A Deeper Divide is Being Caused by the COVID-19 Pandemic

During the past three months, we have had socially distanced “happy hours” with our neighbors in Bethesda, Maryland, an affluent suburb of Washington DC. We have learned that like my wife and I who are professors at local universities, our neighbors and their highly educated offspring are busier than ever at work. Each of us have well paid positions in the knowledge economy such as entertainment, marketing, software and data engineering, financial services, education, and communications that we don’t seem to have missed a beat or lost any income. My own extended family who work in Silicon Valley tech firms have become much more active at work innovating and building ways of digitizing and transforming several sectors of the economy. The challenges in restaurants, hotels, doctors’ offices and transportation spur them on to try and accelerate the nascent automation in these industries.

Every one of these upper middle class professionals are vociferous in their criticism about opening up the economy. Listen to the doctors, they say, and follow the science to decide when to open. Let’s wait for an effective vaccine, they say, because it alone can signal “all’s clear”. They tend to be condescending and mocking about the “rednecks” and “yahoos” especially from the South who don’t seem to understand the dimension of the problem, and the focus of their attack is aimed at governors who are opening up beaches and bars as though this is more important than the potential “spike” on coronavirus cases. There is not the same regard for job losses – there is consensus that lives are more important than livelihoods and if people die, the economy will be worse off than if they don’t.

Hardly any of my friends, relatives and neighbors see the irony of this whole thing. Upper middle class professionals working from home, educating those with high-speed WiFi, creating entertainment for those with Netflix and AmazonPrime accounts, automating the jobs of manual, transportation and hospitality workers, engaging in managing news and political polls, and all at little or no loss of income, telling those who need to be physically at work to earn a living that they are irresponsible if they don’t stay at home and that they should stop bugging their governors, mayors and county executives to open up!

When I bring up this argument with my colleagues, friends and family, it takes them awhile to process the fact that they are unthinkingly contributing to the discourse about opening the economy or not, and they tend to react in a negative but very intelligent and convincing way. The first point they make is that say that many of those who are dying from COVID-19 are African and Latinx Americans or “essential” workers and that opening up too soon will only hurt the poor and minorities. There is also the argument that it is businesses and Trump who want to open the economy but that the workers in high risk occupations like meat processing plants are against it. Ironies aside, they say, if one follows the logical conclusion of my point-of-view, we would simply be playing into the hands of greedy capitalists and Trump.

One cannot disagree with these counterpoints but there’s the rub. The upper middle class professionals working in the knowledge economy have good arguments to rationalize the need to stay at home, self-isolate and not open the economy too soon, especially because it is in opposition to the outrageous pronouncements of a President who most thinking people in the world agree is incompetent, idiotic and self-serving. In fact, there is a certain smugness in knowing and feeling that we oppose Trump’s unintelligent and uncaring directives. However, what we miss is that the logical conclusion of the irony I have identified is not that one needs to open the economy without a proper plan, it is that we, as a nation, need to equalize the opportunity to make a living, no matter what industry we are in and what our educational level is.

If the meat packing workers do not go to work, they do not earn a living. The same goes for waiters and cooks in restaurants, those cutting our hair and nails, packing and transporting packages and letters, cleaning and maintaining offices and airlines and so on. Our capitalist system is structured to pay people only when they work. How about the professionals in all of the knowledge industries who can stay at home and work at the same or higher level of frenzy be charged a super tax during this time of pandemic to be distributed to those who cannot make a living without physically going to work?

Clearly Congress, with the initiative of the Democratically controlled House, has passed the CARES Act providing some relief to those earning less than $75K and are in the process of passing further bills, the most generous of those being the Harris-Markey-Sanders bill providing $2000 per adult making less than $100K plus a generous allowance for at most 3 children per family. These bills have a collective cost to the treasury of about $5 trillion and will eventually have to be paid for. Given that many of the professionals in the knowledge industries are working full steam ahead from home with the same or additional pay through bonuses, it is they who should bear the brunt of the tax bill to pay for the rescue package.

I can already hear the protests of the liberal upper middle class well educated “don’t open too soon” professional set.

Universal Basic Income: The Time Has Come

With soaring unemployment and persistence of the “lockdown”, $3 trillion plus emergency funding already passed by Congress for economic sustenance is clearly inadequate. Senators Harris, Markey and Sanders have proposed another bill aimed at families: $2,000 monthly payment to individuals who make up to $100,000 per year plus $2,000 monthly payments per child up to three children. Our estimate is that this bill would cost around $3-$4 trillion! There is yet another $3 trillion plus bill sponsored by Speaker Pelosi that is making its final rounds through Congress. I predict neither bill will be passed; there is valid concern about the national debt that is soaring with the passage of each emergency funding bill.

All these “stimulus” packages and additional monies to mitigate the financial impact of the novel coronavirus could have been avoided by Congress if they simply adopted universal basic income (UBI) that caught the public eye due to Andrew Yang’s Presidential campaign. There are significant benefits of having a UBI of $1000/adult/month in the United States. If this coronavirus pandemic does not make this clear, nothing will.

For starters, everyone will have money for basics, workers could have been furloughed rather than fired, healthcare would be affordable, and the economy would not have shut down. We will also not be soon dealing with unemployment of 20+%. People who had the symptoms of COVID-19, especially the gig workers would probably have stayed at home because they were not stressed about becoming destitute. This would have certainly mitigated the spread of the virus and death due to COVID-19. It would also been easier for those losing money to follow “stay at home” directives in most states. Our fragile healthcare system and economy would have been much more resilient with a well designed UBI.

Our research project at the University of Maryland shows that it is not difficult to finance a UBI. It would cost $2.984 trillion to provide every adult citizen (76% of the U.S. population) $1000/month without any means testing. Of this, $400 billion would be recovered from taxes, and $300 billion could be saved by eliminating “income security” now provided by the government to the very poor in the form of welfare, food stamps, housing support and such. So the net cost is only $2.3 trillion, lower than anything being proposed right now.

The $2.3 trillion could be paid for by introducing a value added tax (VAT), a wealth tax (WT) or a financial transactions tax (FTT) or a combination of all three. These components of taxation prevailed in the 1950s when the U.S. also had some of the highest growth rates in history.

In 2018, Americans spent $13.95 trillion on personal consumption and expenditure. A 16.6% VAT on personal consumption will easily cover $1000/adult/month of UBI. Most European countries have VATs in the 18-20% range. Clearly, a tax on consumption is regressive because the poor will pay at the same rate as the rich. One way to deal with this is to exempt food, clothing and healthcare from the VAT which would still leave $10.3 trillion subject to tax.

Increasing the wealth tax could also pay for universal basic income. A 4.5% tax on wealth above $1.5 million would easily pay for UBI. This may be too drastic. Elizabeth Warren’s WT proposal of 2% on wealth above $50 million and an additional 1% on wealth over $1 billion will raise about $300 billion. Tomas Piketty’s proposal of 1.5% on wealth over $1.5 million would raise around $600 billion. Some combination of a modest VAT (say 10%) and a reasonable wealth tax (say Warren’s) would pay for UBI.

A financial transactions tax could also do the trick. Our calculations show that a flat out 1% on stock transactions and bond sales would easily pay for UBI. If this is too drastic, one could pass the Ellison-Sanders bill: 0.50% on stock transactions, 0.10% on bond sales and 0.005% on derivatives, which would raise $300 billion/year. Again, some combination of VAT and FTT and Wealth tax can support a universal basic income of $1000/adult/month.

There are further benefits of UBI: Dismantling the entire government apparatus set up to police the poor to ensure that they are not welfare cheats will save money and improve morale. Studies show that people who are not stressed about money actually behave in a more entrepreneurial and socially conscious way; crime would also go down when individuals have UBI. While during bad times UBI would provide a safety net, in good times this addition to income will actually give a small boost to economic growth.

Having universal basic income will ensure that the country will not be as devastated when either the next public health pandemic or the next employment destroying technological upheaval happens; indeed we will be ahead of the curve.

Coronavirus Conundrum: The Democrats Dilemma

 

In these uncertain, stressful and turbulent times caused by the tiny Coronavirus, we can be certain of two things: First, it is certain that this novel coronavirus will pass as all pandemics do. Second, almost certainly Donald Trump will win a second term as President and it will be the fault of the Democratic Party.

The Spanish flu in 1918,one of the deadliest epidemics in human history infected 500 million people and killed up to 50 million, but much of the severity was gone in a year. The Black Death or the Great Bubonic Plague was the most devastating pandemic recorded in human history, resulting in the deaths of an estimated 75 to 200 million people in Eurasia in the 15th century. By most counts, counts, it lasted for 4 years in Europe from 1347 to 1351.

The novel coronavirus and the health impact COVID-19 will also end for certain, perhaps by Easter according to our President, but certainly by the end of the summer by all expert counts. But for certain, the remnants of the novel coronavirus will last for four and a half years with Trump winning re-election in November this year.

Just think about what we are doing to respond to the economic impact of COVID-19. We are giving people money, giving corporations money and loan guarantees, giving individual states money, all for the initial tune of $2.2 trillion. This bill will surely increase. And you know who is giving away this money and helping people and companies in dire straits? It is Donald Trump and the Republicans. No matter what the Democrats introduced into the bill to help ordinary people, it is Donald Trump’s rescue package. At least that is what Trump will run on.

The Democrats could have easily been in front of this but have not supported any true progressive idea since Bill Clinton and the Democratic right captured the leadership of the party and changed its soul. Let’s face it, Joe Biden is on the right wing of the Democratic Party, just look at his voting record over the years. If the Democratic Party had continued on their progressive history, don’t forget it was the Democratic-Labor Party in much of the mid-west, it would be in a different position right now.

Had the Democratic Party supported Medicare-for-All, then many people would have free healthcare and especially free medical testing, and would have volunteered to get tested for coronavirus immediately on the onset of symptoms. Similarly, if the Dems had fully supported extended sick leave for everyone, then the fear of losing money would not have kept people from self-quarantining when they became ill. These simple ideas would have changed the course of how we fight the coronavirus and we would be in less of a crisis now. I will not even bring up things like free Pre-K and public education, student loan forgiveness etc. which would have vastly reduced the emotional strain on the population right now.

Instead, the Democratic Party attacked progressive policies on universal healthcare including sick leave as being too expensive and unaffordable. The Democratic Party reps were cynical in not reading anything written by academics, Bernie Sanders or Elizabeth Warren on how these healthcare proposals would be paid for. Sanders has excruciating detail on how to pay for all of his progressive policies but the media did not highlight it and Biden’s campaign simply dismissed it by saying it was too expensive. Warren had Nobel Prize worthy Berkeley economists Emmanuel Saez and Gabriel Zucman explaining how changes in the tax system can pay for Medicare for All, and the media and the Dems thought they knew better. What are they saying to the new $2.2 trillion package?

Of course, the Democratic Party and the liberal media was also condescending towards the proposal of Andrew Yang regarding Universal Basic Income. My calculations show that giving every 18+ adult $1000/month (some of which would be clawed back via the current tax code) would cost around $1.85 trillion and this could be paid for by having a 15-18% value added tax (VAT) which most European countries have. An added benefit is that it would be so easy to administer, no welfare police, no bureaucrats keeping track of eligibility and the like. And in times like the pandemic we are facing, the level of economic and emotional crisis would be greatly minimized to know that there is enough income to eat and pay your rent. And if people continued spending, even at a lower level, most companies will also not need to be “rescued”.

The Democratic Party was in such a tizzy that the progressive candidates Sanders or Warren might win that they first encouraged Michael Bloomberg to join, even changing their rules to allow him to be on the debate stage (what a disaster!), and then orchestrating the unprecedented capitulation of Buttigieg and Klobuchar the day before Super Tuesday. They also used scare tactics on the voters, by red baiting progressives with the help of the media. How many times was the question asked of Sanders and others whether the country was ready for a “socialist” when the progressive proposals in the U.S. did not go even as far as that of any of the western European countries like the U.K. and Germany, neither would ever be called “socialist”.

Had the Democratic Party adopted progressive measures and passed it in the House by now, all they had to tell the voters was that their plans saved them economically and in terms of their families health. Instead, they have given the leadership to Trump and the Republican Party who will undoubtedly triumph at the polls in November in spite of the media and Nancy Pelosi trying to focus on the initial missteps by the administration.

The U.S. Undermines Its Democracy Much Better Than the Russians

First Published June 2018

Just recently, the five conservative members of the Supreme Court upheld Ohio’s practice of purging its voter rolls based on a failure to vote in previous elections. The state mails a notice to anyone who does not vote in two consecutive years; if the person does not respond and fails to vote or update their registration during the next four years, the state removes that person from the voter registration list. Ohio’s voter purge process effectively disenfranchises thousands of eligible voters. Most of these voters are poor and minority citizens who generally vote sparingly for a variety of reasons. The fundamental essence of a true democracy is that citizens retain the right to vote or not vote. This egregious vote of the Supreme Court hardly warranted much discussion in the media who are obsessed by the cult of Trump and his daily tweets and the Mueller Russia probe.

The Mueller Russia is a great big Red Herring that is keeping the media and the liberal left in full throttle conniptions, not to mention the significant money and other resources being spent to get to the bottom of how Russia undermined democracy in this country. I think the bigger threat to democracy in the United States is ourselves and not the Russians with perhaps the Republican Party playing a significantly bigger role than Donald Trump. By focusing our collective attention and much money on the possible collusion of the Trump Presidential campaign with Russia and Putin, we are ensuring that this Red Herring keeps us away from dealing with our own, and much more egregious behavior vis-a-vis democracy. We have created many ways in which our citizens cannot actually exercise their fundamental right to vote in an election. The recent Supreme Court ruling is the latest attack on our democracy.

First, we have almost all our elections on Tuesdays when most people have to work, and even close the polls in many states too early for those returning from work to cast their ballots. Most nations in the world have their citizens vote on a Sunday or a national holiday, including France, Germany, India, Japan and Russia. In fact, the largest 100 countries with the exception of the U.S. and U. K. have elections on Saturday, Sunday or a national holiday. It is much easier for people to vote on a non-working day, especially those at the lower end of the economic scale for whom there is always a trade-off between losing their daily or hourly wage and voting. Although there are some progressive employers who give their employees time to vote without docking their pay, many do not. It is no wonder that internationally the U.S. has one of the lowest percentage voter turnout (55.7% in 2016) among voting age population; compare this to over 65% in most western democracies.

Second, there are ways in which minorities, especially African Americans and the rural poor are actively restricted from voting. Even though the Voting Rights Act was passed in 1965, many states have been trying to undermine it through violent means early on, and several innovative non-violent means more recently. Under the guise of voter fraud, 14 states adopted measures to restrict voting before the 2016 election. A recent study by the Center for American Progress provides numerous examples of democracy being undermined, with voter suppression mostly aimed at minorities. For example, North Carolina decided to close over 150 polling stations in counties with large black populations thus making it difficult to travel the enormous distance to the nearest polling booth, and the time taken waiting in line to vote very long. Texas adopted strict ID laws which allowed one to choose concealed weapons permits as acceptable form of identification but not student IDs. Also “under the guise of preventing illegal voting”, several states removed names from voter registration lists disproportionately targeting people of color. Many states require driver’s license to vote when many poor voters don’t even drive. The U.S. consciously makes it difficult for minorities to register and vote; thus less than 65% of the eligible voters even bother to register. The recent Supreme Court ruling will lower this number.

Third, there is regular redistricting in almost every state. While the Republicans have practiced it quite aggressively in recent years, the Democrats are no better when they are in power. American attempts to tailor district lines for political gain stretch back to the country’s very origin. Patrick Henry, who opposed the new Constitution, tried to draw district lines to deny a seat in the first Congress to James Madison, the Constitution’s primary author. Elbridge Gerry, the Democratic-Republican governor of Massachusetts, was the key architect who promoted and signed the redistricting plan to ensure his party’s domination of the state senate. Even though the attempt failed the term “Gerrymandering” was born. Gerrymandering undermines true democracy: It is akin to politicians choosing the people who will vote for them rather than voters choosing who will represent them as it should be in a true democracy.

Fourth, the United States is only one of 4 countries among the top 50 high-income countries that completely bans convicted felons from voting even after they are rehabilitated and released from prison; the others are Armenia, Belgium and Chile. According to the US Bureau of Justice Statistics (BJS), 2,220,300 adults were incarcerated in US federal and state prisons, and county jails in 2013; additionally, 4,751,400 adults in 2013 were on probation or on parole. The numbers in 2017 are likely to be more. Thus more than 7 million adults in the U.S. are disenfranchised, a very significant number (around 3%) for country that considers itself a beacon of democracy. Surely we believe that a term served in prison rehabilitates the inmates making them able to reintegrate into civil society.

If we really want to make sure that no one undermines our democracy, it is imperative that we look inside to ourselves and reform our electoral system so that everyone gets the chance to exercise their rights to vote and the politicians don’t play self-interested games. Spending enormous amount of time, money and media attention on whether or not Russia interfered with the election will simply distract us from the more important job of healing our democracy.

 

Social Values Needed to Direct Artificial Intelligence Advancements

The promise of artificial intelligence seems to be all the rage today. The media is full of wide-eyed discussions about the promise of AI and how this is going to transform economies and societies. The technology has certainly moved from the labs into every day lives. It is currently being used in medical devices, smart-home systems and video games. IBM is aggressively marketing Watson as “working alongside people in 45 countries and 20 industries to help businesses work faster and work smarter.”

The most compelling example is the use of AI in driverless cars which many predict will be the way of the future in about 15-20 years. Medical students are now wary of choosing specializations like radiology and pathology because AI is extremely good at reading images and slides. For the past several years, the most lucrative application of AI has been in online advertising. AI is expected to take over routine managerial work like coordination and control tasks, scheduling and reporting. In a recent interview with Wall Street Journal, Andrew Ng, the co-founder of Coursera and former AI scientist at Google and Baidu says that “AI is the new electricity. Whatever industry you work in, AI will probably transform it, just as 100 years ago the rise of electricity transformed industry after industry – everything from transportation and communications to manufacturing to health care.”

What passes of as Artificial Intelligence is neither “artificial” nor really “intelligent”. While Deepmind can beat humans on the Go board and Watson beat the best competitors at Jeopardy, ask each to play Family Feud and they will get stumped. It is human ingenuity (and intelligence) that enable these AI machines to be trained and become very good at specific tasks. While there has been much progress in enabling AI machines to train themselves in many problem domains, humans have to create the algorithms and the rules that actually gets these “robots” to solve problems.

The fact is that AI machines are unintelligent and really cannot deeply think for themselves no matter what their proponents say. They certainly cannot reflect on society’s values and priorities. Consider this: Recently, there has been increasing talk on the U.S. using AI machines to fight wars. What could be better? One can inflict significant damage on the enemy while minimizing loss of lives on our side to the point of not having any soldier in the theatre of war. Every country in the world believes that unarmed civilians should not be killed in a war, and certainly women and children should not be harmed at all. No autonomous AI war machine can come up with these values on their own. What’s more, these intelligent robots would also not be able to learn values even after many trials and errors. The drones that the U.S. used under the Obama administration to destroy the Afghan militants on the Pakistan border ended up causing such civilian casualty that their use had to be suspended. No matter how clever the programmers were in training the drones, these non-human machines could neither imbibe the values well established in the U.S. and elsewhere nor even act on them properly. The Campaign to Stop Killer Robots urges governments to heed an open letter signed by 126 founders and directors of more than 100 robotics and artificial intelligence companies from 28 countries demanding urgent action to address concerns of having fully autonomous weapons.

People who create the new machines based on artificial intelligence are very clever problem solvers. Need intelligent machines to read x-rays and pathology slides correctly, done! Need robots to fight fires in large complex building sites with minimal collateral damage, done! Need cars to drive themselves long distance and avoid accidents on the highway, done! Armed with STEM degrees these problem solvers from the California Silicon Valley to Manhattan’s Silicon Alley and Austin’s Silicon Plateau are working very hard to use intelligent machines to solve complex corporate and societal problems effectively. And digital problem solvers are being rewarded handsomely by the global capitalist system that dominates the world today.

However, for this brave new world to be one we really want we need value creators as much as problem solvers. It is very important for every country to set parameters and boundaries on what is socially acceptable and what reflects the value system prevalent in society. Value creators must be in the middle of this conversation and debate. They will bring empathy, ethics and engagement with society to the technologists who are trained in solving problems. Value creators will also help define what problems need to be solved. Do we really need autonomous vehicles on U.S. highways? Do we need to replace the human touch and empathy of doctors with Watson conveying the diagnosis of an illness to a patient? Should we invest money in intelligent technology that extends the lives of 90 year olds rather than saving the life of an infant? There are no ready answers to these questions. However, trusting those excited and excitable by pure technological advancement and very good at solving technological problems to provide answers to these value laden questions would be quite foolhardy.

We need to nurture and reward value creators educated in the social science and humanities to work hand-in-hand with STEM centered problem solvers to create a better world.

Let me end with two quotes that should really awaken those mindlessly pursuing technological advancement. Sun Microsystems cofounder Vinod Khosla apparently is of the view that “Little of the material taught in Liberal Arts programs today is relevant to the future”, a view held by a vast majority of techies in Silicon Valley. This should really give us pause. Let’s not forget Robert Oppenheimer, the leader of scientists and engineers who worked hard to enable the atom bomb, quoting the Bhagavad Gita “I am become death, the destroyer of worlds.”

End Injustice: Opioid Crisis vs Drug War (appeared in The Hill 9/28/2017)

There is no doubt in the next budget significant money will be allocated in a bipartisan way to fight the opioid epidemic, and rightly so. It is imperative that Congress should also allocate equivalent money for those that need rehabilitation from drug related imprisonment.

According to the Kaiser Family Foundation around 33,000 died from overdosing on opioids in 2015. The New York Times estimated it at 60,000. In July 2017, FDA Director Scott Gottlieb wrote that opioid addiction had become “FDA’s biggest crisis.” CDC Director Thomas Frieden said that “America is awash in opioids; urgent action is critical.”

The opioid crisis is mostly prevalent among the lower middle class, working class and rural poor whites. The great recession seems to have had a significant impact on the psyche and drug dependency of a very vital part of our nation creating a massive public health crisis.

The U.S. government has been working for several years on several counter measures to present, manage and treat the opioid abuse but more needs to be done. In 2010, the U.S. government began cracking down on pharmacists and doctors who over prescribed opioid painkillers.

In July 2016, President Obama signed into law the Comprehensive Addiction and Recovery Act for opioid addiction treatment, and authorized millions of dollars in new funding for opioid research and treatment. In December 2016, the 21st Century Cures Act passed with wide bipartisan support (94-5 in the Senate and 392-26 in the House) and included $1 billion in state funds to fight the opioid epidemic.

In June 2017, Ohio’s Attorney General Mike DeWine filed a lawsuit against a handful of pharmaceutical companies including Purdue Pharma, Teva and Johnson & Johnson accusing them of spending millions of a marketing campaign to “trivialize the risks of opioids while over stating the benefits of using them for chronic pain.”

How does one answer the African American population that is cynical that all of these activities were motivated by the fact that the opioid crisis is a white problem? The opioid epidemic is indeed disproportionately a white phenomenon. In 2015 according to the data from the Kaiser Family Foundation, 83.8 percent of those who died of an opioid were white. African Americans are significantly less likely to be prescribed opioids to treat pain than whites, and this disparity persists even when the numbers are adjusted for socio-economic variables such as income, and even in emergency rooms.

While 33,000 people died from overdosing on opioids in 2015, the crack epidemic in the late 1980s, killed around 94,000 per year. Drug abuse, especially crack cocaine, in the 1980s and 90s was predominantly an African American problem. The reasons for this abuse may have been very similar to the opioid abuse of the recent decade: joblessness, loss of self-esteem due to job loss, societal and economic marginalization. Many turned to cheap heroin and crack cocaine as a livelihood or means of self medication. Of course then the country reacted by declaring “war” on drugs.

The crack cocaine epidemic resulted in militarized policing of mostly minority communities. Police and paramilitary forces armed with assault weapons and tactical training from Special Forces were used to “pacify” neighborhoods suspected of being either buyers or sellers in the crack cocaine “trade.” The federal government responded even more harshly, issuing a discriminatory “100 to 1” decree for the possession or trafficking of crack versus the penalties for trafficking of powder cocaine; this stood for nearly three decades, until 2010, when the Fair Sentencing Act cut the sentencing disparity to 18:1. Someone convicted in federal court of possession of five grams of crack cocaine received a minimum mandatory sentence of five years in prison, compared to less than a year for powder cocaine.

In 1980, about 41,000 people were incarcerated for drug crimes, according to the Sentencing Project. In 2014, that number was about 488,400 — a 1,000 percent increase. As Fareed Zakaria wrote in Time “Drug convictions went from 15 inmates per 100,000 adults in 1980 to 148 in 1996, an almost tenfold increase.”

In 1996, approximately 60 percent of inmates incarcerated in the United States were sentenced on drug charges; around 80 percent of those convicted on crack cocaine were black, 10 percent were Hispanic, and only 10 percent were white. In 2009 alone, 1.66 million Americans were arrested on drug charges, more than were arrested on assault or larceny charges. And four of five of those arrests were simply for possession.

Throughout the crack cocaine epidemic, there was little or no discussion of the crisis being brought on by economic despair, or that it was a public health issue, or that the users needed rehabilitation. The social upheaval caused by the drug war against minorities and their families has had deep and significant effects.

One would even suspect that the slowdown of social and economic progress of the African American community since the early 1990s could be attributed to the violent reaction of the U.S. government to the drug crisis which sent away many young women and mostly men to languish in prison. These very people could have been productive members of society and helped the economic and social wellbeing of their families. What a waste! As Michael Eric Dyson said in a February 2017 appearance at the University of Memphis, “White brothers and sisters have been medicalized in terms of trauma and addiction. Black and brown people have been criminalized for their trauma and addiction.”

It would be inhumane in the extreme and certainly hypocritical if the United States was to treat the white opioid crisis as though it was a public health issue, and not have an active plan to rehabilitate all those African American and minority lost souls who were equally addicted to cheap drugs by letting them waste away in prison.

India: All Set to Be the 2nd or 3rd Top Economy (published in INDIA ABROAD, 70th Anniversary Issue, August 2017)

By all accounts, India should be the world’s second or third largest economy in 2047 after China and the United States. In 2016 purchasing power parity (PPP) India is #3; in nominal terms #7. If India grows at an average rate of only 6% per year for the next 30 years, it should be the #3 economy in nominal terms and #2 in PPP. India will overtake the U.S. in PPP terms and Japan in nominal terms. Hardly any economist expects the U.S. or Japan to grow faster than 3% per year for the next several decades; the U.S. is currently growing at 1.6% and Japan at 1.1%; India is growing at 7.1%. India is currently the world’s 6th largest manufacturer and #11 in the Global Competitiveness Index (Deloitte, 2016).

India is very competitive in cost and labor skill but behind Germany, Japan and the U.S. on innovation, productivity, and supply chain, and has poor legal and regulatory systems, and physical infrastructure. However, with regulatory and legal reforms, rapid modernization of infrastructure, investment in education, and encouragement of innovation, my expectation is that by 2047 India will climb in competitiveness and become the world’s 3rd or 4th largest manufacturer behind the U.S., China and Germany.

In spite of three decades of growth of the ICT sector in India, the universal Aadhaar system introduced by Congress and the current FinTech expansion of BJP India has not reached its ICT potential. The World Economic Forum’s networked readiness index ranks India at #91 out of 139 countries analyzed which is shameful. World Bank’s Digital Adoption Index shows that only 50% of India’s population is “touched” by digitalization; the DAI is 78% for U.S. and 62% for China. It is my expectation that the Indian software industry will start delivering the goods to the hungry domestic market, truly innovating in products and services, and become the second largest in ICT in the world in 2047 after China.

The third main economic cluster that will propel India is health sector. In pharma, India has a “unique blend of low-cost manufacturing, R&D infrastructure and skilled workforce” (McKinsey, 2017). India has 20% market share in the generic drug market. There is no question that Indian pharma will continue to grow rapidly and will become the source of choice for medicines in much of the world. As healthcare costs in the western world increases with its aging population, and the respective governments start cutting back on benefits, having their health attended to in India, and diagnosis made by Indian doctors via global networks will be the medium of choice for much of the western population. Current forecasts expect medical tourism in India to be a $20 billion industry in 2020. I expect that by 2047 medical tourism in India might well be one of the largest “export” industries.

“Opioid Crisis” vs “War on Drugs”

According to the Kaiser Family Foundation around 33,000 died from overdosing on opioids in 2015; the New York Times estimated it at 60,000. New Hampshire and West Virginia are among the states with the highest per capita opioid death rates. In July 2017, FDA Director Scott Gottlieb wrote that opioid addiction had become “FDA’s biggest crisis”. CDC Director Thomas Frieden said that “America is awash in opioids; urgent action is critical”. The opioid crisis is mostly prevalent among the lower middle class, working class and rural poor whites. The great recession seems to have had a significant impact on the psyche and drug dependency of a very vital part of our nation creating a massive public health crisis.

The U.S. government has been working on several counter measures to present, manage and treat the opioid abuse. In 2010, the U.S. government began cracking down on pharmacists and doctors who over prescribed opioid pain killers. In June 2017, Ohio’s Attorney General Mike DeWine filed a lawsuit against a handful of pharmaceutical companies including Purdue Pharma, Teva and Johnson & Johnson accusing them of spending millions of a marketing campaign to “trivialize the risks of opioids while over stating the benefits of using them for chronic pain.”

In July 2016, President Obama signed into law the Comprehensive Addiction and Recovery Act for opioid addiction treatment, and authorized millions of dollars in new funding for opioid research and treatment. In December 2016, the 21st Century Cures Act passed with wide bi-partisan support (94-5 in the Senate and 392-26 in the House) and included $1 billion in state funds to fight the opioid epidemic. There have been significant actions at the state and local levels to deal with the opioid crisis. It will be quite surprising if the new healthcare bill and the budget does not include significant funding to combat the opioid epidemic.

How does one answer the African American population that is cynical that all of these activities were motivated by the fact that the opioid crisis is a white problem? The opioid epidemic is indeed disproportionately a white phenomenon. In 2015 according to the data from the Kaiser Family Foundation, 83.8% of those who died of an opioid were white. Some claim that over the past decade, those affected by opioid addiction was 90% white.  African Americans are significantly less likely to be prescribed opioids to treat pain than whites, and this disparity persists even when the numbers are adjusted for socio-economic variables such as income, and even in emergency rooms.

While 33,000 people died from overdosing on opioids in 2015, the crack epidemic in the late 1980s, killed around 94,000 per year. Drug, especially crack cocaine, abuse in the 1980s and 90s was predominantly an African American problem. The reasons for this abuse may have been very similar to the opioid abuse of the recent decade: joblessness, loss of self esteem due to job loss, societal and economic marginalization. The easy reaction to their depressed condition was for many to get into cheap heroin and crack cocaine. Of course then the country reacted by declaring “war” on drugs.

The crack cocaine epidemic resulted in militarized policing of mostly minority communities. Police and para-military forces armed with assault weapons and tactical training from special forces were used to “pacify” neighborhoods suspected of being either buyers or sellers in the crack cocaine “trade”. The federal government responded even more harshly, issuing a discriminatory “100 to 1” decree for the possession or trafficking of crack versus the penalties for trafficking of powder cocaine; this stood for nearly 3 decades, until 2010, when the Fair Sentencing Act cut the sentencing disparity to 18:1. Someone convicted in federal court of possession of 5 grams of crack cocaine received a minimum mandatory sentence of 5 years in prison, compared to less than a year for powder cocaine.

In 1980, about 41,000 people were incarcerated for drug crimes, according to the Sentencing Project. In 2014, that number was about 488,400 — a 1,000 percent increase. As Fareed Zakaria wrote in Time “Drug convictions went from 15 inmates per 100,000 adults in 1980 to 148 in 1996, an almost tenfold increase.” In 1996, approximately 60% of inmates incarcerated in the US were sentenced on drug charges; around 80% of those convicted on crack cocaine were black, 10% were Hispanic, and only 10% were white. In 2009 alone, 1.66 million Americans were arrested on drug charges, more than were arrested on assault or larceny charges. And 4 of 5 of those arrests were simply for possession.

Throughout the crack cocaine epidemic, there was was little or no discussion of the crisis being brought on by economic despair, or that it was a public health issue, or that the users needed rehabilitation. The social upheaval caused by the drug war against the minorities and their families has had deep and significant effects. One would even suspect that the slow down of social and economic progress of the African American community since the early 1990s could be attributed to the violent reaction of the U.S. government to the drug crisis which sent away many young women and mostly men to languish in prison. These very people could have been productive members of society and helped the economic and social well being of their families. What a waste!

As Michael Eric Dyson said in a February 2017 appearance at the University of Memphis, “White brothers and sisters have been medicalized in terms of trauma and addiction. Black and brown people have been criminalized for their trauma and addiction.” It would be inhumane in the extreme and certainly hypocritical if the United States was to treat the white opioid crisis as though it was a public health issue, and not have an active plan to rehabilitate all those African American and minority lost souls who were equally addicted to cheap drugs by letting them waste away in prison.

MBA Guide for the Democratic Party – Part 2

Part 1 spoke to the need for change in leadership of the Democratic Party. Besides leadership, we also teach strategy, tactics (operations and supply chain management, and marketing) and financing (finance and accounting) in a business school. With change in leadership, there is a better chance for improvement in these business attributes.

Strategy generally involves setting goals, determining actions to achieve the goals, and mobilizing resources to execute the actions. Strategic goals for a company could be deciding what products and services to create and what markets to play in. In U.S. politics this means deciding which candidates to support for the different offices around the nation, what states to concentrate on, and what kind of actions are necessary to get the chosen candidates elected.

The current strategy of being simply the opposition party is not going to work for the Democratic Party. Just imagine if Honest Tea’s strategy was simply that they were not Coca Cola or Pepsi, and that they do not add sugar to drinks, it would not have worked. In order to be successful they followed a positive strategy that focused on using real tea leaves and being an environmentally friendly ethical company. Just imagine if Southwest simply had a strategy or not being a “big bad” major carrier like United, American or Delta. The strategy would never have led to Southwest being the most profitable airline in America. The Democratic Party needs a clear positive strategy to gain “market share”, i.e. the mind share of the American population.

There are essentially four major concerns of almost all voters: (1) Am I going to have a long-term job with a living wage that will allow me and my family to live in reasonable comfort? (2) Am I going to be able to have affordable healthcare until I die? (3) Will I be able to live in any neighborhood from Boise to Baltimore without worrying about safety? (4) Will my children be able to have a standard of living that is no less than mine? The Democratic Party needs its own positive strategy and message for each of these concerns. The most important task for the next-gen Democratic Party leadership should be to come up with long-term sustainable strategies to deal with jobs, healthcare, safety and security, and inter-generational standard-of-living.

Having a strategy is fairly academic if the marketing and tactics are flawed. What we teach at a business schools on marketing and messaging will really help the Democratic Party. Marketing has the customer as front and center, and messaging is a way to get one’s brand across to the consumer. It is well known that the best way to capture a consumer’s mindshare is to get through to their emotions, or heart-share.

The Republicans have really done a great job here. Take the issue of jobs for example. The Republican Party which is anti-unions and against minimum wage says that it supports “right to work”. Who wouldn’t? The Democratic Party simply says that it supports unions and a minimum wage, both of which are subject to complex debate. Is it the same minimum wage in New York as well as Mississippi? Can small business afford minimum wage as much as large corporations? What about if the unions support older workers over the young entrants? Even the child birth issue has been very cleverly usurped by the Republicans as a “right to life”. Who does not support the right to life?

For marketing and messaging, the Dems can take a page out of a movement that has mostly succeeded: Gay Marriage. So long as gays and lesbians were portraying the issue as “gay marriage”, much of the American public considered it to be an affront to their religious and cultural beliefs. Why allow these “weird homosexuals” to get married? After all God turned them into stone in Sodom and Gomorrah. As young people swelled its ranks, the gay movement dropped its stand that “we are gay and you need to respect us, dammit” and started talking about the issue as “marriage equality” and captured the intrinsic value system of a country which was built by immigrants who came to the U.S. to escape discrimination. Yes, no one, even the religious ones would be against equality. So “marriage equality” worked while “gay marriage” did not. Tactics matter.

Marketing matters. The young voices matter. Finally, how one finances the resurgence of the Democratic Party really matters. In Business Schools we teach budding entrepreneurs that the amount of money raised, while very important, is not as important as the person or people who provide the funds. The reason is quite simple: usually the funder, whether an angel investor or a venture capitalist, also brings knowledge, expertise and a network that helps the entrepreneur even more than the money they contribute.

In the last Presidential election, Donald Trump raised about $280 million from small contributors, each contributing less than $200. Clinton was supported by a small army of really wealthy donors and hundreds of bundlers who raised $100,000 or more. And yet she lost. With an enormous war chest, Clinton almost lost the primary to Bernie Sanders who raised roughly $183 million in donations that averaged $27. The tactic that got Barak Obama elected the first time was also an enormous outreach to numerous supporters using many different means, especially social media. More than the money, the way money is raised for campaigns enables those who contributed to have a stake in the victory of the candidate. The more the people contributing financially, the more locked-in the candidate will be to eventually winning the seat. The flip side is that then the Democratic Party will start fielding candidates who can inspire and excite the working class whites and blacks, and rural poor to contribute $20-$30 dollars to that candidate. So what does the current DNC do? It has reversed its practice under Obama of not accepting large corporate donations!

So there are multiple lessons from a business school that should show the way for the Democratic Party to get on a winning way. The question is whether the current leadership is more interested in perpetuating their comfortable positions or whether for party, polity and principle they will step out of the way for a new generation to be at the helm of the resurgence of the Democratic Party.

MBA Guide for the Democratic Party – Part 1

Having lost the recent Presidential election, failed to get a majority in the Senate or the House, and lost 65% of the governorships not to mention multiples of local elections in the United States, the Democratic Party really needs to revive itself in order to get back some modicum of power in this country. If the Democratic Party is a business, how it is responding to these set-backs would likely receive a failing grade in most introductory MBA classes. The best way for the Democratic Party to get on to a winning way is to follow lessons from a business school.

Let’s start with what we teach about leadership. A leader is able to move people and markets in the direction that is profitable for the corporation. The CEO is responsible for the health of a company. If a company keeps losing market share on a continual basis, the CEO and probably senior management should step aside or get fired. The reason for the firing is not necessarily to blame the CEO but to bring new blood, a new sense of purpose and excitement, a new strategy and direction, a new management style, or all of the above to revive the company. In MBA programs we teach students on the expectation of leadership, governance in the corporate world, and board responsibility.

In recent months, several CEOs of well known companies have resigned or were fired by the board because of the decline in either market share, revenue, stock price or all of the above. The most infamous CEO resignation was that of Travis Kalanick of Uber although his resignation was precipitated by several lapses of ethics, sexual harassment in the workplace, management style in addition to having several years of negative profit. The person who could have stayed on but was asked to leave was Mark Fields, the CEO of Ford Motor Company in May 2017 when the board determined that he could not turn around the company after several years of decline in market share and stock prices. Other well known CEO departures in the past two years include Michael Brown of Symantec, a very well known IT compay, Frederica Marchionni of Land’s End, the famous apparel company, and Ron Boire of Barnes and Noble, the iconic bookstore.

Of course, trying to figure out who the CEO-equivalent of the Democratic Party is quite complex. Had Hillary Clinton won, she would have been “crowned” as the titular head of the Democratic Party just as Donald Trump is being referred to as the leader of the Republican Party these days. Being on the losing side of the Presidential election, the Democratic Party leadership seems to be a multi-headed monster: there are leaders in the House, the DNC (Democratic National Committee), the Democratic House Caucus, and of course, the Senate. Leaving aside the Senate for the moment, if the House Democratic Party was a company, my MBA students would say that the recipe for disaster is already enmeshed in this complex governance structure which really has to be reformed.

Nevertheless, in both the eyes of the public and the media, Nancy Pelosi, is the de facto head of the House Democratic Party. After four straight congressional elections in which the Democratic Party has failed to get the majority in the House, it is high time that either she resigns or is “fired”. Her erstwhile deputy Steny Hoyer should also be removed. The Democratic Party needs new excitement and a new strategy, and nothing that anyone has observed since the calamitous day in November suggests that the Pelosi-Hoyer leadership can deliver these. Furthermore, both Pelosi and Hoyer, who are both close to 80, come from very safe states, California and Maryland. Their removal will not jeopardize the electoral map and will certainly bring a more youthful presence for the Democratic Party. In the corporate world, the board would have removed the CEO of a failing corporation. The bankruptcy of the governance structure means that only the Democratic Caucus and the elected members can vote on the removal of Pelosi and Hoyer, both of whom have granted this “board” so many favors that it is unlikely that they would act as would a business. For the good of the Democratic Party and the country, Nancy Pelosi and Steny Hoyer should resign as is the norm in most European countries.

Parenthetically, the Chair of the House Democratic Caucus, Joe Crowley is from Queens, New York and the Vice Chair Linda Sanchez is from East LA, California. The DNC Chair Tom Perez is really from greater Washington DC although he grew up in Buffalo, New York. With the exception of Ralph Ellison who is a Black Muslim from Minnesota, the Democratic Party leadership is not at all geographically diverse. One of the most important lessons in leadership that we teach in a business school is the ability to bring diverse voices and points of view into the decision making process. Where is the voice of the mid-west and the “rust belt”? Where is the voice of the south and Dixie? It is not surprising that leadership that does not embrace and understand the diversity and complex landscape of the United States, has not been able to capture market share or the majority of elected seats in this land.

So the first lesson from an MBA program for the Democratic Party is that it needs to reevaluate the leadership of the party and not keep at the helm those who have presided over its decline in every elected position, at the local level, state level, county and district level, state level, and the presidential level. The second lesson is to infuse this leadership with diversity, not just gender and ethnic but also geographic. The third lesson is to reform the governance structure of the party so that there would be checks and balances on those in leadership positions, and a clear succession plan when leaders do not deliver the goods.