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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

Wendy Sherman’s China visit takes a terrible for the US turn

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Photo: Miller Center/ flickr

US Deputy Secretary of State, Wendy Sherman, had high hopes for the meeting in China. At first, the Chinese side did not agree to hold the meeting at all. The reaction had obvious reasons: Antony Blinken’s fiasco in Alaska left the Chinese disrespected and visibly irritated. This is not why they travelled all the way.

So then the State Department had the idea of sending Wendy Sherman instead. The US government actually needs China more than China needs the US. Sherman was in China to actually prepare the ground for Biden and a meeting between the two presidents, expecting a red carpet roll for Biden as if it’s still the 2000s — the time when it didn’t matter how the US behaved. Things did not go as expected.

Instead of red carpet talk, Sherman heard Dua Lipa’s “I got new rules”. 

That’s right — the Chinese side outlined three bottom lines warning the US to respect its system, development and sovereignty and territorial integrity. In other words, China wants to be left alone.

The bottom lines were not phrased as red lines. This was not a military conflict warning. This was China’s message that if any future dialogue was to take place, China needs to be left alone. China accused the US of creating an “imaginary enemy”. I have written about it before — the US is looking for a new Cold War but it doesn’t know how to start and the problem is that the other side actually holds all the cards

That’s why the US relies on good old militarism with an expansion into the Indo-Pacific, while aligning everyone against China but expecting the red carpet and wanting all else in the financial and economic domains to stay the same. The problem is that the US can no longer sell this because there are no buyers. Europeans also don’t want to play along.

The headlines on the meeting in the US press are less flattering than usual. If the US is serious about China policy it has to be prepared to listen to much more of that in the future. And perhaps to, yes, sit down and be humble.

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Why Jen Psaki is a well-masked Sean Spicer

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When Sarah Huckabee Sanders showed up on the scene as White House Press Secretary, the reaction was that of relief. Finally — someone civil, normal, friendly. Jen Psaki’s entry this year was something similar. People were ready for someone well-spoken, well-mannered, even friendly as a much welcome change from the string of liars, brutes or simply disoriented people that the Trump Administration seemed to be lining up the press and communications team with on a rolling basis. After all, if the face of the White House couldn’t keep it together for at least five minutes in public, what did that say about the overall state of the White House behind the scenes?

But Psaki’s style is not what the American media and public perceive it to be. Her style is almost undetectable to the general American public to the point that it could look friendly and honest to the untrained eye or ear. Diplomatic or international organization circles are perhaps better suited to catch what’s behind the general mannerism. Jen Psaki is a well-masked Sean Spicer, but a Sean Spicer nevertheless. I actually think she will do much better than him in Dancing With The Stars. No, in fact, she will be fabulous at Dancing With The Stars once she gets replaced as White House Press Secretary.

So let’s take a closer look. I think what remains undetected by the general American media is veiled aggression and can easily pass as friendliness. Psaki recently asked a reporter who was inquiring about the Covid statistics at the White House why the reporter needed that information because Psaki simply didn’t have that. Behind the brisk tone was another undertone: the White House can’t be questioned, we are off limits. But it is not and that’s the point. 

Earlier, right at the beginning in January, Psaki initially gave a pass to a member of her team when the Politico stunner reporter story broke out. The reporter was questioning conflict of interest matters, while the White House “stud” was convinced it was because he just didn’t chose her, cursing her and threatening her. Psaki sent him on holidays. Nothing to see here folks, move along.

Psaki has a level of aggression that’s above average, yet she comes across as one of the most measured and reasonable White House Press Secretaries of the decade. And that’s under pressure. But being able to mask that level of deflection is actually not good for the media because the media wants answers. Style shouldn’t (excuse the pun) trump answers. And being able to get away smoothly with it doesn’t actually serve the public well. Like that time she just walked away like it’s not a big deal. It’s the style of “as long as I say thank you or excuse me politely anything goes”. But it doesn’t. And the American public will need answers to some questions very soon. Psaki won’t be able to deliver that and it would be a shame to give her a pass just because of style.

I think it’s time that we start seeing Psaki as a veiled Sean Spicer. And that Dancing with the Stars show — I hope that will still run despite Covid.

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As Refugees Flee Central America, the Mexican Public Sours On Accepting Them

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Authors: Isabel Eliassen, Alianna Casas, Timothy S. Rich*

In recent years, individuals from Central America’s Northern Triangle (El Salvador, Guatemala, and Honduras) have been forced out of their home countries by extreme poverty and gang violence. While initial expectations were that the Lopez Obrador administration would be more welcoming to migrants, policies have slowly mirrored those of his predecessor, and do not seem to have deterred refugees. COVID-19 led to a decrease in refugees arriving in Mexico, and many shelters in Mexico closed or have limited capacity due to social distancing restrictions. Now that the COVID-19 situation has changed, arrivals could increase again to the levels seen in late 2018 or 2019, with overcrowded refugee centers lacking in medical care as potential grounds for serious COVID-19 outbreaks.

Mexico increasingly shares a similar view as the US on this migration issue, seeking ways to detain or deport migrants rather than supporting or protecting them. For instance, Mexico’s National Immigration Institute has been conducting raids on freight trains to find and detain migrants. Public opinion likely shapes these policies. In the US, support for allowing migrants into the country appeared to increase slightly from 2018 to 2019, but no significant majority emerges. Meanwhile, Mexican public opinion increasingly exhibits anti-immigrant sentiments, declining considerably since 2018, with a 2019 Washington Post poll showing that 55% supported deporting Central Americans rather than providing temporary residence and a 2019 El Financiero poll finding 63% supportive of closing to border to curb migration.

New Data Shows the Mexican Public Unwelcoming

To gauge Mexican public opinion on refugees, we conducted an original web survey June 24-26 via Qualtrics, using quota sampling. We asked 625 respondents to evaluate the statement “Mexico should accept refugees fleeing from Central America” on a five-point Likert scale from strongly disagree to strongly agree. For visual clarity, we combined disagree and agree categories in the figure below.

Overall, a plurality (43.84%) opposed accepting refugees, with less than a third (30.08%) supportive. Broken down by party affiliation, we see similar results, with the largest opposition from the main conservative party PAN (52.90%) and lowest in the ruling party MORENA (41.58%). Broken down by gender, we find women slightly more supportive compared to men (32.60% vs. 27.04%), consistent with findings elsewhere and perhaps acknowledgment that women and children historically comprise a disproportionate amount of refugees. Regression analysis again finds PAN supporters to be less supportive than other respondents, although this distinction declines once controlling for gender, age, education and income, of which only age corresponded with a statistically significant decline in support. It is common for older individuals to oppose immigration due to generational changes in attitude, so this finding is not unexpected.

We also asked the question “On a 1-10 scale, with 1 being very negative and 10 very positive, how do you feel about the following countries?” Among countries listed were the sources of the Central American refugees, the three Northern Triangle countries. All three received similar average scores (Guatemala: 4.33, Honduras: 4.05, El Salvador: 4.01), higher than Venezuela (3.25), but lower than the two other countries rated (US: 7.71, China: 7.26) Yet, even after controlling for general views of the Central American countries, we find the public generally unsupportive of accepting refugees.

How Should Mexico Address the Refugee Crisis?

Towards the end of the Obama administration, aid and other efforts directed at resolving the push factors for migration in Central America, including decreasing violence and limiting corruption, appeared to have some success at reducing migration north. President Trump’s policies largely did not improve the situation, and President Biden has begun to reverse those policies and re-implement measures successful under Obama.

As discussed in a meeting between the Lopez Obrador administration and US Vice President Kamala Harris, Mexico could adopt similar aid policies, and decreasing the flow of migrants may make the Mexican public respond more positively to accepting migrants. Lopez Obrador committed to increased economic cooperation with Central America days into his term, with pledges of aid as well, but these efforts remain underdeveloped. Threats to cut aid expedite deportations only risks worsening the refugee crisis, while doing little to improve public opinion.

Increasingly, the number of family units from Guatemala and Honduras seeking asylum in Mexico, or the United States, represents a mass exodus from Central America’s Northern Triangle to flee insecurity. Combating issues such as extreme poverty and violence in Central American countries producing the mass exodus of refugees could alleviate the impact of the refugee crisis on Mexico. By alleviating the impact of the refugee crisis, refugees seeking asylum will be able to navigate immigration processes easier thus decreasing tension surrounding the influx of refugees.

Likewise, identifying the public’s security and economic concerns surrounding refugees and crafting a response should reduce opposition. A spokesperson for Vice President Harris stated that border enforcement was on the agenda during meetings with the Lopez Obrador administration, but the Mexican foreign minister reportedly stated that border security was not to be addressed at the meeting. Other than deporting migrants at a higher rate than the US, Mexico also signed an agreement with the US in June pledging money to improve opportunities for work in the Northern Triangle. Nonetheless, questions about whether this agreement will bring meaningful change remain pertinent in the light of a worsening crisis.

Our survey research shows little public interest in accepting refugees. Public sentiment is unlikely to change unless the Lopez Obrador administration finds ways to both build sympathy for the plights of refugees and address public concerns about a refugee crisis with no perceived end in sight. For example, research in the US finds public support for refugees is often higher when the emphasis is on women and children, and the Lopez Obrador administration could attempt to frame the crisis as helping specifically these groups who historically comprise most refugees. Likewise, coordinating efforts with the US and other countries may help portray to the public that the burden of refugee resettlement is being equitably shared rather than disproportionately placed on Mexico.

Facing a complex situation affecting multiple governments requires coordinated efforts and considerable resources to reach a long-term solution. Until then, the Central American refugee crisis will continue and public backlash in Mexico likely increase.

Isabel Eliassen is a 2021 Honors graduate of Western Kentucky University. She triple majored in International Affairs, Chinese, and Linguistics.

Alianna Casas is an Honors Undergraduate Researcher at Western Kentucky University, majoring in Business Economics, Political Science, and a participant in the Joint Undergraduate/Master’s Program in Applied Economics.

Timothy S. Rich is an Associate Professor of Political Science at Western Kentucky University and Director of the International Public Opinion Lab (IPOL). His research focuses on public opinion and electoral politics.

Funding for this survey was provided by the Mahurin Honors College at Western Kentucky University.

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