Wednesday, May 27, 2020

Coronavirus Color Wars

Remember the old saw about how states are the laboratories of democracy. For the record we owe it to Supreme Court Justice Louis Brandeis.

Be that as it may, different American states have taken different approaches to the coronavirus pandemic. Similarly, different countries have taken a different approach to treatment. See yesterday’s Wall Street Journal article about the exceptionally low death rates in Hong Kong and Singapore, compared to Western nations. The same applies to Japan.

Be that as it may, the Journal editorialized yesterday about the differences between red and blue state reactions to the pandemic. If one were in an uncharitable mood one might suggest that blue state governors are doing their darndest to damage the national economy, because they believe that it will improve their electoral prospects. Obviously, you need to be more cynical than I am to believe such a thing, but given the extremes of rhetorical hyperbole and even legal action that Democrats have brought to bear against the Trump administration, the charge becomes plausible. It’s the downside of extremist rhetoric. If you are that unhinged about something then you might plausibly go to any lengths to advance your righteous cause.

But, let’s not forget New York State's appallingly bad leadership. Gov. Cuomo facilitated the virus’s access to the old and the infirm.

Anyway, it’s all about risk assessment. How much risk are you willing to take against the possible losses and the possible rewards? Blue state governors, being members of the Democratic Party, which I have in the past called the Girl Party, are more risk averse. They are willing to go to whatever extreme is necessary to fight the virus.

Republicans, members of what I have called the Boy Party are less risk averse. They believe that they should limit the economic damage, even if it causes more cases of the virus. As it happens, the blue states tend to have higher levels of the virus and higher death tolls, so perhaps it is not an either/or question.

Even if it is, the fact remains that risk aversion garners better press than taking risks. Looking as though you care and are willing to coddle people produces better press than does asking people to take risks. It's also easier to understand.

At the very least, one should recognize that women are more risk averse than are men. Or better, that men are more reckless than women. Thus, Democrats opt for security. They promise to take care of people. Republicans opt for risk, and that means marketplace risk. Democrats want people to hunker down, to return to the ultimately womanly space, the home, while Republicans want them to get out to work. Democrats want to save environment. Republicans want to compete in world markets. Democrats hate guns. Republicans defend gun rights.

Anyway, the Journal takes the measure of the Democratic governors who have shut down their states’ economies to combat the coronavirus:

It’s been nearly 10 weeks since the Democratic governors of California, New York, New Jersey and Illinois ordered all businesses in their states to shut down save those they deemed essential. Job losses in these states have been especially severe because of their strict lockdowns (see chart nearby).

Not only do these states have higher death rates, but they have higher job loss. Especially when compared with Florida:

Nearly two-thirds of leisure and hospitality jobs in New York and New Jersey and about half in California and Illinois disappeared between February and April compared to 43% in Florida, which was among the last states to lock down and first to reopen. Florida Gov. Ron DeSantis also provided exemptions for lower-risk businesses including contractors, manufacturers and some retailers. Four percent of construction workers in Florida lost their jobs compared to 41% in New York, 27% in New Jersey, 17% in California and 11% in Illinois.

In New York, Governor Cuomo and Mayor de Blasio have chosen to let New York City die, because that will apparently save more lives. That Cuomo was responsible for a policy that sent recovering coronavirus patients to nursing homes, the better to infect old people, does not seem to register-- outside of the conservative media.

While letting construction and manufacturing restart upstate, New York Gov. Andrew Cuomo still isn’t reopening New York City despite a sharp decline in new cases and hospitalizations. A lockdown may have been necessary in New York to slow the virus spread, but the benefits have greatly diminished and the economic costs are swelling.

So, the New York governor and his satrap in New York City are in the process of destroying the world’s greatest city:

It could be worse in New York City since 15% of Manhattan residents have left, according to cell-phone data analyses. Not all will return once businesses are allowed to reopen, and some finance and tech companies say they will let more employees work remotely. New York landlords say many tenants aren’t paying rent, and they have to make mortgage and tax payments. New York City (3.9%) and Chicago (3.8%) have the nation’s highest effective commercial property tax rates after Detroit (4.2%).

High taxes, powerful labor unions, government regulations… coupled with a mass exodus from the city. I have occasionally noted the salient fact that 1% of New York City’s population pays 40% of the taxes. As it happens, the people who have left the city during the pandemic have been among New York wealthiest. For your information, if you live outside of New York City for six months and one day you are exempt from paying city taxes. The same rule applies to New York State. How many NY ex-pats will be rushing back to town to get in under the deadline?

Of course, blue state governors like Cuomo want the federal government to bail out their fiscal recklessness. If Democrats win big in November, that giant sucking sound will be federal dollars going to failing blue states:

Mr. Cuomo said over the weekend that New York’s economy won’t “bounce back” quickly and will need federal help. Yet the same states that are loudest in demanding a federal rescue have hurt themselves the most with long, strict lockdowns and tax-and-spend policies.

And then there is the question of whether you can just flick a switch and turn the blue state economies back on. This is a sidelight on the fact that so many people are leaving those states. Think Elon Musk moving Tesla production to Oklahoma or Texas.

The Journal is skeptical:

Democrats think they can make businesses go dark for months and then use a “dimmer” to turn them back on. It’s more complicated. Businesses need suppliers and paying customers. This is why the economic recovery will be especially painful in Democratic states that stay locked down longer and where businesses were struggling before the pandemic due to high rents, taxes and government labor mandates.

And then there is California. Apparently, the future does not look too bright for the Golden State:

A McKinsey analysis last week estimated that 40% of workers in Los Angeles and 36% in San Francisco will lose jobs or income during the pandemic. The Southern California Association of Governments predicted the “pandemic’s economic impacts [on the region] will be severe and long lasting.” Unemployment in Southern California will average 12.2% in 2021, the outfit forecast, and sales will decline between 53% and 65% at restaurants over the next two years.

The New York Times has also reported the story (via Hot Air via Maggie’s Farm). Tellingly, the Times story declares the price of the lockdown to be: economic free fall:

California faces a daunting budget deficit of $54 billion, which could force painful cuts to schools, social programs, health care and road building. And the state was the first to borrow from the federal government to finance its $13 billion in unemployment claims.

California has a hugely diversified economy, and many of the industries that have made it so strong are also the ones getting hit the hardest. By many measures California, which has the nation’s largest tourism industry, public university system, entertainment industry and port system and produces far more food than any other state, stands to lose more in the coronavirus-induced recession than anywhere else…

Mr. Steyer points to the technology sector as one of the most resilient industries in the state and a source of future strength, but adds tech growth might not be enough to offset the sharp declines in all these other areas of California’s economy.

With a gross domestic product larger than 25 states combined, California’s pace of recovery has stark implications for America’s future. After 2008, California helped lead the nation in economic growth and job creation, powered by Silicon Valley, which remains relatively resilient. But this time the pain is being shared across a much broader area of the economy, including rotted strawberries in fields along the Pacific Coast, the empty wine-tasting rooms of Napa Valley and the deserted campuses of the nation’s largest public university system.


UbuMaccabee said...

The millions of illegals who comprise the giant lumpenproletariat in California will revolt. Swarms of machete-wielding Indios climbing the hillsides. The maids have all the access and alarm codes. Tim and Susan come down the driveway to show solidarity with the mob. They are summarily beheaded and their heads are kicked around like soccer balls in an ancient Aztec game. The Chinese offer hunter drones to the gueros for top dollar, and the savages respond with surface to air missiles provided by the Cártel de Jalisco Nueva Generación.

urbane legend said...

Quite a picture there, UM.

Most, if not all, of Silicon Valley's work can be done in Texas, Georgia, Alabama or Tennessee, can't it? All of them pleasant states.

The loss of the jobs among the deplorables ( Hillary's term, not mine ) is troubling, and sad. To losses by the elites I am indifferent. In fact, they brought this on themselves, and deserve it.

I hope whoever is left in California learns from its 20th century experience. I pray those leaving take an understanding of what happened in California with them and make sure to avoid it.

Sam L. said...

Shutting down businesses and workers: what's that gonna do to California's previously expected business taxes and worker's income taxes when the businesses are shut down and employees don't get paid? I would certainly expect the Gov(s) would ask for federal money.
I would also expect Mr. Trump to say something like "no way, Jose".
BUMMER for blue states.

Sam L. said...

ul, I kinda doubt it. I suspect they WON'T smarten up-. Or, not enough of them.

David Foster said...

"After 2008, California helped lead the nation in economic growth and job creation, powered by Silicon Valley, which remains relatively resilient."

It would not be a bad thing if startup activity became less concentrated in Silicon Valley...indeed, there's already a lot more in non-SV locations than generally recognized.