By Robert Wenzel
The biggest mistake President Trump may have made in his early reaction to the COVID-19 panic is to pay, as a result of state and local lockdowns, $600 a week to those laid off.
Since this payment is coming on top of state unemployment benefits, many of the laid-off have more weekly income unemployed than if they were working (SEE: My Personal Check-Cashing Unemployment Situation).
With this situation, many of the laid-off are perfectly willing to sit on the couch and wait things out. Trump has, thus, eliminated a natural base of opposition to state and local lockdowns.
If those additional checks weren't coming in, there would be a significant increase in opposition pressure to the officials implementing the economic shutdowns. I doubt the state and local officials would be able to stand up to the pressure if the masses were objecting.
New polls now show Trump falling behind Joe Biden in the presidential race. It appears to be all about the economy and the lockdowns. In effect, Trump is funding the lockdowns with the weekly checks by keeping the potential protesters on the couch.
The lockdowns would be over right now if Trump wasn't sending out those $600 per week checks.
This problem is going to get bigger by July 31.
On July 31, the $600 checks end, but those still unemployed at that time will have gotten used to the checks and they won't be very happy if the checks stop. On the other hand, if Trump continues to make the payments, the unemployed will have no incentive to oppose the lockdowns which are hurting Trump's re-election chances.
The only move Trump can make, that makes any sense from a political perspective, is to continue the payments but with one stipulation: He will only continue paying the unemployed in states and cities where the lockdowns have been lifted.
Given the amount of money the Federal Reserve has printed (See: The EPJ Daily Alert), in no time market wages will be higher than the unemployment payments and businesses in cities and states will be open bidding for workers. So the key is really to get the states and cities open and structuring things so that state and local officials look really bad if they don't open their jurisdictions up.
The national nightmare will be over with Trump going down in history as a genius.
Robert Wenzel is Editor & Publisher of EconomicPolicyJournal.comand Target Liberty. He also writes EPJ Daily Alert and is author of The Fed Flunks: My Speech at the New York Federal Reserve Bankand most recently Foundations of Private Property Society Theory: Anarchism for the Civilized Person Follow him on twitter:@wenzeleconomics and on LinkedIn. His youtube series is here: Robert Wenzel Talks Economics. More about Wenzel here.
Wow! Given the current state of affairs, RW has proposed a brilliant political strategy for Trump. But why?
ReplyDeleteThere are numerous signs the USA is rapidly tumbling down the same path that lead to the collapse of the Roman Empire. From free food for all in NYC to states that prohibit the purchase of garden supplies while allowing their dams to deteriorate flooding small towns. Sadly this trend will continue even though RW's strategy may slow it down, it won't be stopped.
The people of USA must experience the deprivations of Mao's China and Stalin's USSR for themselves. And even then the recovery (far in the future) will be slow, hesitant and probably painful. Perhaps like the so-called dark ages hundreds of city-states or voluntary associations (like homeowners associations) will be formed allowing for a diverse amount of competition in social organization. Whether Trump flounders and fails or the hysterical Democratic Party implodes and disappears in a flurry of panic-stricken power grabs. The American people are going to get what they want. And as H. L. Mencken said: they are going to get it good and hard.