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The U.S. Department of Health and Human Services debuted a website Wednesday in which people can sign up to participate in clinical trials related to potential COVID-19 treatments and vaccines.
The website, or network as it’s officially called, was developed by the National Institute of Allergy and Infectious Diseases (NIAID), which is affiliated with the National Institutes of Health.
The NIAID said that the website, known as the COVID-19 Prevention Trials Network, was built from the merger of “four previously existing clinical trials networks that focused on HIV/AIDS.”
After people choose to enroll in the various clinical trials via the website, officials will contact and screen the potential volunteers for participation.
“Having a safe and effective medical countermeasure to prevent COVID-19 would enable us to not only save lives but also help end the global pandemic,” NIAID director Dr. Anthony Fauci said in a statement. “Centralizing our clinical research efforts into a single trials network will expand the resources and expertise needed to efficiently identify safe and effective vaccines and other prevention strategies against COVID-19.”
As CNN noted, the number of required volunteers is unclear.
The Fred Hutchinson Cancer Research Center in Seattle will oversee the new clinical trial project.
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During Bill Clinton’s first term as President, the 104th U.S. Congress undertook a long-needed effort to overhaul telecommunications laws that had been on the books for over 60 years. Although the bill had a significant impact on phone, television, and radio services, the biggest outcome of the Telecommunications Act of 1996 was nothing less than the blossoming of the Internet.
Now, as the country begins reopening the economy following the largest public health panic in a century, the U.S. government has a chance to take similar actions on another emerging technology: blockchain. Like the Internet, blockchain technology will change the game again.
The COVID-19 pandemic paused the development and implementation of many products built using blockchain technology, but the great restarting is the perfect opportunity for companies to embrace the power of the technology. Far from being just a niche interest for developers, real-world applications built with blockchain already provide secure transactions that benefit people everywhere, from agriculture to land management to mobile voting.
However, as the momentum around these projects picks back up, many companies will find themselves once again in gray areas where government reach is ill-defined and sometimes clarified only through after-the-fact enforcement. Collaboration between all stakeholders—including government agencies—is essential to the future adoption of blockchain technology.
Blockchain technology can be a vital driver of the new normal as industries and economies recover from the pandemic, but the government’s role in regulating blockchain technology must be understood. Creating clear policies that protect consumers and building a framework for cooperation are some of the government’s most vital tasks in the coming months as more companies and other organizations explore the unique benefits that applications using blockchain technology will bring.
It’s important for the government to take a hands-off and clarifying role in the development of products built using blockchain technology. As legislators create policies to help guide developing blockchain technology, their primary concern should be ensuring that all businesses in the industry behave responsibly and have fair access to customers and resources.
At Medici Ventures, we invest in organizations that are using blockchain technology to solve real-world problems exacerbated by the pandemic. GrainChain, for example, secures trust across the entire agricultural supply chain, ensuring that the most vulnerable people—the farmers—are paid. Evernym helps everyone from individuals to companies control their identities. Voatz helps people exercise their right to vote in a safe and secure way.
These companies—and all others developing blockchain technology—should be able to operate on a fair and equal playing field, without giving any group or organization an upper hand thanks to unbalanced regulations. Perhaps most important of all, the government should remember that consumers are generally in a better position than regulators to determine what businesses they want to support—a point that was made perfectly clear in the early development of the Internet.
Cooperation will be key to success in the future. Companies need the freedom to develop blockchain technology without onerous oversight, especially as they seek to escape the economic shadow brought on by the pandemic.
As it did in the early days of the Internet, this freedom will lead to creative products and solutions. Blockchain entrepreneurs have barely scratched the surface of the power of blockchain technology. The government needs to let the innovation continue.
It is also crucial that the U.S. government moves quickly. China is urging its financial institutions to support blockchain, which could prove very problematic for the U.S. if we do not match or exceed China’s efforts. The overwhelming benefits of blockchain technology—being able to transfer digitized assets without friction, for example—are already coming to fruition. Without taking a position of leadership, the U.S. risks both slipping further into a potential economic recession and losing its position as the global hub for technological innovation.
The world is moving forward with developing blockchain-based applications, and the post-pandemic economy is a perfect environment in which to embrace new technology. If the U.S. is not careful, we will lose the opportunity to be a blockchain leader.
Blockchain technology has incredible potential. It will grow best in a free environment, unfettered from needless and unclear regulations. By understanding and limiting the government’s role, we can give companies the power to establish a new normal while offering consumers the confidence to invest in and use new blockchain-based products.
Jonathan Johnson is CEO of Overstock.com and president of Medici Ventures.
COVID-19 might be the most urgent public health problem facing us today— but medical professionals are also calling attention to the other serious health crises the pandemic is making worse.
“There are over 11 million confirmed cases of COVID-19,” says Dr. Jessica Mega, chief medical and scientific officer of Alphabet’s Verily Life Sciences. “But at the same time, I think it’s critically important for us all to think about other ailments that we see that are on the rise.”
Mega, speaking at Fortune’s virtual Brainstorm Health conference on Tuesday, called specific attention to the ongoing opioid crisis and its mounting fatalities since the onset of coronavirus. The isolation and financial stresses of the pandemic have contributed to a spike in overdoses this spring, reversing some hard-fought declines.
Fatal overdoses rose by almost 11.4% from a year earlier, with non-fatal overdoses rising by 18.6%, according to the raw data in a May report from the Overdose Data Mapping Application Program.
“Opioid addiction is one of the key health epidemics of our generation,” says Mega, mentioning the OneFifteen opioid recovery center that Verily opened with partners last year.
Of course, Verily and Google have also been involved in efforts to fight the newer pandemic, under some unwanted scrutiny. In March, the company was in the early stages of building a website to help speed up testing for COVID-19, when President Trump erroneously announced that it had developed a nationwide test site.
Despite that rough start, Verily is now making tests available in more than 13 states and has conducted 320,000 tests for COVID-19, Mega said Tuesday.
“It’s important to note that this is just the tip of the iceberg,” she added. “Testing is going to need to continue expand.”
Beijing reported zero new coronavirus cases for the first time in 26 days, a sign the resurgence that ignited fears of a second wave in China looks to have been brought under control for now.
The city of more than 20 million people appears to have quelled a flare-up that infected 335 people, with infections down from 36 a day at their peak in mid-June. Authorities took a different approach to the virus when it reappeared in China’s political and economic hub after nearly two months of no locally transmitted cases than they did in Wuhan, the central city where the pathogen first emerged.
Instead of resorting to a sudden across-the-board lockdown that risked reversing the gains made since China started reopening, Beijing deployed more targeted measures. While some — like confining whole neighborhoods to their homes — may be more difficult to replicate in western democracies, they could hold lessons for other countries as they grapple with the inevitable return of the virus given an effective vaccine is months, potentially even years, away.
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The Beijing resurgence, which took root in a wholesale food market in the city’s southwestern district, injected fresh uncertainty into the global struggle against the virus, hitting as citizens were getting used to a semblance of normal life. It served as a warning to places that look to have nailed the pandemic: the virus is elusive and isn’t easily beaten.
The outbreak, which seeded small virus skirmishes in other parts of China, was contained in less than four weeks. This is how they did it:
Hesitant to fully seal off Beijing like officials did in less economically important regions, the city relied on targeted testing at unprecedented speed.
Reminiscent of the mass operation conducted in Wuhan in May, when most of the population was tested for the virus in about two weeks, Beijing has tested more than 11 million people so far, according to Pang Xinghuo, deputy director of the Beijing Center for Disease Control and Prevention.
Overall, China has the capacity to test 3.8 million samples nationwide every day, officials said June 24, likely one of the fastest speeds worldwide.
Such scale is achieved using a method known as batch testing, where multiple samples are assessed simultaneously with detailed follow-up if any trace of the virus is found. Even without this method, Beijing can test over 300,000 people a day, six times more than the city’s capacity in March, according to Beijing Health Commission official Zhang Hua.
During the Beijing outbreak, entire groups were tested whenever an infection was found in their midst, including all the vendors at several major wet markets. All workers at a PepsiCo Inc. food factory where a case was diagnosed had to undergo testing, and every delivery courier in the city — over 100,000 — was also sampled in weeks.
Rather than confining everyone in Beijing to their homes once the new outbreak emerged, authorities just locked down apartment blocks and housing compounds close to the epicenter. In these high-risk areas, only one member per household was allowed to leave to purchase necessities.
It’s an approach that other countries are also looking at, with authorities in the Australian city of Melbourne implementing localized lockdowns to quell a resurgence in cases there. Specific streets or neighborhoods would be told to stay home and practice social distancing, but the rest of the city would remain open. South Korea, too, has taken a targeted approach, shutting down businesses or schools where there have been outbreaks, but never imposing city-wide lockdowns.
Schools in Beijing were also closed again to limit commuting, while some entertainment venues were shuttered, too.
China appears to have drawn from the lessons of Wuhan’s devastating outbreak in January, when the virus was not well-understood by experts and the system unprepared for how contagious it is. Then, people swarming hospitals for help spread the virus to other patients and infected the environment.
This time in Beijing, residents were banned from entering hospitals unless they had tested negative for the virus, and makeshift test sites were set up in neighborhoods where cases were found to assist those showing symptoms.
Rather than seal off the city’s borders like in Wuhan — a move that caused widespread panic among residents, causing them to rush the city’s highways — China imposed quarantine requirements at destinations instead. People going from Beijing to some other provinces have to be isolated for two weeks in government-run facilities upon arrival, naturally discouraging travel. Carriers canceled flights, even though the airport remained open.
Despite what seems to be a relatively quick containment, the flare-up has shifted the contours of China’s fight against the virus. Prior to the Beijing outbreak, the nation appeared to be largely triumphant in its fight against a disease that continues to devastate the developing world, and China’s biggest rival, the U.S.
The cluster in the capital is believed to have started at the market, but its exact genesis and how it spread remains unknown.
After the virus was detected on a chopping board used for imported salmon at the market, a nationwide boycott of the seafood took place that affected exporting countries like Norway and Australia.
Experts say it’s more likely that the salmon was contaminated by an infected person, or by being in a dark, humid and low-temperature environment where the virus was present. China’s customs department tested over 47,000 samples of imported meat, seafood, vegetables and food and all were negative. Still, the country has suspended imports from some foreign meat plants, including a Tyson Foods Inc. plant in the U.S. where hundreds of employees tested positive for Covid-19, a move that potentially undermines its trade deal with Washington.
Amid that uncertainty — and as cases continue to pop up in areas around Beijing — China’s strategy is to remain circumspect. Even as infections taper, officials say that they won’t ease the restrictions until Beijing has seen two weeks without any new cases.
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Good morning, Bull Sheeters. It’s a risk-on Monday with Asia, Europe and U.S. futures all soaring. China is very bullish on its second-half recovery, and in the capital markets—for investors, that’s enough to drown out weak data elsewhere, plus bearish forecasts and new global records in coronavirus cases.
Let’s see where investors are putting their money.
Today’s markets surge is yet another indicator that investors will run with the good news (in this case, from Chinese state media on a China 2H bounce) and shrug off the bad (Goldman’s U.S. downgrade from over the weekend).
So let’s dig into the “good news” this morning. Last week, Deloitte published its latest COVID-themed CFO survey, and the chief finance suite sees reason for optimism as the economy reopens. (A note: the poll, involving 118 large North American companies, is from mid-June, before the latest record daily surges in the U.S. South and West, but it’s still worth parsing the numbers.)
Nearly 20% of CFOs polled by Deloitte say they are already at or above pre-crisis operating levels, and another 12% expect to reach this milestone by the end of this year. That would mean roughly one-third of companies back to normal (or just about) by year-end. As the Deloitte chart below shows, at this stage, companies have bounced back faster than they thought would be the case back in April. That’s encouraging.
The less encouraging news is that this is an extremely uneven recovery. In sectors such as retail, financial services and manufacturing, the majority of CFOs don’t expect to be at or near pre-crisis levels before next year. And, 17% of all CFOs polled said they won’t reach that level before Q1 2022.
CFOs are a conservative lot. Still, these surveys are a helpful indicator to gauge sentiment inside Corporate America. And while it’s not great news, it is showing an improvement in sentiment.
But does that improved sentiment warrant such a rally in equities?
CFOs aren’t convinced, as the next Deloitte chart shows:
Nearly seven out of ten CFOs say equity markets are either “overvalued” or “very overvalued.”
The S&P has climbed a further 2% since this poll was conducted.
***
Not all Italians go to mass on Sunday. For a hearty few, it’s the bicycle that brings them closer to a state of grace.
Here, in little Amandola, every Sunday morning cyclists fill the town square at 8 a.m., just outside Bar Belli’s red brick facade. The cyclists then split up. The mountain bikers head up into the mountains. The road bikers descend into the valleys. It’s a remarkable scene of young and old, men and women, guys and girls. There’s also a lot of brightly colored bikes, and skin-tight attire.
The region where Amandola can be found, Le Marche, decided this year to promote cicloturismo—cycling tourism (do yourself a favor: at some point, click this link and escape for 2-minute-48-seconds)—a green, low-impact, pedal-from-medieval-hilltown-to-hilltown message to attract tourists. It was a genius idea: there’s so much history, beauty and good food around every bend, that they figured the best way to discover most of these gems was to tell people: take it slow, and discover it at your own pace—preferably, on two wheels.
What they conveniently left out was: some of these hills will knock you out.
A few years ago, I went for a short spin in the valley below my house. I wasn’t in tip-top shape, and when I finally peddled back into the garden I nearly fell over with exhaustion. I grabbed my water bottle and chugged what little was left.
“Where’d you go?,” a voice asked from the shade. It was Fiore, my elderly neighbor. I caught my breath. “Around here,” I replied. I was knackered, but the details of my ride energized him. Fiore just turned 97. In his teens, he was an avid cyclist. He knows every back road and navigable track around here like he knows his pockets.
Under that shady oak, he recounted a story I don’t think I’ll ever forget.
He was a teenager just as Italy was entering World War II. At the height of the war years, Mussolini wanted every fit male in the land to go and fight for the glory of some destructive vision. Fiore wanted none of it. He wasn’t a fighter. Cycling was his thing, not guns. Whenever he had the chance, he’d get on his bike and ride for hours—all day, rain or shine. As the recruitment drive was picking up, Fiore’s dad devised a plan to foil Mussolini. It all came down to, he told me, a girdle.
“A girdle?!,” I jumped in. “Did you say….?”… Si, he nodded. He’d draw tight (with some help) the girdle around his mid-section, and then hop on his bike. He’d go uphill and downhill. And uphill again. For hours on end. Every day he’d do this. The plan was to ride so many kilometers with that tight-fitting girdle it would transform his appearance, creating an hourglass physique that would force the recruitment office to reject him for military service.
War recruiters are funny about the upper body, apparently.
Fiore so wanted to stay off the battleground that he’d cycle distances on his pre-war bike that I can’t even fathom. He’d make it a good half-way to the sea, or climb straight up into the mountains. He became obsessed. It was hard to know what was his real aim: to achieve some new personal best, or to pull one over on Mussolini.
“Did it work?,” I asked. “Did they make you go to war?”
“They wouldn’t take me,” he said with a grin.
He was done talking. “Tell me about your ride.”
***
Have a nice day, everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
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“I’ve been doing this for 47 years,” says Tom MacDonald. “I started when something electronic was the acceptance of a contract with a telegram.”
MacDonald heads up his own realty group in California’s Central Valley, and like most realtors, his business in recent months is depending on technology more than ever before. Jurisdictions across the U.S. have responded to the coronavirus with an array of restrictions, including a total ban on traditional open houses in California.
So in the absence of baked-cookie scents and mingling strangers, MacDonald and other realtors are turning to tools that help them show off houses online. This allows for more immersion than was possible just a few years ago, and makes it easier and less expensive for realtors to put a property’s best foot forward.
These new tools include so-called “virtual staging,” in which images of a property have lifelike decor added to them digitally using 3D modeling and Photoshop. They also increasingly include digital walkthroughs of various kinds, verging on full-blown virtual reality. And while many serious buyers still want to see the property in person before signing on the dotted line, realtors and entrepreneurs believe the new marketing tools will stick around well after coronavirus pandemic is under control.
“Because a lot of open houses and conventional staging companies were not operational during the lockdown … we were actually busier,” says Young Kim, cofounder of Vancouver-based Bella Staging.
Bella specializes in virtual staging, the digital evolution of the common practice of temporarily redecorating a house to impress potential buyers. But instead of renting real furniture and hiring movers to haul it in, which can cost into the thousands of dollars, Bella adds furniture to photos of an empty house using digital wizardry. According to Kim, his team of designers and photo editors can virtually stage an entire house for under $100.
That occasionally leads to confusion. “There’ve been times our clients have had offers on a property, and the buyers wanted the [virtual] furniture included,” says Kim—but for the most part, clients understand that virtual staging is an exercise of imagination. “We help paint the picture of what it can be.”
Another digital tool that has seen a surge in relevance is the virtual walkthrough, which gives potential buyers a more immersive sense of the space. At the very high end, those can be built as full-blown virtual reality experiences using a 3D-rendered simulation. But more common (and affordable) are walkthroughs created using 360-degree photos.
“It gives you a feel for the place. How big it is, what’s the layout,” says Bartek Drozdz, cofounder of Kuula, whose core product he describes as “like Powerpoint for virtual tours.” Users take their own photos, then use Kuula to arrange them into an immersive home-tour experience. (One downside is that Kuula doesn’t allow for the addition of virtual decor, instead capturing a house’s real-life appearance.)
Drozdz says he’s seen a significant uptick in interest and web traffic during the pandemic. But growth at Kuula was steady for years before the coronavirus hit, and Drozdz sees lockdowns as accelerating a longterm change in homebuying, rather than a temporary shift. That’s because of a simple reality: even in normal times, open houses aren’t always an efficient way to shop for a home.
“In L.A., with the traffic, you have to drive for an hour to see a house you don’t like the moment you walk in,” says Drozdz. While sites like Zillow have been shifting more of the homebuying process online for well over a decade, immersive experiences take that to the next level.
MacDonald agrees: “I think this will change longterm how homes are sold. People are becoming very comfortable with sitting in their living room, using their Apple TV to look at real estate.” MacDonald says most shoppers do still want to see their new home in person before committing to a purchase, but the new tools give added confidence to some, such as cross-country movers, who snap up properties without ever setting foot in them.
Thanks in part to these digital tools (but also a lot of help from record-low mortgage rates), the real estate business overall appears to be holding up during the pandemic. In May, according to the National Association of Realtors, contract signings were off just 5.1% compared to the year before. That’s a minor drop compared to many sectors of the economy.
In fact, with supplies tight, U.S. home prices have actually gone up on average in recent months. Combined with job losses and economic uncertainty, that might make it tough for some people to buy a new home, even as stay-at-home orders have highlighted the shortcomings of their current one.
“Almost everybody during this pandemic is learning how their space isn’t working for them,” says Sally Huang, who directs visual technologies for online home design community Houzz. The site offers an online visualization tool called “View in my Room” that lets shoppers virtually check the size and style of furniture against their living space.
So whether you’re on the hunt for a new house to love, or trying to love the house you’re in, you can do more of that work online than ever before.
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Over the past few months, coronavirus lockdowns have impacted cities and communities all over the globe in dramatic ways. This has raised the question: Is there still a place for cities?
The answer is not simple; it requires us to learn from what has happened over the past few months and rethink how we leverage technology to reimagine what cities can be, and the critical role they play in our collective future.
We are now faced with an unprecedented pivot to address what we have learned. And technology is helping us to redefine post-pandemic cities. The challenge is: How do we work together to manage that pivot? Over the past six months, one thing has become clear: Even though this is one of our most trying times as a global community, it also has the possibility to be one of our greatest moments. The progress we’re making as a collective in fighting the virus and rethinking our way of life is something many didn’t think possible at the beginning of 2020. In effect, I see one possible future—a future where people, powered by innovation and technology, pull together to improve our cities and communities.
The fight against COVID-19 is far from over, but there is already a premium placed on “smart” initiatives that leverage innovations such as quantum computing and digital twinning for solutions like smart street lighting and automated water meters. From the COVID-19 pandemic to the climate crisis to the well-being of all life on earth, I believe that technology holds the key to solving some of the world’s greatest problems.
Leadership now needs to increasingly focus on long-range targets, as well as on achieving short-term quarterly profits. For example, business leaders looking at achieving the UN Development Program’s 17 goals for sustainable development now have reason to renew their efforts. Those who have previously dismissed such efforts as unrealistic or aspirational have reason to reconsider their objections.
This is a departure from traditional thinking and a challenge for conventional leadership. As we emerge from this pandemic, it’s important that we learn from the bold commitments and brave solutions the world has undertaken over such a short time.
As our cities reopen, we have the chance to reimagine them. I absolutely believe that cities will continue to be our social centers, our cultural hearts; but now we have the chance to make them cleaner, safer, smarter, and more innovative than ever thanks to the promise of technology. Our evolving relationship with cities will require increased computing power as we continue to process exponential amounts of data, and require better connectivity and more advanced networks.
However, we will also relieve pressure on the environment, as the supply chain linked to the relationship we once had with cities is redirected. We will preserve what we love about cities and build upon the lessons we’ve learned from the coronavirus pandemic.
COVID-19 has created a significant challenge for all of us, but it has also shown us what we as a human team can accomplish working together—a better world and cities that give more than they take.
Jason Goodall is global CEO of NTT Ltd.
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Commentary: To fight the COVID-19 budget crisis, we need a new Alexander Hamilton
Some U.S. states are facing disproportionate financial challenges due to the pandemic. Plunging tax revenue, unemployment, and rising healthcare expenses, coupled with high levels of existing state debt have driven some states into acute financial distress – threatening the nation’s unity.
This is not the first time the U.S. has confronted a common, disparately borne struggle. In 1790, Alexander Hamilton spurred the federal government to take over the debt accumulated by states in the fight for independence. It was the “price of liberty.” The agreement caused controversy, particularly among the states asked to contribute more. In the event, unity prevailed, and the nation strengthened.
Today, a similar act of solidarity is needed. To be clear, we are not suggesting indebted states be bailed out, but they should not be made to pay for their pandemic-induced financial strain. Instead, the incrementalcosts states incur during recovery should be considered the “price of unity” and shared at a national level, as they were over 200 years ago.
Investors, however, seem pessimistic about U.S. unity. In fact, judging by financial market indicators, they have already chosen which states are likely to come out on top post-crisis (the likes of Texas and Florida), and which will pay most dearly (California, Connecticut, Illinois, Pennsylvania, New Jersey, and New York). This divisive verdict does not foster “a more perfect union,” which the US needs today to maintain its status as the world’s most powerful economy.
What are the markets saying?
We know which U.S. states investors are most wary of; we can see the evidence in the current, volatile prices of state-specific default insurance that we examine in our research. The trajectory of these prices, as calculated based on data from IHS Markit, predicts that, over the next five years, New Jersey, Pennsylvania, and Connecticut have a 1-in-10 chance of defaulting on their debt, and Illinois a whopping 1-in-4. These numbers are in stark contrast to the 1-in-60 risk of default recorded for Florida and Texas over the same horizon.
This is surprising. While Illinois’ protracted financial woes and pension obligations are not new, investors’ negative perception of the other five states is. In January 2020, the cost of insuring against the default of California, New York, Florida, or Texas was roughly equal. Today, default insurance for California and New York costs around four times that for Florida or Texas.
What explains the market reaction?
There are three reasons for such a large disparity in default perceptions across states.
First, some states have higher COVID-19 infection rates, which certainly strain a state’s finances. But, infection rates do not tell the whole story; Florida has the largest share of at-risk population, and its per capita infection rates are roughly equal to California’s, while its default risk has hardly budged since January.
Second, all six states with the largest spikes in default risk have high debt levels and overextended budgets. In short, as we have seen with the EU, the markets believe that only the fiscally strongest states avoid default. Yet, unlike the members of the EU, each state is not a separate entity, but an integral part of the United States (whose default probability has remained low, despite unprecedented debt levels).
Last, these six states are predominantly Democratic. While Democratic-favored policies, such as subsidized healthcare, certainly left these states with less fallback finances, Republican implications that they be left to go bankrupt after suffering a shock beyond their control seems irresponsible.
Why does debt matter?
The sting of negative market perception is felt as tax bases shrink, rainy day funds of even well-managed states run dry, and state governments are forced to turn to financial markets to borrow additional funds to meet their budget commitments.
States perceived more likely to default will pay higher interest rates on their debt, making their recovery more arduous. Raising additional debt is more difficult and expensive, as Illinois recently discovered when it committed to paying a punitive 5.85% interest on its $800 million of new debt. Had Illinois issued the same debt before the pandemic, they would have paid half as much.
Although some may experience schadenfreude in seeing a “poorly-run” state forced to tighten its belt, it seems unjust not to aid a struggling state amid a global economic and health crisis.
Where is the unity?
Unfortunately, withholding support seems to be exactly what some leaders favor. Senator Rick Scott (R, Fla.), in a recent Wall Street Journal op-ed, asserts that states should not be rewarded for their “poor choices”. This solution is particularly unfair to strapped cities on those states. Detroit, for example, despite having recently emerged from near-crippling municipal bankruptcy, is being bowled over again by the financial consequences of the pandemic; its recovery will almost certainly require state government aid. With no compromise in sight for easing the economic burden of the most indebted states, residents of cities like Detroit face steeper taxes, reduced efficacy of municipal services, and risk having to choose between pensions and medical coverage.
Although the $3 trillion coronavirus relief bill recently passed by the House ($1 trillion of which will be reserved for state and local governments) is a step in the right direction, President Trump’s veto threat suggests that the U.S. may not be quite ready to set aside their party politics. Unfortunately, such comments will only serve to deepen market concerns, making it more difficult for the overburdened states to finance themselves.
What the U.S. needs now are the same actions it took over two centuries ago: compromise and unity. Indeed, now is not the time for them to practice political distancing – at least not in the room where it happens.
Patrick Augustin is an associate professor of finance in the Desautels Faculty of Management at McGill University.
Valeri Sokolovski is an assistant professor of finance at HEC Montreal.
Marti G. Subrahmanyam is the Charles E. Merrill Professor of Finance, Economics, and International Business in the Stern School of Business at New York University.
Davide Tomio is an assistant professor of business administration in the Darden School of Business at the University of Virginia.
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