Elections, Ebola and Economics

                         
                                                         


Ebola

I was going to write a fairly lengthy piece on the Ebola problem, but after starting it, it became clear that I, along with people with far more expertise than I have,  really do not have a realistic solution either.   I kept asking myself questions like “Why isn’t the entire Texas Presbyterian Hospital in Dallas, including its entire medical staff, its employees, including cafeteria workers, office staff, maintenance people, etc. as well as its present patient population put under a three week quarantine right there in the building? "(If that had been done, persons possibly infected with the virus would not have been able to board airplanes or take off on a Caribbean cruise.)

Supplies could be shipped in for the quarantine period, but no one should be leaving the place.  And when they do eventually leave, shouldn't they be monitored outside for a month or so more?  These people are going home each night and we really don’t know the full story of who is infected and who isn’t.  And this goes for every hospital in the country (other than the four with real isolation units and greater expertise) where Ebola might be initially diagnosed.  But we can’t really do that, or could we, or should we? And if we did, would such a total quarantine be on a mandatory, not a voluntary, basis?

And as for those four places where Ebola patients can be properly isolated, their total capacity is limited to about fifteen beds, some already occupied, so that's another frustrating part of the problem.  And now, it sounds like some in Washington are already starting to politicize the situation, playing the blame game.  And that's why this article is so short, containing questions but not answers!

Jack Lippman

                                                             


                                                     

The Race to Control the Senate

As we get closer to Election Day, the following national trends seem to be appearing.  There will be Republican gains in both the House and Senate.  The few seats the G.O.P. will pick up in the lower House, which they already control, will not be as important as what is happening in the Senate, where the results will be very close.

There are tight Senate races in Louisiana, Alaska and Arkansas which can go either way. In Kansas, an Independent is likely be elected, and whether he caucuses with the Democrats or Republicans is uncertain, as is the position of the existing Independent Senator from Maine, who while caucusing with Democrats now, could switch over to the G.O.P. if they come close to controlling the Senate.

Whether the G.O.P. gets the 51 votes they'll need to control the Senate, including possible Independents who might caucus with them, depends on those three tight races mentioned above, in all of which the Democrat is a threatened incumbent.

 
Landriuex (D) vs. Cassidy (R) in Louisiana 


 
Pryor (D) vs. Cotton (R) in Arkansas 

Begich (D) vs. Sullivan in Alaska            

How things go in these contests will depend to a great extent on how the voters there view what the Democratic Obama administration is doing to deal with crises in the areas of foreign policy, the economy and currently, with the threat of Ebola.  This will overshadow whatever the Senatorial candidates are saying. The level of dissatisfaction (or approval) in these areas could make the difference, when voters translate it into how they make their Senate choices, even though Barack Obama is not on the ballot.   And a strong turnout by traditional Democratic voters (students, women and minorities) is unlikely in these mid-term contests where social issues which usually arouse them are taking a back seat to issues in the areas mentioned above.

    

My prediction is that the Republicans will gain control of the Senate by one or two seats. But things can change over the next few weeks.
JL


                                                              

Fed’s Easy-Money Approach Aids Dysfunction

 

Peter Morici, respected University of Maryland economist, wrote this piece for the Palm Beach Post.  I disagree with it, primarily because while he blames a host of our problems on low interest rates resulting from the Federal Reserve's purchasing of bonds to keep them low (Quantitative Easing), he doesn't offer solutions, other than suggesting that we get rid of the supposed "easy money" low interest rates make available.  

Many economists, including Paul Krugman, feel that low interest rates enable businesses to more easily borrow, expand and create jobs, as well as making mortgages and auto loans more readily available, similarly benefiting construction and manufacturing.  Such economists just feel that it's a slow process that won't happen overnight, and we just have to wait for it to bear fruit.  There is a similar debate going on in Europe where the austerity which accompanies higher interest rates and less Central Bank (like our Federal Reserve) involvement is taking a long time to have positive results.  

I also disagree with his comment regarding "record deficits."  Look it up!  The Federal deficit has decreased under President Obama, not increased.  What do you think?  Here is the article:

 

The U.S. economy is underperforming, and the Federal Reserve’s low interest rate policies won’t reinvigorate it.    To cope with the financial crisis, President Barack Obama pulled out all the stops — record deficits, bank and automaker bailouts, and sweeping financial reform — but since the summer of 2009, GDP has advanced only 2.2 percent annually.    One out of six men ages 25 to 54 remain jobless, wages are stagnant and family incomes continue to fall.    

History dealt Ronald Reagan a tough hand, too — he endured double-digit inflation, interest rates and unemployment. Yet, his recovery accomplished 4.7 percent growth, vigorous jobs creation and a robust prosperity.    America once boasted the most productive manufacturing and R&D on the planet but for some time now, CEOs have been under-investing at home and moving plants and product development to China and other foreign locations.    Nowadays, many young people can’t start a decent career, are burdened with too much college debt and are postponing marriage and children. More elderly are bagging groceries and busing tables, because they can’t get a decent return on savings and many have lost pensions.    University presidents have been over-investing in football, covering up the criminal activities of athletes and coaches, and short-funding science and engineering. They push students into cheap-to-staff majors in the social sciences and humanities, where disaffected faculty often cultivate cynicism about traditional American values such as hard work, personal responsibility and thrift, and students acquire too few marketable skills.    U.S. productivity growth has slowed to a historically anemic 1 percent a year, while over in China the pace is about 5 to 6 percent!    Continuing this way, federal revenues will soon be inadequate. Budget deficits will rise precipitously early in the next decade, and then spin out of control and become tough to finance.

Washington will not able to simultaneously fund Social Security and Medicare, the wider social safety net, the normal operations of government, and a military adequate to defend against terrorism.    Support for democratic institutions will fray and then disassemble, and America could become a darker, unrecognizable place.    The culprits are all around us.    Corporate taxes at 35 percent are too high and government regulations are too burdensome, unless a business can find a politician to put in a fix.    For example, the Treasury recently ruled that transmission wires are now “real estate” for tax purposes, permitting telecom companies much lower rates under the tax code. That will benefit Comcast, whose CEO provides his home to the president for frequent fundraisers.    The U.S. dollar is terribly overvalued against China’s yuan thanks to Beijing’s capital controls and currency market intervention. This makes Chinese products artificially cheap at Wal-Mart and sends American factory jobs to China.    Obama admits the problem but confronting Beijing would upset New York bankers who are also big contributors to the Democratic machine. Instead, he spends his political energy trying to close Guantanamo and bring its terrorist inmates onto U.S. soil.    Since the financial crisis began, the Fed has pumped trillions of dollars into financial markets to keep interest rates low and propagated the myth that a healthy dose of inflation could get the economy growing quickly again, but it has produced little evidence that inflation could fix the dysfunctions besetting American capitalism.  

   

Low interest rates have pushed up auto and home sales and stock prices to give the president and Congress just enough growth and political cover to avoid addressing the big, tough structural problems. But anyone with a nose can smell the stench of decay.    Only by ending its easy money policies could the Fed stop enabling Washington’s irresponsible behavior and help force political change. And if the Fed doesn’t act soon, it may simply be too late.    

Peter Morici is an economist and business professor at the  University of Maryland. He wrote this for The Palm Beach Post. 

JL 

                                                                    

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