Bill Owens: Confounding And Confusing Events 4/5/21

One of the big stories this week has been the irony of the COVID pandemic, with cases increasing in many states, while at the same time vaccinations are also increasing.  Cases are increasing in younger people, primarily between the ages of 10 and 19.  Obviously, they are not getting vaccinated, but also many governors have relaxed the protocols which helped to contain the COVID virus, and we are now seeing the results of those actions.  It started badly and is gaining steam which portends an ominous trend moving forward.  There is one bright spot and that is because fewer older Americans are getting sick, there are less hospitalizations, so the threat to the hospital system has been reduced.

I was listening to Congressman Jim McGovern of Massachusetts, an unabashed progressive, on NPR on Monday of this week, and he was speaking to the issue of the War Powers Act, the nature of the conflicts we have gotten into and the fact that over the last half century Congress has largely abdicated its roll to act as a check against the executive and the military.  I have written previously that I think we need a new National Defense Strategy, and that we need to rethink how much we are spending on the military.  It strikes me that what Mr. McGovern correctly identified the issues, but what he didn’t speak to, is the reasons why. In most instances, the Members of Congress who are most hawkish are folks who have large military installations or defense contractors in their district and thus receive substantial funding which creates jobs.  This is an unfortunate reality, and one, if you will, that drives this train even harder than it might otherwise.  Congress does not do an analysis of what is really needed, and what our roll should be in the world.  Unfortunately, Mr. Trump in his rather bombastic and convoluted way nonetheless had a point that we need to rethink what it is we are doing and how much we are spending, and where the money goes, to determine how to reduce spending and thus reduce the debt. That is the direction I think we should be going. 

One-hundred and fifty years ago the Republican Governor of North Carolina (William Woods Holden), speak of irony, was impeached because he moved to suppress an insurrection led by the Ku Klux Klan and other related groups.  This followed a spate of assassinations, lynching’s and other violence that was directed against the government and black communities, and sounds very similar to what is brewing on the far right in the United States today.  Mr. Holden has no place in the history books to speak of, but he is worthy of note, because this gentleman stood up for the rule of law and to stop what were essentially insurrectionists in his day from attempting to assert mob rule.  The parallels are striking, the irony is, as well. 

On the political front ACO made some surprise contributions to vulnerable Dem’s (translation swing districts) who weren’t very happy about it. If you’re a moderate one of the last things you want is to be associated with Congresswoman Ocasio-Cortez. Her brand of politics is not helpful to holding the majority.

Have you ever heard of the Southern Rhode Island Institute of the Arts which is touted as being one of more exclusive universities in the United States?  I bet you never heard of it, and the reason is, it is not real.  It is the creation of high school students in an attempt to help alleviate some of the anxiety and stress that are created at this time of the year as acceptances are being mailed out by real institutions. A clever approach, and one that deserves study for a number of reasons.  First, its website is apparently compelling and appears to be a real university, this raises the question of “what do you believe from the internet?”. Second, the fact that students are working to relieve stress in a very clever way, also is worthy of note. Third, it’s a fun read by Rachel Wolfe in the Wall Street Journal of March 31, 2021. 

Mr. Biden, this week, and probably the week’s biggest political story, unveiled his public works package which, of course, is getting praised and panned at the same time.  The proposal would increase corporate taxes to pay for fixing roads and bridges, boost research and tackle climate change among other things.  There is some concern on the part of many that it also includes items that are unrelated to infrastructure which is always an issue in Washington, but it is one that is frequently necessary in order to garner the votes to pass a bill.  If something is included that I want for my district, while the bulk of the legislation may not impact my district, I might be inclined to vote for it to get the thing that I want.  This is called bargaining.  It is a healthy business practice, and should work well in government and did work well in government for many years until the early 2000s when the anti-government spending groups came to the fore (tea partiers who disappeared while Trump ran up the debt), and instead moderating what had grown into a problematic practice, it was eliminated.  This is never a good road to walk down, as almost everything that develops in any system starts out with having a good purpose and frequently gets warped over time, what that means is we should go back and reestablish the good purpose and curtail the bad, not throw it out.  We will hear much more about this package going forward and it is going to be I think a remarkable process to watch to see if this can be passed, as there is no doubt that we need infrastructure improvements and it would dramatically boost the economy. 

The tax provisions of the bill are clearly going to be fought vigorously by the business community and Republicans.  It may be modified to provide that the funds collected, (the extra 7% in tax) from at least corporations was devoted to infrastructure, that might be more appealing than the fear that many will have that the funds will be diverted for other purposes, and once comingled in the Treasury, there is great risk. 

Canada is in a bit of a struggle as products from furniture to toilet paper are becoming scarce, and there is the likelihood of price hikes occurring in the near term.  This is brought to the fore by the trade log jam that occurred in the Suez Canal recently, but it is also well known in shipping circles that there are an insufficient number of containers and ships to move goods out of China to the west, thus, dramatically effecting trade, but also what is available on our shelves.  One very notable example is bicycles, which apparently are jammed up in the factories and docks of China, and are not moving to the United States, creating a significant shortage.  This is going to be an important element of trade to watch over the next several months to see if that log jam is broken and goods begin to flow, and at what cost. 

The US added 916,000 jobs in March and the unemployment rate fell to 6%. Many economists believe that growth is poised to take off. Banks continue to see an influx of cash in corporate and individual accounts. When spending begins in will be a welcome relief to business and aid consumers overall confidence.

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