Inflection point

From the August 2020 print edition

The death of John Fitzgerald Kennedy changed the arc of American history, which means that it changed the arc of world history. I acknowledge that I can’t prove any of the following assertions, but here it goes. US involvement in Vietnam would have been fundamentally different had JFK served out his first term of office and then been re-elected in 1964. The Great Society programs of Lyndon Johnson would not have gone forward in the same way.

And the conspiracy theories around the real story behind his assassination altered the way that many citizens looked at their institutions, undermining trust and belief in American-style democracy.

Watershed moment
Yes, JFK’s assassination was a historical watershed. My gut tells me that 20 years from now, after the dust from today’s current and tumultuous events has settled, we will understand that the death of George Floyd while in the custody of four Minneapolis police officers had a similar effect. This could strike some of you as a gross overstatement. Except when you consider that the reach of Black Lives Matter (BLM) spread from the US to Canada and into western Europe with lightning speed, it’s not quite that far-fetched. Before you judge, hear me out.

Let’s be precise about why so many people took to the streets in late May and into June. The protests originally focused on police brutality and the unequal treatment that white Americans and black Americans receive from the police and the criminal justice system. BLM cited several well-publicized incidents as proof: Ahmaud Arbery, Freddie Gray, Eric Garner, Walter Scott and Breonna Taylor. There was a broad consensus among most North Americans that something was wrong. And while the problem was serious,
it seemed manageable – better screening of recruits, followed by more effective training and finally, more robust oversight.

But that’s not what this movement is about right now. BLM used “police reform” as a launching pad. Its goals are far more ambitious. Since 2016, BLM has advocated for universal basic income (UBI) for all Americans, with a higher benefit for black Americans as reparations for slavery. Many of you will recall that Andrew Yang (whose ethnicity is Asian, not black) ran for the Democratic Presidential nominee on the UBI platform. In Yang’s plan, all Americans would be treated the same: $1,000 per month for every American adult. Yang did not address reparations in his plan.

There will be a Presidential election several months from now, and Joe Biden has a significant lead over incumbent Donald Trump. There’s still time and Trump pulled off a huge upset four years ago. However, when you look back at 2016, it wasn’t that Trump won, it was that Hillary Clinton lost because of her incompetent campaign. The Democrats won’t make the same mistakes again.
I believe that Joe Biden will win an overwhelming majority in the electoral college, the Dems will widen their lead in the House of Representatives, and they could take the Senate as well.

Carte blanche
If this happens, the Democrats will be able to do anything they want. Then the question will be, what will their priorities be? The Trump tax cuts, in particular the slashing of taxes on corporate profits from 35 to 21 per cent, will be reversed. Income taxes will go up sharply for high income earners. Joe Biden has promised as much, and he can’t go back on this one. It would destroy his presidency. The Trump administration has been very good about reducing the regulatory burden for a wide variety of businesses, and much of that will be rolled back as well.

But that is small beer. There are powerful forces in the Democratic Party who see 2020 as their opportunity to fundamentally remake American society, levelling the wealth gap between the races. It could be through UBI or other types of transfer payments. The bottom line is, government spending will go through the roof. Simultaneously, I’m certain that aggressive affirmative action practices will be forced down the throat of big business.

It would not surprise me to see out-and-out racial and gender quotas, and vast bureaucracies established to administer this Brave New World.

We’ve seen this before – and not that long ago. From 1960 to 1966, the US deficit averaged $4 billion. Then in the following seven years, the deficit averaged $13.5 billion as domestic spending programs ramped up. At the same time, there was massive government intervention in the economic sphere. Let’s look at stock market performance over that era. On December 31, 1964, the Dow Jones Industrial Average closed at 874.13. Then, 17 years later, it closed at 875.00. History never repeats itself perfectly, but the similarities between the two eras are obvious and ominous.

I’m expecting that the stock market, like the economy, won’t be going anywhere fast over the next decade, and only a massive technological breakthrough will change that dim and depressing future.

Toronto-based Michael Hlinka provides business commentary to CBC Radio One and a column syndicated across the CBC network.