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Who’s In Charge? Hey – I am!!!

What We in the West Can Learn from the East

By Shlomo Maital

   Why is Asia, in general, doing so much better than the US and South America, in battling the pandemic? I found a possible answer in an old American Psychologist article, published 36 years ago. *

     In times of enormous uncertainty, as today, people grasp at straws. They try to re-establish control of their lives, when they feel it has slipped away.

       According to Weisz et al., there are “two general paths to a feeling of control”: Primary control, and secondary control.

   * Primary control:   “individuals enhance their rewards by influencing existing realities (i.e. other people, circumstances, symptoms, or behavior problems).” In the US South and West (Florida, Texas, Mississippi, Arizona), people take control by saying, who are you, Governor, Mayor, to tell me to lock down, stay inside, wear a mask??!! Nuts to that. I’ll do what I wish. I am a free person. I have First Amendment rights. Who’s in charge here? I am!!!

     This is primary control. And – it leads to disaster, as we are seeing now. Because it focuses on the wellbeing of me, the individual, and the hell with everyone else. And it denies reality, even when spoken by those who know.

   * Secondary control: “Individuals enhance their rewards by accommodating to existing realities and maximizing satisfaction or goodness of fit with things as they are”.

     Primary control is highly valued in the US, for example. Secondary control is far more highly valued in Japan – and other Asian nations. China, for instance, has a 5,000-year-old tradition of “the greater good”. This is the basis of ‘secondary control’. Accommodating to existing realities.

   Primary control people seem to deny the pandemic; there have been COVID-19 parties in the US — where a person with novel coronavirus is invited to a party, as a sign of defiance, a belief it’s all a hoax. Recently, according to news reports, “a 30-year-old dies after attending ‘Covid party’ in Texas. Patient said: ‘I think I made a mistake, I thought this was a hoax, but it’s not’. He paid a heavy price.

     I believe that in general, if you drew a color map of the world – color countries with “primary control” red, color countries with “secondary control” green – you will get a fairly close match with the coronavirus hotspot countries today, with a few exceptions.

     It sounds very extreme but – I believe we are seeing a global drama of social evolution. A black-swan pandemic event occurs that kills people. Nations try to adapt. Some have cultures that kill many people, rather than save them. Other nations have cultures that save people’s lives rather than kill them. And out of this mess, emerge nations whose culture is better adapted to the environment, stronger and fitter.  

   It’s not too late. We in the West can learn from the nations in the East. After decades of arrogance and alleged superiority, it is now time to become very very humble. The East knows something. We can learn from them, before it’s too late.

* “Standing Out and Standing In: the Psychology of Control in America and Japan.” John R. Weisz et al.   American Psychologist, September 1984. Pp 955-969.



(Un)Happy Birthday, America – There’s a Hole in your Bucket

By Shlomo Maital

   Happy birthday, America; you are 244 years old today. But it’s an unhappy birthday.   Here is why.

    “New America” is falling behind “Old Europe”. The term Old Europe was used by Secretary of Defense Donald Rumsfeld in January 2003. It was used in scorn. President Trump continues to mock Europe, and even mock even its brilliant German leader Angela Merkel.

     But guess what? Experts believe, as in this New York Times article, that “Europe may bounce back first” (July 3) – long before the US.   But why? America spent relatively far more on relief measures – a staggering $2.7 trillion, or 13% of its GDP!, on economic relief to individuals, firms and states. And more will come soon.

   What went wrong?

   The US spent vast sums on those who did not need it – like big corporations. (Sound Republican to you? Remember the Trump tax cut?). Much money was thrown away through incompetence – thousands of dead people got checks in the mail.   A lot of money went toward unemployment payments – companies laid off people so the government could save them money. So expanding unemployment caused layoffs, rather than prevent them.  America has a terrible leaky bucket – a near-non-existent social safety net. Just when the pandemic really really needed one with no holes in it.

   Europe? Unemployment rose relatively little. The German government reintroduced kurzarbeit– used after the 2008 crisis, in which work hours are shortened and spread around over workers rather than fire or lay off people. Most of Europe simply used its existing safety nets to help those in need, and the safety net expanded nearly automatically. Most people kept their jobs — which means you don’t have to rehire them, something US firms will be hesitant to do.

   In the US, with Trump boasting about 11% unemployment (yes, it’s down from 14%), consumers are highly uncertain about their future. And they are just not spending. With consumption at 70% of GDP, no US recovery is possible without consumer confidence. And it is lacking, especially with an election looming on Nov. 3.  

   America’s bucket is leaky. Somehow it has not managed to create a waterproof bucket for its poor, its ill, its uneducated, its immigrants, etc., in 244 years. So it IS an unhappy birthday.  And the specter of that terrible day in 1619, when the first African slaves landed in America, continues to haunt this troubled nation.

   Now, a strong US leader could look across the ocean and figure out why Europe, old Europe, crusty old Europe, has done so well, and try to copy its social safety net.

   But that would take vision and humility. Those qualities, too, seem to have leaked out of the bucket.

Good-bye America ?

By Shlomo Maital


     A terrible leaky social safety net, social and economic inequality, poor schools, a broken divisive political system, a worse-than-awful President (worst in history) – and a pandemic. It has finally caught up to America.  All its problems seem to be converging, at one point in time.  Here is how Bloomberg News sums it up:

¨   In the three months since isolation measures were first imposed in a belated effort to slow the spread of Covid-19, the world’s largest economy has become a basket case. One quarter of small businesses and two-fifths of restaurants have closed. Some 1 in 4 American workers is out of a job.

¨ At least 40 million people have filed for unemployment. And while the virus has devastated almost every economy it’s touched, individual Americans entered the crisis in an especially vulnerable position. The planet’s wealthiest country is renowned for having one of the weakest social safety nets among developed nations. It is home to more than two-fifths of all millionaires but has the highest poverty rate and the widest wealth gap among its peers.

¨ Despite a booming stock market (increasingly disconnected from the reality of everyday people) and robust job growth (largely low-paying service jobs) in recent years, more than 38 million Americans scrape by. The causes of U.S. inequality are well known, but they have jumped to the fore now that the nation is transfixed by disease, recession and outrage. —Josh Petri

  ¨ Racial repression is built into the American economy, Peter Coy writes in Bloomberg Businessweek. Almost two centuries after the U.S. defeated the slave states, the color of money is still white.

¨  Over the past four decades, the cost of policing in the U.S. has almost tripled, from $42.3 billion in 1977 to $114.5 billion in 2017, according to an analysis of U.S. Census Bureau data conducted by the Urban Institute on behalf of Bloomberg Businessweek. That budget is 10 times greater than the Centers for Disease Control and Prevention (which led the Trump administration’s botched response to the pandemic) and 12 times greater than the Environmental Protection Agency ( which has been dismantling environmental protections). Crime, however, has been trending downward since the early 1990s. As protests over police killings of unarmed black people continue, this disconnect is leading to calls to defund law enforcement agencies and instead fund mental health and social services.

¨ Trump’s performance during national upheaval and the pandemic appears to be having a disastrous effect on his reelection bid. Polls show him performing poorly in 2020 battleground states, and one of his campaign’s most recent ads, entitled “Make Space Great Again” violates NASA guidelines.

¨   Americans filed almost 2 million applications for unemployment benefits last week, reflecting a slowing of the torrent of job losses. Trump administration officials say they expect to spend up to $1 trillion in the next round of economic stimulus, though of course that’s up to Congress. Senate Majority Leader Mitch McConnell, who has said Democratic-leaning states crushed by the virus shouldn’t get financial help (despite being the biggest source of those federal dollars), said any new bailout wouldn’t occur until after July 20.


Is America in Decline? The Economist’s View

By Shlomo Maital


U.S. % of global total for various indicators…

Is America in decline?

   An excellent graphic by The Economist (daily chart) lists a variety of economic, financial and technological indicators for the U.S. as a share of the global total. America leads firmly in venture capital investments, and the U.S. dollar is still 60 per cent of total world forex reserves. In technology, the U.S. leads firmly only in “social media’ (which does not generate jobs, only wealth for a handful) and “cloud hosting” (similar to social media). Most of the indicators in which America dominates are financial in nature.   US dollar share of bonds, R&D spending, FDI stock, debt, etc.  

   So here we have it.  The U.S. is still the financial leader of the world, but not the technology or economic leader. There is a serious mismatch.

   So the question arises:   Can the U.S. remain the center of financial stability of the world?   Or will its flagging economy weaken the dollar and the whole world system? Are we due for another crisis?

   In history, no power has remained dominant in finance without remaining dominant in economics (note the decline of the British empire and its industrial power, and the decline of the pound sterling).



Blog entries written by Prof. Shlomo Maital

Shlomo Maital