The Covid surcharge: Companies confront the unforgiving economics of coronavirus

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Companies from major retailers and package carriers to local restaurants and hair salons are awakening to a new economic reality in the age of the new coronavirus: Being open for business is almost as hard as being closed.

Facing higher costs to keep workers and customers safe and an indefinite period of suppressed demand, businesses are navigating an ever-narrower path to profitability. To make the math work, some businesses are cutting services and jobs. Others are raising prices, including imposing coronavirus-related fees aimed at getting customers to share some of the expenses.

For large companies, the price — and perils — of operating in a pandemic are already coming into focus.

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Walmart Inc., Target Corp. and Home Depot Inc. this week said they absorbed more than $2 billion combined in added expenses for wages, bonuses and other benefits for workers during the early months of the pandemic. McDonald's Corp. laid out conditions for franchisees to reopen their dining rooms that include cleaning bathrooms every half-hour and digital kiosks after every order. Ford Motor Co. this week opened its American assembly plants for the first time in two months, and promptly had to idle factories in Michigan and Illinois after employees tested positive for Covid-19.

Customers shop at a Walmart store on May 19, 2020 in Chicago, Illinois. (Photo by Scott Olson/Getty Images)

The stakes can be higher for small businesses, which tend to operate on thinner profit margins and smaller cash reserves. As they begin to reopen after weeks of being shut down, they are confronting a cost-revenue ratio that is increasingly out of whack.

Prices of food and other items have risen. Employees need protective equipment at work. Rising unemployment, safety concerns and limits on the number of customers a business is allowed to serve are setting a cap on sales. Some have tried to raise prices to bridge the divide, but greeting consumers who have been staying at home with higher costs is a delicate proposition.

Billy Yuzar saw adding a surcharge to diners' tabs as a simple way to compensate for higher food prices at his West Plains, Mo., restaurant, Kiko Japanese Steakhouse & Sushi Lounge. It was more convenient than raising menu prices, Mr. Yuzar said, because he could update the fee in the business's point-of-sale computer in one step.

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Regular customers were supportive, he said, but when a photo of a Kiko receipt showing a Covid-19 surcharge surfaced on social media, people who had never been to his restaurant began calling to complain.

"The people from this community and my actual customers don't mind at all paying," Mr. Yuzar said. "The backlash that I got is just because of these tweets."

Mr. Yuzar has removed the surcharge and raised menu prices.

Other small businesses have stuck with the surcharge strategy.

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Herman Halici, the owner of Dan's Super Subs in Woodland Hills, Calif., said the price of meats such as pastrami, roast beef and corned beef has risen by up to 60%, and new procedures mean that employees must spend 25% more time on cleaning. In response, the shop has added a surcharge of 75 cents to $1 a sandwich. Most customers have been understanding, Mr. Halici said.

"Out of a hundred people, maybe two complain about it," Mr. Halici said. "Unlike before, everyone goes to the grocery store now, so they understand about the meat prices."

Some states have cracked down on price gouging during the pandemic, but Covid-19 surcharges don't appear to have drawn many official complaints. A spokesman for New York's attorney general said the office hasn't received any complaints about surcharges, while a spokesman for Missouri's attorney general said the office has gotten one out of 1,501 total price-gouging complaints.

A surcharge has helped Melissa Aviles grapple with higher costs and lower capacity at her salon, Studio M, in Amelia Court House, Va. After reopening, it can only host one customer at a time, so she can do just four hair-color appointments and one haircut a day, compared with eight to 10 appointments in normal times. Finding supplies such as Lysol also has been a challenge because of high demand.

Ms. Aviles said one customer questioned Studio M's new $3 sanitation surcharge but was understanding once she explained the rationale. "I'm fortunate that I live in a small town, and I'm close with my clients," Ms. Aviles said.

Costs are rising for health-care practices too, leading some to consider adding fees. Jeff Shapiro, a dentist with a practice in Manhattan's financial district, has always worn a surgical mask while he works but has switched to pricier N95 masks following industry recommendations. He now also dons a face shield and disposable gown for each appointment, and said his office may spend tens of thousands of dollars on improved air-filtration systems.

He estimated his costs have risen by $25 to $50 for a patient visit.

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"I think patients would be understanding, if not happy about it," Dr. Shapiro said regarding the possibility of a surcharge. "If you don't do this stuff, the ramifications can be far worse."

The pricing strategy also has landed at large package carriers, with United Parcel Service Inc., FedEx Corp. and DHL Express applying surcharges for some international shipping during the pandemic.

DHL Express said its costs have risen in part because cargo space it buys on commercial airliners has become scarce because of flight reductions. A spokeswoman said it has added an emergency-situation surcharge during the pandemic on some levels of international shipping service, with exemptions for packages that support health-care purposes.

UPS has been applying a fee it calls a "peak surcharge" on international shipments since April 12. The charges top out at $1.81 a pound on express shipments from China, where the novel coronavirus outbreak began late last year, to the U.S., which has the world's highest number of confirmed cases.

"The peak surcharges, which apply to international shipments, reflect the current dynamic market conditions and uncertainties caused by the coronavirus," a UPS spokesman said.

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Chris Hayes Points Out The Glaring Flaw With Trump Base’s Anti-Coronavirus Mask Stance

Chris Hayes on Friday dropped some truth bombs on President Donald Trump, his supporters and the right-wingers who continue to pour scorn on wearing face masks that aim to slow the spread of the coronavirus.

The host of MSNBC’s “All In” noted how “not wearing a mask has kind of become a sort of weird, culture war virtue signaling by Trump people.” Trump himself has not worn a mask during recent briefings and tours of factories. GOP lawmakers and anti-lockdown protesters have also failed to wear them.

But, Hayes explained, the anti-mask brigade (who he noted are “very much in the minority”) in fact appear to be obliviously working against their stated desire to ease lockdown restrictions and reopen the country.

He spelled out why there is “nothing stupider” they can do:

But for Donald Trump’s own stated aims, for the stated aims of those protesters, and all the right-wingers out there who think they’re the ones, the vanguard of opening up America and getting American capitalism cracking again, there is nothing stupider, nothing more counterproductive you can do than turn not wearing a mask into some right-wing badge of honor.

“The mask is your friend,” Hayes continued. “If the stated goal here is to open up the American economy and get people back to work and achieve some level of normalcy, something we all desperately want, there is really good evidence that everyone wearing a mask can really help us in that project.”

Hayes acknowledged he doesn’t like wearing a mask because it fogs up his glasses and makes him feel claustrophobic.

But he does it for the bigger picture,” he said.

“We are facing a pandemic that has ravaged everyone’s life,” Hayes concluded. “The easiest, lowest hanging fruit to make things at least somewhat better, the smallest, most trivial thing is: let’s all wear masks.” 

On its website, the Centers for Disease Control and Prevention recommends “wearing cloth face coverings in public settings where other social distancing measures are difficult to maintain” and “especially in areas of significant community-based transmission.”

More than 88,000 people in the U.S. have now died from COVID-19, the disease caused by the virus. CDC Director Dr. Robert Redfield said Friday that the nationwide death toll could hit 100,000 by June 1.

Trump, meanwhile, continues to push for the reopening of the country, despite case numbers still rising and against the advice of public health officials.

Check out Hayes’ monologue above.

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Ex-Labor Secretary Exposes Donald Trump’s ‘Lethal’ Plan To Reopen Economy Amid Pandemic

Former Labor Secretary Robert Reich has broken down what he believes is President Donald Trump’s “lethal four-point plan” to boost his 2020 election chances by reopening the economy “at all costs” amid the coronavirus pandemic.

The Clinton-era official explained in a video released on his YouTube channel Tuesday how Trump was trying to “remove income support, so people have no choice but to return to work,” “hide the facts” about testing for the contagion, “push a false narrative about ‘freedom’ and ‘liberation’” and seeking to “shield businesses against lawsuits for spreading the infection.”

“The biggest obstacle to reopening the economy is the pandemic itself,” noted Reich, as the nationwide death toll from the public health crisis topped 83,000.

“Any rush to reopen without adequate testing and tracing, a massive increase from what we’re now doing, will cause even more deaths and a longer economic crisis,” he warned.

It echoed the concerns expressed by Dr. Anthony Fauci, the country’s top infectious disease expert, during Tuesday’s Senate Health Committee hearing.

“He’s trying to force the economy to reopen to boost his electoral chances, and he’s selling out Americans’ health to seal the deal,” Reich concluded. “No matter the cost, Donald Trump’s chief concern is and will always be himself.”

Check out the video here:

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Publicly Traded Companies Got $300 Million In Small Business Loans: AP Investigation

Companies with thousands of employees, past penalties from government investigations and risks of financial failure even before the coronavirus walloped the economy were among those receiving millions of dollars from a relief fund that Congress created to help small businesses through the crisis, an Associated Press investigation found.

The Paycheck Protection Program was supposed to infuse small businesses, which typically have less access to quick cash and credit, with $349 billion in emergency loans that could help keep workers on the job and bills paid on time.

But at least 75 companies that received the aid were publicly traded, the AP found, and some had market values well over $100 million. And 25% of the companies had warned investors months ago — while the economy was humming along — that their ability to remain viable was in question.

By combing through thousands of regulatory filings, the AP identified the 75 companies as recipients of a combined $300 million in low-interest, taxpayer-backed loans.

Eight companies, or their subsidiaries, received the maximum $10 million possible, including a California software company that settled a Securities and Exchange Commission investigation late last year into accounting errors that overstated its revenue.

The eight firms getting maximum loans are likely just a tip of the iceberg: Statistics released last week by the U.S. Small Business Administration showed that 4,400 of the approved loans exceeded $5 million. Overall, the size of the typical loan nationally was $206,000, according to the statistics. SBA will forgive the loans if companies meet certain benchmarks, such as keeping employees on payroll for eight weeks.

The list of recipients identified by the AP is a fraction of the 1.6 million loans that lenders approved before the program was depleted last week, but it is the most complete public accounting to date. Neither the Trump administration nor the lending industry has disclosed a list of Paycheck Protection Program beneficiaries.

Representatives of the SBA, which is overseeing the program, did not respond to a request for comment late Monday. But last Friday, Treasury Secretary Steven Mnuchin said in a written statement that most of the loans, 74%, were for less than $150,000 and that demonstrated “the accessibility of this program to even the smallest of small businesses.”

President Donald Trump, asked Monday whether the criteria for who can receive loans should change, said that “we’ll look at individual things and some people will have to return it if we think it’s inappropriate.” He added that the loans are supposed to be awarded, in part, by “what we think is right.”

The AP analysis comes as lawmakers from both political parties negotiate an additional relief package that in large part would replenish the Paycheck Protection Program with more than $300 billion, but there are disagreements about terms for the new funding measure. A final deal could come as early as Tuesday.

AP’s review also found examples of companies that had foreign owners and that were delisted from U.S. stock exchanges, or threatened with removal, because of their poor stock performance before the coronavirus caused a downturn. Other companies have had annual losses for years.

Wave Life Sciences USA Inc., a Boston-area biotechnology company that develops new pharmaceuticals, received a $7.2 million loan. Weeks earlier, Wave Life Sciences, whose parent company is based in Singapore, disclosed in its annual report net losses of $102 million, $147 million and $194 million during the last three fiscal years.

“We currently have no products on the market and expect that it may be many years, if ever, before we have a product candidate ready for commercialization,” it wrote.

In an emailed statement Monday, the company said: “The livelihood of our U.S. employees and their families would be severely disrupted if they were to lose their jobs or be furloughed. We are doing everything we can to support them.”

Michael Minnis, who has studied the SBA program as an accounting professor at the University of Chicago Booth School of Business, said he understood the frustrations of smaller businesses that have not received funding when publicly listed companies have. But he said it would be hard to go into the program and change the parameters now.

“There’s a fundamental trade-off here between speed and targeting this in the absolute best way,” he said.

Minnis estimates the program might need to dispense $720 billion to meet demand.

Since launching April 3, the relief package has faced criticism about slow loan processing, unclear rules and limited funding that left many mom-and-pop businesses without help.

News that the $1.6 billion Shake Shack burger empire had received a maximum $10 million loan, disclosed in a filing Friday, ignited public anger. Company executives said late Sunday they would return the money after finding other sources of capital.

By design, the Paycheck Protection Program was meant to get money out quickly to as many small businesses as possible, using a formula based in part on workforce and payroll size. Some of the eligibility criteria was expanded making it possible for some businesses with more than 500 employees to qualify if, for example, they met certain size standards for their industries or other conditions.

The owners behind large restaurants chains like Potbelly, Ruth’s Chris Steak House and Taco Cabana were able to qualify and get the maximum $10 million in loans despite employing thousands of workers.

Some other big companies that received loans appeared to have enough cash on hand to survive the economic downturn. New York City-based Lindblad Expeditions Holdings, for example, a cruise ship and travel company with 650 workers and a branding deal with National Geographic, got a $6.6 million loan. At the end of March, the business reported having about $137 million in cash on its balance sheet.

“When this crisis hit, we had two business planning cases: 1) substantial layoffs and furloughs or 2) receiving these funds and not impacting our employees,” spokeswoman Audrey Chang wrote in an email. “Lindblad is the very rare travel company that has not imposed any layoffs, furloughs or salary reductions to date.”

Five of the companies that the AP identified were previously under investigation by financial and other regulators, including firms that paid penalties to resolve allegations, records show.

Quantum Corp., a data storage company based in San Jose, California, that has a workforce of 800, paid a $1 million penalty last December over allegations that accounting errors resulted in overstated revenues. Quantum received a maximum $10 million loan.

Without that loan, “we would most certainly be forced to reduce headcount. We owe it to our employees — who’ve stuck with us through a long and difficult turnaround — to do everything we can to save their jobs during this crisis,” company spokesman Bob Wientzen wrote in an email.

Broadwind Energy, a suburban Chicago maker of wind turbines that employs about 520, agreed to pay a $1 million penalty five years ago after the SEC accused it of failing to inform investors that reduced business from two major customers had caused “substantial declines” in its long-term financial prospects. Broadwind, which could not be immediately reached, received $9.5 million from the loan program.

Marrone Bio Innovations, a biopesticide company in Davis, California, that has about 50 workers, similarly agreed to pay $1.8 million in 2016 after the SEC alleged its chief operating officer had inflated financial results to hit projections that it would double revenues during its first year as a public company. Marrone received a loan worth $1.7 million.

Pam Marrone, the chief executive, said the company “shouldn’t be punished” for what happened with the SEC because it has had clean audits for years now. She described the investigation as a “body blow” that cost it investors and drove its stock price under $1. She said it has had to take on $40 million in debt and is still digging itself out of the financial hole.

“People don’t realize how tough it is to be a small public company like us that’s not yet profitable,” she said. “We can’t just go to investors and say, ‘OK, open up your wallets.’ “

The AP analysis found that about 1 in 4 of the companies, in fact, had warned investors months ago that they or their auditors had significant doubts about their ability to remain viable and meet their financial obligations despite the booming economy at the time.

One was Helius Medical Technologies, a company located near Philadelphia that develops technology to help injured brains heal themselves.

The company has 19 employees and received a $323,000 loan amid a tough stretch. Its most recent annual report warned, “We may be unable to continue to operate without the threat of liquidation for the foreseeable future” and did not expect to have enough cash to go beyond May.

In an interview, president and chief executive Phil Deschamps said the company was able to raise enough capital earlier this year that, when paired with the loan, it can survive to early summer — when it expects to have filed for U.S. Food and Drug Administration approval for its device. Without the federal money, he said, the company would have lost scientists and attorneys who help prepare regulatory submissions.

Deschamps said his company followed the same rules and applied like any other, and that its device could help thousands of people in the future. But he also understands why some people might question giving money to publicly traded firms.

“If we didn’t qualify for whatever reason, we would have walked away and figured out another way to do it,” he said.

Another company that was facing financial doubts before the virus was Enservco Corp., a Denver-based firm that helps oil and gas firms, including in the fracking industry. In its annual report filed last month, the company said: “We do not generate adequate revenue to fund our current operations, and we incurred significant net operating losses during the years ended December 31, 2019, and 2018, which raise substantial doubt about our ability to continue as a going concern.”

Chief executive Ian Dickinson said in an interview that his company would not have folded without the $1.9 million loan it received. But, he said, he welcomed the money and would’ve had to let go more employees than he already has without it. Enservco’s annual report cited 186 employees; Dickinson said payroll has “reduced significantly” from that mark, without giving specifics.

Dickinson said he did not believe concerns about how long the company could survive were raised in the application process with its bank.

“At the end of the day, our employees are really no different than the employees of a nonpublic company,” Dickinson said. “These are funds being used to keep folks on payroll and keep food on their tables.”

That big companies and ones with questionable records received such precious financial aid during the chaotic last few weeks frustrates Zachary Davis, a Santa Cruz, California, businessman who runs two artisanal ice cream shops, a beachside café and a taco bar with partner Kendra Baker.

Before a shelter-in-place order in mid-March, the two were expecting their best year to date and were on track to pay off in May the $250,000 loan from the federal government that they used 10 years ago to open their original shop.

“We were feeling pretty good about where we were in the world. Now it’s just all turned upside down,” said Davis, who had to lay off 70 workers.

Davis says they were recently able to obtain a different $10,000 disaster loan from the federal government to pay off vendors, but he says that it “evaporated within seconds.” Davis and Baker submitted a Paycheck Protection Program application with supporting documents on April 2 but are still waiting.

Competing against businesses with hundreds of millions a year in revenue and teams of accountants and lawyers is tough, Davis said, “and if you’re a little guy, chances are you’re going to the back of the line.”

___

Associated Press writers Michael Liedtke in Berkeley, California, and Jeannie Ohm in Washington, D.C., and researcher Rhonda Shafner in New York contributed to this report.

___

Contact AP’s global investigative team at [email protected]

___

Contact the reporters on Twitter at https://twitter.com/ReeseDunklin or https://twitter.com/lalanewsman.

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Denver Post Editorial Board Slams Donald Trump For ‘Playing Political Games With Lives’

The Denver Post editorial board this week accused Donald Trump of “playing political games with lives” amid the coronavirus pandemic.

The newspaper’s board slammed the president’s politicized response to the public health crisis, saying he was “treating life-saving medical equipment as emoluments he can dole out as favors to loyalists” in a critical column.

“It’s the worst imaginable form of corruption,” the board wrote in the editorial Thursday, adding: “For the good of this nation during what should be a time of unity, he must stop.”

The board noted how Trump had “prevented Colorado Gov. Jared Polis (D) from securing 500 ventilators from a private company, instead, taking the ventilators for the federal government” and then giving 100 to the state following a request from its GOP Sen. Cory Gardner.

“We are left to believe that if Colorado didn’t have a Republican senator in office, our state would not be getting these 100 ventilators,” said the board.

Trump has repeatedly attacked Democratic governors’ requests for assistance in tackling the spread of COVID-19, the disease caused by the coronavirus that has killed more than 16,000 people nationwide. He’s even asked White House coronavirus task force lead Vice President Mike Pence not to call them, saying they should be more appreciative.

“We find it hard to believe decisions are being made on such a morally bankrupt basis, but Trump is doing this nation no favors by giving us the impression that politics will drive his administration’s response to a virus that has already killed thousands of Americans and will kill thousands more,” the board concluded. 

Read the full column here.

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Louisiana Pastor: ‘True Christians Do Not Mind Dying’ Of Coronavirus If Infected At Church

An evangelical pastor who is refusing to abide by Louisiana’s ban on large public gatherings and continuing to hold in-person church services suggested his parishioners would not mind dying for their faith. 

Rev. Tony Spell, pastor of Life Tabernacle Church in the city of Central, is facing six misdemeanor charges after defying Gov. John Bel Edwards’ orders aimed at curbing the spread of the coronavirus. Each count carries a maximum penalty of six months in jail and a $500 fine. 

Palm Sunday services at Spell’s church, held last weekend, are reported to have drawn hundreds of parishioners. Local police said many arrived in a fleet of 26 buses that the church, which is located near Baton Rouge, sent to pick them up. 

In a TMZ interview on Wednesday, Spell shrugged off critics who say he is putting his congregants at risk of contracting COVID-19, the disease caused by the coronavirus. 

“The Bible teaches us to be absent from our bodies as to be present with the Lord,” said Spell, a Pentecostal preacher. “Like any zealot or like any pure religious person, death looks to them like a welcome friend. True Christians do not mind dying. They fear living in fear.” 

Watch TMZ’s full interview with Rev. Tony Spell below. 

In previous interviews, Spell has argued that he’s being persecuted for his faith. He reiterated that point on Wednesday, comparing the stay-at-home orders that now cover most Americans to “tyranny” and “prison.” Moving his services to Zoom or other streaming platforms, he added, was out of the question. 

As for those who have already lost their lives to COVID-19, he told TMZ, “They died like free people, fighting for their convictions.” 

Louisiana residents have been under a stay-at-home order since March 23. Last week, the governor extended that order through at least April 30, once again directing residents to leave their homes only for essential needs. Houses of worship are not included on the state’s list of essential infrastructure. 

As of Wednesday, there have been more than 17,000 cases of the coronavirus in Louisiana and 652 deaths. 

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It’s Time To Say It: Trump Is Handling COVID-19 Like A Dictator

President Donald Trump is handling the coronavirus more like the world’s authoritarian rulers than its democratically elected leaders. 

Since the start of the crisis, advanced democracies — even those ruled by right-leaning parties — have listened to public health experts and taken drastic steps to safeguard both their residents and their economies. In the United Kingdom, for example, Boris Johnson’s Conservative Party is offering laid-off workers 80% of their salaries if their employers keep them on the payroll. 

The world’s authoritarians, on the other hand, have responded to COVID-19, the illness caused by the coronavirus, with tantrums of paranoia and denial. As recently as last week, Brazilian President Jair Bolsonaro was calling coronavirus a “little cold.” Vladimir Putin claimed that Russia had conducted 200,000 tests but had found just 495 COVID-19 cases. In Turkey, President Recep Erdogan delayed imposing a full lockdown order, insisting that “the cogs must keep turning under every circumstance and every condition.” 

By any rational calculation, authoritarian leaders should be using the virus to boost their own popularity. Instead, they’re taking a stance that will allow COVID-19 to ravage their populations and destroy their economies — both of which risk sparking popular movements against them. 

Trump is following the same playbook. Though tackling the virus and offering generous relief to workers would likely improve his chances of winning the election in November, Trump has spent the last two months denying the virus’ existence, then downplaying its significance, then signing a skimpy relief package

The effects of this mismanagement are already showing up in the polls. Nearly every world leader, democratic and otherwise, has seen a bump in their approval rating over the last 30 days. Trump’s bump was one of the smallest — and is already starting to fade

To most people, this represents a paradox. Why would Trump handle COVID-19 in a way that’s almost guaranteed to cause the most deaths, irritate the most voters and maximize his chances of losing the election?

To researchers of modern authoritarianism, however, Trump’s actions aren’t so confusing. The last 30 years have given rise to a new type of leader and a new way of doing politics. From Putin’s Russia to Bolsonaro’s Brazil to Viktor Orbán’s Hungary, a global drift away from democracy has changed the way experts think about dictatorships.

“If you check the boxes, Trump fits the classic description of a populist authoritarian,” said Ronald Inglehart, a political science professor at the University of Michigan and the author of “Cultural Evolution: People’s Motivations are Changing, and Reshaping the World.”

“The message is always ‘rally behind a strong leader who will protect you from dangerous outsiders.’ That’s where we’ve been since his campaign started.”

A New Kind of Authoritarian

Dictatorships are not what they used to be. Since the end of the Cold War, authoritarian regimes have changed in two fundamental ways, both of which have profound implications for the global spread of the coronavirus.  

First, modern dictators are more likely to mimic the characteristics of more liberal countries.  

“Most dictatorships these days pretend to be democratic,” said Erica Frantz, a political scientist at Michigan State University. “They didn’t use to do that.”

As opposed to old-school authoritarians like Adolf Hitler, Mao Zedong or Joseph Stalin, modern dictators are more likely to hold regular elections and allow popular protests. Their goal isn’t to terrorize their own populations. They simply want to convince them — through state propaganda and misinformation — that they’re doing a good job. 

“It’s a more subtle and smart form of authoritarianism,” Frantz said. “In the past, there was no fooling ordinary people that the regime was repressive. Now, when it comes to things like restricting the independence of judges or shutting down political opposition, authoritarians are careful to maintain plausible deniability. The smartest dictators have huge numbers of citizens who don’t think they live in a dictatorship.”  

These days, Frantz said, dictators achieve their repressive goals not through mass terror but through seemingly harmless administrative procedures and technicalities. Instead of canceling elections, they underfund polling stations in jurisdictions where they’re unpopular. Instead of assassinating their political opponents, they require them to get an impossible number of signatures to appear on ballots. Instead of censoring journalists, they sue them for libel or subject them to tax audits. 

While a few exceptions still remain (like in North Korea, Myanmar and Iran), today’s dictatorships, on the surface, look at lot like democracies: They’re embedded in the global economy, accepted by international institutions — and very good at hiding their true nature from much of their own populations.  

But while this strategy is great for staying in power, it’s terrible for handling a crisis like COVID-19. Most modern authoritarians are much more concerned about seeming competent than being competent. Under normal circumstances, they can use propaganda, social media or — ahem — daily press briefings to make citizens believe that they’re cracking down on corruption or deftly handling the economy. 

But they can only maintain the illusion for so long. As their rosy public statements fall further behind the real-world conditions of their populations, their approval ratings begin to catch up to reality.  

“In the long term, if deaths keep going up and the disaster is as bad as everyone predicts, there has to be a blowback on Trump,” said Pippa Norris, a political science professor at Harvard. 

And that, she said, is when things will get dangerous. So far, modern authoritarians have responded to falling popular support by enacting “emergency” legislation that entrenches their power and stifles dissent. Turkey has started harassing citizens who criticize Erdogan on social media. Russia has banned the distribution of “fake news — i.e. anything that makes Putin look bad. Last week, in a stunning echo of the 1930s, Hungary’s Orbán gained the power to rule by decree indefinitely.

These moves, Frantz said, are exactly what Americans should watch out for with Trump. If the short-term spike in his approval ratings starts to fade, he may take more desperate steps to protect himself from accountability.

“The things to watch out for are the expansion of emergency powers, changing the timing of the election and anything that seeks to sideline critical voices,” Frantz said. “This is something we’re going to see a lot of in other places and we should watch out for here.”

Authoritarians Value Loyalty Over Competence  

Another subtle shift in authoritarianism is what political scientists call “personalization”: Today’s dictators run their countries more like cults than like governments. 

Before the early 2000s, the typical dictator was a military leader, a monarch or the head of an established political party. When he gained power, he brought an entire hierarchy into office with him. What made leaders like Stalin, Hitler and Mao so dangerous was not only their genocidal policies, but their competence in implementing them. 

Since then, however, evil-genius authoritarians have become rarer. The new generation of dictators are more likely to be what Inglehart and Norris call “populist authoritarians” — charismatic leaders who promise to be the political vessel for their supporters’ cultural frustrations and xenophobia.

“Authoritarian populists depict themselves as outsiders,” Norris said. Brazil’s Bolsonaro, Turkey’s Erdogan and Hungary’s Orbán all rose to power by bragging about their lack of political experience, blaming minority groups for their country’s problems and promising to restore traditional values. (Sound familiar?)

“Authoritarianism is fueled by insecurity, fear and tribalism,” Norris said, adding that most of the world’s authoritarian populist leaders appeal to older, rural and conservative populations, majorities who feel they are losing their grip on power. “These groups feel their status and power is under threat and they are willing to vote for someone who promises to speak for them.” 

In contrast to traditional dictators, however, modern-day authoritarians often don’t have the skill — or, in many cases, the interest — to competently enact their agendas. Instead of employing experienced administrators, authoritarians typically appoint loyalists and family members. When they fail to deliver on their outsize campaign promises, authoritarians double down, blaming shadowy conspiracies and wily saboteurs inside their own government agencies. 

Authoritarian populists don’t trust science and expertise in general and they mistrust scientific evidence,” Norris said. “And it’s not just them as individuals. It’s a philosophy that defines how they approach everything they do.”

This explains why modern authoritarians have responded to COVID-19 with paranoia and denial: They’ve deliberately purged their administrations of anyone who will tell them hard truths about their own performance. 

Trump’s COVID-19 response follows the same outline: deny science, purge whistleblowers, and install unqualified family members in key positions. 

“When leaders hollow out the institutions and get rid of people who aren’t loyal to them, that leads to erratic behavior,” Frantz said. “They insulate themselves from information. They surround themselves with yes-men. That’s a recipe for incompetence.”

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Republican Governor Slaps Down Trump Testing Claim: ‘That’s Just Not True’

Maryland Gov. Larry Hogan (R) on Tuesday rejected President Donald Trump’s claim that there’s no longer a shortage of coronavirus tests, calling the assertion “just not true” and warning that no state has enough tests.

Hogan, who issued a statewide stay-at-home order a day earlier, told NPR’s “Morning Edition” that the country’s governors have made some progress in working with the federal government to obtain additional medical supplies, but more is needed.

“President Trump has suggested that the testing problems are over,” NPR’s Rachel Martin told Hogan during the interview.

“Yeah, that’s just not true,” said Hogan, who chairs the National Governors Association. “I know that they’ve taken some steps to create new tests, but they’re not actually produced and distributed out to the states. So it’s an aspirational thing.”

He added that the Trump administration has some new testing measures “in the works,” but for now “no state has enough testing.”

Asked if he’s concerned that Trump doesn’t have accurate information, Hogan said he believes others in the administration are “talking about the facts.”

“We’re listening to the smart team,” said Hogan, naming Vice President Mike Pence and other members of the White House coronavirus task force, including doctors Deborah Birx and Anthony Fauci.

Trump reportedly told governors during a conference call Monday that he had not “heard about testing in weeks,” even though governors, medical experts and health care workers have been repeatedly sounding the alarm about the continuing shortage of tests.

In a separate interview Tuesday, Hogan told CNN that there’s “no question” that leaders in every state and the federal government believe there’s a need for more testing.

“I’m not here to point blame,” Hogan said. “We’re all working to try to get more testing. … It doesn’t matter who’s supposed to be doing these things ― we’ve all got to get together and get them done because it’s going to save lives.”

“Without the tests we really are flying blind,” he continued. “We’re sort of guessing about where the outbreaks are and about what the infection rate and the hospitalization rates are and the mortality rates.”

On Monday, Hogan and Michigan Gov. Gretchen Whitmer (D) ― who was attacked by Trump after she criticized his response to the pandemic ― published a joint editorial in The Washington Post outlining the help that states need from the federal government. 

Hogan told NPR on Tuesday that “every single state” has a shortage of ventilators and personal protective equipment, such as masks.

“We’ve been pushing these things at the federal level, but there’s simply not enough of them,” he said. 

The White House did not immediately respond to a request for comment.

Hogan has been critical of Trump in the past. He harshly criticized the president last year after special counsel Robert Mueller’s report on Russia’s interference in the 2016 election. And in October, he expressed support for an impeachment inquiry into Trump’s dealings with Ukraine.

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