Minimum Wage Makes It Harder To Reopen the Economy After Coronavirus Policymakers in some states are starting to loosen business restrictions and are hoping for a strong jobs recovery. But a quick rebound in jobs will be undermined by government policies. by Chris Edwards and Ryan Bourne

COVID-19 is wreaking havoc on American jobs. State shutdowns and social distancing have resulted in 26 million people being laid off and furloughed. 

Policymakers in some states are starting to loosen business restrictions and are hoping for a strong jobs recovery. But a quick rebound in jobs will be undermined by government policies. The federal government has expanded unemployment benefits, which will discourage job seeking.

And many state governments impose high minimum wages that will deter cash‐​strapped businesses from hiring. The federal minimum wage is $7.25 per hour, but 29 states impose higher minimums. Some cities have even higher wage floors, such as New York City at $15 per hour.

Minimum wage laws create a barrier to job opportunities for lower‐​skilled workers. Today’s recession centers on industries that employ millions of such workers, making minimum wage laws more damaging than usual. Businesses suffering from lower revenues, higher debt, and more uncertainly won’t be able to afford the wages they used to pay.

Ryan Bourne and I examine the economic crisis and minimum wages in a new op‐​ed at The Hill.

The chart below shows the per‐​hour minimum wage rates by state. The rate is either the federal rate or the state rate if it is higher than the federal one, which is the case in 29 states.

Dozens of local governments—in Arizona, California, Colorado, Illinois, Minnesota, Maryland, New Mexico, and Washington state—impose their own rates that are higher than the state rates. Local minimum wages include: Chicago ($13.00), Denver ($12.85), Los Angeles ($13.25), San Jose ($15.25), San Francisco ($15.59), and Seattle ($15.75).

State and local policymakers should revisit their recent and scheduled minimum wage increases because the mandates will kill job opportunities as the economy struggles to rebound. News reports indicate a rethinking of scheduled increases in some places.

More on minimum wages here, here, and here.

Who Boris Johnson Will Blame for Britain's Coronavirus Problems The blame game begins. by Christopher Byrne, Kevin Theakston and Nick Randall

British political history teaches us that the job of prime minister is more difficult for some incumbents than for others. Some prime ministers enter office at a difficult moment in political time or find their best laid plans scuppered by events, while others find a clear path to implementing their chosen policies. Boris Johnson, now facing the epochal challenge of the coronavirus, has been dealt a difficult hand. He somehow needs to find a way to govern through this crisis and come out the other side in a strengthened position. 

When prime ministers are dealing with a crisis, they must decide whether, when and where to act. It’s very common for political leaders in difficult circumstances to either seek to delay taking action in the hope that the crisis subsides, or to offload responsibility so that, even if it doesn’t, the government avoids some of the blame.

In the present conjuncture, with so many lives at risk, there was virtually no prospect of Johnson either delaying action or offloading responsibility. As the number of COVID-19 cases spiralled, and the easy transmissibility of the virus became clear, the government soon faced overwhelming pressure to act.

Deciding on the narrative

Where the government does have greater scope of action is in how the crisis is narratively framed. Narrative framing is crucial in determining the political consequences of crises. It’s particularly central to determining whether or not a crisis ends up being widely perceived as emblematic of deep-rooted problems with the existing political order.

David Cameron was able to legitimise nearly a decade of austerity in the aftermath of the 2008 financial crisis by framing it as “Labour’s debt crisis”, for example. This was despite the fact that the steep rise in public debt was mainly a consequence of bank bailouts that had cross-party support.

The question, therefore, is how Johnson can frame the coronavirus crisis so as to minimise its impact on his governing agenda.

The crucial consideration, at least in the near term, is government culpability. A successful strategy would frame the crisis as something that happened to the government rather than something the government caused or exacerbated through inaction, blunders or recklessness. This could partly be achieved by focusing attention on the global nature of the problem. Brown did similar when he framed the 2008 financial crisis as a global problem demanding a global response.

The government might also find it expedient to deflect blame for its handling of the crisis by putting the spotlight on China and questioning how it handled the initial outbreak of the virus. This would mark a significant shift in foreign policy from the Cameron years, when China was courted as a future major trading partner.

It would, though, reinforce the narrative that the coronavirus crisis was “imported” and serve to align Britain even more closely with the US. This may become increasingly important over the coming years, if the liberal international order, and the form of globalisation of which it was a handmaiden, fractures under coronavirus-related strains.

Meanwhile, Keir Starmer’s Labour will undoubtedly seek to focus attention on the mistakes made by the government. The new party leader is already raising questions about why lockdown wasn’t imposed sooner and why it has taken so long to provide enough personal protective equipment to NHS staff. Starmer is also pushing hard to suggest the testing regime in place in the first weeks of the crisis was inadequate.

After the health crisis

These are issues likely to be explored in detail in the inevitable future public inquiry into the handling of the coronavirus. For now, however, the government has formulated a response that is the diametric opposite of its Brexit strategy – one that is based on foregrounding medical and scientific experts.

This may increase public buy-in for its coronavirus policies. The strategy is also politically helpful because it gives the government a ready-made excuse for any mistakes. The government’s daily press briefings have given a rotating cast of experts equal billing with whichever cabinet minister has been put forward that day, providing them with human shields for difficult press questions.

The coronavirus could lead to lasting political change, with implications for everything from Britain’s current economic model to the size and scope of the state. What will go a long way to determining whether this happens is if government failings come to be seen as mistakes of the moment or as rooted in key features and priorities of the existing political order. Austerity and then Brexit, for example, both arguably deprived Britain of the ability to fully prepare for emergencies of this kind, both in terms of resources and political will.

This is one of the reasons why the government is likely to be unwilling to respond to the economic ravages of the coronavirus with another bout of austerity. That most of the Conservatives’ seat gains at the recent general election came in areas of the Midlands and northern England least able to absorb further spending cuts is another. What this will mean for the viability of the UK’s public finances in the long run is uncertain. However, perhaps the truly important political consequences of the coronavirus crisis will lie elsewhere.

The crisis has the potential to alter public perceptions of what the British state can and should do. A sustained period of high unemployment and economic dislocation are set to follow in the near future. But they will be combined with the current ongoing experiment in universal basic income prompted by coronavirus. Add to that the rolling series of bailouts on offer to struggling industries and quasi-nationalisations, and neoliberal politics-as-usual may finally no longer be tenable.

Pakistan's Alliance With China Comes At A High Cost Pakistan is being exploited. by Wali Aslam and Bradley A. Thayer

In a future of multilateral alliances and blocs, Pakistan would be well advised to choose its allies carefully. In the event of becoming a vassal state of China, it will primarily have itself to blame. 

Pakistan has made several major grand strategic mistakes since its creation in 1947, including the attack on India in 1971, which led to Pakistan’s dismemberment. However, Pakistan is in the midst of making another grave mistake, and it is one seldom discussed. This is the high cost of its alliance with China. Due to the poverty in its long-term, strategic planning, Islamabad’s conception that the Sino-Pakistani alliance is key to Pakistani security introduces dependence on Beijing and creates the avenue for Beijing’s exploitation and manipulation of it—with the result that Pakistan finds itself less secure and alone in the world. We argue that Pakistan should reverse course. The alliance with China ultimately serves China’s ambitions above Pakistan’s. Islamabad should extricate itself from its alliance with China, and improve its position by aligning with other, democratic states.

The rise of China has had profound impact on Pakistan’s strategic calculations. A more powerful and outwardly amicable China causes a natural reaction in Pakistan to align itself more closely with China in order to balance against India, its long-term adversary. Pakistan’s leadership believe that an alliance with China will somehow replace the long-term Pakistani dependence on the United States in mediating its relations with India. They also think that this relationship will help improve Pakistan’s poor economic situation.

To the contrary, Pakistan’s strategic choice to ally with China is a profound mistake. Before it gets drawn even closer to China, Pakistan should rethink its strategic choices. The alliance with China is a strategic blunder because China is a poor alliance partner. Islamabad should note that China has tended to treat its allies as subordinates instead of partners in shaping its geostrategic ambitions. Indeed, Beijing has not been subservient to any state since the Sino-Soviet split by the late 1950s. China’s steadfast allies are Cambodia, Iran, Myanmar, and North Korea—hardly an august group. Beijing’s relationship with Moscow underscores the authoritarian character of its alliance relationships. China’s behavior as an alliance partner is often boorish, exploitative, and Machiavellian.

China’s economic assistance to Pakistan has come with very high costs. It has vowed to invest up to $60 billion in Pakistan as part of the CPEC but most of this investment will be extended in the form of loans—with a high interest rate of up to 7 percent. Sooner rather than later, Pakistan will find itself unable to service these very costly debts held by China. As it is rapidly moving all its eggs into the Chinese basket, it will quite likely have to enter a “debt-for-equity swap” with China—something that Sri Lanka recently had to do when it was unable to service its Chinese debts. The Sri Lankan deal handed China control of the strategically important port of Hambantota (and fifteen thousand acres of surrounding land) for ninety-nine years. The current Sri Lankan government is trying to extricate itself from such arrangements put in place by the country’s previous administration.

Along with helping Pakistan deal with its imminent economic woes, China has also expressed interest in building a naval base at Jiwani in southwest Pakistan. Jiwani is located around eighty kilometers west of the Gwadar Port (another venture developed by the Chinese). The town is only fifteen miles away from the Iranian border. Perhaps not entirely coincidentally, the Iranian port of Chabahar, developed jointly by Iran, India and Afghanistan, is only a stone’s throw away from Jiwani. The Jiwani base will enable the Chinese navy to service its fleet in the Persian Gulf and the Indian Ocean region, which is present to provide support to the country’s commercial shipping in the region.

Allowing China a military presence in Pakistan is harmful for the country for the following reasons: Pakistan will take a hit to its sovereignty, and the Pakistani military and civilian leadership will have little-to-no say in determining how China decides to use that facility. Also, the Chinese military presence on Pakistani soil will make Pakistan a target in the event of a clash between China and India. The Chinese interest in Pakistan’s northwest has already raised eyebrows in New Delhi, which remains hopeful that its Chabahar port in Iran will allow it to enter the regional market in Afghanistan and Central Asia. India has invested a great deal in that venture and would not like the port to be under any threat. The potential for conflict will grow.

On the other hand, Pakistan’s relations with the United States have continued to spiral downwards, in particular, since the arrival of the Trump administration in office. Washington has long criticized Pakistani sponsorship of terrorist groups in Afghanistan that have made it hard for the United States to extricate itself from the Afghan quagmire. The administration has also decided to cut U.S. aid to the country, which amounted to approximately $1.3 billion per year.

Instead of serving Pakistan itself, the country’s alliance with China paradoxically serves India’s interests. For India, a lonely and isolated Pakistan in tight embrace with China is the best possible option. This relationship makes Pakistan more isolated in the international community. In the event of a clash between India and Pakistan, New Delhi will call upon Washington’s assistance as it has done in the past. Equally, India would be likely to tout Pakistan’s support from an authoritarian China. On the other hand, Pakistan will lose that potential avenue of conflict resolution and path to pressure India. Alignment with China only ensures opposition to Pakistani interests in Washington. That situation is welcomed in both New Delhi and Beijing because China desires some degree of tension between India and Pakistan as this increases its leverage in Islamabad.

A near-term or quick reorientation of its strategy would be unthinkable for Pakistan. Rapid grand strategic changes do happen in international politics, but they are rare. Nonetheless, Pakistan can commence by taking five steps, which will place it on a path to greater security and freedom of action. First, Islamabad can begin to create a little bit more distance between itself and Beijing by not accepting the latter’s every demand but demonstrating independence of action and policy when the People’s Republic of China adversely impacts Pakistan’s interests.

Second, it can also start openly criticizing China’s exploitative economic policies and human-rights violations, such as its treatment of its Muslim Uighur minority in Xinjiang. China has suppressed this minority for many years. However, its repression has gotten much worse. Beijing has initiated a crackdown which includes imprisoning at least 120,000 in “re-education” camps, heightened surveillance, curtailing freedom of movement and Islamic religious practices by limiting marriage ceremonies, children’s names, and facial hair.

Third, it can also negotiate better terms that prevent China from reaping significant benefits from its relationship with Pakistan. At a minimum, the relationship should entail that Pakistan is an equal and not subordinate member, and Islamabad should be open to requiring the renegotiation of existing contracts.

Fourth, Pakistan would be better off to not allow any Chinese military presence on its soil. Any such access would jeopardize Pakistan’s security in the future.

Fifth, Pakistan should endeavor to win over the Trump administration, which has shown itself amenable to opening avenues for dialogue. Islamabad would do well to realize that the Trump administration’s worldview reflects a post–Cold War mindset and the United States is looking to make up for the strategic neglect of the last two presidents.

There does not exist much rationale for Pakistan to justify its embrace of authoritarian states. It remains to be seen whether authoritarian states like Turkey, Russia and China are able to influence the contours of the international system in the future. There are strong arguments against this, including the fragility of the political systems in China and Russia, endemic economic problems and corruption, adverse demography, and environmental disasters. Pakistan would be well advised to avoid them.

In a future of multilateral alliances and blocs, Pakistan would be well advised to choose its allies carefully. In the event of becoming a vassal state of China, it will primarily have itself to blame. A closer relationship with Western democracies will build on the close societal links Pakistan enjoys with states in Europe and North America. It is not certain whether the dragon will easily let Pakistan extricate itself from its embrace, but Pakistan has every motivation to escape its grasp before it becomes impossible to do so.

Coronavirus Recession: America Is Preparing For Long-Term Economic Pain Inflation-adjusted gross domestic product (real GDP) is expected to decline by about 12 percent during the second quarter, equivalent to a decline at an annual rate of 40 percent for that quarter. by Matt Weidinger

The nonpartisan Congressional Budget Office (CBO) today released “Current Projections of Output, Employment, and Interest Rates and a Preliminary Look at Federal Deficits for 2020 and 2021.” The CBO projects the US unemployment rate will peak at 16 percent in the third quarter of 2020, and still average above 10 percent in 2021. The prospect of double-digit unemployment rates over the next year or longer will disappoint those hoping for a rapid recovery. 

Other key selections from this CBO report are copied below.

In the second quarter of 2020, the economy will experience a sharp contraction, and CBO’s current economic projections include the following:

• Inflation-adjusted gross domestic product (real GDP) is expected to decline by about 12 percent during the second quarter, equivalent to a decline at an annual rate of 40 percent for that quarter.
• The unemployment rate is expected to average close to 14 percent during the second quarter.

For fiscal year 2020, CBO’s early look at the fiscal outlook shows the following:

• The federal budget deficit is projected to be $3.7 trillion.
• Federal debt held by the public is projected to be 101 percent of GDP by the end of the fiscal year.

Learn more: Should Congress ‘make whole’ state unemployment trust funds depleted by shutdowns? | Short-time compensation offers promising help for the unemployed, but recent emergency legislation requires repair | Unemployment claims continue to surge.

The Future Is Asian—but Not Chinese A post-pandemic cold war is developing between the United States and China—but both sides are losing the ideological fight. BY JAMES TRAUB

South Korean President Moon Jae-in visits the Daegu Medical Center in Daegu, South Korea, SOUTH KOREAN PRESIDENTIAL BLUE HOUSE
What is the most salient fact about China’s response to the outbreak of the coronavirus pandemic? Is it the cover-up at the outset that delayed an effective response for as long as six weeks, and thus accelerated its spread across the globe? Or is it the astonishing marshaling of political, logistical, and industrial capacities in the aftermath that limited the death toll in China to a fraction of the per capita figures in the United States and Western Europe (even if the true number is two, three, four times greater than the 4,600 or so deaths currently reported)?

Behind this question lies a struggle for global prestige. Ever since U.S. President Donald Trump singled out China as the United States’ public enemy No. 1 in the 2016 campaign, the world’s two great superpowers have seemed to be locked in a zero-sum contest for supremacy. Convinced that China is stealing U.S. jobs and profits through unfair trade practices, the president has provoked a trade war that has harmed the economies of both countries.

But it’s not just Trump and the anti-globalist crowd that looks at China in Cold War terms: When Sen. Bernie Sanders was foolhardy enough to praise the Chinese for reducing poverty in in his debate with Joe Biden in mid-March, the former vice president jumped down his throat. “China is an authoritarian dictatorship,” he cried. Biden insisted that whatever increase in prosperity the regime had fostered was “marginal,” though he must have known perfectly well that China has lifted more people out of poverty over the past four decades than any other nation in human history.

The pandemic has inflamed this competition. Trump persisted in calling it the “Wuhan virus” or the “Chinese virus” in order to make Americans feel that they are the innocent victim of Chinese failure, if not of a sinister plot. But the rhetoric seems vaguely pitiful in the face of the rising death toll and the self-evident dysfunction in the United States at a time when China has reopened for business and ostentatiously donated protective equipment to nations in desperate need. China’s victory lap galls; but it may be earned.

The pandemic has raised the stakes of the competition from a struggle for economic dominance to a contest between rival models. Whose system is better designed to adapt to the global crises, whether of public health or the climate, that lie in our future? The United States fostered the liberal world order after World War II and has sustained it ever since. That order has persisted not only because of U.S. military and economic predominance, but because it has promoted the interests of its leading members (including China). Is that era now drawing to a close? Does the arrow of the future point towards liberal democracy or free-market authoritarianism?

I have just finished Has China Won?, by Kishore Mahbubani, the Singaporean diplomat and author who has made a career explicating “Asian values” to Western readers. Mahbubani (whom I have known for 30 years and consider a friend) does not doubt the answer. He notes that the United Nations has 193 members and asks, “Which country is swimming in the same direction as the other 191?” While he warns China against underestimating a nation as resilient as the United States, he notes that “many thoughtful leaders and observers in strategically sensitive countries around the world have begun making preparations for a world where China may become number one.”

Mahbubani is hardly the first to make this claim. In Destined For War, the Harvard political scientist Graham Allison described China as the quintessential rising power. Mahbubani charts the graph both of China’s rise and the United States’ decline. History, he argues, has “turned a corner” from the epoch of Western hegemony—and the United States, like the Qing dynasty that oversaw China’s 19th-century collapse, has remained trapped by an anachronistic sense of superiority. If one asks, as the philosopher John Rawls did, what kind of society you would wish to be born into if you did not know what advantages you would have, the rational choice would now be China rather than the United States. In fact, he notes, the chances of a child born into the bottom fifth of income distribution rising to the top fifth are significantly greater in China than in the United States. Eat that, Biden.

Though Mahbubani criticizes China for needlessly alienating the U.S. business elite, and not just the Trumpian nationalists, through unfair trade practices and bellicose rhetoric on the South China Sea, he looks around the world and sees China’s model on the ascendant, and the U.S. one in eclipse. “The biggest fact of the last thirty years,” he writes, sounding very much like Hungarian Prime Minister Viktor Orban, the propagandist of illiberalism, “is that many societies of the world that have tried Western liberal democratic systems have come to realize that it does not fit them.”

Mahbubani will lose some of his readers with his hyperbolic kiss-off to democracy, and even more with his apologies for Chinese President Xi Jinping’s autocratic rule. He attributes the mass demonstrations in Hong Kong wholly to poor housing and gets around to mentioning the treatment of the Uighurs only in the very last pages—and then in order to insist that a nation that targets Muslims for assassination by drone has no standing to criticize China for terrorizing and incarcerating an entire population. One has the unmistakable impression that the author does not want to spoil his welcome in Beijing.

There is a more serious shortcoming here. It is one thing to say that China has won, and something else again to say that the Chinese model has won. What is most central to that model, in Mahbubani’s telling, is rational, long-term decision-making, a commitment to good government, pragmatism, and suppleness in the face of a turbulent world and a realist restraint in international affairs. But of course that model also includes the unquestioned dominance of the party in all affairs, and the equally unquestioned dominance of the party by Xi. (Mahbubani argues that Xi suspended constitutional provisions limiting the leader to two terms not out of personal ambition but a legitimate concern for China’s future.)

And this brings us back to the coronavirus. It was not technocratic failure but an authoritarian culture that led to the lapse between the identification of the first case in Wuhan on Dec. 8 and the lockdown on Jan. 23. The defining moment of the sequence came Jan. 1, when eight doctors at a Wuhan hospital were reprimanded by local party authorities for seeking to inform national medical officials of the outbreak, as the country’s early-warning system required them to do. The virus’ genome was sequenced Jan. 11. By Jan. 14, the head of China’s National Health Commission had reported on the virus in grim detail. Still, nothing happened; the public health structure had to give way before the political order. Five million people were allowed to leave Wuhan during the Lunar New Year before the city was locked down, hastening the spread of the virus around the world.

What’s more, Chinese officials have undermined their own narrative by promoting an inane conspiracy theory blaming the coronavirus on the U.S. Army and by insisting on mortality figures at home widely considered implausibly low. The country’s charm offensive was also damaged when many of the ventilators and other products it shipped abroad had to be recalled owing to defects.

While Chinese authorities were desperately hiding the truth, officials in Taiwan, South Korea, and Hong Kong—and Singapore soon after—began screening at their borders and quarantining the sick, and then swiftly ramped up the production of protective gear and testing kits. The first two are vibrant democracies that feature open elections, independent judiciaries, and untrammeled free enterprise. (Singapore’s model is closest to China’s, though an independent civil service largely directs affairs of state.) Together, they have shown what is possible when citizens and the state respect rather than fear one another. Hong Kong has had four coronavirus deaths, Taiwan six, Singapore 12, and South Korea 240.

If some model has emerged as the winner of this dreadful sweepstakes, it is not China’s authoritarian one but rather that of the democracies that share China’s “Asian values” of collective discipline, deference to authority, and faith in the state. (Mahbubani has pointed to the success of those states in a recent piece in the Economist.) What’s more, the relative success of Germany and the quite remarkable success of Australia and New Zealand in driving down mortality rates show that classically liberal democracies can rise to the occasion if leaders defer to science and to public health officials and explain clearly and calmly to citizens the rationale for painful measures.

South Korean and Taiwanese citizens accept intrusions on their privacy that Western liberals might not. The French, for example, have declined to adopt the Korean system of digital monitoring that compels those who fall sick to install an app that lets public health officials keep track of their whereabouts. That may be a battle that the West will, in fact, find itself losing. I have suggested elsewhere that we are entering an era in which our own private decisions, whether driving gas guzzlers or walking around without a mask, so plainly impinge on the well-being of others that we will have to constrain some of our personal liberty in the name of public good. The Asian democracies show us that citizens can surrender some of that freedom without sacrificing fundamental political rights.

So yes, China has already “won” in the sense that Washington continues to dispute; soon it will be absurd to question its economic and technocratic supremacy. But it has not won in the sense that matters most, as a model for other nations. Germany has something to teach its European neighbors. Australia has something to teach the United States, its cultural near-twin. South Korea and Taiwan have something to teach China about the application of “Asian values.” It would be a fine thing if this global catastrophe could force nations to learn from their own failures. Even the United States. Even China.

China Spends $600 Billion To Trump America’s Economy

Ten years from now, when economists mull the exact moment the U.S. ceded the future to China this week’s events are sure to top the list of time-stamp candidates.

This was the week, after all, when Chinese President Xi Jinping tossed another 4 trillion yuan, or $565 billion, at an economy taking devastating coronavirus blows. The 4 trillion-yuan figure will sound familiar to students of 2008 and 2009, back when Beijing threw exactly that amount at plunging demand amid the “Lehman stock.”

It worked back then. China recovered rapidly from Wall Street’s crash thanks to aggressive infrastructure spending. By 2009, China was growing 8.7% again thanks to giant public works projects—six-lane highways, bridges, ports, new skyscraper-strewn commercial centers.

Now, as Xi’s Communist Party pulls a similar play, it’s hard not to lament this week’s missteps in Mitch McConnell’s Washington.

Within the same 24 hours during which Xi’s announced a nearly $600 billion plan to build even more airports, railways and power grids, Senate Majority Leader McConnell gave the thumbs down to comparable upgrades to America’s economic hardware. “Infrastructure is unrelated to the coronavirus pandemic that we're all experiencing and trying to figure out how to go forward,” McConnell said.

Music to Xi’s ears. The trillions of dollars his government lavished on the “Made in China 2025” extravaganza is already positioning China to lead the future of artificial intelligence, automation, micro-processing, renewable energy, robotics, self-driving vehicles, you name it. And Trump made it easy for Xi. As China prepares for the global economy it will confront in 2025, Trump is making coal great again.

Granted, Xi has been slow to get the state’s tentacles out of the economy. His pledges to let market forces play a “decisive” role in decision making have gotten only modest traction in seven years. China’s hulking $10 trillion shadow-banking system, meantime, continues to allocate capital recklessly.

Look no further than the recent jump in the number of bank bailouts, including Hong Kong-listed Bank of Gansu. Beijing’s rescue efforts highlight the deterioration of balance sheets and the extreme opacity that plagues China Inc. The accounting fraud at Luckin Coffee, China’s supposed Starbucks killer, is a reminder Asia’s biggest economy isn’t ready for global prime time.

But Trump’s three-and-half years in office have been a lost period for building the kind of economic muscle needed to stay ahead of China. Trump is doing zero to get under the economy’s hood. His trade-war and protectionist policies might’ve worked in, say, 1985. In 2020, though, his tariffs are merely added headwinds as the global economy fends off COVID-19 fallout.

Trump isn’t increasing competitiveness and productivity or catalyzing innovation. He’s cutting investments in education, training and health. Trump’s Republican Party is avoiding the infrastructure “big bang” needed to raise America’s economic game. Instead, it cut taxes in ways that reward billionaires without incentivizing companies to fatten paychecks or hone competitiveness.

Over the last few years, Trump widened the gulf between rich and poor by putting monetary easing ahead of structural reform. It’s the same mistake Japan has been making since the 1980s. Stimulus alone does nothing to reduce corruption, increase efficiency or level playing fields.

America’s crumbling infrastructure could use its own nearly $600 million—or even $2 trillion—facelift. Not only would it create jobs, and fast, but also better prepare the U.S. for a 2025 when China’s dominance passes the point of no return.

Chinese President Xi Jinping learns about the progress on the vaccine, anti-body, medicine and fast ... [+]

 XINHUA/JU PENG VIA GETTY IMAGES

There’s an alternate reality in which China’s coronavirus debacle plays into Trump’s hands. China absolutely needs to account for its handling of a COVID-19 pandemic believed to have started in Wuhan. There should indeed be investigations and punishment doled by the global community. But Trump’s antics, lies and over-the-top bombast are helping China deflect blame.

Each bizarre Trump Twitter rant makes Xi’s China look serious and sober by comparison. Each Trumpian threat to impose new tariffs here, demand higher military payments there or manufacture some controversy over there plays into Beijing’s hands.

So does McConnell’s refusal to rise to the occasion. At 78, it’s reasonable to think the Kentucky Republican might not have many more years left in top Senate leadership. Yet the lost period of reform that McConnell represents will be with U.S.-China dynamics for decades to come.

Come 2025, U.S. investors may wish they could engineer their own alternative reality—one where McConnell and Trump favored a Marshal Plan of sorts to halt America’s slide toward developing-nation status in terms of infrastructure. When economic historians of the future mull when this risk morphed into fact, the last few days may haunt Washington.

China lied about origin of coronavirus, leaked intelligence report says

The Wuhan Institute of Virology.
A damning dossier leaked from the “Five Eyes” intelligence alliance claims that China lied to the world about human-to-human transmission of the virus, disappeared whistleblowers and refused to hand over virus samples so the West could make a vaccine.

The bombshell 15-page research document also indicated that some of the five intelligence agencies believe that the virus may have been leaked from the Wuhan Institute of Virology, a claim initially dismissed as a conspiracy theory because Chinese officials insisted the virus came from the local wet markets, according to the Australian Daily Telegraph.


At the same time, a senior intelligence source told Fox News that while most intelligence agencies believe COVID-19 originated in the Wuhan lab, “it was thought to have been released accidentally.”
The report from the intelligence-sharing alliance of the five leading English-speaking countries, the US, UK, Australia, New Zealand and Canada called China’s shady handling of the virus “an assault on international transparency.”

The paper described how China downplayed the outbreak around the world while wildly scrambling to bury all traces of the disease at home, including bleaching wet market stalls, censoring the growing evidence of asymptomatic carriers of the virus and stonewalling sample requests from other countries.

Beijing started censoring search engines as early as December to stop Internet surfing related to the virus, according to the report. The World Health Organization went along with China’s claims and also denied human-to-human transmission of the virus despite concern from neighboring countries.

Intelligence gathering showed that China had “evidence of human-human transmission from early December,” but continued to deny it could spread this way until January 20, according to the dossier.


The document pointed out China imposed travel bans on people traveling throughout the nation, but continued to tell the rest of the world travel bans were unnecessary.