Handouts to the wealthy did nothing to boost the pandemic economy. Here's how the US should take a different approach in 2021.

insider@insider.com (Paul Constant) 1/1/2021

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Paul Constant is a writer at Civic Ventures, a cofounder of the Seattle Review of Books, and a frequent cohost of the "Pitchfork Economics" podcast with Nick Hanauer and David Goldstein.

This week's column, Constant explains why doling out aid to wealthy corporations through the CARES Act stimulus package didn't achieve its purported 'trickle down' effect.

Handouts to the rich left small businesses and low- and middle-income Americans struggling, and when these groups don't have money to spend, the economy shrinks and more people lose their jobs.

The country's resolution for 2021 should be to put more aid directly into the hands of Americans who need it, Constant says.

In fact in January, if you'd asked me what I thought the top economic story of 2020 would be, I would have confidently replied that the presidential election would far and away command the economic conversation for the year.

I would have been dead wrong, of course. 

The economic downturn accompanying the pandemic was the biggest economic story of 2020, and it wasn't even close.

Even back in April, less than a month after lockdowns rolled out across the country, ordinary Americans could tell that the corporate handouts in the CARES Act stimulus package were designed to benefit the wealthy while everyone else was hung out to dry. That early outrage turned out to be prescient, as the PPP funds that were supposed to keep small businesses afloat during the pandemic were instead funneled through big banks to their wealthiest clients.

While the CARES Act was being hijacked by corporations and the top .01%, the Trump administration promised that the economy would come roaring back in a "V-shaped recovery" once the lockdowns were over.

Firms like Goldman Sachs predicted in March 2020 that the country would see "the fastest recovery in history." That recovery failed to materialize for the obvious reason that unemployment had skyrocketed, and too many Americans were suffering from economic uncertainty. Without robust consumer spending, the economy has continued to sputter, with unemployment rising and falling in fits and starts throughout the year.

As Joseph Stiglitz, a Nobel laureate in economics, warned in May, the coronavirus recession is "a textbook example of showing that markets don't work." Private enterprise was simply unequipped to get everyday Americans through this pandemic; it's only through good governance that we could have weathered the storm without losing tens of millions of jobs and millions of American families running low on food.

Read more: Women are leaving the workforce in droves - and companies will suffer. Here are 5 urgent steps employers must take to help women succeed in the workplace.

Gallery: Where Experts Think Congress Should Spend Stimulus Money (GOBankingRates)

If our leaders had a firm understanding of how the economy really works, they'd have sent checks to Americans and subsidized small businesses.

This would have allowed businesses and the working and middle class to hibernate through the pandemic, so the economy could truly leap back to life once the vaccine has been distributed.

Instead, the US Chamber of Commerce now predicts half of all American small businesses could close by the end of the pandemic. It could take years for an equivalent number of new businesses to launch, build out, and hire enough employees to get the economy back to pre-pandemic levels.

Unlike the top-down stimulus benefitting a tiny minority of the wealthiest Americans that President Trump and Senate Majority Leader Mitch McConnell have promoted, a middle-out stimulus would be good for everyone. As I wrote in this column:

"...it's time for a stimulus that puts individual Americans first, encouraging growth on Main Street that will buoy the entire economy - including Wall Street. The fantastic thing about a middle-out stimulus is that it's not an either/or proposition; the markets are largely informed by stability and consumer demand, so a stimulus package for low- and middle-income people would naturally help Wall Street stabilize by building economic stability from the ground up."

That's just as true today as it was the day I wrote it in March.

Read more: Experts lay out the criteria for choosing Biden's CTO, who will be faced with using tech to tackle everything from climate change to vaccine distribution
Direct investments in people and small businesses have been proven to work far better than austerity in times of economic stress.

While the pandemic took us all by surprise, none of its economic effects have been surprising. When ordinary Americans don't have money to spend, more Americans lose their jobs and the economy shrinks. When rich people and corporations receive tax breaks and sweetheart deals from the government, that money doesn't trickle back down to the rest of us - it accumulates up at the top.

In fact, you could easily make the argument that the pandemic has only exacerbated the massive flaws that had been built into our economy over the last four decades. If we were to turn back the clock on the economy to January 2020, too many Americans would be on the ragged edge of disaster. The truth is that trickle-down economics has airlifted some $50 trillion dollars out of the paychecks of everyday Americans and forked it over to the top .01% of the economy. 

Our New Year's resolution for the recovery in 2021 shouldn't be to return the economy to what it was. Our goal should be to rebuild the economy to what it was when the American middle class was at its strongest, by growing the median American paycheck by some $45,000 a year. Only then will we be adequately prepared for the next unforeseeable disaster.

The legacy of 2020: Riches for the wealthy and White, financial pain for others

The Covid recession, and the extreme inequality it wrought, will be among 2020's legacies.

Rich, White and college-educated Americans saw jobs recover quickly, and their wealth balloon as the stock market and housing prices reached new highs.

Racial minorities, low earners, women and those without a college degree were more likely to be unemployed and fall into poverty.

The legacy of 2020 will endure in America's collective memory for many reasons: a deadly pandemic, a vicious presidential election.

It also brought the most severe recession in almost a century, which hurtled millions into poverty and joblessness and created burgeoning inequality.

That financial pain has been concentrated among certain groups, like racial minorities, women, low earners, those without college degrees and workers in the service economy, like restaurant and retail jobs that require face-to-face contact. (These categories often overlap.)

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'No pain at all'

To a certain extent, these dynamics play out in all downturns. But the coronavirus-fueled economic shock has been singular in the way rich, White Americans rebounded from the depths of the crisis.

For many of them, the recession ended months ago. They quickly recovered lost jobs. Their wealth has never been higher, as stocks and home prices soared. Their disproportionate ownership of such assets means other groups shared little in their riches.

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The result is a financial chasm between the have and the have-nots that emerged faster than prior downturns, according to economists.

"The most marginalized groups always get hit the hardest," according to Wendy Edelberg, director of the Hamilton Project, an economic policy arm of the Brookings Institution.

"But what is so unusual is, for a lot of other groups, it's not that they're being hit less — it's that they're seeing no pain at all," she said. "And they're doing well."

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Unequal recovery

The diverging experiences of those at the top and bottom have led many economists to identify the recovery as having a "K" shape.

But that unequal financial pain wasn't apparent in the early months of the pandemic recession.

Congress swiftly passed the CARES Act, a $2.2 trillion relief package, propping up household income with extra unemployment benefits and stimulus checks.

Nearly 40% of jobs had evaporated for the lowest earners by the height of the crisis, according to Harvard's Opportunity Insights project. But a $600 weekly boost to jobless benefits more than doubled household income for many of them.

The cash infusion helped lift millions out of poverty.

In June, there were almost 5 million fewer Americans among the ranks of the poor than at the start of the year, before the pandemic, according to data published by researchers at the University of Chicago, University of Notre Dame and Zhejiang University.

But inequality flourished as that aid ran dry.

Nearly 8 million people fell into poverty between June and November, the researchers found. Poverty grew in each successive month over that time, they found, increasing most for Blacks, children and those with a high school education or less.

Food insecurity has grown and more households report being behind on bills like rent, federal data shows.

"This may not have been the most unequal recession, but it was clearly the most unequal recovery," said Olugbenga Ajilore, a senior economist at the Center for American Progress.

The new year may usher in buoyed household finances and reduced inequality. President Donald Trump has signed a $900 billion relief package into law, injecting families with extra jobless benefits until mid-March and $600-per-person stimulus checks.

Unemployment and jobs

Jobs among the lowest earners (those making less than $27,000 a year) were still down almost 20% from pre-pandemic levels by mid-November, according to Opportunity Insights. Extra unemployment aid expired months ago.

The unemployment rate for Blacks remains above 10% and is almost twice that of Whites, at 5.9%. Those without a high-school degree are also unemployed at a rate more than double those with a college degree

.

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The official jobless rate among women is also artificially low — women, more so than men, have left the labor force entirely due to childcare and other responsibilities, said Edelberg, a former chief economist at the Congressional Budget Office.
The rich prosper

Meanwhile, the highest earners (those making more than $60,000 a year) had fully recovered their job losses by the end of August, according to Opportunity Insights. By mid-November, they had about 1% more jobs than they did before the pandemic.

Richer Americans typically take a financial hit via their wealth holdings — stock and home prices, for example — rather than lost job income during recessions, economists said.

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But that wealth has proved resilient in the Covid downturn.

"That's one of the things that makes this recession so unusual," Edelberg said. "For a lot of people, the crisis is over. It's invisible to them."
Stocks, homes

Stock prices (as measured by the S&P 500 index) plunged 34% by the market bottom on March 23 — the quickest decline of its kind in history. But they recovered at their fastest-ever clip, fully erasing losses by Aug. 21, less than five months later.

The S&P 500 has swelled by 67% from the market trough. The index was up more than 15% in 2020.

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Home prices were also up almost 15% in November from the year prior, according to the National Association of Realtors. (The group measures median price, which is the one right in the middle of a range.)

Wealthy Americans are also spending about 5% less money than before the pandemic, while the lowest earners are spending about 3% more, according to Opportunity Insights. That suggests the wealthy may be boosting their savings, while others are unable to do so.

"Low earners] are living paycheck to paycheck, so any money they get they'll spend on bills, food," Ajilore said. "High-income [people] are maybe doing fewer leisure activities, so instead of spending it they're holding that money back."

CAPPLETALI$M
Apple knew a supplier was using child labor but took 3 years to fully cut ties, despite the company's promises to hold itself to the 'highest standards,' report says

Tyler Sonnemaker 1 day ago

© Provided by Business Insider AP Photo/Ng Han Guan

Apple discovered that Suyin Electronics, one of its Chinese-based suppliers, relied on child labor on multiple occasions, but still took three years to fully cut ties, The Information reported on Thursday.

Ten former members of Apple's supplier responsibility team told The Information the company has refused or has been slow to stop doing business with suppliers that repeatedly violate its labor policies when doing so would hurt its profits. 

Apple has faced intense criticism recently amid reports that it relies on forced Uyghur labor and protests over poor working conditions and wage theft by workers that make its products.

Apple is back under the spotlight over labor conditions in its supply chain following an explosive report from The Information on Thursday that revealed new details about the company's reluctance to cut ties with suppliers who violate its ethics policies.

According to the report, Apple learned in 2013 that Suyin Electronics, a China-based company that (at the time) made parts for its MacBooks, was employing underage workers, and despite telling Suyin to address the issue or risk losing business, Apple discovered additional workers as young as 14 years old during an audit just three months later.

But rather than immediately cutting ties with Suyin for violating its supply chain ethics policies - which prohibit child labor and which Apple claims are the "highest standards" - Apple continued to rely on the company for more than three years, according to The Information.

Apple did not respond to a request for comment on this story. Suyin could not be reached for comment.

Ten former members of Apple's supplier responsibility team told The Information that Suyin wasn't an isolated incident, and that Apple had refused or was slow to stop doing business with suppliers that had repeatedly violated labor laws or failed to improve workplace safety when it would have cut into its profits.



Video: Trump signs spending bill, unlocking Covid aid and averting shutdown (MSNBC)



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Trump signs spending bill, unlocking Covid aid and averting shutdown
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Apple similarly refused to cut ties with Biel Crystal, one of its two suppliers of glass iPhone screens - despite a consistently poor workplace safety record, Apple employees' own concerns, and Biel executives explicitly admitting that improving safety wasn't worth it because doing so had actually led to less business from Apple - because cutting ties would have left Apple with less financial leverage over its remaining supplier, Lens Technology, according to The Information.

Biel did not respond to a request for comment.

In an illustration of just how intertwined Apple has become with unethical labor practices, The Washington Post reported earlier this week that Lens Technology itself relies on forced labor from thousands of Uyghurs that the Chinese government has displaced from their homes in Xinjiang.

While US lawmakers have proposed legislation aimed on curbing American companies' ability to use forced Uyghur labor, Apple sought to weaken the bill, The New York Times reported last month. (Apple took issue with that claim, telling The Times that it "did not lobby against" the bill but rather had "constructive discussions" with congressional staffers).

Apple has long been criticized over the labor practices of its suppliers, particularly in China but increasingly in other countries including India, where workers at an iPhone factory rioted after accusing management of withholding their pay.

In November, Apple was also forced to cut ties with its second-largest iPhone manufacturer, Pegatron, after discovering the company had violated labor laws by relying on "student workers" who were in practice doing work that had nothing to do with their degrees.
Read the original article on Business Insider

COVID-19 shook, rattled and rolled the global economy in 2020

By Dan Burns and Mark John

© Reuters/THOMAS PETER FILE PHOTO: Employees wearing face masks work at a factory of the component maker SMC during a government organised tour of its facility following the outbreak of the coronavirus disease (COVID-19), in Beijing

(Reuters) - When 2020 dawned, the global economy had just notched its 10th straight year of uninterrupted growth, a streak most economists and government finance officials expected to persist for years ahead in a 21st Century version of the "Roaring '20s."

But within two months, a mysterious new virus first detected in China in December 2019 - the novel coronavirus - was spreading rapidly worldwide, shattering those expectations and triggering the steepest global recession in generations. The International Monetary Fund estimates the global economy to have shrunk by 4.4% this year compared with a contraction of just 0.1% in 2009, when the world last faced a financial crisis.

Graphic: The global coronavirus recession https://graphics.reuters.com/GLOBAL-ECONOMY/YEAREND/xklvyjlxkpg/chart.png

Government-mandated shutdowns of businesses and any non-essential activities in much of the world unleashed a wave of joblessness not seen since the Great Depression. Still, unemployment levels varied dramatically across the globe.

In some countries, like China, COVID-19 infection levels were effectively suppressed through strict but relatively brief lockdowns, allowing unemployment rates to remain low. Others, such as Germany, deployed government-backed schemes to keep workers on company payrolls even as work dried up.

Elsewhere, including in Brazil and the United States, the uncontrolled spread of the virus and patch-work government health and economic responses fueled rampant job losses. Some 22 million people in the United States were thrown out of work in March and April alone and the unemployment rate jumped to near 15%.

Most economists expect it to take a year or more for labor markets to return to something resembling the pre-pandemic era.

Graphic: Global unemployment in the pandemic https://graphics.reuters.com/GLOBAL-ECONOMY/YEAREND/azgvoyljgvd/chart.png

The pandemic delivered a body blow to global trade, with export volumes dropping abruptly to their lowest in nearly a decade in March and April.

The recovery since then has been led largely by China, which stands alone among major economies in seeing year-over-year growth in exports.

Graphic: Global exports have cratered almost everywhere https://graphics.reuters.com/GLOBAL-ECONOMY/YEAREND/xegvbbeqyvq/chart.png

Unprecedented levels of government stimulus prevented even larger damage to many economies but also added to a global mountain of sovereign debt amassed by governments, raising questions about whether a financial crunch is the next crisis the world must deal with.

Graphic: Pandemic stimulus adds to the global debt mountain https://graphics.reuters.com/HEALTH-CORONAVIRUS/GLOBAL-ECONOMY/qzjvqdqdlpx/chart.png

However, historically low interest rates hovering around – and sometimes below – zero percent mean that debt servicing costs for the Group of Seven (G7) economies are at their lowest since the 1970s, when the debt burden was only a fraction of what it is now.

"Debt today is sustainable and it will remain so for a few years because as long as economic activity and employment have not recovered momentum, central banks are unlikely to do anything with their interest rates. That allows governments to keep up the fiscal support in the form of retention schemes and support to firms," said Laurence Boone, the OECD's chief economist.

Graphic: The cost of countries' debt burdens has fallen https://graphics.reuters.com/GLOBAL-DEBT/qzjvqorbyvx/chart.png

One offshoot of that largesse has been that consumer spending has held up better than many had expected. While spending on services plunged and remains depressed - at restaurants and for travel and leisure in particular - consumers did lay out for goods, especially big-ticket items such as cars and home improvements that benefited from rock-bottom interest rates.

As a result, retail sales in many economies are up on a year-over-year basis, in some instances by more than they were at the end of 2019.

Graphic: Retail sales have been a mixed bag https://graphics.reuters.com/GLOBAL-ECONOMY/YEAREND/azgpoylzgpd/chart.png

Another direct effect of all that government spending has been a surge in savings among consumers in many parts of the world. Government support payouts in developed economies padded household bank accounts and, with consumers hunkered down in the pandemic's early days in particular, savings rates soared.

They began returning to earth in the latter part of 2020 but remain well above pre-pandemic levels. Some economists see this as the dry tinder to help fuel an economic rebound in 2021 and beyond when COVID-19 vaccines allow a wider recovery to take hold and consumers to begin moving about - and spending - more freely.

Graphic: Personal savings rates soared during the pandemic https://graphics.reuters.com/GLOBAL-ECONOMY/YEAREND/nmovabodbpa/chart.png

(Reporting by Dan Burns in Newtown, Connecticut, and Mark John in London; Additional reporting by Leigh Thomas in Paris; Editing by Paul Simao)

US IMPERIALISM IN SPACE

White House releases planetary protection strategy

by Jeff Foust — December 30, 2020

Plans for Mars sample return, starting with the Mars 2020 rover mission (above), along with growing private sector interest in missions beyond Earth, prompted the creation of a new national strategy to update planetary protection policies. Credit: NASA/JPL-Caltech

WASHINGTON — The White House released a national strategy for planetary protection Dec. 30, outlining new assessments to prevent terrestrial contamination of other worlds and vice versa.

The National Strategy for Planetary Protection, developed by an interagency working group led by the National Space Council and Office of Science and Technology Policy (OSTP), outlines work to be done over the next year to update planetary protection policies, considering both scientific advances as well as growing private capabilities in space exploration.

The strategy is designed to implement a portion of the updated National Space Policy, released Dec. 9, that calls on OSTP, in cooperation with NASA and other agencies, to develop new planetary protection guidelines “working with scientific, commercial, and international partners, for the appropriate protection of planetary bodies and Earth from harmful biological contamination.”

“Current and future missions to Mars and other destinations necessitate a strategy to support a safe, sustainable, and predictable Earth and space environment,” Scott Pace, executive secretary of the National Space Council, said in a statement. “By establishing objectives for the implementation of the 2020 National Space Policy’s direction on planetary protection, this strategy continues American leadership in scientific discovery, human exploration, and private sector space activities.”

The planetary protection strategy has three broad objectives. One is to create a “risk assessment and science-based guidelines” for mitigating what’s known as “forward contamination,” or contamination of other worlds by terrestrial life. It also directs an assessment of the role of planetary protection in the government’s payload review process for private missions.

A second objective seeks to avoid “backward contamination,” or potential contamination of the Earth by any extraterrestrial life. The strategy directs agencies to develop various frameworks for assessing risks of sample return missions and other sources of backward contamination, as well as an approval framework for such missions and procedures for safely handling materials returned from beyond Earth.

A third objective seeks to incorporate private sector views on planetary protection issues given the growing capabilities of, and interest by, companies in flying missions to other worlds, in particular Mars. That objective includes work by the government to develop guidelines for authorization and continuing supervision of private sector missions to destinations with planetary protection implications.

The strategy does not set any new policy, but instead outlines work on various issues to be done over the next year. “Really it’s a work plan,” said an administration official, speaking on background. “It’s a strategy laying out work that’s going to be done over the next nine months to a year.”

Planetary protection has traditionally been an issue primarily for NASA. The agency has been working to update its own planetary protection policies, based on recommendations made by an independent review board last year. In July, NASA announced it was issuing new interim directives to both reclassify most of the moon into a lower category that has no planetary protection requirements, as well as to study how to make planetary protection guidelines compatible with future human missions to Mars.

“We’re very fine with what NASA has done, but the problem is that the NASA rules and interim directives don’t really apply to the private sector,” said the administration official. The strategy follows what the official described as a “light touch” approach for any planetary protection regulations for private missions. “We’re trying to find ways so that people can go forward, but to do so safely.”

The strategy also seeks to leverage the expertise of other agencies. The interagency working group included several Cabinet-level departments, from Agriculture and Health and Human Services to Commerce and State. It also included the Centers for Disease Control, Environmental Protection Agency and the Federal Aviation Administration, among others.

Many of them were brought in to support work on backward contamination. “It’s a great opportunity to bring in departments and agencies who may not have worked together on this issue historically,” said an administration official, “but are very excited to be doing so now.”

“There’s really no reason for the space guys to reinvent the wheel. There’s tons of great expertise out there,” an official added.

The planetary protection strategy is part of a surge of space policy activity by the White House in the final weeks of the Trump administration. In addition to the updated National Space Policy, the White House released a space nuclear strategy Dec. 16, outlining priorities for development of nuclear power and propulsion capabilities and related policy issues.  

#INFRASTRUCTURE

Puerto Rico government supports rebuilding Arecibo

by Jeff Foust — January 1, 2021

A WorldView satellite image of Arecibo Observatory's 305-meter radio telescope after the observing platform fell into the dish Dec. 1.

Credit: Satellite image ©2020 Maxar Technologies


WASHINGTON — The governor of Puerto Rico says she backs rebuilding the Arecibo radio observatory, but a final decision on whether, and how, to reconstruct the giant telescope could take years.

Governor Wanda Vázquez Garced signed an executive order Dec. 28 stating it was the formal policy of the commonwealth to rebuild the 305-meter radio telescope at Arecibo Observatory. The telescope’s 900-ton observing platform fell to the dish below when several cables snapped early Dec. 1, weeks after the National Science Foundation (NSF) said it was unsafe to repair cables at the telescope that previously broke.

“The Government of Puerto Rico states, as a matter of public policy, its conviction to the reconstruction of the Arecibo Radio Telescope and the prompt resumption of world class science and education at the Arecibo Observatory,” the order states.

The order adds that the Puerto Rican government foresees rebuilding a “newly designed” telescope that would have a larger effective aperture and wider field of view. It also calls for a more powerful radar transmitter, which is used for solar system observations such as characterizing near Earth asteroids.

The order states the government is “assigning and allocating” $8 million to start the reconstruction work. Vázquez Garced, in a separate statement, said the funding is from budget surpluses from previous years, but didn’t elaborate further on the source of the funding. The funding, she said, would be used for removing debris from the telescope’s collapse and other environmental remediation work.

The $8 million, though, is only a small down payment on the cost of rebuilding the telescope, with informal estimates in the astronomy community projecting it to cost several hundred million dollars. Vázquez Garced, in her executive order, gave no estimate herself but said it would be funded by “state, federal and private sources (including public-private partnerships and state-federal partnerships).”

The NSF, notably, has not committed to rebuilding Arecibo. At a briefing two days after the telescope’s collapse, agency officials said their focus was on the assessment of the damage and cleanup efforts.

“NSF has a very well-defined process for funding and constructing large-scale infrastructure, including telescopes,” Ralph Gaume, director of NSF’s Division of Astronomical Sciences, said at that briefing. “It’s a multiyear process that involves congressional appropriations and the assessment and needs of the scientific community. So, it’s very early for us to comment on the replacement.”

Congress, which would have to allocate any federal funding for rebuilding Arecibo, did not earmark any money for doing so in the fiscal year 2021 spending bill passed in December. However, the report accompanying the bill directed NSF to prepare a study on the telescope’s collapse and cleanup efforts, as well as “the process for determining whether to establish comparable technology at the site, along with any associated cost estimates.”

That report is due to Congress 60 days after the bill was enacted, which took place Dec. 27. However, it is not uncommon for agencies to deliver such reports weeks, or even months, late.

At the same time, the astrophysics decadal survey, which sets priorities for both space-based and ground-based astronomy for the next 10 years, is completing its study, now scheduled for release in the spring. The NSF said in December that it informed the survey’s steering committee of Arecibo’s collapse but did not make any special requests for it to evaluate the impact of the loss of the telescope.

Astronauts aboard the International Space Station celebrated the New Year with a traditional "ball drop" 

 Jan. 1 (UPI) -- Five of the seven astronauts aboard the International Space Station celebrated the New Year with a traditional "ball drop," but because of weightlessness, it headed upward rather than down.

The astronauts quickly followed the zero-gravity twist, rising toward the top of their cabin as they wished those on Earth good wishes for a happy 2021 as they traveled 15,500 mph some 250 miles above the Earth

The five, from Expedition 64 -- NASA astronauts Kate Rubins, Mike Hopkins, Victor Glover, Shannon Walker and Japan Aerospace Exploration Agency astronaut Soichi Noguchi -- took turns with their greeting to those below.

Glover noted that one of the most famous New Year's Eve traditions is watching the ball drop from Times Square in New York City, which was empty this year because of the coronavirus pandemic.

Hopkins added," As many of us celebrate the New Year from home this year, we've brought this famous tradition to space to share with you."

Noguchi noted that the celebration, because of the zero-gravity environment, would have a "special twist," and Walker told viewers, "We hope thisinspires you to celebrate in your own way."

The crew then counted down, and Rubins released an inflatable globe, which floated upward above their heads as they cheered Happy New Year!" and floated upward, as well

CRIMINAL CAPITALI$M
Japan awarded more than 100 contracts over 10 years to Dentsu-linked non-profit groups




By Ju-min Park, Sakura Murakami, Mari Saito and Antoni Slodkowski

© Reuters/KIM KYUNG-HOON FILE PHOTO: 

Dentsu's logo is seen at its head office building in Tokyo

TOKYO (Reuters) - The Japanese government has awarded more than 100 contracts over the last decade to two non-profit groups set up by Dentsu Inc, according to a Reuters analysis of government data, in arrangements that some opposition lawmakers say obscured the role of the advertising giant in winning public funds.

The contracts, which ranged from administering tourism-promotion projects to distributing coronavirus relief funds, were worth at least $1.6 billion, according to  public disclosures by  government ministries and data provided by those ministries to Japan’s parliament, seen by Reuters, which has not previously been reported.

Dentsu Inc received at least $1.2 billion of that amount as a subcontractor to the two non-profit groups, according to government records, and many of the contracts were awarded in non-competitive bids.

Tokyo-based Dentsu has close ties to Prime Minister Yoshihide Suga’s ruling Liberal Democratic Party. It is part of Dentsu Group Inc, one of Japan’s most influential companies.

Dentsu’s use of non-profit groups to win public contracts first came to light in May, when local media reported that the advertising company had used one of the two non-profits, called Service Design Engineering Council, to win a government contract worth $700 million to distribute more than $20  billion  in state aid to businesses hit financially by the new coronavirus.

Opposition lawmakers have protested against the government’s award of the coronavirus aid contract to the non-profit.   

At issue is whether Dentsu used non-profit groups to prevent scrutiny of its involvement in lucrative government contracts and whether the additional layer of bureaucracy caused by subcontracting work to Dentsu was a waste of taxpayers’ money.

In response to Reuters’ questions, Dentsu said it was a “co-founding member” of the two non-profits. It declined to comment on the number or value of contracts the non-profits won.

A Dentsu spokesman said the non-profit group Dentsu used to win the coronavirus aid contract was the most appropriate way to bid for the project under rules established by Japan’s Ministry of Economy, Trade and Industry (METI), which awarded the contract. Dentsu said it could not bid for the project directly because its accounting department determined its balance sheet would be adversely impacted.

Officials representing METI, which awarded the vast majority of the contracts won by the two non-profits, said in response to Reuters’ questions there was no problem giving projects to non-profits as long as the bidding process was legitimate. In response to the outcry over the coronavirus relief contract, METI conducted a review of its procurement practices. On Friday the ministry announced reforms, including steps to make its dealings with bidders more transparent.

Dentsu halted new bids on METI projects while the review was being conducted. On Monday, following METI’s announcement of its reforms, Dentsu told Reuters it will adhere to new standards set forward in the ministry's review.

Hidekazu Takakura, a deputy director-general overseeing strategy at METI, said the contracting structure  Dentsu  employed did not break ministry rules.   

“They said they wanted to do it this way with the people they have relationships with, so we didn’t really question it at the time,” Takakura said.

Hiroshi Arikawa, a former official at Japan's Board of Audit, an independent body that reviews government spending, said the Dentsu arrangement  meant an additional layer of cost for taxpayers. He said the structure also shielded  Dentsu  from the board’s inspections as the company was not a direct recipient of the contract but a subcontractor.

Suga’s office did not respond to requests for comment.

SOLE BIDDER    

Dentsu  stepped up its involvement in Japanese government contracts a decade ago, after the global financial crisis, as it looked to expand its public sector business and offset slow growth in its traditional advertising and media businesses, according to a former Dentsu official.

Rules introduced by Japan in 2006 allowed non-profits to be established by as few as two people with minimal disclosure. These entities could then bid for government contracts.

Once a Dentsu-affiliated non-profit won a contract, it then subcontracted work to Dentsu in the majority of cases, public government records show.

Dentsu co-founded Service Design in 2016. Since then, the organisation has been the sole bidder on eight of the 14 projects it was awarded, according to METI, winning contracts worth at least $812 million in total.

Service Design’s first project was to set up a programme designed to establish Michelin-like ratings for hospitality businesses such as restaurants and hotels in Japan ahead of the 2020 Tokyo Olympics. Service Design handed management of the programme to Dentsu, which held meetings at its own headquarters and dispatched Dentsu employees to run the scheme, five people involved told Reuters.   

In response to Reuters’ questions, Dentsu and Service Design said Dentsu was cooperating on the tourism project as part of the non-profit and Service Design led the project. Service Design said it would "take appropriate measures" following METI’s review of its procurement practices, without giving further details.

Alongside Service Design, Dentsu also won contracts through a second non-profit group called the Sustainable Open Innovation Initiative (SII), which is run by Satoshi Tanaka, a former Dentsu employee. It shares its Tokyo office building with one of the ad agency’s subsidiaries.

According to government procurement records, SII has received at least $837 million for administering 89  government contracts  since 2011. It was the sole bidder for most of those, according to data provided to lawmakers by METI officials, seen by Reuters. SII outsourced about three quarters of the work for the contracts awarded by METI, with the bulk of that work going to  Dentsu, according to ministry data from 2015 onwards.  

In an email to Reuters, SII’s Tanaka declined to comment on the value of contracts SII won and how much of the work was subcontracted to Dentsu.

METI advises companies it awards contracts to not to outsource more than half of the work to third parties, in order to encourage transparency and efficiency in government procurement, but it allows exceptions in the case of large-scale projects or ones that need technical support.

Opposition lawmakers have called on Japan's Board of Audit to investigate how the two non-profits subcontracted work to Dentsu. The board will not rule on whether it will take up that request before the end of the fiscal year on March 31, its spokesman said. The board’s investigations often take more than a year, ending in recommendations for government entities on how to improve their practices. 

(Reporting by Ju-min Park, Sakura Murakami, Mari Saito and Antoni Slodkowski in Tokyo; Additional reporting by Ami Miyazaki in Tokyo; Editing by Bill Rigby)

Israel arrested 4,634 Palestinians in 2020

January 1, 2021  MEMO

Palestinian prisoners kneel in a gym as they take part in prayers 05 March 2006 at the Gilboa prison, east of the northern Israeli town of Afula 

[HAGAI AHARON/AFP via Getty Images]

January 1, 2021 

The Israeli occupation authorities arrested 4,634 Palestinians during 2020, including 543 minors and 128 women, according to a statement issued by institutions dealing with prisoner concerns and human rights.

The statement, of which Anadolu Agency received a copy, was signed by the Palestinian Prisoners Club, Addameer Prisoner Support and Human Rights Association, and the Prisoners' Affairs Commission.

The occupation authorities launch almost daily arrest campaigns in the West Bank, but they usually release some detainees after interrogation, referring others to court.

READ: UNRWA and Palestinian refugees are the next targets of normalisation deals with Israel

The statement indicated that the total number of detainees in Israeli prisons at the end of the year reached 4,400 detainees, including 40 women and 170 children, while the number of administrative detainees (without charge) is estimated at 380. The number of unwell prisoners reached 700, including ten cancer patients and 300 with chronic diseases.

During 2020, Israel issued five life sentences, bringing the number of prisoners facing life imprisonment sentences to 543.

The statement indicated that the Israeli authorities: "Escalated their arbitrary arrests of Palestinian minors and women, and subjected them to various methods of torture during and after arrest, in 2020."

DESPITE THE TRUMP KILL-A-THON
The decline and fall of the American death penalty

The number of death sentences and executions in the US has fallen off a cliff since the 1990s. 2020 continued that trend.

By Ian Millhiser Dec 30, 2020, VOX

Staff members dismantle the death row lethal injection facility at San Quentin State Prison on March 13, 2019, Photo by California Department of Corrections and Rehabilitation via Getty Images

Fewer people were executed in 2020 than in any year for nearly three decades, and fewer people were sentenced to die than at any point since the Supreme Court created the modern legal framework governing the death penalty in 1976. Those are two of the striking findings in the Death Penalty Information Center’s (DPIC) annual report, which was released on December 16.

One significant reason so few people were executed in 2020 is the Covid-19 pandemic — which has slowed court proceedings and turned gathering prison officials and witnesses for an execution into a dangerous event for everyone involved. But even if 2020 is an outlier year due to the pandemic, DPIC’s data shows a sharp and consistent trend away from the death penalty since the number of capital sentences peaked in the 1990s.

Death Penalty Information Center

In total, only 17 people were executed in 2020, a number that would be much lower if not for the Trump administration resuming federal executions this year for the first time in nearly two decades. 2020 is the first year in American history when the federal government executed more people than all of the states combined: 10 of the 17 people executed in 2020 were killed by the federal government.

Only five states — Texas, Alabama, Georgia, Missouri, and Tennessee — conducted executions in 2020. And of these five states, only one, Texas, killed more than one person on death row.

The trend away from new death sentences and executions has continued despite two recent significant pro-death penalty opinions from the Supreme Court. The Court’s decisions in Glossip v. Gross (2015) and especially in Bucklew v. Precythe (2019) make it much more difficult for death row inmates to claim their executions violate the Constitution’s prohibition on cruel and unusual punishments.

Nevertheless, it remains to be seen whether the longstanding trend away from the death penalty will eventually be reversed by the Court’s new 6-3 Republican majority. For the moment, the trend appears to be robust even in the face of significant doctrinal shifts by the Supreme Court.

Why has the number of death sentences and executions declined so sharply?

There are many factors that likely contribute to the death penalty’s decline. Among other things, crime fell sharply in recent decades — the number of murders and non-negligent manslaughters fell from nearly 25,000 in 1991 to less than 15,000 in 2010. Public support for the death penalty has also fallen sharply, from 80 percent in the mid-90s to just 55 percent in 2020, according to Gallup. And, beginning in the 1980s, many states enacted laws permitting the most serious offenders to be sentenced to life without parole instead of death — thus giving juries a way to remove such offenders from society without killing them.

Yet, as Duke University law professor Brandon Garrett argues in End of Its Rope: How Killing the Death Penalty Can Revive Criminal Justice, these and similar factors can only partially explain why the death penalty is in decline. Murders, for example, “have declined modestly since 2000 (by about 10 percent),” Garrett writes. Yet “annual death sentences have fallen by 90 percent since their peak in the 1990s.”

Garrett argues, persuasively, that one of the biggest factors driving the decline in death sentences is the fact that capital defendants typically receive far better legal representation today than they did a generation ago. As Justice Ruth Bader Ginsburg said in 2001, “People who are well represented at trial do not get the death penalty.”

The Supreme Court briefly abolished the death penalty in Furman v. Georgia (1972). Though Furman produced a maze of concurring and dissenting opinions and no one opinion explaining the Court’s rationale, many of the justices pointed to the arbitrary manner in which death sentences were doled out. The particular death sentences before the Court in Furman, Justice Potter Stewart wrote, “are cruel and unusual in the same way that being struck by lightning is cruel and unusual” because death sentences appeared to be handed down to just a “random handful” of serious offenders.

Four years later, in Gregg v. Georgia (1976), the Court allowed states to resume sentencing serious offenders to death but only with adequate procedural safeguards. Gregg upheld a Georgia statute that allowed prosecutors to claim that a death sentence is warranted because certain “aggravating circumstances” are present, such as if the offender had a history of serious violent crime. Defense attorneys, in turn, could present the jury with “mitigating circumstances” that justified a lesser penalty, such as evidence that the defendant had a mental illness or was abused as a child. A death sentence was only warranted if the aggravating factors outweigh the mitigating factors.

This weighing test is now a centerpiece of capital trials in the United States, which means the primary job of a capital defense lawyer is often to humanize their client in the eyes of a jury. Defense counsel must explain how factors like an abusive upbringing, mental deficiencies, or personal tragedy led their client to commit a terrible crime.

Doing this well, Garrett argues, “takes a team.” It requires investigators who can dig into a client’s background, and it often requires social workers or other professionals who “have the time and the ability to elicit sensitive, embarrassing, and often humiliating evidence (e.g. family sexual abuse) that the defendant may have never disclosed.”

And yet, especially in the years following Gregg, many states didn’t provide even minimally competent legal counsel to capital defendants — much less a team that included a trained investigator and a social worker.

Virginia, for example, has executed more people since the Gregg decision than any state except for Texas. A major reason is that, for quite some time, Virginia only paid capital defense lawyers about $13 an hour, and a lawyer’s total fee was capped at $650 per case.

In 2002, however, the state created four Regional Capital Defender offices. And, when state-employed defense teams couldn’t represent a particular client, the state started paying private lawyers up to $200 an hour for in-court work and up to $150 an hour for out-of-court work. As a result, the number of death row inmates in Virginia fell from 50 in the 1990s to just five in 2017.

Virginia’s experience, moreover, was hardly isolated. As Garrett notes, many states enacted laws in the last four decades that provided at least some defense resources to capital defendants.

Brandon Garrett

And in states that did not provide adequate resources to defendants, several nonprofits emerged to pick up the slack. In Texas, for example, an organization called the Gulf Region Advocacy Center (GRACE) was formed in response to a notorious case where a capital defense lawyer slept through much of his client’s trial.

Some of these nonprofit lawyers have become minor celebrities within the legal profession. At least one, Bryan Stevenson, is arguably a celebrity well beyond the world of attorneys — Stevenson was played by Michael B. Jordan in the movie Just Mercy.

Capital defendants, in other words, are much less likely to be left alone — or practically alone with an incompetent lawyer — during a trial that will decide if they live or die. And that means that they are far more likely to convince a jury that mitigating factors justify a sentence other than death.

The future of the death penalty is now very uncertain thanks to the Supreme Court’s new majority

Cases like Furman and Gregg are rooted in the Eighth Amendment, which prohibits “cruel and unusual punishments.” This amendment’s use of the word “unusual” suggests that the kinds of punishments forbidden by the Constitution should change over time, as certain punishments fall out of favor in society and thus become more unusual. As Chief Justice Earl Warren wrote in Trop v. Dulles (1958), the Eighth Amendment “must draw its meaning from the evolving standards of decency that mark the progress of a maturing society.”

Under this framework, there’s a very strong argument that the death penalty is unconstitutional. After all, if a punishment becomes more constitutionally dubious as it becomes less common, what should we make of a punishment that was only carried out 17 times in the last year and that has been used less and less frequently over the last three decades?

The Supreme Court, however, almost certainly cut off any chance that this argument could prevail in its 5-4 decision in Bucklew.

Although Bucklew does not explicitly overrule the long line of Supreme Court decisions applying Warren’s “evolving standards of decency” test, Justice Neil Gorsuch’s majority opinion in Bucklew ignores that framework altogether and substitutes a different, much more narrow approach to the Eighth Amendment.

“Death was ‘the standard penalty for all serious crimes’ at the time of the founding,” Gorsuch wrote in Bucklew. And, while his opinion does list some methods of execution — “dragging the prisoner to the place of execution, disemboweling, quartering, public dissection, and burning alive” — that violate the Eighth Amendment, Gorsuch argues that these methods of execution were unconstitutional because “by the time of the founding, these methods had long fallen out of use and so had become ‘unusual.’”

Warren’s framework, in other words, asks whether a particular punishment has fallen out of favor today. Gorsuch’s framework, by contrast, asks whether a particular punishment was out of favor at the time of the founding. That’s a sea change in Eighth Amendment doctrine and one that could have profound implications for the death penalty.

It’s not yet clear how far the Court will take its recent opinion in Bucklew. Bucklew was a case about whether a state could use a particularly agonizing method to execute someone sentenced to death. That makes it distinct from cases like Gregg, which ask whether certain individuals can be given a death sentence in the first place.

It’s possible that the Supreme Court’s current majority will leave in place the Gregg framework, with its mandatory weighing of aggravating and mitigating factors, while also giving states more leeway to decide how to execute someone once a death sentence is handed down.

At the very least, though, Bucklew suggests that many members of the Supreme Court object to some of the foundational principles that guided Eighth Amendment cases for many decades. And that they are eager to make significant doctrinal changes to the constitutional law governing criminal punishments.

The future of the death penalty is highly uncertain. But Bucklew gives capital defense lawyers plenty of reasons to fear that future.