Episode 51 June 12, 2020
CLP Topic. Economic Growth.
Chinese Covid Lockdowns, Black Economic Dysphoria, Global Crony Capitalism, and the Killing of George Floyd.
Introduction.
Out podcast today is titled, Chinese Covid Lockdowns, Black Economic Dysphoria, Global Crony Capitalism, and the Killing of George Floyd, and the podcast is the introduction to a much longer article.
We begin our podcast with the ideological distinction about societal racism revealed in Rush Limbaugh’s discussion with 3 Black media hosts on the Black radio program The Morning Breakfast Club.
Rush explains that he initially sought out the discussion to see if he could find common understanding with Black activists about the killing of George Floyd. Most of his commentary was with one of the three hosts, named Charlamagne tha God, (hereinafter CTG).
The distinction we make, using Rush’s discussion, is the difference between an individualistic perspective and a group-identity collectivist perspective about racism, in the United States.
Those ideological differences are irreconcilable, and we argue that the two ideologies cannot be reconciled, under Madison’s Constitution.
Part of our argument is that the United States, under Madison’s representative republic, ended in the failure of a centralized global elite tyranny, disconnected from the will of the voters.
We make a distinction between the rules of civil procedure in the Constitution of the United States, and the promise of liberty in the American Declaration. The two documents are not connected in Madison’s Constitution.
This is the same distinction between the United States, and the American promise of liberty in the Declaration that Candace Howze writes about in HuffPost.
She states,
“I admit it, the idea of America is super cool. It really sounds amazing and yes, it’s a geographically and culturally influential and beautiful place. But America isn’t really America.”
We agree with her point that the nation of the United States is not the same thing as America.
The founding documents of the new nation were Jefferson’s Declaration, followed by the nation’s first Constitution, The Articles of Confederation, drafted by Thomas Burke, of Hillsborough, N. C., and ratified in 1781. And third, Madison’s Constitution of 1787, followed by the Bill of Rights, in 1791.
Madison organized 38 elites, who met in secret, and executed a quiet coup in replacing the Articles with his Constitution. His rules did not provide a mechanism for citizens to protect their own liberty from the current entrenched elite tyranny.
Only 37 elites signed the Constitution because one elite signed twice, once for himself, and second as a proxy for another elite, not in attendance on the signing day.
Not one common citizen participated in the drafting, and not one common citizen signed the document.
The distinction about the ideology of racism revealed in Rush’s discussion is relevant for the broader distinction in logic between the social construction of reality of socialists and the philosophy of empiricism in Western logic.
In the social construction of reality, the mental image of the cop killing Floyd will never cease to be a useful tool for promoting the socialist agenda because it so perfectly confirms the prior premise that America is a brutal white supremacist society.
We argue that the difference in language and logic between socialists and conservatives is one reason, but not the only reason, why the differences between socialists and conservatives are irreconcilable, under Madison’s Constitution.
As the discussion between Rush and CTG shows, the cultural and moral values of the two-world views, individualism and collectivism, do not connect anywhere. There is no common ideological agreement on the mission of the Nation.
The Black Democrat socialists are correct that the United States must change its economic system, but they are incorrect to argue that the economic change needed is a socialist dictatorship.
The Black socialists will never reject the premise of socialism because their end goal is to replace the existing Constitution with a panel of socialist elites who make judgments about income fairness and justice.
The panel of socialist elites is similar in concept to the non-constitutional authority of Democrat governors to judge what is essential and non-essential, and how long the Covid lockdowns continue.
Rush began his discussion with CTG by making the obligatory genuflection to the murder of Floyd by cops.
Rush states,
“RUSH: ‘Cause I’m fed up with it. (the police killing Black people) I mean, I’m not tolerant of any of them, but I’m fed up with it, Charlamagne. None of this, to me, and I know that you’re gonna disagree with me on this. To me, this is not America.”
CTG responded, not on the topic of the cops killing Floyd, but with a much broader statement about institutional, systemic racism.
CHARLAMAGNE THA GOD: “Oh, no, it’s definitely America.”
Rush interprets racism from the individualistic perspective that individual white people are not racists, and CTG interprets the killing from the perspective that the entire white American society is racist.
Rush makes his case by using the individualistic evidence that white DNA does not contain a gene for racism.
Rush: “White supremacy to me means somebody, a white person who thinks that they’re better, that they’re superior, that the white race is superior based on DNA, based on science. White supremacy and white privilege is a catch- all for the way the country was designed. It’s a way of saying that America as constituted will never be fair, will never be not racist. It’s a way of laying the groundwork for getting rid of the Constitution and transforming the country, starting over into something it was never intended to be.”
CTG does not disagree with Rush about getting rid of the Constitution, but counters with a robust condemnation of the capitalist economic system, that he cites as evidence of systemic, institutional racism.
His main point is that the economic system only works for white privileged people, like Rush.
CTG: “I do think America does work, but it works for the people that it was designed to work for. It doesn’t work for everybody else the way it works for you. Let’s not act like there isn’t 40 million people who have filed for unemployment in America, folks that have been sitting around the last three months waiting on stimulus checks, more than 44% of those people have been denied unemployment checks are still waiting on ’em tocome. People of all races are broke. They don’t know where their next meal is coming from.”
Rush bristled at being called a privileged white person, and noted that he had worked hard for his success, and that if he could do it, anyone could achieve success.
RUSH: “Well, it can work for everyone. That’s the point of America, it can for anybody who wants to adapt to it, for anybody who wants to try to take advantage of the unique opportunities that exist in the United States.We’re the only nation that’s ever enshrined the concept of individual liberty and freedom in our founding documents.”
The error in the statement Rush made is to conflate and combine the American promise of liberty, in Jefferson’s Declaration, with Madison’s civil rules of procedure, of the United States, that permanently stacked the economic deck in favor the natural aristocracy, which eventually ended in the crony corporate globalist tyranny.
Madison feared that the majority of common citizens would use their majority voting power to oppress the minority of wealthy citizens, and his rules for the Senate, the Supreme Court, and runaway slaves, were all part of his grand design to overweight the power of the elite against the common citizens.
While Rush can see and condemn the unelected power of the deep state, he cannot bring himself to extend that condemnation to Madison’s rules, which empowered the deep state crony capitalist system of the Republican Party, which is odd because Rush often cites Codevilla’s work on the American ruling class.
Rush provides the right analysis of Codevilla’s ruling class, but he never identifies the actors who make up the deep state ruling class. Those actors are the corporate military industrial complex, the unelected deep state bureaucrats, and the newly enriched technology information companies.
Combined, those actors constitute the crony corporate capitalist class.
Rush states, that from his individualistic perspective, the collectivist notion of white privilege, and its near cousin, white supremacy, does not exist, as it is applied by Black activists to all white people, collectively.
RUSH: “No, wait a minute, I don’t buy into the notion of white privilege. ‘Cause I hate it, we’re all Americans here and I don’t like the fact that you’re (using the term white privilege)”
The two are talking past each other, and their discussion never connects on a common understanding of racism, or the mission of the Nation.
Rush misses CTG’s ideological point entirely. Without the notion of white privilege, CTG cannot make his extended argument that the capitalist system is systemically racist. And, without the ideology of racism, CTG cannot get to his main goal of eradicating the individualism of capitalism.
CTG: “Here’s the thing. I think that we gotta stop acting like white supremacy isn’t done by design, the whole function of systemic racism is to marginalize black people… So, once again, we need people that are willing to dismantle the mechanism of white supremacy, period. This is America’s fault, and the War on Drugs, mass incarceration, segregation, slavery, all of those things are and have been the proverbial knee on the back of black folks’ neck. And ’til somebody’s willing to dismantle the mechanism of white supremacy, nothin’ is gonna change.”
CTG misses Rush’s ideological point entirely. CTG assumes that the current crony capitalist system is the only form of capitalism. Rush is arguing for a free market entrepreneurial economy, but Rush fails to make the distinction between crony capitalism and entrepreneurial capitalism.
Two days after his conversation with CTG, Rush had an opportunity to reflect on the significance of his call with one of his callers, named Sherry. Rush reverts to his earlier, individualistic interpretation of white supremacy.
Rush: “White supremacy to me means somebody, a white person who thinks that they’re better, that they’re superior, that the white race is superior based on DNA, based on science.I think, Sherry, that white supremacy is another name for hate. And it’s an umbrella under which a number of guilty traits that are alleged to part of being white. It’s a way of laying the groundwork for getting rid of the Constitution and transforming the country, starting over into something it was never intended to be. That’s really what the ultimate purpose of all of these terms is, I believe.”
Rush is correct in his assessment of the end goal of the socialist Black activists, like CTG, is to use the hatred of racism as a weapon to eradicate the Constitution and replace it with a socialist dictatorship.
CTG is correct in his analysis that Madison’s Constitution stacked the deck in favor of the natural aristocracy. CTG is incorrect to argue that the main economic issue to be solved in the United States is racism.
The bigger war to be fought by the Black activists is over the disappearing Black middle class, and fighting against the global corporate, and deep state elites, who use Madison’s rules to distort the flow of economic benefits to themselves.
The bigger issue for CTG to solve, is what type of economic system generates fair economic outcomes for Black people, while preserving individual freedom.
The statement by CTG that the economic system only works for white supremacists, like Rush, needs to be revised slightly. The U. S. economic system only works for Black people when the benefits of economic growth and prosperity are fairly distributed to them, as reward for their work.
The solution to racism is the same as it has always been, since Jefferson’s Declaration: a fair economic system where all individuals are treated as equals, and obtain their just rewards.
Or, to paraphrase the political slogan of agrarian populists, in the 1880s, who confronted the same set of unfair policies as Blacks do today: Equal Rights For All. Special Privileges for None. (Equal Rights For All. Special Privileges for None. Re-examining the Agrarian Arguments Against a Centralized American Government, Laurie Thomas Vass, GabbyPress. 2017.
The solution to racism is more democracy, and more economic freedom, at the most local level of government, not more globalist, centralized tyranny, under Madison’s flawed document.
Oddly, CTG is great at pointing out the flaws in the existing political system, but woefully deficient in offering a compelling economic alternative to crony capitalism for the Black middle class to achieve individual freedom and success.
In the Black social construction of reality, CTG adopts a Pollyanna economic myth that the existing crony capitalist economic structure can be modified to function, like Chinese Communist state capitalism, and that racism will disappear when the agents of government take wealth from the rich and give to the poor.
And, to help CTG imagine that fair economic system, it is not a communist dictatorship of the proletariat. We cite the historical example of Durham’s Black Wall Street, in the 1920s, as the goal of Black economic freedom to achieve financial success.
The most fair economic system that generates fairness and freedom is called competitive free market entrepreneurialism. (The American Millennial Attraction to Socialism. Laurie Thomas Vass. GabbyPress. 2020).
We conclude that the competitive free market entrepreneurial economy cannot be obtained under the existing Constitution, because the ideology of racism, as a tool of Democrat socialists, prohibits authentic discussion between people like Rush Limbaugh and CTG about a better economic system.
This podcast is the introduction of a much longer article, available at the clpnewsnetwork.com
The other sections of the longer article include:
Section 1. The Origins of Modern Racism in the United States.
Section 2. Black Economic Dysphoria Under Global Corporate Capitalism and the Covid Lockdowns.
Section 3. Globalism and the Killing of George Floyd.
Conclusion: Re-connecting a New Constitution to the Principles of Liberty in the Declaration.
The full text and audio of the most recent podcast is available for free at clpnewsnetwork.com. The entire historical text and audio archive of all the CLP News Network podcasts are available for an annual subscription of $30.
I am Laurie Thomas Vass, and this podcast is a copyrighted production of the CLP News Network.
Section 1. The Origins of Modern Racism in the United States.
Socialists, like the writer of the 1619 project for the New York Times, are fond of placing the start of racism in the year 1619, 12 years after the establishment of Jamestown, and 157 years before Jefferson’s Declaration.
While that starting date fits the social construction of reality for the case that the United States was racist from the start, it does not fit the argument for the origins of modern racism in the United States.
Modern racism is different than old, historical racism of slave and master, or the neo-slavery of the Democrat one-party apartheid in the South. But, both modern and historical racism have their roots in the evolution of modern crony corporate capitalism, which has its roots in Madison’s rules that favored the natural aristocracy.
Modern racism is based upon the framework of global crony capitalism, that began around 1985. The initial stages of global corporatism involved innovative ways for large corporation to move production facilities to low cost nations.(Vass, Laurie Thomas, Searching for Signs of Technological Innovation in the Ruins of the American Economy (August 4, 2008). The Private Capital Market Working Paper No. 2008-03-04. Available at SSRN: https://ssrn.com/abstract=1270789.)
In their article, “Why Are Companies Offshoring Innovation?The Emerging Global Race for Talent,” (CEB Working Paper 08/009, March 2008), Arie Y Lewin, et.al., (LMP), examine 880 cases of American corporate offshoring.
They investigated offshore implementations initiated by US firms between 1990 and 2006. In particular, they investigated the determinants of firms’ decision to offshore product development activities (i.e. R&D, product design and engineering services).
While they identify the earlier period beginning around 1985 as the start of the manufacturing offshoring trends, they also find, like other researchers, that something about offshoring dramatically changed, beginning around 2003, after the implementation of the China trade deals.
“In the early 1980s,” they explain, “several leading edge companies such as Texas Instruments, Motorola, and General Electric established technology centers in India and China to secure strategic advantages such as favorable political treatment (Delios and Henisz, 2003) and access to talent.”
“In comparison,” they note to the earlier period of offshoring factory jobs, “the offshoring of high-value adding white collar activities – pioneered by a few companies in the 1980s – is still a relatively undiffused practice (Amiti and Wei, 2005). However, Dossani and Kenney (2007, p.779) conclude that “in less than six years, technology innovation offshoring has evolved from an exotic and risky strategy to a routine business decision.”
According to LMP,
“Offshoring increasingly complex and advanced activities requiring more and more qualified workers (Lewin and Peeters, 2006). This trend is enabled by trade liberalization policies, advances in information technologies (Doh, 2005; Levy, 2005; Dossani and Kenney, 2006), and by the ability of companies to disintermediate and modularize almost any process, including knowledge creation.”
They also cite Kuemmerle (1999b), who shows that in 1965, 32 multinational firms in his paper carried out 6.2% of their R&D efforts outside of their home country boundaries, while in 1995 the corresponding figure was 25.8%.
We argue that the early initiative to offshore production, and then later, to offshore R&D innovation, corresponds to the change in the American economy from a goods-producing economy to a rentier economy, that exclusively benefits the global crony capitalist class.
Long before the Chinese Covid lockdowns, the ruling class was perfecting the latest iteration of a tyrannical seamless global market, unburdened by artificial national boundaries.
Modern racism began around 1985, with the political alliance of the U. S. Chamber of Commerce and the Business Roundtable, organized and coordinated under the auspices of the National Republican Party, to implement George Bush’s vision of a one-world government.
There is nothing about the ideology of individual freedom in the modern version of a one-world government in the trade policies of the Republican Party.
The unifying principle of Republican crony capitalism is globalism, and modern racism is consequence of globalism. (The Restoration of the American Natural Rights Republic. Correcting the Economic Consequences of the Republican Party Abdication of Natural Rights and Individual Freedom. Laurie Thomas Vass, GabbyPress. 2017).
Globalism destroys the middle class blacks and whites, together, but globalism cannot work unless the Blacks and Whites hate each other more than they hate the crony capitalist ruling class.
When George Bush, Colin Powell, and Mitt Romney state that they will not vote for Trump in 2020, they are expressing their allegiance to globalism, because globalist Republicans hate Trump for promoting America First.
In the first major political victory of the alliance of global crony capitalism, the lobbyists for the Business Roundtable wrote the legislation for NAFTA, and paid elected Republicans to usher the legislation through the Congress.
Ross Perot was right that there would be a giant sucking sound resulting from NAFTA, as the legislation eviscerated the Black middle class.
Traditional Black skilled occupations, like brick laying, textile toppers and mechanics, and skilled auto production line occupations, disappeared as a result of NAFTA, implemented on January 1, 1994.
The political work conducted by the politically-organized globalists to enact NAFTA served as a type of apprenticeship for the next stage of globalism that involved the trade deals with China.
We connect the early political learning of NAFTA with the subsequent bigger success of the Chinese trade agreements.
The economic data below describe a snapshot of the economy in 1992, before NAFTA, to the economy in 2006, just before the economic collapse, in 2008. Our intent is to describe how the NAFTA agreements damaged Black economic welfare.
Diagram 1. describes the income of all workers, not simply Black workers,and their sources of personal income, with column two showing wages and salary income.
At the end of 1993, wage and salary income was $3.1 trillion. (Table B-26 is taken from the Council of Economic Advisors Annual Economic Report of the President.)
Diagram 1. 1993 Sources of Income.
Diagram 2. Describes the sources of personal income in 2006.
Comparing the two years, wage and salary income increased 93% in 13 years. Non-farm proprietors’ profits increased from $410 billion to $993 billion, or about 142%.
Diagram 3. describes just the corporate profits from manufacturing in 1993.
TABLE B-90.—Corporate profits of manufacturing industries, 1959-93
[Billions of dollars: quarterly data at seasonally adjusted annual rates]
| Year or quarter | Corporate profits with inventory valuation adjustment and without capital consumption adjustment | ||||||||||||
| Total manufac‑ turing |
Durable goods | Nondurable goods | |||||||||||
| Total | Primary metal industries | Fahri-cated metal products | Industrial machinery and equipment | Electronic and other electric equipment | Motor vehicles and equipment | Other | Total | Food and kindred products | Chemicals and allied products | Petroleum and coal products | Other | ||
| 1992:I………….. | 98.9 | 39.4 | .9 | 6.8 | 5.5 | 10.0 | 1.9 | 14.4 | 59.6 | 14.5 | 15.3 | 4.9 | 24.9 |
| it………….. | 115.7 | 45.8 | 1.0 | 8.1 | 6.6 | 8.7 | 4.8 | 16.6 | 69.9 | 19.6 | 14.8 | 7.7 | 27.8 |
| III ,,, .„ | 119.3 | 49.9 | .3 | 8.0 | 6.5 | 12.2 | 2.4 | 20.5 | 69.4 | 18.5 | 15.0 | 6.7 | 29.2 |
| IV…………. | 128.0 | 58.0 | .0 | 6.6 | 7.8 | 17.6 | 4.9 | 21.0 | 70.0 | 15.2 | 17.7 | 5.0 | 32.1 |
| 1993: I…………. | 118.9 | 48.0 | -.5 | 5.5 | 5.7 | 14.9 | 3.1 | 19.4 | 70.9 | 18.0 | 18.4 | 7.2 | 27.3 |
| It…………. | 132.5 | 58.4 | 2.5 | 6.9 | 6.2 | 12.1 | 10.0 | 20.7 | 74.2 | 14.8 | 16.3 | 13.5 | 29.5 |
| III………… | 126.7 | 59.9 | 1.1 | 6.3 | 8.8 | 14.4 | 8.1 | 21.3 | 66.8 | 14.6 | 14.6 | 12.0 | 25.6 |
Diagram 4. describes manufacturing profits at the end of 2006.
Profits in total manufacturing went up from $126 billion to $331 billion, in the 13 years. The chart for 2006 describes the loss of profits in car manufacturing, which declined about $16 billion in the third quarter, reflecting the policy of NAFTA to ship U. S. car manufacturing to Mexico.
Diagram 5. describes the year ending 1992 of the median money income of Black year-round, full time workers. The annual median income of Black males was $22,942, and for Black females, income was $20,299.
Diagram 6. describes the median Black money income, at year end 2002 to 2005.
In 2005, Black male full time workers had a median income of $34,144, about the same level of median income in 2002.
Black female full time workers had a median income of $30,356 in 2005, about the same level as median income in 2002.
We argue that the economic and financial effect of NAFTA caused Black wages and incomes to stagnate over the 13 years, while corporate manufacturing profits increased dramatically.
That disparate outcome in incomes is not due to the old master-slave racism, it is due to modern racism of globalism, and the power of the crony capitalist class to manipulate the flow of income to themselves, as a result of deep state political influence.
The negative economic effects of globalism do not discriminate between Blacks and Whites, it destroys the financial prospects of all middle class citizens.
However, the globalist agenda requires that Blacks hate Whites in order to divert attention away from disrupting the political advantages of the crony capitalists.
The hatred, perpetrated by the ruling class, is the modern form of racism, used as a political tool.
Diagram 7. describes the job losses attributed to NAFTA. Seventy two percent of all NAFTA job losses occurred in manufacturing.
The brunt of all job losses was borne by white workers.
The bigger loss of jobs was in the middle and lower income jobs, which is related to our next topic that the effect of both the NAFTA and China trade deals was to herd low and middle class manufacturing workers into the unstable, poorly-paid jobs of the American gig economy.
Herding Black people out of decent manufacturing jobs, and into unstable jobs in the gig economy is one outcome of the modern crony capitalist racism.
Diagram 7.
Section 2. Black Economic Dysphoria Under Global Corporate Capitalism and the Subsequent Covid Lockdowns.
Long before the deep state unleashed the Covid lockdowns, Black middle class workers were losing decent jobs, with decent benefits, and decent wages, in stable manufacturing jobs, and were left scrambling for indecent jobs in the gig economy.
As a result of the Chinese trade deals, in 2002, the U. S. economy bifurcated into a part that was connected to the global economy, and a domestic part that was not connected to the global economy.
As a result of the bifurcation, about 70% of all jobs were in the service sector gig economy, and by 2019, about 80% of all GDP was linked to the service sector jobs.
When the Covid lockdowns were enacted, the jobs in the gig economy bore the brunt of the economic damage, with a majority of the damage inflicted on Black workers who could not work from home.
Diagram 8. describes the industrial sectors where workers could more easily work from home.
The jobs in the global corporate part of the economy were relatively unharmed by the lockdowns because those workers could work from home.
From 2002, occupation entry into the good jobs in the global corporate economy was limited, and there were no portals of entry from the gig economy to the good jobs in the corporate global economy.
Young millennial workers, especially young Black millennials, are correct that the United States economy is not generating good, upwardly mobile job opportunities.
We argue that the chronological sequence of events that damaged Black economic welfare were first, the 18 year long cumulative effect of the China trade deals, and second, the short-term shock of the Covid lockdowns.
Black welfare had already been damaged with the China deals, and their economy was already sick and weak, when the Covid lockdowns were enacted.
We first describe the economic damage inflicted by trade with China, and next, we turn to the immediate shock to Black welfare from the Covid lockdowns.
Diagram 9. Describes hourly wages by race, from 2000 to 2017.
For the lower 30% of Black wage earners, from 2000 to 2017, the average hourly wage was around $11. The wages of the lower 30% of Black wage earners, over this 17 year period, did not increase.
Black wages in the 40th to 70th percentile were around $16 per hour in 2000. Black wages in this percentile group did not increase in the 17 years of the China trade deals.
In the last two years of this survey, Black wages in this 40% to 70% percentile group declined about 2%.
In the 95th percentile, Black wages started out at $37 and rose to $43.68, about a 1% annualized increase over 17 years.
At the same period of time that Black wages were stagnating, corporate profits, after the China trade deals, were skyrocketing. Corporate profits went up from around $500 billion in 2002, to around $1.5 trillion, in 2006.
Diagram 10. Corporate Profits, 2000 to 2008.
At the same period of time, after the China trade deals, that wages were stagnating, and profits were skyrocketing, manufacturing was hemorrhaging jobs, from around 11,000 jobs to about 8,000 jobs in 2006.
Document 11.
Economists at Harvard Business School issued a report on the economic effects of the China Republican trade policies on the national prosperity. They found:
- After the implementation of the trade policies, American median real household income declined 7%, with incomes stagnating across virtually all income levels. Median household income remains below the peak attained in 1999.
- The job growth rate began to decline around 2001, and under Obama, the loss of jobs overwhelmed the rate of job growth.
- Private sector investment for equipment, intellectual property and structures began to decline in 1999. For 2010-2016, the average quarterly investment by business as a percentage of GDP was lower than it had been since the 1980s.
- The number of small business firms created in the U.S. was actually lower in 2010 than 1999.
- Under Obama, half of the country’s new business establishments created between 2010 and 2014 were clustered in just 20 counties, in the nation.
Harvard economist George Borjas estimated that open borders and global trade reduced the wages of American citizens by an estimated $118 billion a year.
At the same time that American workers are losing $118 billion a year, the open borders global economy generates a net increase in profit for global corporation of $128 billion a year.
Almost 80% of all job losses in manufacturing, caused by China trade, were concentrated in just 50 of the nation’s 370 metro regions.
The 50 metro regions were critical to future economic growth because manufacturing plants, in a supply chain, like to be located close to each other in a specific metro region.
We begin our analysis of the economic impact of Covid with a macro economic analysis of the damage to GDP resulting from the Covid lockdowns.
Our own analysis, using the BEA input-output model, suggests that by year end 2020, GDP will decrease from around $21 trillion, at year end 2019, to around $14 trillion, at year end 2020. (Vass, Laurie Thomas, U.S. National COVID Economic Collapse and the Collapse of the U.S. Dollar (April 14, 2020). Available at SSRN: https://ssrn.com/abstract=3575761).
We estimate, that since 80% of all GDP was generated in the 6 service sectors, that 80% of the GDP loss will be felt in those six sectors, where most of the Black unemployment was herded, after 2002.
As we noted above, the 20% of the GDP that is generated from global trade was able to continue functioning, because those workers were able to work from home.
A number of other economists are predicting GDP declines similar to our own.
According to a report by Jeff Reynolds, in PJ Media, the Federal Reserve Bank of Atlanta estimates a GDP decline of about 50% from the Covid lockdowns.
He wrote,
They lowered their expectations for the American economy from a -40% growth rate yesterday to -51.2% today.”
In their article, “Aggregate Demand and Aggregate Supply Effects of COVID-19: A Real-time Analysis,” Geert Bekaert, et.al., state,
“We estimate that the real GDP growth shock during 2020:Q1 is -6.6 percent at an annual rate, and is largely due to an aggregate demand shock. In 2020:Q2 the real GDP growth shock is -34.3 percent at an annual rate
The leftmost column of Table 5 indicates that the real GDP growth shock is an astounding 34.3 percent at an annual rate (reflecting an expected growth rate of -32.2 percent for the quarter versus an expectation of 2.1 percent from the previous survey) and the inflation shock is -4.6 percent (reflecting an expectation of -2.6 percent in the Q2 survey versus a previous expectation of 2 percent).” (Available at SSRN. https://ssrn.com/abstract=3611399).
Bekaert offers a series of graphs describing the results of their research that show the cumulative effect of the lockdown over future economic quarters, all of which add up to their estimate of a 34% decline in GDP.
Diagram 12.
In addition to the job loss in the 6 service sectors from the China trade deals, the Covid damaged small businesses. Many of the Black small businesses in the Floyd riots that had managed to survive the bad trade deals, were subsequently destroyed in the riots.
In their research, “Small Business Recovery after COVID-19,” Patrick A. McLaughlin and Tyler Richards, used the 2008 recession as a baseling to estimate the effect the Covid lockdowns.
They state,
“Though small businesses employed less than half of US workers leading up to the recession (45 percent), they accounted for the majority of job losses (62 percent).1 In just one year, the total number of small businesses in the US declined by 160,000. Though many factors contributed to these effects, poor sales and economic uncertainty were the main drivers.”
They share our ideology of economic freedom by linking small business to economic liberty. In other words, rather than being herded into unstable service sector jobs, many Blacks opened small businesses.
“Small businesses are an important avenue for economic mobility; they allow enterprising individuals to become economically independent. Two, small businesses employ nearly half of the US labor force and are a major source of US job creation and productivity growth. They reinforce the direction of growth or contraction of the entire economy. How small businesses recover from this pandemic will likely determine the pace of the national economic recovery.” (McLaughlin, Patrick A. and Richards, Tyler, Small Business Recovery after Covid-19 (May 6, 2020). Mercatus Special Edition Policy Brief. Available at SSRN: https://ssrn.com/abstract=3595311).
The negative impact of the Covid lockdowns on Black small business is related to the fact that most of those Black businesses were the ones caught in the “essential-non-essential” arbitrary and capricious definitions of Democrat governors.
Diagram 13.
Using the same type of econometric input-outpout model as we did, but calling their model a “network model,” Shaowen Luo, et. al., estimated that the total negative effect of the lockdowns was around 43%.
They state,
“Based on our most conservative estimates, the measures as of April 15, 2020 reduce 26% of total US output per period, and about 43% of which is due to the input-output connections in the production network.” (The Impact of Stay-at-Home Orders on US Output: A Network Perspective (April 18, 2020). Available at SSRN: https://ssrn.com/abstract=3571866)
Christos A. Makridis and Jonathan S. Hartley also find about the same magnitude of impact on GDP as the other economists.
In their article, “The Cost of COVID-19: A Rough Estimate of the 2020 US GDP Impact,” they state,
“We estimate that the real GDP growth rate will decline 5 percent for each month of partial economic shutdown. Therefore, the economic cost of the first two months spent fighting the pandemic will be $2.14 trillion (10 percent), which is surprisingly close to the static fiscal cost of the CARES Act.” (Makridis, Christos and Hartley, Jonathan, The Cost of COVID-19: A Rough Estimate of the 2020 US GDP Impact (April 6, 2020). Special Edition Policy Brief. Available at SSRN: https://ssrn.com/abstract=3570731).
Our argument is that Black workers were already damaged by the China trade deals, and that the Covid-induced declines in GDP hurt even more because of their prior weak economic condition.
We agree with the economists at EPI, who stated,
“Black workers have suffered record numbers of job losses over the last two months (March 2020–May 2020), along with the ensuing related economic devastation. They also are disproportionately found among the essential workers in the economy today—continuing to go to their workplaces, risking their health and that of their families because they are unable to sustain adequate social distance from their co-workers and customers.”
The EPI analysis combines the job losses of non-essential Black workers, due to the Covid lockdowns to the vulnerability of essential Black workers who worked in the front lines. The revealing data in the EPI table is that front line workers were the ones herded into the 6 service sectors as a result of the China trade deals.
Diagram 14.
Section 3. Globalism and the Killing of George Floyd.
In the social construction of reality, the mental image of the cop killing Floyd will never cease to be a useful tool for promoting the socialist agenda because it so perfectly confirms the prior premise that America is a brutal white supremacist society.
We argue that the difference in language and logic between socialists and conservatives is one reason, but not the only reason, why the differences between socialists and conservatives are irreconcilable, under Madison’s Constitution.
The cop who killed Floyd may, in fact be a racist. Using Rush’s individualistic ideology, his possible racism could be revealed in his trial for murder.
Using CTG’s ideology of collectivism, Floyd’s killer is part of a white supremacist society that routinely executes Black people. The defund the policy movement is based upon the logic that all police are racists, and that the police agencies must be defunded in order to defeat systemic social racism.
The logic of those two perspectives cannot be reconciled.
Writing in the Atlantic, Ibram X. Kendi, notes the never-ending utility of racism, as a tool, that will never end.
He writes,
“The worst part of the Black nightmare is knowing that racist Americans will never end it. While black Americans view their experience as the American nightmare, racist Americans view black Americans as the American nightmare. Racist Americans, especially those racists who are white, view themselves as the embodiment of the American dream. All that makes America great. All that will make America great again. All that will keep America great.”
Kendi continues, with his analysis that the Civil War changed nothing in the welfare of Black people. His argument hightligts the difference in logic between individualism and collectivist communism.
“In winning the Civil War, the Union effectively restarted the civil war that has lasted until this day. The psyche of the slaveholder never left the American, he is constantly striving to wield his freedom over the community, is constantly battling all those restricting his individual freedom.
This is to say that the freedom of the individual should never come at the expense of deaths in the community…The individual should be restricted from harming the community.”
Julia Cusick, writing for Center for American Progress reverts to the 400 year history of America to explain the cop killing. In her article, Violence of This Week, Past 400 Years Shows Systemic Racism Is Underlying Disease, she states,
“Racism is our underlying disease. It has permeated not only our economic, social, and civic systems but also our everyday behaviors. Living in America is more deadly for Black Americans than their white counterparts.”
Ed Chung and Betsy Pearl, writing in the Center for American Progress, cite Ron Davis, former police chief and former director of the U.S. Department of Justice’s Office of Community Oriented Policing Services, to make their point that the existing economic system is already flawed beyond redemption.
Davis states,
But what you’re doing is you’re feeding into a system that’s already flawed. And when you have a system that is flawed, then even good cops can have bad outcomes. It’s not the police officer that decides to do stop and frisk. It’s the structure, it’s the community, because the social conditions are set exactly for that outcome—which means the only way to succeed as a chief is to keep going with those same policies, which makes me resistant to things like bail reform, sentencing reform, police reform.”
We agree with the analysis of Davis that the structure of the community in Democrat-run cities is set for exactly that outcome because the socialist ideology is logically flawed, based upon the collectivist logic of the social construction of reality. (Understanding Adam Schiff’s Concept of Truth, Laurie Thomas Vass, CLPnewsnetwork.com, December 18, 2018).
It is not systemic, white racism that killed Floyd, it is systemic socialism, in socialist Democrat cities, that killed Floyd.
We also agree with Davis in making the point we made in asking CTG about what replaces the crony capitalist economic system.
He states,
“If we’re going to divest from the system, what are we going to invest in, and how are we going to shift accountability in that same paradigm?”
The paradigm he cites is global crony capitalism, and changing the alleged racism of America will not have solved anything about racism, if they succeed in implementing socialism, while leaving the same economic paradigm in place.
Bernie Sanders makes this same point in asking why things have not changed in over 50 years of Democrat rule in the major cities.
In his interview with John Nichols, Sanders states,
“Where is the power in America? Why aren’t things changing? How do you end up with three people owning more wealth than the bottom half of America?
Writing in the New Republic, Ryu Spaeth, asks the same question as Bernie about why things have not changed under Democrat rule in American cities.
Spaeth wrties,
“So little has changed. Nearly 30 years have passed since the Los Angeles riots, and yet we find ourselves in a near-identical situation: a black man brutalized by police; the incident caught on camera, extinguishing any doubt that a horrendous crime has been committed; then an eruption of violence, fueled not only by the crime itself but by a long history of racial discrimination…this violence is the collective scream of rage, of what happens when the social contract between citizens and their government is so thoroughly, irredeemably broken.”
Danyelle Solomon, in her article, “Truth and Reconciliation Addressing Systematic Racism in the United States,” swerves into the answer for changing the crony capitalist paradigm by citing the demands made by freed black slaves to Union General Sherman.
She states,
“During a meeting with then-Secretary of War Edwin McMasters Stanton and Union Gen. William T. Sherman in 1865, a group of Black Baptist and Methodist ministers discussed the importance of land. For them, freedom was “placing [them] where [they] could reap the fruit of [their] own labor. Following the meeting, Gen. Sherman issued Special Field Order No. 15, which instructed the federal government to redistribute 40-acre plots of land to the newly freed slaves so that they could create a life for themselves.”
This demand for freedom to reap their own rewards was the same one made by that agrarian populists, 30 years later, under their slogan, “Equal Rights For All. Special Privileges For None.”
That fair economic system is not a socialist dictatorship of the proletariat.
The relationship between constitutional individual freedom and economic growth is through the ability of individuals to create their own life.
Nations which have constitutional rules that aim at individual freedom and happiness have the greatest rates of economic growth and upward occupational mobility.
Rush offers the individualist ideology of the killer cop. According to Rush, all cops and all white Americans are not racists, but this individual cop could be a racists, and that may explain why he killed Floyd.
CTG offers the socialist, group identity ideology of the killer cop.
We offer a third explanation for the cop’s behavior, based upon a social economic theory of James Buchanan that public agents and elected representatives do not have an objective, independent social welfare function that maximizes the broad public purpose.
Rather, Buchanan explains that the welfare that public agents maximize is their own.
The issue of fair distribution of income and wealth can only be resolved, according to Buchanan, when citizens are involved in the deliberations about creating the constitutional contract, which is the only reason for voluntary allegiance to follow the rule of law.
The differences in the level of citizen rule obedience between societies was explained by Buchanan in terms of the perceived “fairness” of the rules.
The reason socialist logic is flawed in attempting to subjugate White Americans to a socialist dictatorship is the same flaw of Madison’s Constitution. In his case, in 1787, 37 self-selected elites met in secret, and common citizens had no role in drafting the new Constitution.
In the case of socialism, the socialists are attempting to overthrow a constitutional government and implement a new socialist dictatorship constitution that White people have no role in creating.
White people will have no more reason for voluntary obedience to the socialist rules, than Black socialist activists have for rule obedience to the existing Constitution.
In Logical Foundations of Constitutional Liberty, (1999), Buchanan relies on a philosophy of logic to explain how the end goals of a constitution, clearly stated in the preamble, create the binding allegiance of citizens to follow the rule of law.
His first principle of logic is that all individuals are rational in the pursuit of their own sovereign life mission.
Buchanan suggested that different constitutional rules produced different social welfare outcomes and income distributions.
Change the constitutional rules, suggests Buchanan and you change the distribution of income. Buchanan’s rules aim at creating a society based upon mutual reciprocity of fairness and trust.
As Buchanan points out, voluntary allegiance to the rule of law results from the realization that it is in one’s best interest for his or her life’s mission to be consistent with the public purpose of the rule of law.
Buchanan is especially harsh in his criticism of Madison’s Preamble because it does not state the social mission of the nation with the level of precision required for just outcomes and rule obedience. (Vass, Laurie Thomas, Buchanan’s Fair Constitutional Rules as the Foundation of the Entrepreneurial Economy (March 9, 2020). Available at SSRN: https://ssrn.com/abstract=3551168).
Following Buchanan’s criticism of Madison, a more perfect union could mean anything, and insuring domestic tranquility may be exactly what the cop killer thought he was doing in killing Floyd.
We place the militarized American police force into the greater social/political context of globalism versus national sovereignty.
The Minneapolis Police Department is best seen as an extension of the globalist ideology of the Democrat socialist mayor and council of the city. The police are the unelected agents who follow the orders of their union bosses, and the agents of government who pay their salaries.
The union bosses and city government staffers had plenty of opportunities to fire the rogue cop, but they did not get rid of him.
The welfare that the police maximize is their own welfare, as they understand it to be, as explained by their bosses.
Just like the cops who harassed and arrested the Covid lockdown citizens, the killer cop was just doing his job, and placing his knee on the neck of Floyd was a routine, approved restraint technique of his bosses.
The killer cop’s defense to murder is that he was just following the orders of his bosses to insure domestic tranquility, which is defined by a globalist, crony capitalist interpretation of the mission of cops in the seamless global economy.
Conclusion: Re-connecting a New Constitution to the Principles of Liberty in the Declaration.
The Black Democrat socialists are correct that the United States must change its economic system, but they are incorrect to argue that the economic change needed is a socialist dictatorship.
The change that is needed is to replace Madison’s flawed rules, which ended in mass civil violence, with rules that promote voluntary allegiance to the rule of law, because citizens see the rules as fair.
Those new rules would limit the unelected power of the deep state agents and crony corporate capitalists from distorting the flow of economic benefits to themselves.
The propaganda of the globalist Ruling Class is that the elites know better than common citizens what promotes global social welfare, and must, therefore, have the unchecked political power to exploit the production value of the non-elites in order to obtain the tax revenue to achieve better social welfare outcomes in fairness and income equality.
As Codevilla notes,
“The elite’s attitude (of moral superiority) is key to understanding our bipartisan ruling class. Its first tenet is that “we” are the best and brightest while the rest of Americans are retrograde, racist, and dysfunctional unless properly constrained…Our ruling class’s agenda is power for itself.”
The crony capitalist ruling class is the most powerful political and economic force in implementing and maintaining the economic status quo.
We argued that the NAFTA trade deals, and the subsequent trade deals with China had a disproportionate negative effect on the Black middle class, and on the entire Black population, not connected to global trade.
The major crony capitalist political organizations for maintaining the status quo of the China unfair trade deals are the 200 member companies of the US-China Business Council.
The USCBC is a private, nonpartisan, nonprofit organization of approximately 200 American companies that do business with China. Their membership overlaps the members of the Business Roundtable, which provides added political muscle to implement their covert political activities.
As they modestly state on their website, the mission of the USCBC is to “Help Shape the World’s Most Important Relationship.”
Buchanan argues that there is only one constitutional configuration that produces maximum economic growth, based upon maximum rates of knowledge creation and diffusion.
That constitutional configuration of rules creates the free enterprise innovation entrepreneurial economy.
We conclude that Black socialist activists, like Charlemagne, would make more progress on eliminating police brutality against Black citizens by joining a political movement that aims at re-connecting the new constitution to the principles of liberty declared by Jefferson, in the Declaration.
CLG’s current idea of implementing a socialist dictatorship will solve neither the virulent brutality of the globalist ideology of global citizen control, nor the replacement of the crony corporate globalist economy for a fair economic system that provides maximum individual liberty and freedom for both Blacks and Whites.
The Citizen’s Liberty Party believes that the differences between Democrat socialists and conservatives are irreconcilable and unsolvable, under the current Constitution.
On every single principle of a natural rights republic, the Democrats socialists have an alien, subversive, view of America as a hopelessly racist nation.
Today, nothing binds the two factions together in a common national mission.
The Black socialists will never voluntarily obey the unwritten American rule of law because they never shared in making Madison’s flawed Constitution
The only peaceful, non-violent solution to the nation’s conflict is to dissolve the nation.
We advocate the creation of a new constitution, based upon on the state sovereignty framework of the Articles of Confederation, which changes the representative republic to a democratic republic.
I am Laurie Thomas Vass, and this podcast is a copyrighted production of the CLP News Network.