2020-03-30_Bloomberg_Businessweek

 BUSINESS Bloomberg Businessweek March 30, 2020

AsCongressandthe

presidentdebateCovid-

cashandbailoutsfor

companiesandworkerson

thefrontlines,eldersare

sidelined.I’mstunnedthe

onlyproposalwidelyfloated

onSocialSecuritywastocut

taxesforemployers.That’sa

mistake.SocialSecurityand

pensionsarea significant

sourceofaggregate

demand,especiallyin some

regionshithardbyCovid-19.

SocialSecuritybenefitsare

0.003%ofgrossdomestic

productin Utahandmore

than 10 timesthatin older

andpoorerstateslike

TennesseeandMaine.

Thereis noguaranteethat

SocialSecurity’s 64 million

beneficiarieswillreceive

a Trumpstimuluscheck.

U.S.elderpoverty,atabout

23%,is thehighestamong

richnationsandwillriseas

olderworkersprematurely

losingjobs—andprematurely

enteringretirementwith

crashing401(k)sthatcould

nowbecalled201(k)s—face

a morechallengingpost-

coronavirusfuture.Sohere

is whatpolicymakersneedto

dotoday.

First,raisetheaverage

SocialSecuritybenefitof

about$1,395by$200,and

raisethespecialminimum

benefitfortheverypoorest

seniors.Ananalysisof

SenatorElizabethWarren’s

similarplanbyMarkZandiof

Moody’sAnalyticsconfirmsit

wouldcuttheelderlypoverty

ratebyabouttwo-thirdsand

couldbecompletely paid for

bya payrolltaxon earnings

above$250,000—the

workersmostprotected from

anyvirus-sparkedrecession.

Second,moremust be

donetoprotectseniors from

financialmistakesor fraud

amidthevirusconfusion.

Seniorsarerunning scared:

Theyareextremely vulnerable

tothedisease,they hear

somewantCovid-19 “to cull”

themasa “Boomer Remover,”

andtheyaremore isolated

andespeciallysusceptible

tofraud.TheObama

administration’soriginal

fiduciaryrulerequired that all

professionalsadvising clients

onretirementaccounts put

clients’interestsfirst. That

rulewas killed by the Trump

administration. Bringing

backthe fiduciary rule

savesworkers and seniors

about$20 billion in fees and

exposure to fraud.

Seniors should not be

sidelined in this run for

government assistance. They

needed cash before the virus-

cession, and their cash will

helpstimulate the economy.

17

GHILARDUCCI:

COURTESY

SUBJECT.

TESLA:

QILAI

SHEN/BLOOMBERG

○ ProfessorGhilarducci

is directoroftheSchwartz

CenterforEconomic

PolicyAnalysisatthe

NewSchoolforSocial

Research.Herlatestbook

isRescuingRetirement

(withTonyJames).

○ Teresa Ghilarducci

on Retiree Assistance

 A worker at Tesla’s

car plant near Shanghai

outbreak snowballed—is emblematic of China’s

wider embrace of Elon Musk’s venture. The billion-

aire has waged a charm offensive since he decided to

build his first plant outside the U.S. in China, home

to the world’s biggest electric vehicle market, and

has been rewarded with the support of top officials.

That backing is crucial for Musk’s vision to make

China a centerpiece of his automotive ambitions. It

also serves a purpose for Beijing, with Tesla’s new

factory south of Shanghai becoming a symbol of the

government’s efforts to open the economy to global

competition and be the world’s EV pioneer. “Given

Tesla’s image of having advanced electric-vehicle

technology and expected strong demand for Made-

in-China Tesla Model 3s this year, no local govern-

ment anywhere in the world would neglect such a

new project,” says Yale Zhang, founder of Shanghai-

based consulting firm AutoForesight.

As Beijing pushed local authorities to get the

country back to work in February, officials of

Shanghai’s Lingang industrial zone singled out

Tesla as an example of their success. The manage-

ment committee of Lingang “will make all efforts to

help key companies including Tesla return to nor-

mal production,” Xu Wei, a spokesperson for the

Shanghai municipal government, said at a brief-

ing in February. Tesla representatives in China

declined to comment on the help it received.

In addition to the protective materials, Chinese

authorities helped arrange dormitories for hun-

dreds of Tesla employees, as well as transport

to and from the plant. Shanghai Lingang Human

Resources Co., a government-backed agency that

coordinates hiring in the area, said it’s helped

Tesla add more than 100 workers since the out-

break, and it’s assisted with virus screening and

online interviews.

Authorities are also trying to ensure that Tesla’s

parts suppliers in China resume production as soon

as possible by providing epidemic prevention mate-

rials, Sun Xiaohe, a local official in charge of assist-

ing Tesla, told state media.

While other automakers such as China’s

Zhejiang Geely Holding Group Co. also received

masks and other support, the actions to help Tesla

have been trumpeted in state media. Footage of

locally built Model 3 sedans being assembled amid

the epidemic has proliferated on TV and online.

Even before the virus, local banks provided

financing for Tesla’s China push, including a $1.6 bil-

lion injection announced at the end of last year. The

acquisition of land for the plant and a slew of local

permits were cleared swiftly, and the factory was

hooked to the nation’s power grid more quickly

than is customary for many other businesses. Tesla

even obtained an exemption from China’s 10% sales

tax on cars—something typically given only to EVs

made by Chinese companies. “The fact that Tesla

received significant government support to over-

come the current crisis,” says Ivan Su, an analyst

at Morningstar Inc. in Hong Kong, “shows China

is delivering its promises to treat foreign firms on

equal footing with local ones.” —Chunying Zhang,

withTianYing

THE BOTTOM LINE Tesla’s plant near Shanghai, its first outside

the U.S., is key to building China into a major source of its sales.

Chinese officials have given the factory plenty of help.