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Welfare Transformation Ushers in “Super-Boom Period” in the United States

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Authors: Chan Kung and He Jun

With Joe Biden emerging victoriously in the U.S. presidential election, the “Trump Era” that disrupted both the United States and the world is coming to an end. However, the internal changes in American society as reflected in the general election is beyond simple winning or losing. Americans showed great enthusiasm in voting this year, and more than 150 million voters cast their ballot even under the severe COVID-19 outbreak. Biden had received more than 73 million votes, which not only set the highest turnout rate in more than a century, but also the number of voters reached the highest in history. It is worth noting that Donald Trump still has the support of more than 73 million Americans. The public opinion of American society reflected behind the numbers is profound and cannot be ignored.

Many have mistaken American politics to be merely about the Congress, the President, and the Pentagon. The reality is that the foundation of American politics lies not in these places, but in counties. From the perspective of the U.S. electoral process, although Biden is the winner, the whole process was rather “tortuous” as there have been many twists and turns. The process of Biden’s victory, as a matter of fact, was more complicated than previously expected by the ANBOUND research team, and the gap between the two parties was also smaller than what had been previously thought. The fierce competition in this election shows that the degree of mobilization of American society, the degree of organization of social groups, and the degree of high-level participation of various ethnic communities have reached a high level. The superficial polls and data analysis from the media are full of errors and are incapable of reflecting the internal changes in the American society, especially among the grassroots. This year’s election process in Georgia, Arizona, Pennsylvania, Michigan, Wisconsin and other states alternated between blue and red, and finally there was turnaround. The changes of voting pattern in “county politics” played a big part throughout the United States; even in a red state like Texas which primarily consists of Republicans, this trend holds true. With such volatility in election, if “county politics” is ignored, one would not understand the social organization and mobilization of this level, and it will be difficult to have an objective prediction of Trump’s early lead and the subsequent turnaround.

The extremely high voting participation rate in the 2020 U.S. election not only shows the foundation of the American public opinion, but also contains the source of power for American social and economic development in the future. What do these grassroots voters who have been mobilized in large numbers want? How should the Biden administration meet their needs? All these will be related to the future political and economic development of the United States. Researchers at ANBOUND believe that the post-Trump American society is likely to opt for a welfare-oriented transition, which is likely to become an important direction to promote the long-term prosperity of American society and economy.

From both an economic and political economy perspective, the vitality and sustainability of capitalism come from its self-evolution and improvement according to the needs of social development. Generally speaking, when a country’s economy has developed to a considerable extent, the level of social welfare will be improved. Unlike the developed capitalist countries in Europe (mainly Western and Northern European countries), which have generally opted for a high-welfare model, the United States, which favors liberal capitalism, does not have a high level of social welfare. It is staggering that the United States, the world’s major superpower, does not have universal health coverage. That was in fact one of the key reasons why former U.S. President Barack Obama pushed for the Affordable Care Act (commonly known as “Obamacare”).

There is a strong demand to improve welfare in American society. U.S. Senator Bernie Sanders, who has performed brilliantly in the last two U.S. elections, has gained support in the U.S. because of his welfarist ideas, including significantly increasing the level of welfare, reducing health care costs, and promoting social justice. In the capitalist United States, Sanders’ political positions lean toward the socialism”. During his political career, Sanders has been advocating the establishment of a single-pay medical system for all. His view is that medical services are the basic right of all people, and the United States should, like other industrialized countries, protect this basic right.

Improving the level of welfare is an important means of achieving balanced social development. With the development of technology and the capital market, inequality in American society is increasing. Data show that the wealth of the richest 1% of the U.S. population is US$ 34.2 trillion, which is equivalent to 15 times the wealth of more than half of the U.S. population. Data also show that the wealth of the richest 50 individuals in the United States is equal to the combined wealth of the poorest 165 million individuals in the United States. The Federal Reserve estimates that the richest 10% of U.S. households hold 69% of the nation’s wealth (or US$ 77.3 trillion), up from 60.9% in the late 1980s. An important means to change all this, in addition to adjusting fiscal policy as some economists have suggested, is to increase the level of social welfare so that the public can live a dignified middle-class life.

Figure 1: U.S. National Health Expenditure as a Share of GDP, 1960 – 2021

Source: Centers for Medicare & Medicaid Services

Judging from the situation of the U.S. election, the future U.S. government will face greater pressure to improve the level of social welfare, which will be reflected in several important areas such as health care, education, and consumption. Significant improvements in these areas could lead to greater support among Democrats and Republicans on both sides of the aisle. If the Biden administration were to follow this path of transformation, “Obamacare” would become “Bidencare”. This is determined by grassroots politics in the United States, and a transition to a welfare society is inevitable in the United States.

What are the consequences for the United States to raise its level of welfare? ANBOUND’s research team believes that this will bring a longer period of super-prosperity to the United States. Obviously, not every country can seek super prosperity by raising the level of welfare. To achieve this goal, there must be two conditions that exist simultaneously. The first is to be “rich”, and the second is to produce large-scale welfare consumption. Therefore, to realize the welfare transformation of the United States, a fundamental question is that “where does the money come from”? To answer this in simple terms, there are two sources of money to support the transformation of the welfare system. The first is from the growth of fiscal revenue, such as tax growth through sustained economic development; the second is from the continuous printing of money, i.e. relying on the country to continuously expand credit. For the United States, the former is a conventional approach, and it is an important foundation for supporting the welfare system. However, the speed of relying on tax growth to support the welfare system is too slow, and there are difficulties in meeting the huge needs of the United States for the transition to welfare in the short term. The latter is what the United States has been doing after the financial crisis in recent years, i.e. expanding credit through continuous printing of money and expanding debt to support current spending needs. This approach in the United States has, to a certain extent, already possessed the characteristics of modern monetary theory (MMT) that fiscal expenditure precedes revenue and fiscal deficits are not restricted.

However, whether under the conventional fiscal and monetary theory or under the MMT, the increase in government debt and fiscal deficit is accompanied by credit expansion, and the continuously expanding credit requires a huge market to digest and cooperate, and a country’s welfare transformation should provide huge “market” for welfare consumption. Among countries in the world, based on the credit as a major power and the strong dollar system, the United States has the ability to support the transition to welfare-oriented through continuous expansion of credit. If this mechanism runs smoothly, it will bring about a huge change in American society and may usher in a period of super prosperity in the United States.

For the United States, welfare improvements in the following three areas are likely to bring significant results.

The first is medical security. The United States spends hugely in the medical field but lacks universal coverage. Data reveal that from 1996 to 2013, the U.S. medical and health expenditure soared by US$ 900 billion. In 2013, the total U.S. medical and health expenditure reached US$ 2.1 trillion; in 2018, it was approximately US$ 3 trillion. Now, this figure may have exceeded US$ 3.2 trillion, equivalent to 18% of the total U.S. economy. If the coverage of medical insurance is expanded and universal medical insurance is achieved, the medical expenditure in the United States would reach US$ 5 trillion. Using this to calculate medical consumption, a huge national healthcare consumer market will emerge in the United States. Currently, the annual education expenditure of all levels of government in the United States exceeds US$ 1.2 trillion. The second is the education. Since 1980, the proportion of U.S. education expenditure to GDP has been relatively stable at more than 5%. Although the U.S. government’s allocation in education is high, American college students still need to pay high tuition fees and have to bear the burden of education loans. So far, the balance of student loans in the United States is approximately US$ 1.5 trillion, surpassing auto and credit card debt, and second only to housing debt. It can be seen that the education sector is also an important area of welfare transformation; rough estimation shows that its scale is more than US$ 2 trillion. The third is the consumption. The United States is a major consumer market. An increase in welfare supply equals an increase in wages, which is the basis for consumption growth. Nationally, in 2018, the consumption expenditure of U.S. households was US$ 14.14 trillion, which was divided into two parts, namely consumer goods and services. The former accounted for 35%, and the total household consumption expenditure reached US$ 4.94 trillion; the latter accounted for 65%, and the total household consumption expenditure reached US$ 9.19 trillion. If only healthcare is considered, the healthcare consumption expenditure of American households a year amounts to US$ 2.4 trillion.

Based on the above three areas, if the United States fully implements welfare transformation, it will create a super consumer market of nearly US$ 10 trillion. It should be noted that this US $10 trillion market scale is not created out of thin air by the Fed through money-printing, but rather the economic development of the United States itself has provided sufficient support for this market. At the same time, the situation where unlimited money issuance in the United States can be maintained before the status quo of the United States’ national capabilities and national credit, and the U.S. dollar system are being truly threatened. This signifies that a system reform can indeed create a huge market. It is entirely possible for the United States to achieve prosperity for a long period of time through welfare transformation, and the United States will usher in a “super-boom period.”

Final analysis conclusion:

The post-election United States is likely to transit to become welfare-oriented, which will create a huge market and maintain a period of prosperity for a long time.

Founder of Anbound Think Tank in 1993, Chan Kung is now ANBOUND Chief Researcher. Chan Kung is one of China’s renowned experts in information analysis. Most of Chan Kung‘s outstanding academic research activities are in economic information analysis, particularly in the area of public policy.

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Americas

Democracy Or What? – And Then Climate

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Most of us were appalled to see what happened in Washington a ten days ago when a ‘mob’, incited by Donald Trump’s address, stormed the Capitol building to prevent the presentation of Joe Biden as the next President. He gave voice to a possible fraudulent (in his mind) election, by putting suspicion on the postal ballot long before the election took place, and tried to ‘engineer’ the ballot by putting his ‘own’ man in control of it. He tried to manipulate the Supreme Court by replacing vacancies with people he expected to follow his lead and must have been disappointed, if not shocked, to find that the court unanimously rejected his claim that the votes had been rigged and should be thrown out. His unruly term of office saw the greatest turnover of people of any previous presidential term as staff could only hack the unusual behaviour of a disordered mind for so long. And so on and on. Much will be written about the 4-year aberration that was Donald Trump. On a lighter note, his escapades in golf have given rise to a book, ‘Commander in Cheat’!

Concerned people have written and spoken about the state of democracy today. Those of us who have spent some time stateside appreciate the immensity of the country, how one is made welcome, but also the prejudices that one finds and the general unknowing of the world we live in by large swathes of the population. Some are still steeped in attitudes that pre-date the civil war. Donald Trump played to all of those and gave them voice. That is a big challenge facing Joe Biden and Kamala Harris to get America back on track and if not ‘great again’ to stand up and join the rest of us and share and appreciate that there are billions of other people that are working away with hopes and dreams and looked to the US as a beacon.

That should be the meaning of ‘great again’, and if they can look up and truly be the land of the free and welcome the weak and downtrodden who are fleeing war and violence, as was once the way, then we can say that once more ‘you have earned the right to be the leader of democracy’, and democracy, for all its imperfections, is still the least bad form of government. It is well that the US re-joins the world as totalitarianism, in all its forms and at all levels, is on the rise again. Countries that espouse democracy and heed its precepts need to speak up loudly and be heard once again.

In November of this year is the World Climate Meeting, COP21, in Glasgow, Scotland at which the latest news on climate will be debated. Hopefully, the coronavirus will be on the decline and the US election will no longer be an issue. We can then get together on the one matter that should concentrate all our minds and separate the wheat from the chaff because there is some said that is wrong that muddies the waters, and leads the politicians to make incorrect decisions. But change is around us.

Climate is a highly complex issue, arguably the most complicated, that not all the modelling can get right, but study must go on. It is strange that it has only come to our notice since the population of the world over the past 60 years, has increased dramatically from approaching 3 billion to 8 billion. Mankind has thus significantly increased breeding himself, and thus his use of natural resources, for example cutting down trees, which need carbon dioxide to live, and vastly increased the pollution of the seas and the seas cover 70% of the planet. It has only been in comparatively recent times that we have started to pay attention to the seas and are alarmed at what we see.

However, we have the tools to put things right. We just need the will and ability to spend money wisely.

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Americas

A Disintegrating Trump Administration?

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If Donald J. Trump wanted a historic presidency, he certainly seems to have achieved it — he is now the only president to have been impeached twice.

According to the rules, the House impeaches followed by a trial in the Senate.  There is precedent for the trial to continue even when the office holder has left office.  Should that trial result in conviction, it prevents him from seeking any future elected office.  Conviction is unlikely, however, as it requires a vote of two-thirds of the members present.

It has been reported that Trump wanted to lead the crowd in the march to the Capitol, but was dissuaded from doing so by the Secret Service who considered it much too dangerous and could not guarantee his safety.

Various sources attest that Trump’s mind is focused on pardons including himself and his family members.  Whether it is legal for him to pardon himself appears to be an unresolved question.  But then Trump enjoys pushing the boundaries of tolerated behavior while his businesses skirt legal limits.

He appears to have been greatly upset with his longtime faithful vice-president after a conversation early on the day of the riot.  As reported by The New York Times, he wanted Mike Pence to overturn the vote instead of simply certifying it as is usual.  The certification is of course a formality after the state votes already certified by the governors have been reported.  Pence is reputed to have said he did not have the power to do so.  Since then Trump has called Vice President Pence a “pussy” and expressed great disappointment in him although there are reports now that fences have been mended.

Trump’s response to the mob attacking the Capitol has also infuriated many, including lawmakers who cowered in the House chamber fearful for their lives.  Instead of holding an immediate press conference calling on the attackers to stop, Trump responded through a recorded message eight hours later.  He called on his supporters to go home but again repeated his claims of a fraudulent election.

Aside from headlining the US as the laughingstock among democracies across the world, the fall-out includes a greater security risk for politicians.  Thus the rehearsal for Biden’s inauguration scheduled for Sunday has been postponed raising questions about the inauguration itself on January 20th.

Worse, the Trump White House appears to be disintegrating as coordination diminishes and people go their own way.  Secretary of State Pompeo has unilaterally removed the curbs on meeting Taiwanese officials put in place originally to mollify China.  If it angers China further, it only exacerbates Biden’s difficulties in restoring fractured relationships. 

Trump is causing havoc as he prepares to leave the White House.  He seems unable to face losing an election and departing with grace.  At the same time, we have to be grateful to him for one major policy shift.  He has tried to pull the country out of its wars and has not started a new one.  He has even attempted the complicated undertaking of peace in Afghanistan, given the numerous actors involved.  We can only hope Biden learned enough from the Obama-Biden administration’s disastrous surge to be able to follow the same path.

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Americas

Flames of Globalization in the Temple of Democracy

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Authors: Alex Viryasov and Hunter Cawood

On the eve of Orthodox Christmas, an angry mob stormed the “temple of democracy” on Capitol Hill. It’s hard to imagine that such a feat could be deemed possible. The American Parliament resembles an impregnable fortress, girdled by a litany of security checks and metal detectors at every conceivable point of entry. And yet, supporters of Donald Trump somehow found a way.

In the liberal media, there has been an effort to portray them as internal terrorists. President-elect Joe Biden called his fellow citizens who did not vote for him “a raging mob.” The current president, addressing his supporters, calls to avoid violence: “We love you. You are special. I can feel your pain. Go home.”

That said, what will we see when we look into the faces of these protesters? A blend of anger and outrage. But what is behind that indignation? Perhaps it’s pain and frustration. These are the people who elected Trump president in 2016. He promised to save their jobs, to stand up for them in the face of multinational corporations. He appealed to their patriotism, promised to make America great again. Arguably, Donald Trump has challenged the giant we call globalization.

Today, the United States is experiencing a crisis like no other. American society hasn’t been this deeply divided since the Vietnam War. The class struggle has only escalated. America’s heartland with its legions of blue-collar workers is now rebelling against the power of corporate and financial elites. While Wall Street bankers or Silicon Valley programmers fly from New York to London on private jets, an Alabama farmer is filling up his old red pickup truck with his last Abraham Lincoln.

The New York banker has no empathy for the poor residing in the southern states, nothing in common with the coal miners of West Virginia. He invests in the economies of China and India, while his savings sit quietly in Swiss banks. In spirit, he is closer not to his compatriots, but to fellow brokers and bankers from London and Brussels. This profiteer is no longer an American. He is a representative of the global elite.

In the 2020 elections, the globalists took revenge. And yet, more than 70 million Americans still voted for Trump. That represents half of the voting population and more votes than any other Republican has ever received. A staggering majority of them believe that they have been deceived and that Democrats have allegedly rigged this election.

Democrats, meanwhile, are launching another impeachment procedure against the 45th president based on a belief that it has been Donald Trump himself who has provoked this spiral of violence. Indeed, there is merit to this. The protesters proceeded from the White House to storm Congress, after Trump urged them on with his words, “We will never give up, we will never concede.”

As a result, blood was shed in the temple of American democracy. The last time the Capital was captured happened in 1814 when British troops breached it. However, this latest episode, unlike the last, cannot be called a foreign invasion. This time Washington was stormed by protestors waving American flags.

Nonetheless, it is not an exaggeration to say that the poor and downtrodden laborers of America’s Rust Belt currently feel like foreigners in their own country. The United States is not unique in this sense. The poor and downtrodden represent a significant part of the electorate in nearly every country that has been affected by globalization. As a result, a wave of populism is sweeping democratic countries. Politicians around the world are appealing to a sense of national identity. Is it possible to understand the frustrated feelings of people who have failed to integrate into the new global economic order? Absolutely. It’s not too dissimilar from the grief felt by a seamstress who was left without work upon the invention of the sewing machine.

Is it worth trying to resist globalization as did the Luddites of the 19th century, who fought tooth and nail to reverse the inevitability of the industrial revolution? The jury is still out.

The world is becoming more complex and stratified. Economic and political interdependence between countries is growing each and every day. In this sense, globalization is progress and progress is but an irreversible process.

Yet, like the inhumane capitalism of the 19th century so vividly described in Dickens’ novels, globalization carries many hidden threats. We must recognize and address these threats. The emphasis should be on the person, his dignity, needs, and requirements. Global elites in the pursuit of power and superprofits will continue to drive forward the process of globalization. Our task is not to stop or slow them down, but to correct global megatrends so that the flywheel of time does not grind ordinary people to the ground or simply throw nation-states to the sidelines of history.

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