The Dangerous Months

I remember the day after Trump’s election, wandering the rainy streets of Manhattan in a daze. I went to a Broadway matinée, and it seemed the entire audience was numb like me. It was a dark day, and four years seemed an awful long time to endure.

Well, we are now at three and a half years, and somehow it hasn’t been as bad as I feared. There is not about to be a world war. The EU is still together, apart from recalcitrant Britain, and is somewhat more united. The Paris agreement has held, most of the world’s citizenry want to go further, and even US cities are busy undermining the federal government on climate. The Washington Post and the New York Times are stronger than ever. The Supreme Court has wobbled but is still credible. Congress is as dysfunctional as ever, but the number of Trump style semi-fascist thugs in positions of power is rather small. There is popular anger between ethnicities, but it has remained largely peaceful and even informed. I can still write my blog without much fear of deportation.

Perhaps I am setting the bar too low, but on the dark day in November 2016 I truly wondered what might occur in these four long years. What we must accept is that they have been years of regression and lost opportunities. An enlightened administration might have led a decisive global climate movement, or started to reverse the lurch towards inequality that underpins public distrust. I believe China would have been open to a fair deal with an honest broker, ceding some domestic liberalisation and respect for human rights and fair business practices in return for more of a seat at the table in global affairs. In 2016, despite the stalemate in congress, there was gentle momentum towards a fairer world, but that vanished overnight.

I expected a neutralisation of Trump after the midterms. I thought there would be a grand deal in quiet corridors that would restore some competence to government while allowing Trump his ego and some harmless playing fields. That is what would have happened in the UK, led by the civil service and supported by other institutions like the military and colleges and judges and CEO’s and Bushes and Romneys. Key to that would have been senior Republicans in congress, fed up with holding their nose, aware that the eventual backlash might sweep them away and with the national interest at heart. But the silent establishment coup did not happen.

In the absence of any backbone among Republicans, our saviour has been sheer incompetence. This lot could not organise a piss up in a brewery. There is no inner circle with a strategy, only a rotating cast of lackeys fighting fires and watching their backs, achieving little of import. Most of their attempts to implement madness have been screwed up or abandoned before securing any traction. 

Now we reach the last few months of Trump’s first term and perhaps the most dangerous phase of all. Re-election matters to every politician, but to Trump it is everything, for two basic reasons. Firstly, he clearly has no agenda nor aspiration for the country, only for himself, and power is the only antidote for such an ego. Secondly, as soon as he loses power he becomes vulnerable legally across many fronts, and he knows it. His support is wafer thin and entirely dependent on power, so those silent Republicans will join everybody else in seeking vengeance once his power has gone. Unless there is some grand bargain involving a pardon, he will spend most of the rest of his days in jail if he loses. That is one large motivation to win at all costs.

So we have a leader whose ego needs him to win and whose personal security needs him to win, and one whose absence of probity will stop at nothing in the quest to win. Worse, any semblance of checks on his behaviour has long since disappeared: there will be no more impeachment, his base support is immune to any slur, and the remaining lackeys are locked in as well.

So, anything goes, and the more he looks like losing the more extreme will be the response. Watch out immigrants, and journalists, and Chinese, and health experts, and anybody else that might become fodder for the base. It will be open season between now and November. Watch out also technology companies, and election supervisors, and anyone else with responsibility for election fairness.  Finally watch out for a disputed result and the civil unrest that might unleash. There is no such thing as a gracious loser when the stakes are this high and the morals this absent.

But there is a second reason to fear the coming months. US adversaries know of Trump’s position too, and will exploit it ruthlessly.

It is a well-observed part of the Putin playbook to create facts on the ground when the enemy cannot respond and before any negotiated settlement. We see this time and again in conflicts around the globe, from Syria to Ukraine to Libya. Wait until the other side needs a deal for political purposes, then attack to the limit and negotiate from the newly established position.

We are seeing this already around the world. It is no coincidence that North Korea is being belligerent again. Trump cannot condemn him without undermining his claims, so now is the time to take a risk. Expect Russia to be aggressive in the next few months, also because of domestic weakness. Modi will do the same in India, and Israel will probably choose these months to annex more of the West Bank. In each case, Trump’s hands are tied.

But nowadays the most important adversary is China, and the Chinese are master strategists who will have planned for this moment since Trump’s election. Chaguan has become one of the most interesting pages in The Economist lately, and an article last week posed the question as to whether the Chinese would like Trump or Biden to win in November. They can play Trump like a fiddle, but they also crave recognition and peaceful global development, which can only happen under Biden.

The Chinese will use the next months to be prepared whoever wins. Trump must claim that his bluster has led to success in controlling China, so they can push the limits now without fear of any backlash. We see this already in the South China Sea and Hong Kong, and pessimists might wonder if this could be a decisive moment regarding Taiwan. They are also ready to decouple from the US in technology, though they would rather not have to.

If Trump wins in November, China will bank the gains and prepare for four more adversarial years, with a key goal of separating the US from its allies and creating parallel institutions to those the US currently dominates, such as SWIFT. If Biden wins they will be ready for a sweeping global deal with many dimensions, but will have the best possible starting point for negotiations.

There is not much that most of us can do except watch this play out of the coming months, and pray that the damage continues to be limited. The last three and a half years have been scary enough, but the next six months are likely to make them seem rather mild. Buckle up.

Reimbursement For Care in Practice

Reimbursement for Care is my solution for many of the social and economic problems currently afflicting developed societies.The basic concept is for local authorities to pay citizens for beneficial activities that are currently either performed for free or not carried out. It is better than Universal Basic Income because society gets something in return for its investment and because it is better targeted to those who need it.

Jill is an only child in an affluent mid-western family. She attends college locally and pays tuition fees, and rent to her parents. She takes paid vacation jobs and paid internships, but also tops up her income with RFC, working an average of ten hours per week as a care assistant at a local senior care facility. This way she can graduate without a student loan.

Jill moves to New York to take a job with a major employer. Because her rent is high and her experience low, she agrees a fifty-hour per week annual rolling contract with her employer. She is the vocalist in a band and every fortnight the band spends Saturday’s performing at local senior homes, earning Jill just four hours per week of RFC.

Jill starts living with fellow band member Jack and before long they marry and have twins. For the final month of her pregnancy Jill takes a pause with her employer and self-certifies twenty hours per week self-care RFC. For two years after the birth, the first child entitles Jill’s household to thirty hours per week of RFC and the second child a further ten hours. Jack and Jill split this equally and both reduce their employment contracts to thirty hours. Fortunately, both employers allow a proportion of work from home.

Once the kids are a year old, their parents register them in a local nursery for twenty hours per week. Jack and Jill both become accredited carers at the nursery and each work there ten RFC hours per week. Most of the kids’ RFC entitlement is now transferred to the nursery budget, but they can still claim five hours each of self-certified RFC. The nursery enables both to increase their employment back up to thirty-five hours.

RFC entitlement starts progressively reducing when the kids are two, but the parents initially only sacrifice the self-certified RFC. The kids progress to pre-school and then full school, a blend of classroom, online learning and play-centre. The parents gain accreditation to work ten RFC hours each at the play centre, and stay at thirty-five hours with their employers. Now the band can play again, and it gains approval to start a project teaching music to deprived kids elsewhere in the city each Saturday, paid with RFC.

When the twins reach twelve they no longer need supervision at home and lose their remaining entitlement to RFC. Jack and Jill both increase their employment contracts to forty hours, but now they can expand their band commitments to earn ten hours each of RFC on their project.

Five years later, Jack’s widowed mum Jess has an accident that leaves her disabled and comes to live with Jack and Jill. Soon she needs at home care assessed at ten hours per week, which Jack and Jill share and self-certify as RFC, reducing the band project hours. As Jess requires more specialised help both secure accreditation to higher care levels. The RFC entitlement of Jess becomes twenty and then thirty hours, and Jack and Jill reduce their employment hours accordingly.

Next Jess needs help that can’t be provided at home and so moves to a senior care home. Jack and Jill register as RFC carers at the same home, but can now increase their hours at their regular employment again. After Jess dies, Jack and Jill are in their fifties and only wish to work twenty-five hours per week for their employers. They expand their band project into a second community and continue to care at the senior home, claiming RFC for each.

At sixty-five, Jack and Jill are still healthy and keen to be active. They maintain their RFC activities at the same level but reduce their regular employment to ten hours, giving them more free time to spend with the grandkids and to travel. At seventy they retire from their regular employment but keep up the RFC, until Jack falls sick and Jill must care for him, earning additional ten hours per week RFC entitlement for Jill. Jill continues her other RFC work but scales back the hours.

Jack and Jill have varied their RFC activities and hours as their lives have evolved, and also varied their regular employment hours. Their lifetime income is similar to the time before RFC, but they have been able to look after the mental and physical health of themselves, their family and others in their community.

Another example is Denise, who comes from a deprived part of Cleveland and does not attend college, but becomes a single mother at twenty-one. Her own mother lives with her to help bring up the child, and they share the RFC entitlement as well as hustling with various gig jobs and supporting another RFC funded local community project. The balance of hours varies as the child grows and as the gig work waxes and wanes, but luckily the community project is able to offer unlimited hours so their income is always enough to live on.

All the various RFC projects except the self-certified ones are registered with the local authority and require standards of service. Most of the projects also have paid professionals leading them, qualified at the highest RFC accreditation levels. Each school, nursery and care home need fewer full-time professionals than before RFC, but the pay is better and the total number of projects is much higher because of RFC, so the system efficiency has improved. No longer to mothers have to sacrifice their careers or struggle to find adequate child-care or senior care, and the whole community has become part of the solution.

The RFC incentives also nudges resources towards more deprived neighbourhoods, as well as providing an adequate safety net for those who can’t find sufficient regular employment, either temporarily or permanently.

RFC works best if all regular employment takes a gig like character, because then employees can vary their hours as their lives develop. In most cases, there will be a rolling annual contract specifying an average hours per week, and a rolling weekly sub-contract agreeing hours a week or two in advance, including required particular hours for team activities and location specific activities. Work hours become more spread through the day and the week, so commuting is less of an issue for anybody. With the new concept for schools and child-care, these can also be handled more easily in parallel with regular jobs.

RFC involves a lot of reallocation of budgets but can be self-financing, assuming delayed pensions for most and higher taxes for the highest earners. The effect on national productivity is arguable. Perhaps some firms will be less competitive internationally, especially if corporation taxes increase, but higher staff motivation can be expected, and increased automation can also add competitiveness.

Implementation would be far from simple and there would be transition issues. People currently benefiting from tenured jobs with generous pensions may consider themselves losers. There will be fraud, though mobile communications can reduce that risk.     

Reimbursement for Care

Recent events have laid bare the bankruptcy the extreme capitalist model practised in the western world. Reimbursement for Care (RFC) is my idea for a key component for a successful modification of the model.

A fundamental flaw in our current model lies in the goals we use. While affairs are managed by nation states, some competitive financial metric will remain necessary. But the internal goals are all flawed, and create consequences leading to failure.

I believe there are three key metrics in use. The first is GDP. This has always been an ugly metric, including things like arms sales and financial transfers and excluding much of the informal economy and beneficial activity such as volunteering. GDP is essentially a corporate rather than a human metric. There is no obvious human replacement, but some sort of dashboard of welfare, happiness and development could work.

The second metric is also corporate. It is not a goal but more of an axiom. It is assumed return on capital, and it has converged globally on something like 6% real for no risk assets. This assumption has driven the turbo-charging of capitalism and caused the squeeze on labour. International agreement for series of radical changes could reset 6% at a sounder level such as 3%.

The third metric is the only human one and that is full employment. Less than full employment creates waste and welfare and discontent. Of the metrics, this is the one most dear to the left. Yet I find it the most damaging one.

The underlying assumption behind a full employment goal is that humans should undertake paid work as much as possible, or at least for a defined segment of their week. Humans do need activities to support self-esteem, but why should that be dominated by paid work? What if machines could do all the work and we could just sit back and have fun?

The emphasis on full employment leads to crazy distortions. We are trained to be upset when a factory automates so that robots can replace humans doing grinding, unsafe and mind-numbing activity. How on earth is toiling to an early death in a coalmine a good thing? Surely humanity should maximise automation and embrace technology, and find a better metric to replace full employment and compensating mechanisms to rebalance incomes?

The traditional model is increasingly out of date even for those who can find work. People with families cannot easily balance rearing kids with work, perpetuating gender inequality. The gig economy is growing and sits uncomfortably next to the classic model.

Keynes mooted the concept of the post-work society, and I believe its time has come. It is supported by a number of factors, not just the speed of development in technology and communication. It is not just technology that is squeezing traditional jobs. The most labour-intensive sectors are most stressed, such as retail. During the pandemic and post-pandemic, we can add hospitality and tourism. Worse, the squeezed segments most affect the least well paid, and can kill whole communities.

Next, the pandemic has awakened both the need for and the value of community service. Too many of our old and disabled people live in unfit conditions. Housing in vulnerable communities is detrimental to health. Many of our young lack the critical advantage of pre-school. Local facilities are crumbling. And those who have volunteered have realised that community work makes them feel good as well as the beneficiaries. The right often promote national service: why not national service for all, focused on communities?

Inequality, deprivation and temporary economic pause have moved Universal Basic Income (UBI) from the fringes to the mainstream. UBI is a sticking plaster, but does little to address the more fundamental issues listed above. RFC is a fairer and more sustainable alternative.

RFC envisages payment by local government for a whole slew of beneficial activities that people can enjoy, activities that currently are unpaid or underpaid or not done or done poorly. In an RFC society, people will rebalance towards these activities, with the balance varying depending on phase of life. A young single adult may choose only a few hours of RFC (or even none). Parents of young kids will complete more RFC hours, and older adults will place a higher priority on supporting society than career development or income maximisation. Someone living with a dependent relative will devote many hours per week to RFC (as they do already, but unpaid).

RFC activities should be widely defined. They include childcare, elderly and disabled care, sick and deprived person care, community maintenance and development activities and projects, and even arts and culture. Citizens can self-declare a number of hours per week depending on the make-up of the household, and add additional hours via certified and loosely regulated organisations. Because of the explosion of potential funding, there would be a step-change increase in the number and quality of nursing homes and childcare facilities.

I envisage hourly payments based on defined levels of qualification, with training provided to progress through levels for different types of RFC. The lowest level requires no training, and should be reimbursed at a local minimum wage, set depending on a basic cost of living including housing rental, utilities and food. It should be possible to live a simple life only with RFC income for say forty hours per week at level two or three, but most people will choose more like ten hours of RFC and continue regular employment. Over time, I suggest that all employment follows a gig model, one where the employee defines their availability and the employer cannot discriminate based on the hours per week offered, only on total experience.

I believe this model to be more affordable than might be envisaged. In the US, 200m people might claim an average of 10 hours and a rate of $10, giving an annual budget for RFC of a trillion dollars. But RFC obviates the needs for many existing budgets, including some social security (healthy pensioners undertake RFC), food stamps, welfare and so on. In addition, many public sector jobs could be eliminated, which we should not see as a bad thing in a post-employment world, so long as sufficient RFC is made available (and I propose it can be bottomless).

I see the biggest implementation challenge not in affordability but in equitable distribution. I can see a lot of wealthy white suburban folk embracing RFC with all sorts of fancy playgroups for their own kids and beautification of their own neighbourhoods. Rich faith communities will tend to restrict their efforts to their own kind. That is all well and good, but I believe that incentives will be required to direct a higher share of the effort (and supply) to more deprived populations. Perhaps a share of total RFC hours should be mandated towards higher priority areas and projects. It should be possible, so long as budgets are equalised. Funds should be disbursed locally, but from a national pot.

In an RFC world, corporations may have to lower their expectation for return on capital, partly because taxation will need to fund RFC and partly because labour supply would be reduced. So long as a sufficient number of developed nations choose to implement RFC in some form, this should be seen a benefit rather than a problem.

I find it sad that so few imaginative ideas have come to light in this rare moment of global opportunity. We should cheer UBI and the various support packages implemented by governments, but many seem to be ignoring the signs and planning for a return to normal business after the pandemic. Stock markets seem to agree. In my opinion any return to normal that supports corporations to the level now assumed by the markets would involve catastrophic hardship among communities and whole segments of the population. The time has come for something more radical. It is time for RFC.