Coronavirus (2019-nCoV)

More stories

  • 50 Shares199 Views

    in Economy

    The Age of Anti-Ambition

    by

    Listen to This ArticleAudio Recording by AudmTo hear more audio stories from publications like The New York Times, download Audm for iPhone or Android.I used to think of my job as existing in its own little Busytown — as in the Richard Scarry books, where there’s a small, bright village of workers, each focused on a single job, whose paths all cross in the course of one busy, busy day. In my neighborhood in Brooklyn, I would see the same person at the Myrtle Avenue bus stop several days a week and imagine where he was going with his Dell laptop bag and black sneakers. I’d buy coffee from a rotating cast of the same baristas at the cafe on the third floor of my office building, where I worked as an editor at a magazine. I’d stop to chat with another editor, whose office was on the other side of the wall from mine; sometimes, she would motion for me to shut the door, and we would say what we really thought about some piece of minor professional gossip, important to at most about 3.5 people in the world. I would watch my boss walk toward a meeting with his boss and wonder whether their chat would wind up affecting my job.We all mostly worked on computers, typing in documents and sending emails to the person on the other side of a cubicle wall, but there was a bustle to the whole endeavor. It was a little terrarium where we all spent 50 hours a week, and we filled it with office snacks and bathroom outfit compliments and after-work drinks. Even on a day when nothing much happened professionally, there was the feeling of having worked, of playing your part in an ecosystem.Every job had its own Busytown. Although no one in the broader world wanted to talk about, say, cost-cutting strategies for a potential new client, you could find someone in your Busytown who was just as preoccupied about it as you were. In Scarry’s actual Busytown, meanwhile, the world is populated by people (OK, animals) who find it very easy to explain their jobs. They’re policemen and grocers and postmen and doctors and nurses. When the pandemic hit, the people with those Scarry-style jobs had to keep going to work. Their Busytowns rolled on. And actually, those jobs got harder.Everyone else has lost all touch with theirs. They log on to Slack and Zoom, where their co-workers are two-dimensional or avatars, and every day is just like the last one. Depending on what’s happening with the virus, their children might be there again, just as in March 2020, demanding attention and sapping mental energy. The internet is definitely there, always, demanding attention and sapping mental energy. A job feels like just one more incursion, demanding attention and sapping mental energy.And it didn’t help that, early in the pandemic, all jobs were pointedly rebranded: essential or nonessential. Neither label feels good. There is still plenty of purpose to be found in a job that isn’t in one of the helper professions, of course. But “nonessential” is a word that invites creeping nihilism. This thing we filled at least eight to 10 hours of the day with, five days a week, for years and decades, missed family dinners for … was it just busy work? Perhaps that’s what it was all along.For the obviously essential workers — I.C.U. nurses, pulmonologists — the burden of being needed is a costly one. The word “burnout,” promiscuously applied these days, was in fact coined to diagnose exhaustion in medical workers (in a more quaint time, when we weren’t heading into the third year of a multiwave global pandemic). And meanwhile, a vast majority of people deemed essential have jobs like Amazon warehouse worker or cashier. To be told that society can’t function without you, and that you must risk your health to come in, while other people push around marketing reports from home — often for much more money — it becomes difficult not to wonder if “essential” is cynical, a polite way of classing humans as “expendable” or “nonexpendable.”Teachers, who happen to be both highly unionized and college-educated, haven’t taken kindly to being on the expendable end of the equation, asked to work in person with tiny people who aren’t good at distancing and masking and have spent the past years cooped up. In early January, I read an article in The Times about the drama between the Chicago teachers’ union and the city over in-person instruction. When classes were abruptly canceled, a mother who worked as a bank teller had taken her child in for day care, provided by nonunionized school employees. (Day care workers: even further down the ugly new caste lines than teachers.) “I understand they want to be safe, but I have to work,” the bank teller said of her child’s teachers. “I don’t understand why they are so special.” This kind of comparison can curdle people’s relationships to one another — and to their own jobs.Essential or nonessential, remote or in person, almost no one I know likes work very much at the moment. The primary emotion that a job elicits right now is the determination to endure: If we can just get through the next set of months, maybe things will get better.The act of working has been stripped bare. You don’t have little outfits to put on, and lunches to go to, and coffee breaks to linger over and clients to schmooze. The office is where it shouldn’t be — at home, in our intimate spaces — and all that’s left now is the job itself, naked and alone. And a lot of people don’t like what they see.There are two kinds of stories being told about work right now. One is a labor-market story, and because that’s a little dull and quite confusing, it’s mixed up with the second one, which is about the emotional relationship of American workers to their jobs and to their employers. The Great Resignation is the phrase that has been used, a little incorrectly, to describe each story.The Future of WorkDive into the magazine’s annual exploration of the ways in which work, and our lives with it, is changing.The Age of Anti-Ambition: When 25 million people leave their jobs, it’s about more than just burnout.Calling All Job Haters: Inside the rise and fall of r/Antiwork — the Reddit community that made it OK to quit, but couldn’t quite spark a labor movement.Nurse Shortages: As the coronavirus spread, demand for nurses came from every corner. Some jobs for those willing to travel  paid more than $10,000 a week. Is this a permanent shift?It’s true that we’re in the midst of a “quitagion,” as this paper has jauntily termed it, citing the record number of people (4.5 million) who gave notice in November alone. An estimated 25 million people left their jobs in the second half of 2021; it’s all but certain that this is the highest U.S. quit rate since the Bureau of Labor Statistics began tracking those numbers in 2000.The labor market, as economists like to say, is tight: Employment statistics are strong and getting stronger. Despite inflation, real income is up across all income levels. It’s a remarkable turnaround, following the early pandemic’s horrific job losses, which disproportionately affected the lowest earners and those with little job security. Many of the recent quitters have been on the lower part of the income ladder. They’re getting or seeking better work, for more money, because they can. And that kind of labor market means at least some lower-income workers get to think about their jobs the way the white-collar class more traditionally has, as something that needs to work for them, rather than the other way around.But those top-line numbers obscure a muddier truth. After the latest employment numbers were released in February (which seemed to show remarkable job growth and an unemployment rate of 4 percent), one B.L.S. economist took to his Substack to call it the “most complicated job report ever.” In addition to those workers trying to trade their way into objectively better jobs, millions of others have simply left the work force — because they’re sick, or taking care of children, or retiring, or just plain miserable.The precise reasons are a little mysterious. The jobs recovery isn’t spread evenly across industries, nor is the quit rate. Staffing levels in the leisure and hospitality sectors are still 10 percent lower than they were prepandemic, and according to December’s job report, people who work in hotels and restaurants are the most likely to have quit. Eight percent of all jobs in health care are open right now. There are almost 400,000 fewer health care workers now than there were before the pandemic. As LinkedIn’s chief economist put it to CBS News, “It may not just be worth it for some folks.”Even among the people who were technically employed, a sizable number were unable to work because of child care issues or sick leave. Add to that the fact that many people who would prefer full-time work with benefits are still working on employers’ terms, which means part-time, unstable employment, as The Times’s Noam Scheiber recently reported. And if you dig into the quit numbers for higher-wage workers, it’s still hardly about people going on “Eat, Pray, Love” journeys. The full picture just isn’t that rosy.It’s also not entirely a fluke of this moment. For decades, job productivity has been increasing while real wages haven’t. People were already stretched thin. The writer Anne Helen Petersen, who has made a specialty of truffle-hunting for the millennial internet’s preoccupations, recently wrote a book about professional-class burnout based on a viral 2019 BuzzFeed article she wrote on the same subject. (Her lead personal example involved not getting around to having her knives sharpened.) I was in a particularly stressful moment of a management job at the time and would Google the symptoms of burnout late at night, on a private browser screen. But I was allergic to people talking ostentatiously about it, and I was embarrassed by the indulgence of the language, or, maybe, what I saw as the self-importance of it.Now, though, it’s as if our whole society is burned out. The pandemic may have alerted new swaths of people to their distaste for their jobs — or exhausted them past the point where there’s anything to enjoy about jobs they used to like.Perhaps that’s why the press is filled with stories about widespread employee dissatisfaction; last month a Business Insider article declared that companies “are actively driving their white-collar workers away by presuming that employees are still thinking the way they did before the pandemic: that their jobs are the most important things in their lives,” and pointed to a Gallup poll that showed that last year only a third of American workers said they were engaged in their jobs.At Amazon, in its managerial ranks, employee departures have reached what is being seen as a “crisis” level, according to Bloomberg’s Brad Stone. (A source told him that the turnover rate was as high as 50 percent in some groups, although Amazon disputes this.) One woman, leaving her job, posted in an internal listserv she started called Momazonian, which has more than 5,000 members. “While it has been an incredibly rewarding place to work, the pressure often feels relentless and at times, unnecessary,” she wrote, in a Jerry Maguire screed for the careful networker set; she also copied senior vice presidents and some board members.It’s not an accident that it was the moms’ affinity group where she aired that feeling. A McKinsey study from last year showed that 42 percent of women feel burned out, compared with 32 percent in 2020. (For men, it jumped to 35 percent from 28 percent.) At the beginning of the pandemic, the working world lost more than 3.5 million mothers, according to the Census Bureau; and the National Women’s Law Center found that in early 2021, women’s labor-force participation was at a 33-year-low, returning us all the way back to the era when “Working Girl” was revolutionary. Many of those women haven’t come back.Illustration by María Jesús ContrerasSo the numbers are bad enough. But then there’s the way the hard facts of the economy interact with our emotions. Consider this theory: that the current office ennui was simply the inevitable backlash to the punishing culture of the previous decade’s #ThankGodItsMonday culture. And furthermore, sometime around the rise of #MeToo (and after Donald Trump’s election), ambition began to seem like a mug’s game. The enormous personal costs of getting to the top became clear, and the potential warping effects of being in charge also did. It wasn’t just the bad sexually harassing bosses who were fired but the toxic ones, too, and soon enough we began to question the whole way power in the office worked. What started out as a hopeful moment turned depressing fast. Power structures were interrogated but rarely dismantled, a middle ground that left everyone feeling pretty bad about the ways of the world. It became harder to trust anyone who was your boss and harder to imagine wanting to become one. Covid was an accelerant, but the match was already lit.Recently, I stumbled across the latest data on happiness from the General Social Survey, a gold-standard poll that has been tracking Americans’ attitudes since 1972. It’s shocking. Since the pandemic began, Americans’ happiness has cratered. The graph looks like the heart rate has plunged and they’re paging everyone on the floor to revive the patient. For the first time since the survey began, more people say they’re not too happy than say they’re very happy.The plague, the death, the supply chain, long lines at the post office, the collapse of many aspects of civil society might all play a role in that statistic. But in his classic 1951 study of the office-working middle class, the sociologist C. Wright Mills observed that “while the modern white-collar worker has no articulate philosophy of work, his feelings about it and his experiences of it influence his satisfactions and frustrations, the whole tone of his life.” I remember a friend once saying that although her husband wasn’t depressed, he hated his job, and it was effectively like living with a depressed person.After the latest job report, the economist and Times columnist Paul Krugman estimated that people’s confidence in the economy was about 12 points lower than it ought to have been, given that wages were up. As the pandemic drags on, either the numbers aren’t able to quantify how bad things have become or people seem to have persuaded themselves that things are worse than they actually are.It’s not in just the data where the words “job satisfaction” seem to have become a paradox. It’s also present in the cultural mood about work. Not long ago, a young editor I follow on Instagram posted a response to a question someone posed to her: What’s your dream job? Her reply, a snappy internet-screwball comeback, was that she did not “dream of labor.” I suspect that she is ambitious. I know that she is excellent at understanding the zeitgeist.It is in the air, this anti-ambition. These days, it’s easy to go viral by appealing to a generally presumed lethargy, especially if you can come up with the kind of languorous, wry aphorisms that have become this generation’s answer to the computer-smashing scene in “Office Space.” (The film was released in 1999, in the middle of another hot labor market, when the unemployment rate was the lowest it had been in 30 years.) “Sex is great, but have you ever quit a job that was ruining your mental health?” went one tweet, which has more than 300,000 likes. Or: “I hope this email doesn’t find you. I hope you’ve escaped, that you’re free.” (168,000 likes.) If the tight labor market is giving low-wage workers a taste of upward mobility, a lot of office workers (or “office,” these days) seem to be thinking about our jobs more like the way many working-class people have forever. As just a job, a paycheck to take care of the bills! Not the sum total of us, not an identity.Even elite lawyers seem to be losing their taste for workplace gunning. Last year, Reuters reported an unusual wave of attrition at big firms in New York City — noting that many of the lawyers had decided to take a pay cut to work fewer hours or move to a cheaper area or work in tech. It’s happening in finance, too: At Citi, according to New York magazine, an analyst typed “I hate this job, I hate this bank, I want to jump out the window” in a chat, prompting human resources to check on his mental health. “This is a consensus opinion,” he explained to H.R. “This is how everyone feels.”Things get weird when employers try to address this discontent. Amazon’s warehouse workers have, for the past year, been asked to participate in a wellness program aimed at reducing on-the-job injuries. The company recently came under fire for the reporting that some of its drivers are pushed so hard to perform that they’ve taken to urinating in bottles, and warehouse employees, for whom every move is tracked, live in fear of being fired for working too slowly. But now, for those warehouse workers, Amazon has introduced a program called AmaZen: “Employees can visit AmaZen stations and watch short videos featuring easy-to-follow well-being activities, including guided meditations [and] positive affirmations.” It’s self-care with a dystopian bent, in which the solution for blue-collar job burnout is … screen time.The cultural mood toward the office even appears in the television shows that knowledge workers obsessed over. Consider “Mad Men,” a show set during the peaking economy of the late 1960s. It was a show that found work romantic. I don’t mean the office affairs. I mean that the characters were in love with their work (or angrily sometimes out of love, but that’s a passion of its own). More than that, their careers and the little dramas of their daily work — the presentations to clients, the office politics — gave their lives a sense of purpose. (At the show’s end, Don Draper went to a resort that looks an awful lot like Esalen to find out the meaning of life, and meditated his way into a transformative … Coke ad campaign.)Peggy Olson, the striving adwoman on the make, has recently been taken up as the patron saint of quitters. An image of her shows up frequently illustrating articles about people leaving their jobs, sometimes in GIF form. In it, Olson is wearing sunglasses, carrying a box of office stuff. She has a cigarette dangling from her mouth, off to the side for maximum self-assurance. But she isn’t actually quitting in that scene. Instead, she’s walking into a new, better job at a different agency. The swagger she has comes from ambition, not from opting out.That show was on the air from 2007 to 2015, at the peak of what sometimes gets called hustle culture (and Obama-era optimism). Back then — just before, during and after a psyche-shattering global recession — work had betrayed large swaths of the population, but many (at least those who were better off, for whom the economy recovered much more quickly) took that as inspiration to work harder, to short-circuit the problems of employment with entrepreneurship, or the dreams of it. Start a company! Build a brand! Become a girlboss! (A word that used to be a compliment, not an insult.)Now, Sunday nights are for “Succession,” the beloved pitch-black workplace drama of the post-Trump nihilistic years. On that show, whose third season recently came to a close, work is a corrupting force. The Roy family is ruined not by their money but by their collective desire to run a conglomerate. Ambition perverts the love between parent and child, husband and wife, brother and sister. Even the from-nothing strivers on the show are ruined by their jobs. It’s a Greek tragedy filtered through the present moment, in which every bit of labor is said to happen under late capitalism, and all the jobs are burnout jobs.When “Succession” was over, the office workers of America got up off the couch, and they turned off the TV. They dozed off thinking about the psychological abuse the Roys heap on one another and their Waystar Royco underlings, then sat on the same couch Monday morning.It’s important to acknowledge that some people have reacted to this moment by becoming less cynical about the possibilities of work. The broader world is getting darker — climate change, crumbling democracy. It feels impossible to change it. But work? Work could change. An idealistic generation has set about demanding a utopian world, on a local scale, in their own little Busytowns. More diversity, more attention to structural racism, better hours, better boundaries, better leave policies, better bosses.At some companies, it finally feels as if the old hierarchies are being upended, and the top-paid people are running a little scared of their underlings, rather than the other way around. (No one has much sympathy for managers, and it’s true, as Don Draper once told Peggy Olson, that’s what the money is for. But steering a company through the past few years has been its own particular challenge.)Confronted with this world, many young people with professional options want to be in solidarity with their colleagues instead of climbing the ladder above them. The meaning that they once found in work is now found in trying to make the workplace itself better. At Authentic, a Democratic consulting firm, some members of the unionized staff are refusing to work a contract serving Senator Kyrsten Sinema. Unionized think-tankers at the Center for American Progress, which tends to serve as a pipeline to coveted roles in Democratic presidential administrations, threatened to strike in mid-February over their wages. Some congressional staff members have begun the process of forming a union.I’m now on staff at a digital news site that is unionized; I marvel at the fact that I can have a job with a title like “editor at large” and all the benefits that come from union membership. At Google, home of plush offices and free meals, the company formally recognized a union in early 2021 composed of 400 of its highly paid engineers. The professional managerial classes — as Bernie Sanders supporters called that slice of the white-collar work force pejoratively — are in the middle of developing a class consciousness.So some of the most prestigious offices are organizing, and the college-educated make up a larger slice of the union pie than ever, thanks largely to growth among teachers’ unions. But union membership, more broadly, is at an all-time low. Those warehouse employees at Amazon voted against unionization in Alabama last year. (A federal review board found that Amazon had improperly pressured staff members against forming a union, and ordered a revote, which will take place in five weeks.) Amazon workers might end up voting to join a union. Starbucks employees are starting the process, too. But somehow, workplace protections still seem in danger of becoming one more luxury item that accrues to the privileged.Perhaps there’s no better example of this than what happened at Goldman Sachs last year. Junior bankers in San Francisco felt alienated over their long hours, what they considered low pay and lack of Seamless stipends while working from home. They made a formal presentation to their office’s top executives, relying on survey data they gathered that showed, for instance, that three-quarters of them felt they had been victims of workplace abuse. It was something a little like collective action by America’s future elite.One lead organizer of that action was, as Bloomberg reported, the son of the vice chairman of TPG Capital, a private-equity firm. His father, a creature of a previous zeitgeist, got his start working for Michael Milken at Drexel Burnham Lambert, the famously competitive (and corrupt) investment bank.The son’s hostile takeover worked. The Goldman analysts got their base pay raised by nearly 30 percent. New York magazine reported that while at least five of the 13 analysts from the protest cohort in San Francisco had already left Goldman (four of whom were women of color), the bank was having no trouble recruiting college students to join the next class of analysts.The Goldman raise is a reminder of a cold, hard fact. One that is explained in the very first sentence of Richard Scarry’s “What Do People Do All Day?”: “We all live in Busytown and we are all workers. We work hard so that there will be enough food and houses and clothing for our families.” Work is mainly, really, about making money to live. And then trying to make some more. A boring, ancient story. The future of work might be more like its past than anyone admits.Noreen Malone is an editor at large for Slate Magazine. In 2015, she won a George Polk Award and a Newswomen’s Club award for her reporting in New York magazine on the women who accused Bill Cosby of rape and sexual assault. More

  • 113 Shares99 Views

    in Economy

    For China, Hosting the Olympics Is Worth Every Billion

    by

    For many cities, the Games make no economic sense. National pride and an enthusiasm for building transportation infrastructure change the equation for Beijing.ZHANGJIAKOU, China — To make an Olympic ski jump, China clad a hillside in steel and blanketed it with artificial snow. To construct a high-speed rail line linking the venues and Beijing, engineers blasted tunnels through the surrounding mountains. And to keep the coronavirus at bay, workers are conducting tens of thousands of P.C.R. tests on Games participants every day.Hosting the Winter Olympics is costing China billions of dollars, a scale of expenditure that has made the event less appealing to many cities around the world in recent years. More and more of them have concluded that the Games are not worth being left with a hefty bill, white elephant stadiums and fewer benefits from tourism than they had hoped.But China looks at the Games with a different calculus. Beijing has long relied on heavy investments in building railway lines, highways and other infrastructure to provide millions of jobs to its citizens and reduce transportation costs. With the 2022 Games, it also hopes to nurture an abiding interest in skiing, curling, ice hockey and other winter sports that could increase consumer spending, particularly in the country’s chilly and economically struggling northeast.The Zhangjiakou National Ski Jumping Center for the 2022 Winter Olympics. Beijing hopes the Games will nurture interest in skiing and other winter sports that could boost consumer spending.Hiroko Masuike/The New York TimesPerhaps most important of all to China’s leader, Xi Jinping, the Olympics are a chance to demonstrate to the world his country’s unity and confidence under his leadership.“For China’s international image, prestige, and face, as the Chinese would say, nothing is too expensive,” said Jean-Pierre Cabestan, a political scientist at Hong Kong Baptist University.Still, with China’s economy already slowing, and a dimming outlook for global growth, as well as concerns that the Omicron variant of the coronavirus would lead to more shutdowns and choking of global supply chains, Beijing has been wary of spiraling costs. Even Mr. Xi acknowledged the event had to be streamlined, saying last year that the aim was to hold a “simple, safe, splendid” event.Making hockey skates at Hongwei Sports Goods Company’s facilities in Zhangjiakou.Kevin Frayer/Getty ImagesPractically every Olympic Games in recent years has triggered disputes over cost overruns. A study at Oxford University had found that the operating costs of Olympics held since 1960 have averaged nearly three times what the host cities originally bid.The city of Sochi in Russia, which hosted the Winter Olympics in 2014, spent and invested more than $50 billion — half of which was on infrastructure. When Beijing hosted the Summer Olympics in 2008, it said it had spent $6.8 billion, but that did not include the tens of billions more it used to build roads, stadiums, subway lines and an airport terminal.Names to WatchKamila Valieva: The doping case surrounding the Russian figure skater, who will be allowed to compete but won’t be able to receive medals, echoes another dark Olympic era.Kaillie Humphries: The bobsledder, who left Canada after accusing her coach of mental abuse, won gold for the U.S. in monobob.Erin Jackson: The speedskater’s gold ended a U.S. drought and made her the first African American to medal in the sport.Chris Corning: The American snowboarder, who is more calculating and quiet than his competitors, thinks his sport has an image problem. He wants to fix it.This time, China has set a budget of about $3 billion, a figure that includes the building of competition venues, but not projects like a $1 billion high-speed rail line and a $5 billion expressway.Yang Qian, an Olympic sport shooter, during the Winter Olympics torch relay at the Badaling Great Wall on Feb. 3 in Beijing. One way China saved money was by shortening the torch relay.Kevin Frayer/Getty ImagesThe pandemic is making the Games even more expensive. The bill for last summer’s Olympics in Tokyo included $2.8 billion in coronavirus prevention costs alone. China’s “zero Covid” strategy, which focuses on eradicating outbreaks, has meant infection control measures are much more elaborate.China’s concerns about the pandemic have dashed hopes that the Games would draw tourists. Organizers said last autumn that they would not sell tickets to foreign spectators. Then they announced last month that most Chinese residents would not get to go, either, prompting a last-minute rush by hotel managers in Beijing to cut drastically the high room rates they had set for February.Despite these difficulties, Chinese authorities have insisted that they have stayed within the operating budget.Officials have said the lack of spectators has meant fewer employees are needed at the Games. China also saved money by canceling a welcoming ceremony for foreign visitors and shortening the torch relay to just three days, the Beijing organizing committee said in an emailed reply to questions. Beijing has also been able to reuse competition venues, a giant media center and other facilities built for the 2008 Summer Olympics.The National Stadium, also known as the Bird’s Nest. Hosting the Winter Olympics is costing China billions of dollars, a scale of expenditure that has made the event less appealing to many cities.Hiroko Masuike/The New York TimesAt $3.1 billion, China’s operating budget is comparable to the average, inflation-adjusted cost of hosting previous Winter Olympics, according to the University of Oxford researchers.“Judging by the cost of previous Winter Olympics, that should be enough to cover the cost, especially when you consider that many of the facilities have already been built,” said one of the experts, Bent Flyvbjerg, a professor of major program management at Oxford.But it is hard to assess what portion of the coronavirus prevention costs, if any, is being included in the budget, Mr. Flyvbjerg said. Chinese accounting is often opaque, and there are many budgets in which health spending can be counted, he said.The government has also pressed businesses to take on more of the cost of hosting the Games. Other host cities of previous Olympics spent heavily to build lodging for athletes and journalists and a media center. China has taken a different approach.In Zhangjiakou, an area near Beijing where some competitions are being held, the Chinese authorities have temporarily taken over the Malaysian-owned Genting Secret Garden ski resort. The resort expanded its capacity to 3,800 rooms and vacation apartments, up from 380 before China won its Olympic bid. Lim Chee Wah, the founder and a co-owner of the resort, said in an interview that he had not been told how much the government would compensate him for the use of the resort for most of the winter season, but that he trusted it would be fair.Apartments at the Genting Secret Garden ski resort in 2019. The resort is near the venue for some of the events at the 2022 Games.Greg Baker/Agence France-Presse — Getty Images“We said, fine, thank you, but we’ll negotiate how to do the compensation — that will be done later,” he said.China also doesn’t count long-term infrastructure investments made in the years before the Games.The national government spent $2 billion building an expressway from northwest Beijing to Yanqing, where Olympic sliding and Alpine skiing events are being held, and an additional $3.6 billion to extend the expressway to the Taizicheng valley, where the ski resorts are.Before Beijing won its bid to host the 2022 Olympics, the government began spending $8.4 billion on a high-speed rail line that whisks travelers from Beijing toward Inner Mongolia at speeds of up to 217 miles per hour. After winning the Olympics, Beijing added $1 billion to that project to build an extra segment that peels off the main line and goes up into the mountains to Taizicheng.“The Chinese are not counting any of that — they say they would have built that anyway,” said Andrew Zimbalist, a professor at Smith College who has published three books about the economics of the Olympics. “I question whether they were going to do it anyway, and if they were going to do it anyway, why do they have to host the Olympics.”Big Air Shougang, the location of the freestyle skiing and snowboarding events.Hiroko Masuike/The New York TimesResort owners like Mr. Lim of Genting hope the new infrastructure will help develop the industry. In expanding the resort 10-fold ahead of the Olympics, he said, he had been told to expect that the national rail service would run 15 or 20 trains a day to the Taizicheng valley.In an email reply to questions, China’s national railway said it ran 15 bullet trains daily in each direction when the line opened at the end of 2019. But the schedule was cut drastically just a month later when the pandemic began, to five trains on most days, and an extra five on peak travel days.China regards the Olympics as transforming Beijing, which gets only a foot of natural snow most winters, into a global destination for winter sports.“The success in opening the Winter Olympics has brought positive economic benefits and created new sources of growth for the local economy,” said the top spokesman for the city of Beijing, Xu Hejian.Liu Yi More

  • 150 Shares199 Views

    in Economy

    Modern Monetary Theory Got a Pandemic Tryout. Inflation Is Now Testing It.

    by

    The sun was sinking low over Long Island Sound as Stephanie Kelton, wearing the bright red suit jacket she had donned to give a virtual guest lecture to university students in London that morning, perched before a pillow fort she had constructed atop the heavy wooden desk in her home office.The setup was meant to keep out noise as she recorded the podcast she co-hosts, a MarketWatch production called the “Best New Ideas in Money.” The room was hushed except for Ms. Kelton, who bantered energetically with the producers she was hearing through noise-blocking headphones, sang a Terri Gibbs song and made occasional edits to the script. At one point, she muttered, “That sounds like Stephanie.”What Stephanie Kelton sounds like, circa early 2022, is the star architect of a movement that is on something of a victory lap. A victory lap with an asterisk.Ms. Kelton, 52, is the most familiar public face of Modern Monetary Theory, which posits that if a government controls its own currency and needs money — to make sure its citizens have food and places to live when, say, a global pandemic pushes many out of work — it can just print it, as long as its economy has the ability to churn out the needed goods and services.In the M.M.T. view of the world, “How will you pay for it?” is a vapid policy question. Real-world resources and political priorities determine how much lawmakers can and should spend.It is an idea that was forged, and put to something of a test, during a low-inflation era.When Ms. Kelton’s book, “The Deficit Myth,” was published in June 2020 and shot onto best seller lists, inflation had been weak for decades and had dropped below 1 percent as consumers retrenched in the pandemic. The government had begun to spend rapidly to try to prop up flailing households.When Ms. Kelton appeared on a Bloomberg podcast episode, “How M.M.T. Won the Fiscal Policy Debate,” in early 2021, inflation had bounced back to around 2 percent.But by a chilly January afternoon, as ducks flew over the frosty estuary outside Ms. Kelton’s house near Stony Brook University, where she teaches, inflation had rocketed up to 7 percent. The government’s debt pile has exploded to $30 trillion, up from about $10 trillion at the start of the 2008 downturn and $5 trillion in the mid-1990s.The good news: The government has had no trouble selling bonds to fund its spending, contrary to the direst projections of deficit scolds.The bad news: Some economists blame big spending in the pandemic for today’s rapid price increases. The government will release fresh Consumer Price Index data this week, and it is expected to show inflation running at its fastest pace since 1982.And that may be why Ms. Kelton, and the movement she has come to represent, now seem anxious to control the narrative. The pandemic spending wasn’t entirely consistent with M.M.T principles, they say — it wasn’t assessed carefully for its inflationary effects as it was being drawn up, because it was crisis policy. But the situation has underlined how hard it is to know just where the economy’s constraints lay, and how difficult it is to fix things once you run into them.Last summer, Ms. Kelton called inflation a temporary sign of “growing pains.” By the fall, she painted it as a good problem to solve, compared with a continued weak economy. As it lingers, she has argued that diagnosing what is causing it is key.“Can we blame ‘MMT’ for the run-up in inflation?” she tweeted rhetorically last month, just hours before her podcast recording.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: We asked readers to send questions about inflation. Top experts and economists weighed in.What’s to Blame: Did the stimulus cause prices to rise? Or did pandemic lockdowns and shortages lead to inflation? A debate is heating up in Washington.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.“Of course not.”Emon Hassan for The New York TimesThe economy is the limitTo understand how M.M.T. fits in with other dominant ways of thinking, it’s helpful to take a trip to the beach.In economics, there’s a school of thought sometimes called “freshwater.” It’s the set of ideas that became popular at inland universities in the 1970s, when they began to embrace rational markets and limited government intervention to fight recessions. There’s also “saltwater” thinking, an updated version of Keynesianism that argues that the government occasionally needs to jump-start the economy. It has traditionally been championed in the Ivy League and other top-ranked schools on the coasts.You might call the school of thought Ms. Kelton is popularizing, from a bay that feeds into the East River, brackish economics.M.M.T. theorists argue that society should feel capable of spending to achieve its goals to the extent that there are resources available to fulfill them. Deficit spending need not be constrained to recessions, even theoretically. Want to build a road? No problem, so long as you have asphalt and construction workers. Want to feed children free lunches? Also not a problem, so long as you have the food and the cafeteria workers.What became Modern Monetary Theory began to percolate among a small group of academics when Ms. Kelton, a former military brat and one-time furniture saleswoman, was a graduate student.She had a gap period between graduating with a bachelor’s degree from California State University, Sacramento and attending Cambridge University on a Rotary scholarship, and her college economics professor recommended that she spend the time studying with L. Randall Wray, an early pioneer in the set of ideas.They hit it off. She remained in Mr. Wray’s circle, and he — and Warren Mosler, a hedge fund manager who had written a book on what we get wrong about money — convinced her that the way America understood cash, revenues and budgeting was all backward.Ms. Kelton earned her doctorate at The New School, long a booster of out-of-mainstream economic thinking, and went on to teach at the University of Missouri-Kansas City. She, Mr. Wray, who was there at the time, and their colleagues mentored doctoral students and began to write academic papers on the new way of thinking.But academic missives reached only a small circle of readers. After the 2008 financial crisis punched a hole in the economy that would take more than a decade to fill, Ms. Kelton and her colleagues, invigorated with a new urgency, began a blog called “New Economic Perspectives.” It was a bare bones white, red and black layout, using a standard WordPress template, that served as a place for M.M.T. writers to make their case (and, in its early days, featured a #Occupy[YourCityHere] tab).The theory picked up some fervent followers but limited popular acceptance, charitably, and outright derision, uncharitably. Mainstream economists panned it as overly simplistic. Many were confused about what it was arguing.“I have heard pretty extreme claims attributed to that framework and I don’t know whether that’s fair or not,” Jerome H. Powell, the Fed chair, said in 2019. “The idea that deficits don’t matter for countries that can borrow in their own currency is just wrong.”Ms. Kelton kept the faith. She and her colleagues held conferences, including one in 2018 at The New School where she gave a lecture on “mainstreaming M.M.T.”Rohan Grey organized the conference and a media reception afterward at an Irish pub (“‘Shades of Green,’ monetary pun intended,” he said). It was attended by organizers, academics, “lay people” and lots of journalists. At the happy hour — which lasted until 1 a.m. — Ms. Kelton was mobbed when she walked in the door. “She was already on her way to super celebrity status at that point,” said Mr. Grey, an assistant professor at Willamette Law.When she gave presentations on her ideas, Ms. Kelton would occasionally display a quote often attributed to Mahatma Gandhi: “First they ignore you, then they laugh at you, then they fight you. Then you win.”And her star was rising more broadly. She advised Bernie Sanders’ presidential campaigns in 2016 and 2020, getting to know the Vermont senator. He never fully publicly embraced M.M.T., but he nevertheless advanced policies — like Medicare for All — that reflected its ideals.She amassed a following of tens of thousands, later growing to 140,000, on Twitter. Her first handle, @deficitowl, prompted ardent fans to gift her wise bird figurines, some of which are still on display in her home office. She cultivated a small coterie of prominent journalists who were interested in the idea, most notably Joe Weisenthal at Bloomberg. She signed a book deal. She was regularly talking to Democratic lawmakers, sometimes in groups.Her idea percolated through Washington’s media and liberal policy circles. Mainstream economic predictions that huge debt loads would come back to haunt nations like Japan had not played out, the anemic rebound from 2008 had scarred society and called the size of the crisis response into question. Ms. Kelton and her colleagues were ensuring that their theory on benign deficits was an ever-present feature of the blossoming debate.Then the pandemic hit, and suddenly the theoretical question of just how much the government could spend before it ran into limits faced a real-world experiment.The $1.9 Trillion FloorWithout thinking about paying for it, Donald J. Trump’s government quickly passed a $2.3 trillion relief package in late March 2020. In December, it followed that up with another $900 billion. President Biden took office in early 2021, and promptly added $1.9 trillion more.Inflation F.A.Q.Card 1 of 6What is inflation? More

  • 138 Shares199 Views

    in Economy

    From Liverpool to London, Inflation Means Tighter Wallets and Colder Homes

    by

    LIVERPOOL, England — For the past few weeks Vincent Snowball hasn’t needed to use the weekly food bank that runs out of a church near Liverpool’s city center. But he’s still there each Tuesday, laying out fabric swatches to advertise his upholstering services, and to socialize with the people he grew up with.Like many people across Britain, Mr. Snowball, 61, has been forced to cut down his already modest expenses to stabilize his finances. Prices are rising at their fastest pace in three decades.“I go to Tesco and I get a shock,” he said, referring to Britain’s ubiquitous supermarket chain. The prices there are “troubling,” he said. Instead he shops at Aldi, the rapidly growing chain that claims to be the cheapest supermarket in Britain.Prices are rising steeply in the United States and across Europe, driven by rising energy costs and supply-chain issues triggered by the easing of pandemic rules. But in Britain, there is a fear that sharply escalating heat and electricity bills, combined with food inflation, will push millions more into poverty.The Bank of England on Thursday lifted interest rates for the second time in two months — moving before the Federal Reserve or the European Central Bank. But policymakers acknowledge there is little they can do about the global factors driving inflation.Up and down the country, people are turning their heat down or off, switching to cheaper supermarkets, taking fewer car trips, cutting out takeout and restaurant meals, and abandoning plans for vacations.Because natural gas prices have risen so much, Vincent Snowball rarely turns on his heat, using it mainly for hot water. “I’m very conscious about what I use,” he said.Mary Turner for The New York TimesThursday brought more painful news when the government’s price cap on energy bills was raised by 54 percent, or about 700 pounds ($953) annually, reflecting high global prices for natural gas. The increase will affect 22 million households beginning in April. That same month, a large rise in National Insurance, a payroll tax that finances the National Health Service, among other things, will also take effect, further shrinking take-home pay.Although inflation is expected to peak in April, at 7.25 percent, Bank of England economists say household finances will continue to erode: For the next two years, household incomes after inflation and taxes will be less than the year before, the bank said. This will be the third stretch of time in about a decade that real wages have shrunk in Britain.This period is “somewhat unprecedented because it comes on the back of a very huge Covid shock” and Brexit, said Arnab Bhattacharjee, a professor of economics at Heriot-Watt University in Edinburgh and a researcher at Britain’s National Institute of Economic and Social Research.Mr. Snowball’s gas bill has risen, after a surge in natural gas prices in Europe late last year, and so he mostly uses it for hot water. Despite living in the northwest of England, he rarely turns the heating on. “I’m very conscious about what I use,” he said.But there are limits to how much Mr. Snowball can withstand. He receives about £300 ($403) in state support toward his £550 monthly rent and another £213 a month in working tax credits, financial support for people on low incomes. There aren’t any luxuries to cut.Having cup of tea and a chat at the food pantry run by Micah Liverpool, a charity. Since the pandemic began, the number of Britons receiving the main public income benefit has doubled.Mary Turner for The New York Times“There’s millions of people like that,” Mr. Snowball said.Although the British economy has slowly shaken off much of the torpor from the sharp recession brought on by the coronavirus, millions aren’t enjoying the recovery. Since the start of the pandemic, the number of people receiving Universal Credit, the main government income benefit, doubled to six million. Since the peak nearly 11 months ago, it has fallen only to 5.8 million. The number of people using food banks also jumped, according to the Trussell Trust, a nonprofit that provides emergency food packages, and independent groups.A cost-of-living crunch was forewarned last fall but “what came as a surprise this time round was the degree of food price inflation,” Mr. Bhattacharjee said. “This has not happened in the past decade.” In December alone, food and nonalcoholic drink prices rose 1.3 percent, the fastest monthly pace since 2011.For more and more people, it’s impossible to ignore. Katie Jones’s main food shopping trip, which she does twice a month, used to cost up to £80; now it’s more likely to be £100. Ms. Jones, 33, works full time in Liverpool city center at a branch of a national coffee shop chain. She lives across the River Mersey with her partner and their three children where, in December, the energy bills increased from £95 a month to £140.“We no longer have takeaways in the house,” she said. “Partly it was for health reasons, but I also noticed just how much it costs.” And there are fewer date nights with her partner because she can’t push the cost of them out of her head.In Earlsfield, the local food bank has had to cut more expensive food and toiletry items from its packages.Mary Turner for The New York TimesFood inflation is hurting those who are trying to help. Managers of the Earlsfield Foodbank in southwest London recently decided to cut items from their offering — including juice, snacks, cheese and peanut butter — because they are too expensive now. And they will provide fewer toiletries and household items, such as laundry detergent.Each week, the food bank buys a wide variety of fresh vegetables and fruit, and other food, to supplement its donations. In the past few weeks, the cost of supplies has increased worryingly.“That number is going up and isn’t really sustainable throughout the year,” said Charlotte White, the manager.As the cost of purchases rises, so does the list of people seeking help. Last week, eight more people registered with Earlsfield Foodbank, and 71 people received food parcels. In March 2020, they were averaging 25 guests a week, with fewer families and working people.“Families are already at, if not beyond, breaking point,” said Ruth Patrick of the University of York and the lead academic of Covid Realities, a national project in which about 150 low-income parents and care-providers have documented their experiences through the pandemic. “We get a really dominant message coming through about fear and anxiety and worry about how people will get by.”“Probably, I was quite comfortable last year,” said Joanne Barker-Marsh. “Now there is no buffer.” She is considering selling her home, which is becoming less affordable.Mary Turner for The New York TimesThrough the project, Joanne Barker-Marsh, 49, has found some emotional, and at times financial, support. She lives in a two-bedroom house on the outskirts of Manchester with her 12-year-old son Harry, and worries that, with its high ceilings and uncarpeted floors, it is too cold. Understand Rising Gas Prices in the U.S.Card 1 of 5A steady rise. More

  • 113 Shares199 Views

    in Economy

    Food Prices Approach Record Highs, Threatening the World’s Poorest

    by

    The prices have climbed to their highest level since 2011, according to a U.N. index. It could cause social unrest “on a widespread scale,” one expert said.WASHINGTON — Food prices have skyrocketed globally because of disruptions in the global supply chain, adverse weather and rising energy prices, increases that are imposing a heavy burden on poorer people around the world and threatening to stoke social unrest.The increases have affected items as varied as grains, vegetable oils, butter, pasta, beef and coffee. They come as farmers around the globe face an array of challenges, including drought and ice storms that have ruined crops, rising prices for fertilizer and fuel, and pandemic-related labor shortages and supply chain disruptions that make it difficult to get products to market.A global index released on Thursday by the United Nations Food and Agriculture Organization showed food prices in January climbed to their highest level since 2011, when skyrocketing costs contributed to political uprisings in Egypt and Libya. The price of meat, dairy and cereals trended upward from December, while the price of oils reached the highest level since the index’s tracking began in 1990.Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics who was formerly chief economist at the International Monetary Fund, said that food price increases would strain incomes in poorer countries, especially in some parts of Latin America and Africa, where some people may spend up to 50 or 60 percent of their income on food.He said that it wasn’t “much of an exaggeration” to say the world was approaching a global food crisis, and that slower growth, high unemployment and stressed budgets from governments that have spent heavily to combat the pandemic had created “a perfect storm of adverse circumstances.”“There’s a lot of cause for worry about social unrest on a widespread scale,” he added.Even before the pandemic, global food prices had been trending upward as disease wiped out much of China’s pig herd and the U.S.-China trade war resulted in Chinese tariffs on American agricultural goods.But as the pandemic began in early 2020, the world experienced seismic shifts in demand for food. Restaurants, cafeterias and slaughterhouses shuttered, and more people switched to cooking and eating at home. Some American farmers who could not get their products into the hands of consumers were forced to dump milk in their fields and cull their herds.Two years later, global demand for food remains strong, but higher fuel prices and shipping costs, along with other supply chain bottlenecks like a shortage of truck drivers and shipping containers, continue to push up prices, said Christian Bogmans, an economist at the International Monetary Fund.Drought and bad weather in major agricultural producing countries like Brazil, Argentina, the United States, Russia and Ukraine have worsened the situation.The I.M.F.’s data shows that average food inflation across the world reached 6.85 percent on an annualized basis in December, the highest level since their series started in 2014. Between April 2020 and December 2021, the price of soybeans soared 52 percent, and corn and wheat both grew 80 percent, the fund’s data showed, while the price of coffee rose 70 percent, due largely to droughts and frost in Brazil.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: We asked readers to send questions about inflation. Top experts and economists weighed in.What’s to Blame: Did the stimulus cause prices to rise? Or did pandemic lockdowns and shortages lead to inflation? A debate is heating up in Washington.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.While food prices appear set to stabilize, events like a conflict in Ukraine, a major producer of wheat and corn, or further adverse weather could change that calculation, Mr. Bogmans said.The effects of rising food prices have been felt unevenly around the world. Asia has been largely spared because of a plentiful rice crop. But parts of Africa, the Middle East and Latin America that are more dependent on imported food are struggling.Countries like Russia, Brazil, Turkey and Argentina have also suffered as their currencies lost value against the dollar, which is used internationally to pay for most food commodities, Mr. Bogmans said.In Africa, bad weather, pandemic restrictions and conflicts in the Democratic Republic of Congo, Ethiopia, Nigeria, South Sudan and Sudan have disrupted transportation routes and driven up food prices.Joseph Siegle, the director of research at National Defense University’s Africa Center for Strategic Studies, estimated that 106 million people on the continent are facing food insecurity, double the number since 2018.“Africa is facing record levels of insecurity,” he said.While shopping at a market in Mexico City’s Juarez neighborhood on Thursday, Gabriela Ramírez Ramírez, a 43-year-old domestic worker, said the increase in prices had strained her monthly budget, about half of which goes to food. Inflation in Mexico reached its highest rate in more than 20 years in November, before easing slightly in December.“It affects me a lot because you don’t earn enough, and the raises they give you are very small,” she said. “Sometimes we barely have enough to eat.”The impact has been less severe in the United States, where food accounts for less than one-seventh of household spending on average, and inflation has become broad-based, spilling into energy, used cars, dishwashers, services and rents as price increases reach a 40-year high.Yet American food prices have still risen sharply, putting a burden on the poorest households who spend more of their overall budget on food. Food prices rose 6.3 percent in December compared with a year ago, while the price of meat, poultry, fish and eggs jumped 12.5 percent, according to the Bureau of Labor Statistics.The Biden administration has tried to restrain some of these increases, including with an effort to combat consolidation in the meat packing business, which it says is a source of higher prices.Inflation F.A.Q.Card 1 of 6What is inflation? More

  • 150 Shares179 Views

    in Economy

    Why the January Jobs Report May Disappoint, and Is Sure to Perplex

    by

    The January jobs report is arriving at a critical time for the U.S. economy. Inflation is rising. The pandemic is still taking a toll. And the Federal Reserve is trying to decide how best to steer the economy through a swirl of competing threats.Unfortunately, the data, which the Labor Department will release on Friday, is unlikely to provide a clear guide.A slew of measurement issues and data quirks will make it hard to assess exactly how the latest coronavirus wave has affected workers and businesses, or to gauge the underlying health of the labor market.“It’s going to be a mess,” said Skanda Amarnath, executive director of Employ America, a research group.Data for the report was collected in mid-January, near the peak of the wave of cases associated with the Omicron variant. There is no question that the surge in cases was disruptive: A Census Bureau survey estimated that more than 14 million people in late December and early January were not working either because they had Covid-19 or were caring for someone who did, more than at any other point in the pandemic.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: We asked readers to send questions about inflation. Top experts and economists weighed in.What’s to Blame: Did the stimulus cause prices to rise? Or did pandemic lockdowns and shortages lead to inflation? A debate is heating up in Washington.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.But exactly how those disruptions will affect the jobs numbers is less certain. Forecasters surveyed by Bloomberg expect the report to show that employers added 150,000 jobs in January, only modestly fewer than the 199,000 added in December. But there is an unusually wide range of estimates, from a gain of 250,000 jobs to a loss of 400,000.The Biden administration and its allies are bracing for a grim report, warning on Twitter and in conversations with reporters that a weak January jobs number would not necessarily be a sign of a sustained slowdown.Economists generally agree. Coronavirus cases have already begun to fall in most of the country, and there is little evidence so far that the latest wave caused lasting economic damage. Layoffs have not spiked, as they did earlier in the pandemic, and employers continue to post job openings.“You could have the possibility of a payroll number that looks really truly horrendous, but you’re pulling on a rubber band,” said Nick Bunker, director of economic research for the job site Indeed. “Things could bounce back really quickly.”Still, the January data will be unusually confusing because Omicron’s impact will affect different particulars in different ways.Two Measures of EmploymentThe number that usually gets the most attention, the count of jobs gained or lost, is based on a government survey that asks thousands of employers how many employees they have on their payrolls in a given pay period. People who miss work — because they are out sick, are quarantining because of coronavirus exposure or are caring for children because their day care arrangements have been upended — might not be counted, even though they haven’t lost their jobs.Forecasting the impact of such absences on the jobs numbers is tricky. The payroll figure is meant to include anyone who worked even a single hour in a pay period, so people who miss only a few days of work will still be counted. Employees taking paid time off count, too. Still, the sheer scale of the Omicron wave means that absences are almost certain to take a toll.The jobs report also includes data from a separate survey of households. That survey considers people “employed” if they report having a job, even if they are out sick or absent for other reasons. The different definitions mean that the report could send conflicting signals, with one measure showing an increase in jobs and the other a decrease.Inflation F.A.Q.Card 1 of 6What is inflation? More

  • 150 Shares109 Views

    in Economy

    Why Are Oil Prices So High and Will They Stay That Way?

    by

    HOUSTON — Oil prices are increasing, again, casting a shadow over the economy, driving up inflation and eroding consumer confidence.Crude prices rose more than 15 percent in January alone, with the global benchmark price crossing $90 a barrel for the first time in more than seven years, as fears of a Russian invasion of Ukraine grew.Though the summer driving season is still months away, the average price for regular gasoline is fast approaching $3.40 a gallon, roughly a dollar higher than it was a year ago, according to AAA.The Biden administration said in November that it would release 50 million barrels of oil from the nation’s strategic reserves to relieve the pressure on consumers, but the move hasn’t made much of a difference.Many energy analysts predict that oil could soon touch $100 a barrel, even as electric cars become more popular and the coronavirus pandemic persists. Exxon Mobil and other oil companies that only a year ago were considered endangered dinosaurs by some Wall Street analysts are thriving, raking in their biggest profits in years.Why are oil prices suddenly so high?The pandemic depressed energy prices in 2020, even sending the U.S. benchmark oil price below zero for the first time ever. But prices have snapped back faster and more than many analysts had expected in large part because supply has not kept up with demand.Oil prices are at their highest point since 2014.Price of a barrel of Brent crude, the global benchmark, and West Texas Intermediate, the U.S. standard

    Source: FactSetBy The New York TimesWestern oil companies, partly under pressure from investors and environmental activists, are drilling fewer wells than they did before the pandemic to restrain the increase in supply. Industry executives say they are trying not to make the same mistake they made in the past when they pumped too much oil when prices were high, leading to a collapse in prices.Elsewhere, in countries like Ecuador, Kazakhstan and Libya, natural disasters and political turbulence have curbed output in recent months.Understand Russia’s Relationship With the WestThe tension between the regions is growing and Russian President Vladimir Putin is increasingly willing to take geopolitical risks and assert his demands.Competing for Influence: For months, the threat of confrontation has been growing in a stretch of Europe from the Baltic Sea to the Black Sea. Threat of Invasion: As the Russian military builds its presence near Ukraine, Western nations are seeking to avert a worsening of the situation.Energy Politics: Europe is a huge customer of Russia’s fossil fuels. The rising tensions in Ukraine are driving fears of a midwinter cutoff.Migrant Crisis: As people gathered on the eastern border of the European Union, Russia’s uneasy alliance with Belarus triggered additional friction.Militarizing Society: With a “youth army” and initiatives promoting patriotism, the Russian government is pushing the idea that a fight might be coming.“Unplanned outages have flipped what was thought to be a pivot towards surplus into a deep production gap,” said Louise Dickson, an oil markets analyst at Rystad Energy, a research and consulting firm.On the demand side, much of the world is learning to cope with the pandemic and people are eager to shop and make other trips. Wary of coming in contact with an infectious virus, many are choosing to drive rather than taking public transportation.But the most immediate and critical factor is geopolitical.A potential Russian invasion of Ukraine has “the oil market on edge,” said Ben Cahill, a senior fellow at the Center for Strategic and International Studies in Washington. “In a tight market, any significant disruptions could send prices well above $100 per barrel,” Mr. Cahill wrote in a report this week.Russia produces 10 million barrels of oil a day, or roughly one of every 10 barrels used around the world on any given day. Americans would not be directly hurt in a significant way if Russian exports stopped, because the country sends only about 700,000 barrels a day to the United States. That relatively modest amount could easily be replaced with oil from Canada and other countries.A Russian invasion of Ukraine could interrupt oil and gas shipments, which would increase prices further.Brendan Hoffman for The New York TimesBut any interruption of Russian shipments that transit through Ukraine, or the sabotage of other pipelines in northern Europe, would cripple much of the continent and distort the global energy supply chain. That’s because, traders say, the rest of the world does not have the spare capacity to replace Russian oil.Even if Russian oil shipments are not interrupted, the United States and its allies could impose sanctions or export controls on Russian companies, limiting their access to equipment, which could gradually reduce production in that country.In addition, interruptions of Russian natural gas exports to Europe could force some utilities to produce more electricity by burning oil rather than gas. That would raise demand and prices worldwide.What can the United States and its allies do if Russian production is disrupted?The United States, Japan, European countries and even China could release more crude from their strategic reserves. Such moves could help, especially if a crisis is short-lived. But the reserves would not be nearly enough if Russian oil supplies were interrupted for months or years.Western oil companies that have pledged not to produce too much oil would most likely change their approach if Russia was unable or unwilling to supply as much oil as it did. They would have big financial incentives — from a surging oil price — to drill more wells. That said, it would take those businesses months to ramp up production.What is OPEC doing?President Biden has been urging the Organization of the Petroleum Exporting Countries to pump more oil, but several members have been falling short of their monthly production quotas, and some may not have the capacity to quickly increase output. OPEC members and their allies, Russia among them, are meeting on Wednesday, and will probably agree to continue gradually increasing production.In addition, if Russian supplies are suddenly reduced, Washington will most likely put pressure on Saudi Arabia to raise production independently of the cartel. Analysts think that the kingdom has several million barrels of spare capacity that it could tap in a crisis.What impact would higher oil prices have on the U.S. economy?A big jump in oil prices would push gasoline prices even higher, and that would hurt consumers. Working-class and rural Americans would be hurt the most because they tend to drive more. They also drive older, less fuel-efficient vehicles. And energy costs tend to represent a larger percentage of their incomes, so price increases hit them harder than more affluent people or city dwellers who have access to trains and buses.Rising oil and gas prices would pinch consumers, especially the less affluent and rural residents.Jim Lo Scalzo/EPA, via ShutterstockBut the direct economic impact on the nation would be more modest than in previous decades because the United States produces more and imports less oil since drilling in shale fields exploded around 2010 because of hydraulic fracturing. The United States is now a net exporter of fossil fuels, and the economies of several states, particularly Texas and Louisiana, could benefit from higher prices.What would it take for oil prices to fall?Oil prices go up and down in cycles, and there are several reasons prices could fall in the next few months. The pandemic is far from over, and China has shut down several cities to stop the spread of the virus, slowing its economy and demand for energy. Russia and the West could reach an agreement — formal or tacit — that forestalls a full-scale invasion of Ukraine.And the United States and its allies could restore a 2015 nuclear agreement with Iran that former President Donald J. Trump abandoned. Such a deal would allow Iran to sell oil much more easily than now. Analysts think the country could export a million or more barrels daily if the nuclear deal is revived.Ultimately, high prices could depress demand for oil enough that prices begin to come down. One of the main financial incentives for buying electric cars, for example, is that electricity tends to be cheaper per mile than gasoline. Sales of electric cars are growing fast in Europe and China and increasingly also in the United States. More

  • 113 Shares119 Views

    in Economy

    U.S. National Debt Tops $30 Trillion as Borrowing Surged

    by

    The record red ink, fueled by spending to combat the coronavirus, comes as interest rates are expected to rise, which could add to America’s costs.WASHINGTON — America’s gross national debt topped $30 trillion for the first time on Tuesday, an ominous fiscal milestone that underscores the fragile nature of the country’s long-term economic health as it grapples with soaring prices and the prospect of higher interest rates.The breach of that threshold, which was revealed in new Treasury Department figures, arrived years earlier than previously projected as a result of trillions in federal spending that the United States has deployed to combat the pandemic. That $5 trillion, which funded expanded jobless benefits, financial support for small businesses and stimulus payments, was financed with borrowed money.The borrowing binge, which many economists viewed as necessary to help the United States recover from the pandemic, has left the nation with a debt burden so large that the government would need to spend an amount larger than America’s entire annual economy in order to pay it off.Some economists contend that the nation’s large debt load is not unhealthy given that the economy is growing, interest rates are low and investors are still willing to buy U.S. Treasury securities, which gives them safe assets to help manage their financial risk. Those securities allow the government to borrow money relatively cheaply and use it to invest in the economy.For years, presidents have promised to limit federal borrowing and bring down the nation’s budget deficit, which is the gap between what the nation spends and what it takes in. Under President Bill Clinton, the United States actually ran a budget surplus between 1998 and 2001.But taming deficits had fallen out of fashion in recent years, including during the Trump administration, when lawmakers blew through budget caps and borrowed money to fund tax cuts and other federal spending.Now, deficit concerns have resurfaced, helping to stall negotiations over President Biden’s $2 trillion safety net and climate spending proposal. Senator Joe Manchin III of West Virginia, a Democrat whose vote is key to passing Mr. Biden’s package, cited “staggering debt” as a reason he could not support the legislation.Senator Joe Manchin on Capitol Hill last month.Tom Brenner for The New York TimesThe lingering pandemic has slowed the momentum of the economic recovery, fueling inflation rates unseen since the early 1980s and raising the prospect of higher interest rates, which could add to America’s fiscal burden.“Hitting the $30 trillion mark is clearly an important milestone in our dangerous fiscal trajectory,” said Michael A. Peterson, the chief executive officer of the Peter G. Peterson Foundation, which promotes deficit reduction. “For many years before Covid, America had an unsustainable structural fiscal path because the programs we’ve designed are not sufficiently funded by the revenue we take in.”Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: We asked readers to send questions about inflation. Top experts and economists weighed in.What’s to Blame: Did the stimulus cause prices to rise? Or did pandemic lockdowns and shortages lead to inflation? A debate is heating up in Washington.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.The gross national debt represents debt held by the public, such as individuals, businesses and pension funds, as well as liabilities that one part of the federal government owes to another part.Renewed concerns about debt and deficits in Washington follow years of disregard for the consequences of big spending. During the Trump administration, most Republicans ceased to be fiscal hawks and voted along party lines in 2017 to pass a $1.5 trillion tax cut along with increased federal spending.While Republican lawmakers helped run up the nation’s debt load, they have since blamed Mr. Biden for putting the nation on a rocky fiscal path by funding his agenda. After a protracted standoff in which Republicans refused to raise America’s borrowing cap, threatening a first-ever federal default, Congress finally agreed in December to raise the nation’s debt limit to about $31.4 trillion.In January 2020, before the pandemic spread across the United States, the Congressional Budget Office projected that the gross national debt would reach $30 trillion by around the end of 2025. The total debt held by the public outpaced the size of the American economy last year, a decade faster than forecasters projected.The nonpartisan office warned last year that rising interest costs and growing health spending as the population ages would increase the risk of a “fiscal crisis” and higher inflation, a situation that could undermine confidence in the U.S. dollar.The Biden administration has said the $1.9 trillion pandemic relief package the Democrats passed last year was a necessary measure to protect the economy from further damage. Treasury Secretary Janet L. Yellen has argued that such large federal investments are affordable because interest costs as a share of gross domestic product are at historically low levels thanks to persistently low interest rates.But that backdrop could start to change as the Federal Reserve prepares to raise interest rates, which have been set near-zero since the start of the pandemic, to curb inflation.The Fed indicated last week that it was on track to begin increasing rates at its next meeting in March. Investors are predicting the central bank could usher in five rate increases this year, bringing rates to a range of 1 to 1.25 percent.Trillions in federal spending has left the United States approaching levels of red ink not seen since World War II.Sarah Silbiger/ReutersThe Fed has also been keeping long-term interest rates low by buying government-backed debt and holding those securities on its balance sheet. Those purchases are set to wrap up next month, and last week, the Fed signaled it planned to “significantly” shrink its bond holdings.Esther L. George, the president of the Federal Reserve Bank of Kansas City, suggested during a speech this week that the Fed’s big bond holdings might be lowering longer-term interest rates by as much as 1.5 percentage points — nearly cutting the interest rate on 10-year government debt in half. While shrinking the balance sheet risks roiling markets, she warned that if the Fed remained a big presence in the Treasury market, it could distort financial conditions and imperil the central bank’s prized independence from elected government.Inflation F.A.Q.Card 1 of 6What is inflation? More