be diminished and long term economic growth will be stunted. 

The stimulus spending temporarily will increase economic activity to help dampen the recession but the can is kicked down the road to a time when the deficit cannot be sustained requiring increased taxes and/or reduced spending. It will take the U.S. more than five years to escape from the pandemic-driven recession.

The ugly. If the embers of the first wave of the pandemic reignite a devastating second or third outbreak, and/or if the virus mutates voiding herd immunity, stimulus spending will need to double or even triple to attempt to prevent another Great Depression. Congress and the Fed will be desperate to avoid an economic collapse and would instead take the risk of substituting the bad economy for the ugly economy. The debt/GDP ratio will rise above 130% in the next few years. 

The renewed pandemic spike will be global and every country will try to borrow at the same time with few or no willing lenders. Record interest rates will be required to entice investors to buy securities, millions of additional jobs will be lost, global GDP will decline and many businesses and governments will be unable to raise enough revenues to avoid insolvency. 

Some governments will attempt to raise taxes rather than borrow but the same empty pockets that couldn't lend would not be able to pay sufficient taxes to prevent defaulting on some or all of the governments' debts. Government spending reductions will cause even more jobs to be permanently lost and the production capacity of the world will be dropped to a lower long term trajectory. It will take decades to return to our pre-pandemic level of financial security. 

An Achievable Scenario

Today the government is deploying enough fiscal and monetary firepower to avoid both the bad and ugly scenarios. But the expansionary actions of the government need to be continued and refined. We have the opportunity and ability to get back on the pre-pandemic economic trajectory within two or three years if we don't allow unproductive political bickering and ill-conceived government policies get in the way. 

Unemployment will worsen but will not reach 25% as in the Great Depression. Although employers are beginning to reopen, a growing number of businesses are insolvent or nearing insolvency; some of the job losses will need to be delayed until overall demand for products and services returns to pre-pandemic levels which may take years (it took four years for employment to recover from the dotcom bubble at the beginning of this century and six years for employment to fully recover from the Great Recession). 

Employers will need to rebuild foreign and domestic supply chains and, in many cases, adapt and transform their production processes and workforce skills to accommodate changes in the technologies and behavior caused by the pandemic. For example, there will be more work from home, more remote interaction with the public, increased attention to health and sanitation, more online business activity, and changes in the way the merchandise is moved from factories to homes (e.g., new delivery channels and transportation technologies). 

 Fiscal and monetary policy are being used more aggressively than during any other peacetime period. However, stimulus payments to workers currently are neither sufficient in amount nor suitably targeted to restore smaller businesses and consumer spending by late 2021 although I see some improvement by year-end. Federal policy has emphasized top-down economic stimulation; large corporations have benefited from more tax cuts and federal funding than have small businesses and workers. While large companies support large numbers of employees, direct corporate grants and loans don't stimulate demand for products and services as powerfully as the same money carefully targeted to consumers and employees if smaller businesses. 

If additional stimulus actions of the federal government agencies are refocused on the average household, the pending recession could be foreshortened but presently there is a dysfunctional lack of agreement within Congress necessary to trigger a more rapid bottom-up stimulation. 

Interest rates and inflation could be kept under control if our government prudently works to layout a predictable and carefully planned roadmap to recovery. Investors would trust the full faith and credit clause of our constitution and fiscal and monetary authorities will continue to keep both interest rates and inflation in check through next year. 

Public uncertainty about inflation and interest rates has increased dramatically. Some fear deflation which would cause people to defer purchases waiting for prices to fall and therefore depress economic activity. Others fear inflation will increase as the economy eventually recovers. Expectations about inflation often become self-fulfilling. But there has never been (in my experience) as much diversity among economists and public policymakers about long term interest rate and inflation predictions as there is today. My bet is that inflation and interest rates will be a non-issue for at least two years. 

Beyond 2021. I believe there will be a prolonged period of recovery under the best of circumstances. Bear markets will outnumber bull markets. Federal and state governments have been weakened and will be saddled with debt that the public cannot comfortably pay in taxes or fees. The aging population will require more medical and living assistance than federal, state, and local governments can provide. Fiscal and monetary authorities will be low on ammunition to combat the typical economic fluctuations of a market economy.  Basic state and federal government services will be reduced and will require increases in marginal tax rates. Mandatory spending including interest on the national debt, entitlements,  and sustaining essential government functions will become a greater share of the federal budget. However, assuming a COVID-19 vaccination is developed or the virus dies out, five years from now today's social and economic disruption will be recorded in history as the pandemic-driven recession that is most memorable as one that altered our culture and our business institutions.

Commentary

Predicting the US economic condition more than two years ahead is exceptionally difficult for two reasons. 1) The Covid-19 virus and its impact on the world's inhabitants are still unpredictable. 2)  The worst economic turmoil in almost a century is occurring during an election year which creates incentives that conflict with safe and successful navigation through a pandemic-driven storm. 

Unfortunately, we as a nation tend to short-sightedly devote our resources to resolving immediate problems rather than securing the economic and physical environment of future generations. We do this with both our physical environment and our economic policies.

The best outcome will be realized if we resist the temptation to allow self-interest, political rivalry, or apathy to deflect us from doing the very best we can to tame COVID-19 and skillfully manage the economy. In all matters affecting the comfort and security of ourselves and future generations each of us should respect the advice of knowledgeable experts and weigh their advice on the scales of our personal conscience.  We can't change human nature but we can temper it within ourselves and by practicing compassion for others. 

I called my prediction an achievable scenario but much depends on which of many paths our leadership might take. I hope and expect either my version, or the good scenario come to be. 

I strongly believe we will not experience the worst scenario, an economic collapse. No forecast I surveyed suggested an economic collapse of a developed country. I include it here because failed states do occur, especially, but not exclusively, in undeveloped countries.  

Economic Collapse

 A summary of the consequence of economic collapse is described on the website thebalance.com, a website providing financial information for the average investor. Here is an excerpt.


"If the U.S. economy collapses, you would likely lose access to credit. Banks would close. Demand would outstrip the supply of food, gas, and other necessities. If the collapse affected local governments and utilities, then water and electricity might no longer be available.

A U.S. economic collapse would create global panic. Demand for the dollar and U.S. Treasurys would plummet. Interest rates would skyrocket. Investors would rush to other currencies, such as the yuan, euro, or even gold. It would create not just inflation, but hyperinflation, as the dollar lost value to other currencies."


...As for cash, it may not be useful in a total economic collapse because its value might be decimated. Stockpiles of gold bullion may not help because they would be difficult to transport if you needed to move quickly. In a severe collapse, they may not be accepted as currency. But it would be good to have a stash of $20 bills and gold coins, just in case. During many crisis situations, these are commonly accepted as bribes."