Warning: COVID-Fueled Mental Health Crisis Will Be a Costly Second Pandemic

Devastating conditions like major depression, bipolar disorder, schizophrenia, and obsessive-compulsive disorder are among the leading causes of disability in established market economies, according to Johns Hopkins Medicine. In the U.S., more than one in four adults was suffering from a diagnosable mental disorder even before the pandemic.

For too long, cost and access barriers to mental health care have caused incalculable suffering.

Covid has now blown the lid off a crisis building for decades. So why isn’t there a plan to deal with it?

A Runaway Train Accelerating

The Lancet reports that cases of mental disorders have skyrocketed during the pandemic, including 53 million new cases of major depressive disorder and 76 million new cases of anxiety disorders. In the U.S., since spring of 2020, the National Center for Health Statistics has partnered with the Census Bureau on a new, rapid-turnaround data system to monitor depression and anxiety, finding that just over half of adults between the ages of 18 and 44 surveyed have reported symptoms, as have 38% of adults living with children.

Researchers find that younger adults, racial and ethnic minorities, essential workers, and unpaid adult caregivers (most of them women), have been especially hard-hit by mental distress and increased substance use. Growing alcohol use is particularly worrisome among stretched-to-the-breaking-point young women juggling children under the age of five and work responsibilities. Feedback loops within families mean that distressed parents transfer their anxiety and depression to children and vice versa. Three top U.S. organizations specializing in child and adolescent mental health, including the American Academy of Pediatrics, recently declared a state of emergency for the country’s youth, noting that Covid-19 and the ongoing struggle for racial justice have compounded trends of declining mental health among kids observed prior to 2020.

Many people find themselves in so much pain, they think about dying. Suicide attempts by young girls are notably on the rise. Young people unable to obtain mental health care are being sent to hospital emergency rooms, where the staff are under their own intense stress due to private equity takeovers of health care and the spillovers of an inadequate care system.

We can’t go on like this. Yet as alarming as it all sounds, signs indicate the crisis may only intensify. Covid-19 case rates may be falling in some areas, but the stresses associated with the pandemic are far from over – particularly as new variants spread, causing further disruption.

In the U.S., those needing help face a serious shortage of mental health specialists (themselves often suffering from burnout and stress), a reduced number of psychiatric hospital beds, and a loss of job-based health insurance. Even for those who have insurance, a lack of in-network counselors and therapists means that care is frequently out of reach. And if you don’t live in a city, you may be out of luck: In some states, 80% of the population lives in an area where mental health professionals are scarce.

The upshot is that millions are going without the treatment they require. People are unable to sleep, gaining weight, and turning to potentially harmful strategies as they struggle to cope with grief, loss, isolation, family and workplace stress, and economic woes, including the latest worries about inflation.

A Neurotoxic Virus

The coronavirus itself attacks the mind. The infected may experience psychological symptoms like brain fog, and for some, the virus is nowhere near done with them after the initial infection. Long-haulers face a nasty list of potential psychiatric disorders, from phobias to anxiety. Some estimates suggest that as many as one in five people infected with Covid experience such disorders within three months. They get better, then they get worse, then they get better – up and down on a hellish rollercoaster.

That’s not all -- research has shown that those recently diagnosed with a mental disorder were significantly more likely to contract Covid -- and they tended to have worse outcomes than people infected who don't have a mental disorder. Researchers now suspect that having schizophrenia is second only to advanced age as the highest risk factor for dying of Covid. Nobody knows exactly why.

Viruses have long been linked to mental illness, though just how they relate is not well-understood. As early as 1732, clinicians noted that the flu often came with symptoms like neurasthenia, melancholy, hysteria, mental prostration, and insanity. When Covid hit, researchers looked back at the impact of the Spanish flu and other pandemics on mental health. Available data was scant, but demographer Svenn-Erik Mamelund had studied an increase in asylum hospitalizations from 1872 to 1929, finding that the number of first-time hospitalized patients with mental disorders attributed to influenza rose by an average annual factor of 7.2 in the 6 years following the Spanish flu pandemic. He also found that Spanish flu survivors reported sleep disturbances, depression, mental distraction, dizziness, and difficulties coping at work, and that influenza death rates in the U.S. during the years 1918-1920 were significantly and positively related to suicide rates.

Researchers in Great Britain reported an uptick in various nervous symptoms in patients recovering from Spanish flu infections, including neurasthenia, depression, nerve cell damage, and visual problems. Cases of encephalitis lethargica, an inflammatory central nervous system condition featuring psychotic and catatonic symptoms, also became common – 1 million cases were reported from the beginning of the Spanish flu pandemic in 1916 until the early 1930s. Clinicians surmised a link between the two, though causality is not established.

The Spanish flu, and other types of flu, have been linked to psychosis. Early observers of influenza, including Karl Menninger in 1919, noted that people who contracted flu showed a variety of psychotic symptoms, particularly schizophrenia, and theorized that the viruses were neurotoxins. They were onto something. Evidence indicates that Covid is indeed a neurotoxin.

Over the course of the current pandemic, doctors have seen infected teens suffer sudden psychosis, and researchers are wondering if brain inflammation or immune reactions may account for psychotic symptoms in Covid patients with no history of psychiatric complaints.

The coronavirus highlights the insufficiency of an outdated medical perspective separating the mind from the body. Viruses and other things that harm our bodies frequently affect our mental well-being, and vice-versa.

Social Toxins Spreading

Like wars and other devastating events, pandemics produce a wide range of mental health issues that hit poor and vulnerable groups especially hard. Covid is no exception.

Researchers Anne Case and Angus Deaton brought the term “deaths of despair” into public awareness with their studies of how mortality rates had risen sharply among certain populations since the 1990s. Their work has highlighted how the impact of stressors tends to widen the gulf between haves and have-nots already affecting the U.S and other countries.

Shannon Monnat of the Institute for New Economic Thinking and researchers at the Brookings Institute point to increased stress from Covid-19 on populations already facing rising deaths of despair, particularly those in rural areas. Monnat, who tracked deaths of despair related to the opioid crisis prior to the pandemic, has been studying how the coronavirus has been affecting populations of drug users in New York state. She has found that drug supply chain disruptions, including the increased appearance of deadly fentanyl as filler, along with other Covid-related factors like increased loneliness and isolation, appear to have helped fuel an increase in overdoses. She sees a breakdown in trust as an added stressor in areas where overdoses are high: “Trust in government, trust in media, trust in science, even trust in your own family have been strained…Families have been torn apart because of different willingness to accept facts.”

The pandemic, Monnat notes, has “accelerated a disruption in the social fabric of communities.”

People are feeling lonelier than ever. Even before the pandemics, researchers had begun to focus on the links between social isolation and loneliness and declining mental health, along with reduced lifespans and heightened risk for disease. Harvard researchers find that older teens and young adults are especially vulnerable to loneliness and isolation. They observe that people this age are particularly in need of a “robust social infrastructure,” which includes supportive connections with schools, doctors, and employers. Since many do not have such infrastructure, the reliance on social media to find a sense of connection increases. Yet studies show links between social media use and even more feelings of loneliness, particularly when online interactions replace face-to-face connecting. Recent revelations about Facebook (now changing its name to “Meta”) from whistleblower Frances Haugen, a former employee of the company, show that Facebook was aware of its negative impact on teen mental health – especially girls -- but did nothing about it.

The Cost of Ignoring Mental Health

The costs of mental illness are staggering, in human suffering and in dollars. In the U.S., 10% of insured people make up 70% of the total spending on health care. Of that high-cost group, more than half are seeking treatment for behavioral health. Mental health spending is rising twice as fast as overall medical spending. Shockingly, nearly half of people seeking treatment for mental distress get the wrong diagnosis.

In 2016, data from the National Health Expenditure Accounts showed that mental disorders were already the most expensive conditions in the U.S. in terms of health care spending—costing $201 billion. Heart disease, by way of comparison, cost $147 billion, and cancer, $122 billion. Of course, mental health issues and physical ailments like heart disease are often intimately related, so the cost of mental distress is likely even higher when vulnerability to disease is factored in.

People in mental distress can’t work at optimum levels. The loss of productivity as a result of two of the most common mental disorders, anxiety and depression, costs the global economy US$ 1 trillion each year. Affected employees quit, leading to replacement costs.

It should be clear by now that mental well-being will have to be a higher priority in plans for national and global recovery. It’s encouraging to see positive steps taken in the two stimulus packages, such as increased funds for mental health and substance abuse services, and the push to increase the use of telehealth for mental health services, such as expansions of coverage for such, will be helpful to some sufferers.

Going forward, some of the provisions in the Build Back Better Act (BBB), including investments in public health, child care, Medicaid expansions, and paid leave (a paltry 4 weeks, but better than nothing) will help to ease the strain on some – if they are enacted. The Act allocates $165 million to mental well-being, including $75 million for improving the National Suicide Prevention Line; $50 million for the mental health and substance abuse workforce in addressing the needs of communities of color; $25 million for peer-based programs to support substance abuse treatment; and $15 million for a program to educate school-aged youth about mental health issues. This is good, but it’s not nearly enough. And Thomas Ferguson, Director of Research at the Institute for New Economic Thinking, warns that rapid withdrawal of most Covid support spending, especially for health care, is likely to make things worse in the near term.

We need to think in terms of more transformative changes to address what is making us so unwell in the first place. Extreme inequalities and the wide range of pathologies generated by an economic model and political system that favors the interests of the wealthy and corporations are not yet being addressed. The priority of wealth for the few over health for the many is upside down. As our anxiety and depression increase, politicians can manipulate us into directing our frustration at various bogeymen, from immigrants to the unemployed. When we feel we have little power in our lives, many turn to guns for an illusory sense of control, creating more dangerous and tense conditions. When we feel disconnected, we may sink further into the unreal worlds of social media and gaming. The coming metaverse looks like a virtual world that could swallow us entirely. Mark Zuckerberg gushes that “creation, avatars, and digital objects are going to be central to how we express ourselves,” but others call it a “dystopian nightmare.” It will certainly have profound implications for mental health.

Mental distress is not just personal. It’s collective and political. An inadequate social safety produces mental illness. Income that can’t keep up with inflation causes it. So does a lack of child care and care for the elderly. And feeling like your kids will be worse off than you. Environmental damage and unregulated companies create mental illness. Misguided policies traumatize individuals, families, communities, and ultimately, our entire society.

The pandemic’s impact on mental health was predictable. In October 2020, the American Psychological Association released a report warning of a second pandemic, one of plummeting mental health, that would outlast the virus. What is also predictable is that recovery requires a comprehensive approach to support our mental well-being, individually and collectively.

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The Pandemic Triggered the Questioning of Current Governance Systems in Africa

In this interview for INET’s COVID-19 and Africa series, Camilla Toulmin and Folashadé Soulé discuss with Dr Ibrahim Mayaki, CEO of the African Union Development Agency (AUDA-NEPAD) about how the effectiveness of State responses to COVID-19 in Africa have been very visible, and are leading to far greater public scrutiny of the public sector and prospects for better governance.

Dr. Mayaki of the Republic of Niger has been the Chief Executive Officer of the African Union Development Agency (AUDA-NEPAD) since January 2009. A former Prime Minister of Niger, from 1997 to 2000, Dr. Mayaki set up the Analysis Centre for Public Policy in Senegal in 2000. He was a guest Professor at the University of Paris XI (2000-2004). He went on to serve as Executive Director of the Rural Hub, based in Dakar, Senegal, before taking up his current position.

In our discussions with African leaders and thinkers so far, many see the COVID pandemic as laying bare the weaknesses in current economic structures and relationships, and that Africa’s COVID recovery offers a starting point for doing things differently. Do you agree, and what lessons do you take from the COVID crisis for changes in Africa’s future economic direction? What has to change?

My first point is that such views have a certain truth. However, it also has to be put in perspective. It is true that, due to COVID-19, Africa has known its first economic recession in the last 25 years. It is recognised by multilateral institutions that generally, we had good economic growth rates and well-designed macro-economic policies in most cases. We were doing quite well and sustainability of debt in the pre-COVID period was fundamentally not an issue. However, there were some red flags for certain countries to be more careful, but overall, the situation was not alarming.

The second point is that the economic model we have been following is a consequence of structural adjustment programmes of the 1980s and 90s, and which was not sufficiently inclusive. We still are the most unequal region in the world. Inequality and youth unemployment are very important issues. The median age in Africa is 19 years and every year we have about 20 million young people coming onto the job market, but only 12 million jobs are created, and these are mainly in the informal sector. So, inclusivity was not the characteristic of that growth but nevertheless, we did grow. The COVID-19 pandemic accentuated existing fragilities, which you can see mostly in the social sectors – education, health, etc. - and we hadn’t invested sufficiently in primary health care. Evidently our capacity to respond to the pandemic was weakened by this limitation. We really need to take primary health care more seriously. Before COVID-19, we had 34-35 million children out of school and evidently this has increased with the pandemic. Pre-existing fragilities have been worsened during the COVID period.

The third point, to which we don’t give sufficient importance, which is happening as a consequence of the pandemic, is a questioning of the governance systems we have had till now. Why? The pandemic created a situation where governments face public opinion and public scrutiny directly, and the effectiveness of the solutions they are promoting can be gauged immediately. If you supplied sufficient masks or not, it was seen. If you had sufficient diagnostic tests, it could be seen. This immediate visibility of the efficiency of the State was immediately sensed by the population. It created a dynamic evolution where trust in public institutions has been reinforced in places where the response has been positive, or severely damaged because the response was not there. This is the most important facet from which will come a new economic model. Till now, governments and States had the monopoly of designing public policies. COVID-19 has led to communities becoming more pre-eminent, so we will likely see more co-creation of public policies. If it happens well, it will allow a reform of the economic model. If it doesn’t happen, we may see violent changes in certain parts of the continent.

The pandemic has shown the many advantages of coordinated collective action by African institutions, international institutions like the WHO, the World Bank and African governments, in addressing the health crisis early on and looking for financing. What are the key preliminary lessons that can be derived from this collective action and exercise of African agency for the future?

The first important point is that Africans could give concrete substance to the concept of regional integration. We have been promoting, discussing and reflecting on African integration through investment in physical infrastructure, but in this particular situation and in response to the pandemic, we could see an immediate reaction based on regional integration. You will remember that all the Ministers of Health met in Addis Ababa as soon as the pandemic started in February 2020. We had an organised and structured African Centre for Disease Control (CDC) and they drafted a roadmap which was immediately implemented in all countries, with the CDC outlining what needed to be done; for example, how to collect and report data et cetera. At the African Union level, we started putting in place mechanisms for the procurement of personal protective equipment, and diagnostics, and began thinking about a vaccine even before the COVAX system started. So, the content and purpose of regional integration in that domain was clearly understood by Africans and that has been one of the big lessons of the crisis. We realised we could use the same kind of approach in other domains beyond the immediate health issues. It also opened new reflections for African institutions. The World Bank, IMF, and EU have been helpful by accompanying us, without getting into the detailed discussions and decisions that were led by Africans.

The second lesson is this - most of the time when we design public policy, we bring our ideas and co-construct with donors and partners. However, this time we didn’t co-construct in this way but moved out on our own path which gave a real, tangible sense to what regional integration could do. At the same time, it opened new pathways for reflection in a very concrete manner. Access to vaccines was a real issue so we quickly started talking about vaccine manufacturing and that raised the question about broader manufacturing capacities on the continent. This concrete example has pushed us to reflect on the way we had been proceeding with regional integration. It is true that the African Continental Free Trade Agreement (AfCFTA), which was looked at rather theoretically by most Africans, even though it was a huge step forward, suddenly made sense. This is because it could enhance the creation of regional value chains, sharing lessons learned about manufacturing, especially from specific countries like South Africa which could produce and link to the other parts of the continent. Regional integration became even more real, once we started looking at the global scene. What we saw was vaccine nationalism, and we saw that global solidarity always starts with national solidarity. That meant that we as a continent really had to count on ourselves. If we look at the numbers of vaccinated people today, we see that in many countries there is a surplus of vaccines and people are talking about boosters. In contrast, in our countries, most people have not even had their first shot. So, there are economic questions about manufacturing, but there are also moral questions that need to be asked.

My other point is around vaccines and government behaviour. Some governments succeeded very quickly in getting vaccines accepted, while others couldn’t convince their populations to get vaccinated, despite having access to various media sources and much more information than in the past. It is therefore interesting to ask why some governments succeeded and others did not succeed in this domain. We have a list of countries where there is a surplus and people are not queuing to get the vaccine, and other places where there is a deficit and people are very keen to be vaccinated. Communities have played a big role here. Generally, the ordinary citizen believes much more in their community and on the views of local groups than what the state and governments are saying.

African countries will not be able to achieve their ambitions for economic growth and structural change without access to energy. COP26 has been an important moment to discuss climate and the constraints this places on Africa’s energy choices, but this is at a time when many countries are also discovering new reserves of oil and gas. How should fossil-fuel-rich countries navigate their future, given huge needs for energy on the one hand, and risks from stranded assets and climate change on the other?

Most western countries industrialised using fossil fuels and have benefitted enormously from them over the last 200 years, an era of explosive growth. Historically, Africa has been the least emitter of greenhouse gases, the principal drivers of climate change. This is nothing new. However, African countries have still made strong commitments to the Paris Agreement, in order to do their bit and contribute their part to the global goal of reducing warming to 1.5C above pre-industrial levels. There is, on the one hand, a commitment to an international accord, but there is also, on the other hand, the sense that as we industrialise, we shouldn’t make the same errors that others have made. We need “green industrialisation”. But the problem is no one in the history of economics has gone through a process of green industrialisation, there is no model. It will need the construction of a fundamentally innovative process, which requires transfer of technology. When African countries want to use gas to be able to industrialise quickly, there are some global institutions that are critical of this use of gas. But look at California, where their renewable energy supplies rely on gas for base-load power. Within our new economic model, we must think about what kind of transition we want to take. We should not be blinded by severe commitments because we still have 50% of our population who do not have access to energy. Our transition cannot be one that increases extreme poverty. It must not increase the burden on the most vulnerable. We should think of a green energy mix that can allow us to have a reasonable implementation of commitments and at the same time reduce extreme poverty, which has been rising during the pandemic. That’s the way we should think about energy. We cannot reject coal. If you reject coal in South Africa today, you will significantly reduce people’s access to energy, since coal remains central to the grid. Nonetheless, we should have a mix of energy sources, and think about the use of renewables in an intelligent manner, following a learning curve in coherence with reducing extreme poverty and achieving more inclusive growth. Otherwise, we will be doubly penalised because we fully implement commitments, which doesn’t make sense. We need incentives to move towards green industrialisation.

Some initiatives associating with the private sector were launched during the pandemic, such as the mVacciNation digital toolbox with Vodacom, Mezzanine and NEPAD. How do you assess the impact of such joint initiatives? Do you think the African private sector has been involved enough during the crisis? What lessons can be derived for the future?

There are some critical issues here. First, if you look at indicators of innovation and levels of expenditure in R&D in Africa, it is mostly driven by the private sector. Sometimes governments create an ecosystem that allows the private sector to be much more innovative. It happens in Kenya and some other countries. Innovation comes from the private sector, and if governments want to implement innovative solutions, they have to partner with the private sector. That’s the spirit with which we went into our partnership with Vodacom, MTN and now Orange for the mVacciNation solution so we could tap into the innovative capacity of the private sector through these partnerships. We found a very receptive private sector to engage with, not only the big ones like Vodacom but also a full range of start-ups that are emerging from countries across the continent and have enormous energy in terms of innovation. So, this is the context in which the governments are working. Some have pushed in a resolute manner in the creation of an ecosystem that can let these innovative institutions emerge. Some haven’t done it at all, but this hasn’t prevented these actors to rise up.

We realised that we could as a development agency of the African Union create very concrete partnerships with private entities. The receptivity of many governments has been very high because they realise they need to facilitate quicker, accelerated vaccination programmes, get the data on how vaccination is going, and then correct and adapt it based on feedback. So this is also one of the lessons which can be drawn from the pandemic. The behaviour of central governments has been shaken because they have discovered two things: they recognised their weaknesses and two, they have at the same time understood that there are many innovative ideas happening, structures, products and systems from which they can benefit. But in order to do so, they need to partner with business, which demands a fundamental mental shift. Most civil servants in African countries do not have a private sector culture, so their ability to link with them is somehow limited.

We need to create a space where there can be intercultural interaction between government and business, which allows this partnership with the private sector to flourish. We also have decided to promote this, and we have an initiative called 100,000 micro, small and medium-sized enterprises. We know most employment in Africa is in the informal sector - 80% of those employed in Africa are in the MSMEs, and the pandemic hit them very seriously. Our idea was to create a digital platform supported by financial institutions – we have a partnership with ECOBANK and accompany them in managing the financial and institutional stresses which the pandemic has brought. We created a Digital Academy and a digital platform to allow them better access to finance. Why a Digital Academy? To allow them to move from informal to more formal structures. This partnership with the private sector helps shape and change the behaviour of our states and governments culturally and structurally too. I like the work of Mariana Mazzucato very much, and her book The Entrepreneurial State, which describes an approach that is greatly needed in many of our countries.

As a former Prime Minister of your country Niger, and President of the Sahel and West Africa Club of OECD, we must ask you how you see the future of the region. Ten years on from the overthrow of President Gadhafi of Libya, terrorist and jihadist groups have embedded themselves very firmly in much of Mali, and parts of Niger and Burkina Faso. Neighbouring countries, like Cote d’Ivoire and Senegal, are increasingly concerned with spill-over. Military solutions don’t seem to be working. What political and economic measures could bring a better result?

The first thing the political elite in the Sahel must do is to recognise that they are the principal people responsible for this situation with the jihadists. That’s absolutely fundamental. If you think that jihadism is just an import from elsewhere, and the consequence of the extremely negative NATO intervention in Libya - while this does play a role, it is not the main cause of jihadism. If you say it’s the acceleration of the influence of particular religious figures, or Middle Eastern countries which have established radical religious education networks, if you believe this you are way off the mark. You are not facing reality. The reality is that our governments in the Sahel have completely neglected the territorial dimensions of planning and implementation of development. If you put two maps of the Sahel one on top of the other, you see those areas where the government has been active to improve health and education, and compare with those areas where jihadism is rife, you realise they have grown in those locations where the government has been absent. We need to recognise this as the elite.

Moreover, our response cannot be based exclusively on military intervention. The response must be the presence of the State in those zones that feel they have been completely abandoned. Evidently, the presence of the State currently demands a military presence, but the military by themselves are clearly not enough. The fundamental question for the Sahel is the re-establishment and re-founding of the State. There is a lot of writing and literature on this subject, but the re-foundation cannot be done by elites based in ministries in capital cities. Let me give you an example. When I was Prime Minister, we launched a survey before an exercise in national planning to see what the population really wanted. We asked the population of Niger about priorities for health, water, roads, education, health, and so on. Astonishingly, what came to the top of the list as the priority across the country, was not water, health or education, it was justice. It was a system of justice that was equitable, accessible, and not corrupt. They needed this to live their lives with dignity. In this context, you see that a military solution cannot provide all the answers. Clearly, if you have people with Kalashnikovs, you need people on the other side who also have Kalashnikovs. Given the evolution of the conflict, there are people who are now drawing a livelihood from these criminal activities, which have nothing to do with jihadism. It is easy to recruit young people at US$2 to $3 per day who become kings and lords in their own right when they hold a Kalashnikov.

We need to rethink the presence of the State. The army cannot sort out the problem. What we need is the State to be present in a decentralised, locally rooted form. This demands the presence of public services, and engagement with local communities in deciding what is to be done. The State has to be decentralised. It is a new way of thinking. If we don’t go in this direction, we will follow the route of Afghanistan – many billions spent and nothing to show for it. States must be present and make difficult but necessary choices in budget expenses. They should no longer prioritize the functioning of ministries that have no capacity to deliver anything in practice. We must help to construct local communities themselves who can then become a rampart and defence against the jihadists. Unfortunately, this essential shift in approach is not well enough recognised and understood. Instead, we see the multiplication of military actions and the corresponding spread of jihadist and terrorist groups. Too many international actors also participate in the illusion that this is the way to make progress.

Changing course won’t be easy. It will be slow and long, but we must follow the right road. We must renew the State, decentralise our budgets, and reinforce community-based actions so that people can judge for themselves that they are better off under the aegis of the State than jihadist groups. This should be our aim for the medium and longer-term. At the OECD Sahel and West Africa Club, we are trying to create space where people from a wide variety of backgrounds can meet, in what we call the Concertations sahéliennes to ask the real questions and co-construct policies and solutions with actors on the ground.

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Experts on Inflation: Prognosis, Political Fallout and Who’s Really to Blame

Just in time for the holidays and the winter season, prices are rising at eye-popping rates. Energy costs have leapt 30% in the past 12 months, and food is way up -- the price of meat, poultry, fish and eggs together rose almost 12% over the same period.

I have just seen a $14 rotisserie chicken. Okay, it was Manhattan. But still.

All told, the consumer price index surged 6.2% from a year ago in October, the most since December 1990. According to the Labor Department, that wipes out any increases in wages workers have seen, with real wages falling 0.5% from September to October.

Neel Kashkari, the Minneapolis Fed Chair, has just said that it’s going to get worse in the coming months, blaming rising prices on people buying more goods and services with extra money from stimulus checks and also to Covid-related supply chain snags. But’s it’s temporary surge, he says. Yet Americans are still nervous – especially since energy and food prices don’t seem to fit that narrative especially well. Do you buy more heating because of a stimulus check you got months ago? Probably not.

So just how serious is the problem and what do we do about it?

Public Health is Key

Claudia Sahm, a senior fellow at the Jain Family Institute who has worked at the Federal Reserve and the Obama White House, sees higher prices at the pump and the grocery store as a real hardship to ordinary people: “It squeezed the budgets, particularly of low-income households who spend most of their money on necessities.”

In her view, the Fed failed to see just how long it would take to contain the global pandemic. “The highly contagious delta variant disrupted labor markets and supply chains again,” observes Sahm. “Covid is the root of all the problems, and the only lasting solution is a public health one.”

Sahm urges the White House, as well as state and local governments, to get more people vaccinated ASAP through measures like employer mandates and making access to the vaccine easier. Other measures she advocates to keep prices from ticking up further include using the Strategic Oil Reserve, reducing trade tariffs, and continuing to work with ports to speed the processing of goods in the short term.

On the bright side, Sahm sees a helpful buffer in the American Rescue Plan Act of 2021 – namely the “stimulus checks and the new Child Tax Credit which have given families the income necessary to cover the higher prices.” She points out that consumer spending, after accounting for inflation, is increasing more than prices: “That is notably better than after the Great Recession when families got much less relief, and consumer spending grew slowly for years.”

Infrastructure, Child Care Spending Will Help

Pia Malaney, Co-Founder and Director of The Center for Innovation, Growth and Society and Senior Economist at the Institute for New Economic Thinking, warns that “wages are not able to keep up and rising food and gas prices are hitting the pocketbooks of many Americans who are still reeling from the pandemic economy.” She notes that this has persuaded some to call for a cutback in proposed spending on Biden’s Build Back Better plan. But it is important to remember, she points out, “that much of the proposed spending will address exactly the labor and supply chain issues that are driving the rise in inflation.”

Malaney is optimistic that money spent on infrastructure will improve roads and transportation, and that help with child care and education “will allow many women to re-enter the workforce, easing the tight labor market that is making it hard for employers to hire.” But she also observes that climate change is already causing costly damage that will have long term effects on economic output if not addressed. “While the rise in inflation is troubling, reigning it in at the cost of long term investments in people and the economy can be even more costly.”

Political Turmoil, Greedy Oligopolists

Delft University of Technology’s Servaas Storm also worries that consumer prices are eroding the real incomes of households, resulting in “all-round pessimism and growing recession fears, as shown in a recent CNBC poll).” He warns that if we see a long, cold winter and rising energy prices, U.S. households will increasingly suffer from “fuel poverty” and the number of “winter deaths” will increase. Most households are likely in for a rough ride, he warns.

“All this is likely to lead to anger and upset among the population and to political repercussions for the U.S. mid-term elections in 2022,” predicts Storm. “The recent elections for governor in Virginia may well be the first of more electoral surprises.”

Storm does not believe that the Fed has underestimated the problem. “Officials have been telling anyone who would listen to expect higher, transitory, inflation in the near term as the economy recovers from the COVID-19 crisis and gets back to normal,” says Storm. “And it has not raised interest rates, even with influential observers telling it to do so.”

The Fed thinks the problem is transitory, he notes, but a lot of folks still worry that higher inflation will become entrenched and we will see a rerun of 1970s stagflation, when supply shocks (the two oil crises) triggered a wage-price spiral in a stagnating economy with rising unemployment. “That’s due to a communication error on the part of the Fed,” says Storm. “They made a mistake in avoiding comments on the major role played by food and fuel prices.” Storm thinks that people with such fears are focused on the wrong issue -- stagflation is unlikely, he says, because there’s nothing to keep pushing up wages.

“Labor unions in the U.S. have been crushed and no longer constitute a force for wage-cost-push inflation,” he says. “It is true that strikes and work stoppages are rising, but their impact at the macroeconomic level is still negligible.”

He points out that while nominal wages are rising, especially in specific industries where workers left during the pandemic and are reluctant to come back, it’s not nearly enough to offset the sudden increase in cost of living. In his view, we should be looking at how firms in various industries, from retail and manufacturing to biotech, have boosted their profit margins, which inflates prices.

“The Wall Street Journal noted recently that nearly two out of three of the biggest U.S. publicly traded companies have reported fatter profit margins so far this year than they did over the same stretch of 2019, before the pandemic,” observes Storm. “Rising inflation makes it possible for firms to hide their increased profit margins from customers.

“Nearly 100 of these corporations raised profit margins by more than 50%,” says Storm. “Part of the inflation is therefore due to profit-push – and we should blame the oligopolists, rather than the working population.”

Thomas Ferguson, Research Director at the Institute for New Economic Thinking, who has just released a new study on what drove the 2020 election, put it this way: “We don’t’ have a wage-price spiral. We have a price-wage spiral.”

Storm thinks the Fed is right so far in refraining from increasing the interest rate in order to curb inflation. “That’s a blunt instrument which can bring inflation down, but only by depressing consumption and investment demand,” notes Storm. In his view, the problem is not mainly about too much demand, but rather supply-side problems “in very specific global and domestic production chains impacted by the pandemic.”

“Higher interest rates won’t solve bottlenecks in (just-in-time) commodity chains,” he warns, “so instead of solving inflation they will just depress aggregate demand and push the economy into recession.”

Sure, says Storm, a recession will lower inflation. “But it would amount to a clear instance of ‘operation succeeded but patient died.’”

Storm points out that there is another reason why the Fed will remain careful when raising the interest rate, namely “the high indebtedness of U.S. households, banks and corporation in combination with strongly inflated asset markets.” Raising interest rates too quickly, or even at all, could trigger painful financial-sector adjustments and a crash in the dramatically overvalued stock market and derivative markets, he warns. And that could mean “a balance-sheet-restructuring recession of similar proportions to the one following the financial crisis of 2008.”

Yikes.

Bottom line, says Storm, is that the Fed will likely err on the safe side in allowing higher inflation with the hopes that it will be short-lived rather than risking a major crash.

So what to do to help the ordinary people who are hurting? “A sensible policy response to the inflationary pressures would make a distinction between the short run and the long run,” Storm explains. “In the short run, the government can impose temporary price controls (and rationing) on energy, especially.”

He agrees with Sahm that government agencies should act vigorously to unsnarl supply-chain bottlenecks, adding that there should be “mandatory cooperation moves between firms and unions, reversing decades of deregulation, to solve the present trucking crisis, for instance.”

Storm also urges direct income support to the poorest households to compensate for higher energy costs. This could be paid for out of higher taxes imposed on the super-rich (say, the richest 1%-5% of U.S. households or on corporate profits, which in many cases have grown because of higher profit mark-ups).

“The collateral damage of such targeted fiscal interventions would be much smaller than the negative side-effects of higher interest rates, and the distributive implications will be progressive (rather than regressive),” notes Storm.

In the long run, Storm sees the need for increasing the energy efficiency of homes and transportation, as well as expanding the renewable energy supply system and to lower the dependence on fossil fuels. He would also like to see governments curbing speculation in oil, gas and coal futures markets, which he says is now contributing to higher energy prices and inflation. “The Fed can outlaw the trade in socially useless crypto-currencies,” says Storm, noting that “Bitcoin mining consumes around 0.6% of global electricity production, which is roughly equal to the annual energy consumption of the 21.4 million people of Sri Lanka.”

“Of course all these responses require cooperation, coordination and planning between the various actors including the federal government, state governments, the Fed, unions, corporations, the CFTC, and political parties,” Storm points out. “Absent that, we are left with second-best and third-best ersatz-solutions – which will not work.” He warns that how this ends will depend on the vagaries of the coming winter, the fancies of the coronavirus, the speed at which supply-chain bottlenecks will be removed, and the dynamics of heightened political polarization in 2022 and beyond.

Fasten your seatbelts, folks.

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2020’s Knife Edge Election: An Analysis

The 2020 election is very much like the famous opening notes of Beethoven’s Fifth Symphony: Virtually everyone can hear “fate knocking at the door.” But agreement on what that means is elusive.

Many foreign observers and Democrats, who never warmed to Trump anyway, keep wondering how he could possibly have rolled up more than seventy-four million votes in 2020 – as he said, more than any sitting president in history. Conversely, supporters of the former President and members of the Republican establishment advance all kinds of theories, some quite outlandish, to explain how the Democrats managed to win.

Meanwhile, everyone is pondering the long-term implications of the Trump movement’s transformation into an openly anti-system political formation uncomfortably reminiscent of the Weimar Republic as well as the breathtaking way big tech companies selectively shut off access to their systems following the storming of the Capitol. As the changes sweeping through the international system become more obvious, new worries are also rising: in particular, whether the shocking American exit from Afghanistan is a warning that the establishments of both political parties are living in a fool’s paradise.

All this persuades us that a careful look at what happened in the 2020 election is not idle curiosity. Elections, especially in money-driven political systems, are complicated affairs that repay analysis at many different levels.

Our new INET Working Paper analyzes the 2020 presidential election, focusing on voters, not political money, and emphasizing the importance of economic geography. Drawing extensively on county election returns, it analyzes how spatial factors combined with industrial structures to shape the outcome. It treats Covid 19’s role at length. The paper reviews studies suggesting that Covid 19 did not matter much, but then sets out a new approach indicating it mattered a great deal. The paper analyzes the impact on the vote not only of unemployment but differences in income and industry structures, along with demographic factors, including religion, ethnicity, and race. It also studies how the waves of wildcat strikes and social protests that punctuated 2020 affected the vote in specific areas. Trump’s very controversial trade policies and his little-discussed farm policies receive detailed attention.

The paper concludes with a look at how political money helped make the results of the Congressional election different from the Presidential race. It also highlights the continuing importance of private equity and energy sectors opposed to government action to reverse climate change as conservative forces in (especially) the Republican Party, together with agricultural interests.

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Why Mislead Readers about Milton Friedman and Segregation?

Not long ago I published the results of my research on the backstory of Milton Friedman’s discussion of education in his Capitalism and Freedom. The title of my INET Working Paper summed up my findings: “How Milton Friedman Exploited White Supremacy to Privatize Education.” Drawing on the private papers of Friedman and other primary sources, the paper started with the obvious: that as soon as the U.S. Supreme Court handed down its landmark Brown v. Board of Education decision in 1954 outlawing segregation in public education, southern political leaders began scheming to evade it and maintain racist education systems.

My paper was clear that we do not know exactly how much Milton Friedman knew of these plans when he wrote the 1955 case for vouchers that spawned today’s “school choice” movement. But we know for sure that, to promote his views, he decided to exploit the southern campaign. Documenting his take up and work with segregationists makes up the bulk of my paper. I also showed that Friedman’s correspondence with an economist colleague who was troubled by his stance revealed that his soothing reassurances that making parents responsible for paying for the education of their children might somehow enhance quality or even reduce segregation in some indefinite long run only scratched the surface of what he really thought. For in a twist reminiscent of some eugenics campaigns through the ages, he wrote that if parents were forced to assume the entire burden of paying for the education of their children, poor people would decide to have fewer of them.

One would think that today the facts about the long struggle of southern white leaders to preserve segregation are so well known that simple fact-checking would suffice to rule out attempts to whitewash their efforts. And that efforts to exculpate economists and policy advisers who worked with them would collapse out of sheer shame.

But on October 18^th an author in the Wall St. Journal set out to defend Friedman and rebut my INET study. Written by Phillip W. Magness, the attempted rebuttal bore the title “School Choice’s Antiracist History,” and carried the summary line that “Vouchers Sped up Integration, While Teachers Unions Fought to Preserve Segregation.”

That assertion could not stand up to even a quick internet search of reputable online Virginia history sites such as this one or this one. But here we are. Because the Wall St. Journal is such a prominent venue, and because Magness’s piece is such a teachable example of how unwilling libertarians have been to reckon with their cause’s long history of working against civil rights reform, I think it is worth exploring just how perverse the whole set of claims Magness advances really is. I also want to invite other libertarians to come to terms with his conduct, and finally accept their past so that they can learn from it.

Magness’s article begins as an attempt to defend Milton Friedman’s advocacy of private school vouchers in the wake of Brown v. Board of Education but quickly descends into a wholesale whitewashing of the formative era of their cause. Magness plays fast and loose with the staple elements of sound history: context, chronology, change over time, causation, and complexity.

Refusing to acknowledge facts established by African American civil rights leaders at the time and by seven decades of scholarship since the period I wrote about, and going well beyond a generous reading of Friedman as naïve and opportunistic, Magness seeks to make his readers believe that down is up and night is day: that a school voucher program designed and advocated by Virginia’s most avid white supremacists in the late 1950s in defiance of the desegregation mandate was intentionally “antiracist.”

The first stunning feature of Magness’s piece is that although he claims to be refuting my work, he completely ignores the substance of my research, especially the obvious point that Friedman published his case for vouchers at the very moment the South’s most arch segregationist officials were threatening public education (in 1955). Friedman then came South to make his case among potential disciples in the region’s universities (in 1957). Thereafter, Friedman moved on to active cooperation with a leading segregationist voucher advocate introduced to him by his first Ph.D. student, G. Warren Nutter, then a faculty member at the University of Virginia. Finally, my INET piece demonstrated that other leading libertarians—including what was then a leading libertarian foundation, the William Volker Fund – joined Friedman in embracing the segregationist voucher program, as did many members of the Mont Pelerin Society and two Virginia-based board members of the Foundation for Economic Education. The INET piece also points out that Friedman held up Virginia’s segregationist vouchers as a universal model in his 1962 manifesto Capitalism and Freedom.

This is all documented over 28 pages of abundant evidence with 84 footnotes and a 6-page bibliography including primary sources that Magness never engages in any detail.

Instead, he changes the subject by creating out of whole cloth a context-free story that seeks to absolve Friedman by fingering others. In Magness’s Virginia, there is no powerful oligarchy led by Harry F. Byrd, the aristocratic former Governor and sitting U.S. Senator at the time who called for “Massive Resistance” to Brown v. Board of Education. The deliberately created Virginia system of elections with its minuscule voter turnouts thanks to poll taxes, off-year races, and other disabling restrictions is never mentioned. Nor is there a Defenders of State Sovereignty and Individual Liberties, the organization founded to carry out that program.

Readers of Magness would never know that these self-appointed guardians of segregation on June 8, 1955, issued a Plan for Virginia that called on the General Assembly to pass legislation to supply tuition vouchers for white parents to send children to private segregation academies, and to cut off state funds to any school that integrated. The Assembly’s overwhelmingly rural white conservative representatives complied in 1956. But you do not learn this from Mr. Magness, who manufactures a chronology of immaculate conception, presenting vouchers as first arising in 1958 to make his own fictitious narrative work.

Instead, Magness would have his readers believe that the era’s worst oppressors were “teachers' unions.” This is rich; almost amazing, in fact. Anyone conversant with this period of Virginia history or the history of public sector unionism would immediately recognize its implausibility. The state was an early adopter of right-to-work legislation in 1947 and had a long history of labor suppression. And besides, there were no “teachers’ unions” at the time. There were only voluntary professional associations, segregated as the school districts employing them would have insisted they be. None had the power to be responsible for what Magness alleges. Further, this was a decade before teachers had collective bargaining rights anywhere; public employees in right-to-work states like Virginia to this day lack that means of exercising collective voice. The claim is preposterous on its face.

Nor is this all. Magness conjures up an entity he calls “Virginia’s racist antivoucher movement.” Abetting the teachers’ unions, he tells us, were the so-called moderate whites, who mobilized to save public education. Reasoning from a crude public choice axiom that people only act in their own (usually venal) self-interest, he depicts “public-education interests” as acting to save public education to preserve “their funding.” That assertion is a headscratcher since the movement was led by mothers, ministers, and some forward-looking businessmen, none of whom gained income from public education. But leave that to the side. It’s not the character assassination that matters now, but his claim about causation.

Seeking to make his reductionist public choice logic work, Magness asserts that the cause he seeks to malign “traces its origins” to a particular Charlottesville elementary school in 1958. This is impossible to take seriously. He adduces one school board attorney there, John S. Battle, Jr. and offers up some racist quotes from this individual to have us believe that he has identified the missing mastermind speaking for the public schools. Magness maintains that those who were defending public education were doing so not only to line their own pockets but also to ensure segregation.

Magness has been ably refuted for this and other sleights of hand by Daniel Kuehn, a Senior Research Associate at the Urban Institute. In fact, Kuehn’s excellent letter to the WSJ should shame its editors for giving Magness a platform with no attempt at fact-checking.

But there is a deeper moral stain here: the bait-and-switch gambit about who was most guilty could only seem plausible to someone unfamiliar with this history because Magness has mangled the context. He removes from readers’ view the other actors his case implicitly protects—the actual advocates of Massive Resistance who won the voucher program in 1956.

Thus, Magness keeps from readers potentially exculpatory information about how the protectors of public schools had to argue on terms set by the Massive Resisters, who had a grossly unfair advantage.[1] After all, Virginia’s conservatives—who had known for generations that their policy preferences were unpopular--disenfranchised Black voters, maintained a poll tax to also keep lower-income whites from voting, hamstrung labor unions, and used legislative malapportionment to overrepresent Byrd-backing rural whites and underrepresent liberal and moderate urban and suburban whites of all classes. Voting turnout in the gubernatorial election of 1957, for example, was 23.2%; in 1961, it was 16.7.

Those seeking to rescue public education from the wrecking ball of Massive Resistance knew all too well two key things about the enfranchised white voters they had to persuade: that most believed in public schools, and also preferred segregation. To save the schools for future generations, some advocates appealed to that racism in their arguments. They pointed out in print (“thundered” in Magness’s rendering) that the voucher program—designed only for parents in schools closed under the Massive Resistance policy--was being “greatly abused” by wealthier parents who had long sent their children to private schools and now tried to free-ride the segregationist voucher program to save money.

These people were trying to stem the revenue drain that threatened to destroy most children’s education, not to protect segregation per se.[2] They were no heroes in the fight for racial equity, to be sure. But nor were they the drivers of history—the causal force--Magness makes them out to be in his quest to exonerate Friedman and his Virginia allies. That disgrace belongs to Harry Byrd, his famous political machine (known as the Byrd Organization); James J. Kilpatrick, as editor of the Richmond News Leader and National Review stringer; and other champions long since identified by serious historians.[3]

While insisting that this formative voucher system was “antiracist,” Magness does another very curious thing that tells us something important about his real mission here.

He turns a deaf ear to those in the best position to judge his portrayal: contemporary African Americans. Virtually to a person, Black Virginians opposed the segregationist vouchers. Moreover, the state’s civil rights leaders quietly applauded the white-led fight to save public schools so that they could survive being desegregated. My piece quoted, among others, Oliver Hill, the Richmond-based NAACP attorney who helped win the Brown ruling. Hill put their shared conviction concisely: “No one in a democratic society has a right to have his private prejudices financed at public expense.”

Magness, like Friedman before him, clearly disagrees with Hill and other Black Virginians of the day. Indeed, he sides with the white supremacist parents who saw no ethical problem in taxing disenfranchised Black citizens to subsidize private segregation academies. But Magness lacks the courage of his convictions to argue the case honestly and openly, as Milton Friedman did, in the name of liberty from state coercion—opposing what Friedman called “forced nonsegregation.” Today, not many outside libertarian ranks would accept that liberty for some based on the exclusion and subjugation of others deserves to be called by that word. Aware of that vulnerability, Magness has invented “alternative facts.”

Some of the worst alternative facts on display in his work involve the tragic case of Prince Edward County, where local officials allied with the Defenders of State Sovereignty in Individual Liberties completely shut down public schools for Black children for five years, while sending white children off to segregated private schools—for part of that time with the state-funded vouchers Friedman backed to buy white solidarity that would otherwise fracture.

To pretend to unknowing readers that voucher advocates opposed racism, Magness makes the misleading point that “most voucher advocates welcomed a 1961 federal court ruling” that denied Prince Edward County access to tax-funded vouchers after county leaders shut down the public school system for Black children in defiance of Brown. I say misleading because Magness appears to have spent some time in primary sources that would readily refute his premises, even if he is determined to ignore the evidence in my work and others on this pivotal episode in civil rights history.

As my INET article showed, the two shrewdest pro-segregation strategists—the journalists Leon Dure and his convert James J. Kilpatrick—were painfully aware that Prince Edward County’s defiant stand was endangering the wider effort to salvage as much segregation as possible in the new constitutional context. It was hard to convince the National Review darling Jack Kilpatrick to stop trumpeting Prince Edward’s stand and see its peril for the voucher cause, not least because he had encouraged the county’s leaders to such an extent that they named the segregation academy’s library after him. After all, Kilpatrick in one debate warned the NAACP attorney and future U.S. Supreme Court Justice Thurgood Marshall: “We will fight state by state…school by school, and if necessary, room by room. The white south proposes to resist…by every device of legislation and litigation that ingenious men can contrive—and we can contrive quite a few.”

But contrary to what Magness has told his readers, Kilpatrick soon came around to endorse the formally race-neutral vouchers advocated by Friedman and Dure as a way to win the fight against desegregation. He did so repeatedly, in print, at a time Magness claims he was opposing vouchers. During the 1959 legislative session in which the revised voucher program was crafted and adopted, Kilpatrick editorialized repeatedly in favor of it. On February 11, he explained that “a tuition grant plan, to be valid, cannot be tied in any way, directly or indirectly, to the segregation controversy.” If it were, it would not “survive court challenge.” The 1956 program just voided by the State Supreme Court had proven that vulnerability.[4]

On March 6, Kilpatrick warned the legislators not to “bungle” the opportunity to ensure that “white parents” in areas with the largest concentrations of Black residents (including Prince Edward), would get “the only tolerable answer” to their unwillingness to have their children attend school with Black peers: state-subsidized private schools.[5]

On March 19, Kilpatrick told the General Assembly, “the plan of tuition grants is basically sound.” In fact, he explained, it was the only viable way “to meet the integration problem in Virginia” and ensure a “workable system that will endure for years to come.”[6]

On April 2, after the revised plan passed, Kilpatrick went further: he advised changing the state constitution to ensure state subsidies to private schools could never be eliminated. Such a referendum could forever, in his words, save “Virginia from the evils of integration.”[7]

On April 23, furious that legislators had rejected his extremist constitutional measure, he charged cowardice: “needless and premature retreat—from Statewide resistance to integration.” Worse, he said, the Assembly had undermined white solidarity “in fighting a superbly unified foe”: presumably, the NAACP and the federal and state courts which its plaintiffs and attorneys had won over.[8]

How did Magness overlook this extensive documentary record to misinform readers that Kilpatrick only came around to backing vouchers in 1962? Magness quoted the Richmond News Leader’s news coverage of Battle’s anti-voucher position in Charlottesville but curiously failed to acknowledge that Kilpatrick’s editorial page was consistently and loudly pro-voucher.[9]

Dure and Kilpatrick then labored for several years to get Prince Edward County’s leaders to reopen the schools and embrace formally colorblind vouchers while there was still time. As Dure summarized: “the only way to get rid of compulsory integration was to erect the old marketplace right of free choice"—or “freedom of choice of association,” as he originally branded the vouchers to signal that white recipients should be free to refuse to have their children associate with Black children. Privately, Kilpatrick tutored the bullheaded Senator Byrd that "sound generalship" called for "waging a flexible, shifting, guerrilla defense." By that he meant a switch to ostensibly color-blind vouchers that could survive court review.

So yes, Magness is technically correct in reporting that voucher advocates applauded the ruling against Prince Edward’s school closures. But he is withholding crucial evidence, either from ignorance or intent: that advocates like Dure and Kilpatrick welcomed the ruling precisely because they were segregationists who knew that the denial of education to Black children endangered the wider cause. After all, the Prince Edward horror was widely reported and condemned almost universally by outsiders--with the exception of the National Review and like thinkers who applauded the white county leaders’ stand for, as the Defenders’ name put it, “state sovereignty and individual liberties.”

On the very eve of the 1961 ruling Magness cites, in fact, Leon Dure met with and then sweet-talked the attorney for Prince Edward and a leader of the Defenders, J. Segar Gravatt, by warning that “in winning this battle you lose the campaign." He went on to explain that “you subject the very thing we all want [state-funded vouchers for segregation academies] ... to the unnecessary risk of bad context: the black heart of Prince Edward."

Not long after, Dure privately referred to Gravatt and company as "stupid buttheads.” Their obstinacy was harming his fundraising for two segregation academies as well as his attempt to build pro-voucher alliances with northern Catholics. Dure and Kilpatrick never did persuade the "stupid buttheads.”

But the two did win over the head of the Charlottesville Defenders of State Sovereignty, a University of Virginia math professor who testified in favor of converting to colorblind vouchers in the spring of 1959. Dure then exulted to a former Governor: “The Defenders up here [in Charlottesville], like the [General] Assembly, are now entirely willing to give up segregation by law in a swap for the individual freedom of association.” Let’s be clear: they made a swap for the better word-smithed pro-segregation vouchers that Magness sold to the credulous Wall St. Journal opinion page editors as “antiracist.”

Dure went on to enjoy remarkable “success with segregationist officialdom in the Deep South,” as a member of the Southern Regional Council noted at the time. She skewered the vouchers for “pamper[ing] the pride of prejudiced white people with privileged and expensive isolation in private schools.”[10]

What should we call someone who wrongfully accuses bystanders while keeping information from the jury about the actual perpetrators? Accessory after-the-fact? For there is no getting around it: Magness’s account is complicit with the segregationists’ attempts to fool both the judiciary and northern critics with phony race-neutral vouchers. He is airbrushing from the past a history that is troublesome for his cause.

At the end of the day, though, Magness relies not only on evisceration of historical context, phony chronology, and sham causation. He also shows a willingness to stretch the truth beyond endurance. And not just once. Magness comforts his WSJ readers (who might be feeling some moral prickly heat about this history) with a statement he must know to be untrue, unless he is self-deceiving: he tells them Friedman pushed the vouchers “as a strategy to expedite integration.”

Magness is fully aware that was not Friedman’s purpose in touting vouchers, hence not “a strategy.” As the Urban Institute researcher Daniel Kuehn, himself a supporter of well-regulated vouchers, told the Wall St. Journal: “In Friedman’s 1962 best-seller Capitalism and Freedom he stressed not once, but twice, that the purpose of Virginia’s voucher program was to defend segregation.” Friedman was under no illusion that the voucher proponents in Virginia were doing anything other than promoting segregation. He just tried a Hail Mary pass to claim there might be a silver lining in the end (one that never materialized).

As if to reassure himself and his readers that his deal with the devil was not what it seemed, Friedman at a few points predicted that vouchers would eventually result in integration, reasoning not from any empirical evidence but axiomatically from his ideological premises. For such a smart man that would seem surprisingly self-delusional, because contemporary published investigations from across the South and in the Black press had been reporting the opposite since 1956: that the vouchers were working as intended--to forestall integration. That is why the NAACP continuously fought them in court. But Friedman ignored all this. Seeing that his logic failed the test of practice for seven years after publishing his case, he anted up as the only proof for his sunny predictions some hearsay: “I have been told,” (likely by Leon Dure) that one early voucher advocate transferred to an integrated school because it was a better school.[11]

“I predict” and “I have been told”: what kind of public officials would adopt a radical policy change on such flimsy foundations?

For his part, Magness goes further. He hoodwinks readers about the Massive Resisters whose program Friedman was abetting from 1955 to 1959 by inventing yet another alternative fact, this one at odds with a mountain of contemporary evidence and subsequent scholarship: “Virginia’s segregationist hard-liners recognized the likely outcomes [of vouchers expediting integration, sayeth Magness] and began attacking school choice as an existential threat to their white-supremacist order.”

There is no nice way to say it: this is a complete falsification of what actually happened. And Magness doubled down on it in his October 22 attempt to rebut Kuehn’s critique.

It’s as though Magness cannot resist churning out nonsense. “Vouchers sped up integration,” Magness declares. Really? Why, then, did the federal appeals court conclude in Griffin v. State Board of Education, 296 F. Supp. 178 (1969) that Virginia’s “freedom of choice” vouchers blocked integration? How did the NAACP Legal Defense Fund’s team of attorneys so fool the judges about the purpose and effect of Virginia’s voucher system? How was the court hornswoggled into believing that, in the conclusion of Judge Albert V. Bryan, “the present and past school tuition grant laws of Virginia are again assailed as violative of the equal protection clause of the Fourteenth Amendment”?

Perversely, perhaps it’s good that Magness and his libertarian colleagues who make analogous arguments don’t want to acknowledge how their cause has leveraged (and is leveraging) racism to achieve its purposes. It means they know white supremacy is no longer acceptable to most people. And they realize that people might see an even deeper ethical failure on the part of someone like Friedman, who said “I deplore segregation and racial prejudice”—yet rather than walk that walk, chose to ally with arch segregationists to achieve his own goal of privatization.

People might be further shocked to learn that at no point, at the time or later, did Friedman and his libertarian allies in this effort ever look critically at what they had done. For, after all, they were accessories to the Massive Resisters who sought to overturn what Brown promised: equal protection of the law for African Americans.

Notes

[1] See James H. Hershman, Jr., "A Rumbling in the Museum: The Opponents of Virginia's Massive Resistance," (Ph.D. Dissertation, University of Virginia, 1978), a superb study, and the first to show how white “moderates” who had worked so hard to save public education came to accept the tuition grants as a “safety valve” compromise for militant Black-majority counties like Prince Edward, in a shift from “caste” to “class”-based moats for white privilege.

[2] As signaled by the title of this article about the sole individual Magness cites for his case, John S. Battle, Jr: "Battle Cautions Against Move to Private Schools," Charlottesville Daily Progress, 24 March 1959.

[3] This was all documented in my 2017 book, Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America, particularly Chapters 3 and 4. Numerous libertarians denounced it vociferously while failing to ever come to terms with its well-documented factual content on this matter and others covered in its pages.

[4] “Notes on Tuition Grants,” Richmond News Leader, Feb. 11, 1959, p. 12.

[5] “In a Few Words,” ibid., March 6, 1959, p. 12.

[6] “Keep It Simple, Mr. Perrow,” ibid. March 19, 1959, p. 12.

[7] “The Perrow Report,” ibid., April 2, 1959, p.10. On the proposed constitutional change, see also “Virginians Divide on School Bills,” New York Times, April 10, 1959. P. 30.

[8] “A Sorry Session,” April 23, 1959, p. 14.

[9] For more on Kilpatrick’s opportunistic evolution, well-known to students of Virginia history, see William P. Hustwit, James J. Kilpatrick: Salesman for Segregation (Chapel Hill: University of North Carolina Press, 2013).

[10] Margaret Long, Editorial introducing “Six Years of Southern Free Choice,” New South, April 1964, 2, 16.

[11] Friedman, Capitalism and Freedom, 117-18. On other occasions, Friedman would change the subject and invoke Chicago, which was certainly segregated, too, as though that answered the question of whether the South would desegregate or not.

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Trade and Development Backstory: The Struggle Over the UNCTAD 15 Mandate

Developing countries have been devastated economically by the COVID-19 crisis, in many cases far worse than they were hit by the global recession of 2008, and without the massive financial support mobilized by developed countries to protect their citizens from the economic damage caused by COVID-19.

This was the message from the UN Conference on Trade and Development (UNCTAD), as governments from around the world gathered, virtually and in Barbados, last month for the institution’s fifteenth conference. UNCTAD plays a unique role in the international economic governance ecosystem as the focal point for trade and development, acknowledging that trade doesn’t occur in a vacuum. The interrelated issues of finance, technology, investment, and sustainable development must also be addressed in a holistic manner for countries to be able to benefit from integration into the global economy and to achieve the Sustainable Development Goals (SDGs).

At the conference, member states finalized negotiations on the mandate of UNCTAD’s next four years.

This was one of the first opportunities for the international community to step up to the plate to ensure that millions — possibly billions — of people would not remain impoverished by the economic tsunami wrought by the COVID-19 crisis. While the mandate does clearly lay out the multiple and overlapping health, economic, and social crises faced by developing countries at this point, it unfortunately falls short of meeting the moment. In particular, a few developed countries, led by the European Union (EU) delegation, blocked what could have been a bold agreement to strengthen the role of UNCTAD in shaping a transformative agenda in tune with the challenges facing policymakers across the developing world.

Solutions to Transform Development Opportunities and Build Back Better

UNCTAD is one of the only international economic agencies that has analyzed the biases and asymmetries in the current corporate-led model of hyper-globalization, exposing its over-financialization and increasingly monopolistic practices. It has instead advocated for a people-and-planet-focused system of economic global governance. Over time, however, like many UN agencies, some of its divisions have become increasingly dependent on donor funding, and have thus turned away from development-centered models toward more mainstream or corporate-friendly trade and economic policies.

UNCTAD’s research, however, has consistently put forward alternative development strategies, policy proposals, and reform measures that could rebalance the international division of labor and help developing countries to bridge the economic and technological gaps with advanced economies. More recently, it has offered a comprehensive, extremely workable plan to address the profound economic, social, and environmental crises into which developing countries have been plunged by recurrent external shocks and tightening constraints — dubbed a “Global Green New Deal” (GGND).

This involves a new development model that could address the interconnected crises holding back developing countries through a range of institutional reforms, at the national and international levels, along with a series of macroeconomic, structural, and financial measures, including, most recently, the provision of trillions of new Special Drawing Rights (SDRs) by the International Monetary Fund (IMF). This would represent zero cost to developed countries, and yet would provide developing countries with trillions of dollars in assets. These assets could be invested in development projects, such as for their health ministries to combat COVID-19, as well as to improve their credit standing so as to access cheaper borrowing on international markets.

A GGND would also include the transformation of the existing debt management regime, including creating a new sovereign debt workout mechanism that UNCTAD has long advocated. It also includes the cancellation, or sustainable restructuring, of existing debt; new debt sustainability analysis mechanisms to ensure that debt restructurings would result in actual sustainability instead of just kicking the can down the road; and other measures.

A GGND would also necessitate the transformation of existing trade and investment regimes. Current regimes privilege transnational corporations over public interests and the right to develop and have been an underlying factor in the acceleration of inequality that has been a defining feature across the global economy over the last four decades. The transformation of these regimes would include the abrogation of various bilateral investment treaties, as well as the cancellation or replacement of various bilateral or regional “free trade agreements.” It would also include the conclusion of the development agenda in the World Trade Organization (WTO), including strengthening flexibilities for developing countries to actually use trade for their development. And it would most definitely include waiving barriers of “intellectual property” rules for products to prevent, treat, or contain COVID-19.

The Path to Get There: UNCTAD’s Mandate

For developing countries to be able to achieve the transformations indicated by the evidence-based research, UNCTAD must be mandated to provide technical assistance toward those goals — as well as build international consensus toward the required solutions.

The vast majority of UNCTAD member states are developing countries, which work together through the G77 group. They tabled proposals which, if they had been adopted, would have restored the original (and rightful) role of UNCTAD in global economic governance.

Even though UNCTAD is designed to focus on trade for development, all UN countries can be members. And unfortunately, at every turn during the last year of negotiations, the EU delegation sought to diminish, constrain, or limit the ability of UNCTAD to assist developing countries in adjusting to the multiple crises and in transforming the current system.

Instead, they sought to ensure that the current economic, investment, finance, and debt regimes were portrayed as functional and workable, with the only problem being that some developing countries have not yet integrated enough into these global regimes so as to access their benefits.

The EU in particular fought to curtail UNCTAD’s work on the most important development issues in today’s global economy. This included constraining UNCTAD’s work toward a sovereign debt workout mechanism; combating illicit financial flows (IFFs) and tax havens; improving global taxation; and constraining UNCTAD’s work to assist developing countries in transforming the current trade regime into one that actually benefits them.

Instead, the EU, aided sometimes by other developed countries, sought to ensure that UNCTAD’s role was limited to simply assisting developing countries to adjust to the current unfair and antidevelopment debt, finance, investment, trade, and other global regimes.

Unfortunately, the EU was abetted by the fact that UNCTAD’s secretary-general exited the organization in March, and was temporarily replaced by an acting secretary-general, from Belgium, who did little to correct the misleading claims made by the EU about UNCTAD’s longstanding mandate on development issues or to provide the G77 and China with the secretariat support needed to advance its positive agenda for the institution.

One of the acting secretary-general’s strategies was to work together with the head of outreach to block, rather than facilitate, civil society organizations (CSOs) from providing their expertise on various issues and assist member states in their deliberations.

In spite of the official blocking, civil society took action. An International Civil Society Facilitation Group (ICSFG), hosted by the Barbados-based Caribbean Policy Development Centre, organized a Civil Society Forum in which groups working with the Civil Society Financing for Development (FfD) Group and the Our World Is Not for Sale (OWINFS) global network presented their vision for UNCTAD’s role, including on major panels covering a range of issues from trade, investment, technology, and structural transformation to debt, finance, tax, and the reform of international financial institutions.

When civil society organizations following the mandate negotiations first got access to the negotiating texts, they sent a memo to member states outlining their concerns with regard to controversies in the mandate on all of the above issues. They followed up with a sign-on “Letter on Trade, Investment, Digitalization, [and] Climate Issues in the UNCTAD Mandate” endorsed by key trade groups. The Gender and Trade Coalition called for an UNCTAD mandate focusing on a feminist economy.

The International Trade Union Confederation (ITUC), representing 200 million workers in 163 countries and territories through 332 national affiliates, and its counterpart, the European Trade Union Confederation (ETUC), also sent a letter to the European Commission and the members of the European Parliament in charge of trade policy, outlining the ways in which the EU’s negotiating stance has constrained workers’ right to development. Public Services International (PSI), a global union federation representing 20 million workers in 154 countries around the world, sent a letter, together with their counterpart of the European Public Services Union (EPSU), grounding their call for a strong mandate for UNCTAD on debt, trade, digitalization, and other issues in developing countries’ obligations to provide quality, accessible public services to their populations.

Renowned economists Jeffrey Sachs and Mark Weisbrot sent a letter underscoring the need to strengthen UNCTAD’s mandate on unilateral coercive measures, which are by definition illegal under international law. These trade and financial measures by powerful states seek to impose so much economic harm on developing countries that their populations will change their governments to the powerful states’ liking.

The Civil Society Declaration for UNCTAD XV provides a blueprint for a much stronger vision for UNCTAD moving forward across a broad range of economic issues.

The final Bridgetown Covenant assesses the major global challenges of growing inequality and vulnerabilities, including high levels of unsustainable debt; accelerating climate change and environmental degradation; and the widening digital divide and uneven speed of digital transformation. It identifies four major transformations needed to move to a “more resilient, digital and inclusive world of shared prosperity: transforming economies through diversification; fostering a more sustainable and more resilient economy; improving the way development is financed; and revitalizing multilateralism.” The Covenant then details how each transformative strategy can be realized and mandates UNCTAD to play a role through its analysis, capacity-building, and consensus-building pillars to achieve these strategies, toward achieving the SDGs.

In the end, thanks to the hard work of some negotiators in the G77 and China, the agreement preserves UNCTAD’s mandate on key issues, and particularly those advocated for by civil society, such as its work on debt, IFFs, and taxation, which will be essential for developing countries to recover from the COVID-induced economic crisis.

Way Forward

Now that the negotiations on the mandate are concluded, it will be up to the incoming secretary-general, Rebeca Grynspan, and her staff to oversee its implementation. SG Grynspan is off to a good start in recognizing some of the most important issues to developing countries, such as SDRs; debt sustainability analysis and restructuring; stemming the hemorrhaging caused by illicit financial flows such as was revealed in the Pandora Papers; and recognizing the importance of research and evidence-based policies to inform the technical cooperation and consensus-building pillars, especially in UNCTAD’s work on trade and technology. She also seems to be breathing fresh air into UNCTAD’s collaboration with civil society, which will benefit members’ ability to access their expertise.

The world needs UNCTAD now more than ever. Civil society is poised to work with the institution to transform global finance and trade regimes. Governments and CSOs must work together with UNCTAD to provide developing countries the tools — and the transformed governance regimes — they need to “build back better” through these challenging and difficult times.

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