COVID-19 Economy: A Deliberate Disaster
Above photo: Nathaniel St. Clair.
With nearly 12 million cases and a quarter million deaths in the US so far (over 55 million cases and 1.3 million deaths world-wide), the COVID 19 pandemic is ravaging civilization. The disease is on track to be the deadliest epidemic since 1918.
The economic fallout for the working class has been severe. In the US, unemployment has skyrocketed, with 45.4 million new unemployment claims since March 14. At least 1/6 of those with jobs before the pandemic are now out of work. According to The New York Times, “The economic downturn is shaping up to be particularly devastating for renters, who are more likely to be lower-income and work hourly jobs cut during the pandemic.” As many as 40 million, or up to 43% of renters, may be facing eviction by the end of the year. Breadlines not seen for generations now stretch for miles. Tens of thousands of small businesses have closed; millions more are threatened and may not survive.
Strikingly, all of this was completely avoidable.
To begin with, the atrocious COVID 19 infection and death totals in the US could have been orders of magnitude smaller. How do we know? Because China, with more than four times the US population has had 1/50th as many fatalities! (86,398 cases and 4,634 deaths.) Blame for the failed US response is shared by the President, Congress, both political parties and many corporate conglomerates. How China spectacularly outdid the US and Europe in controlling their COVID outbreak – allowing Chinese citizens to attend work and school and enjoy restaurants, theaters, sporting events and pool parties while the US continues to languish under lockdown – is a story for another time.
The question for now is this: in the midst of a raging pandemic, was immense economic hardship and disruption necessary?
The answer is a resounding no.
Five basic measures could have prevented – and still could greatly mitigate – the COVID economic nightmare in the US.
1. Full, no-cost healthcare for everyone while the pandemic lasts. This should cover all healthcare needs, not just COVID 19 related care. No one should need to delay seeking care for any reason during a pandemic. Arguably, such universal care is a right that ought to be available whether or not there’s a global health emergency, but that broader debate can be deferred. Meanwhile denying free, universal care during a pandemic is self-defeating.
2. Provide a significant monthly payment ($1,000 or greater) to each adult and child while the pandemic lasts. Among other things, the success of any quarantine depends on people being financially able to stay at home. For efficiency, there should be no means testing. Later, reclaim some of this income from those at the top through a special tax on the wealthiest.
3. Institute a moratorium on all loan, rent and mortgage payments. This is not a deferral of payments that accumulate during the pandemic but the complete suspension of those charges until the pandemic ends. At the end of the pandemic, payments would resume as if no payments had been missed; no additional back payments would be owed. (To include credit card payments in the moratorium, there would need to be a suspension in the use of credit cards for new purchases. Debit cards and cash could continue to be used.)
4. No corporate bailouts. Period. Leaving aside the irresponsible behavior of big business leading up to the pandemic, corporate titans should be able to live on the special monthly government payments like everyone else for the duration of the crisis.
5. Most small businesses would be able to survive on the money people spend from their monthly government payments. Small business owners would not be burdened by rent and loan payments during the crisis, and they and all their employees would receive their own monthly government stipend. Any small business for which this doesn’t work could apply for hardship grants. But any big business having trouble surviving should either be allowed to fail or be nationalized and run as a public utility.
Rent Creates No Value
Unlike the production of needed commodities and useful services, mortgage, insurance, interest and rent payments produce no new value. These payments (collectively referred to as “rent”) merely transfer existing wealth from one person to another or one class of people to another. So, suspending rent during the pandemic has no harmful effect on the real economy. Such a suspension only temporarily halts the upward transfer of wealth. After the pandemic, the country as a whole would not be one cent poorer for having implemented a rent holiday.
By contrast, reduced production of real goods and services – from restaurants, factories, businesses and farms whose employees and customers must shelter during the pandemic – does negatively affect the economy. The monthly government payments can offset some of this. Beyond that, the best that can be done is to defeat the pandemic as quickly as possible in order to return to economic “normality”.
Show Me the Money
The question “How will we pay for it?” is meant as a showstopper, but it’s really a red herring. The US government, as a sovereign currency issuer, can print money whenever it wishes. That’s exactly how the government funded the $6 trillion CARES Act which was touted as COVID relief but was actually a humongous transfer of wealth to those at the top. No new taxes were announced to fund this bipartisan deception. The Treasury just authorized the electronic distribution of additional money.
Not convinced? Still believe that the federal government can only spend what it has previously collected in taxes? Fine. Paying for serious COVID relief is still not a problem. We could take funds from the bloated, pugnacious “defense” budget. Or tax Wall Street and the richest 1% to generate new funds. Either way, political will, not money, is the limiting factor.
They’re Just Not That into You
The failed US response to the COVID 19 pandemic has led to unnecessary death and suffering. Comparing US results with China, Vietnam, New Zealand, South Korea and Singapore makes this clear. China has experienced 0.34 deaths per 100,000 people, while the figure for the US (77.19) is 227 time greater!
The resultant economic hardship was also completely avoidable. The best way to ameliorate COVID-triggered economic fallout would have been to address the pandemic in a scientific, efficient manner, as some countries demonstrated was possible. Trump and the Republicans failed to provide national leadership. But the Democrats are hardly blameless. Despite previous disease-driven wakeup calls, health funding decreased for most years under the Obama administration. Though China first notified the World Health Organization of the Wuhan outbreak in December 2019, the Democrats prioritized their doomed impeachment initiative in January over mobilizing a healthcare response. Both corporate parties were asleep at the wheel when it came to early COVID mitigation.
But as we’ve seen, even with infection rates raging throughout the country, the required health response did not necessitate piling economic suffering on top of illness for working people, farmers and small business owners. It’s always been possible to fix this problem without the cure being worse than the disease. Choosing a different, more onerous course was a deliberate decision by the powers that be.
Going forward, there’s every indication that the incoming Biden administration will offer nothing close to the measures required to ameliorate the COVID economic crisis. As an outspoken opponent of Medicare for All and government spending, Biden will be facing the healthcare emergency having discarded our most potent weapons in advance. The Democrats and Republicans will give us nothing; we have to organize and fight for what’s needed. As Frederick Douglass warned, “Power concedes nothing without a demand.”