The White House shift to a “herd immunity” policy (see my October 14th Sick ‘Em! blog) will continue our economy of uncertainty, where reluctant consumers are unwilling to take the risks necessary to bring back normalcy. Secondly, even if we are able to find temporary economic support through the expected second wave of the virus (we’re still in the first wave!), the economy is still not on a sharp, V-shaped recovery vector. Businesses have closed permanently, and the appurtenant jobs are gone. People have deferred mortgage and rent… which will be payable once the legal moratoria are lifted. Many major corporations have been drained of their liquidity, particularly those that require an in-person presence (e.g., theaters and retail malls), and may face bankruptcy.
Absent serious federal intervention after the pandemic subsides to a manageable level – through New Deal level direct federal employment and/or providing massive cash infusions to people and businesses – the “recovery” could take a decade or more. We could even see a permanent down-shift. See my The Big Restart blog (October 10th). We are not, contrary to the malarky (a Biden word) being funneled at us by the Trump administration, starting on a dramatic upward climb. No matter who is elected president in November, there has been so much damage done by not providing a central and focused approach to the pandemic, that without addressing that past and existing damage, it will take so many extra years to get even to the stage where developed countries that did address the explosion of viral deaths and infections are right now.
It is important to look at what the virus has done to us economically already, and how much worse our condition is than other developed nations, to understand the ground we have to make up before the ramp up of the economy can really begin. Writing for the October 14th Los Angeles Times, Michael Hiltzik provides the numbers from the experts: “The total economic cost in the U.S., measured in lost gross domestic product as well as premature deaths and other health losses, comes to $16 trillion.
“That’s as much as 90% of U.S. annual GDP, four times as much as lost output in the Great Recession and more than twice the outlay on all the wars the U.S. has fought in this century… That makes the pandemic ‘the greatest threat to prosperity and well-being the U.S. has encountered since the Great Depression,’ say Harvard economist David M. Cutler and former Treasury Secretary Lawrence H. Summers in a new article in the Journal of the American Medical Assn., from which these estimates are drawn. ‘Output losses of this magnitude are immense.’
“Even worse: A good portion of this loss could have been averted by a robust response to the pandemic by government. ‘Most of the damages scale with the number of people affected,’ Cutler told me Tuesday [10/13]. To take only the number of those whose deaths have been attributed to COVID-19, that’s more than 200,000 people in the U.S.
“The dire projection by Cutler and Summers also harbors reason for optimism — if the government’s laissez-faire approach to the pandemic thus far changes. The greater the U.S. effort to address the pandemic going forward, the lower the possible cost.” But that’s not what the GOP and the President want to see happen. They only see big deficits and stock market numbers by pumping money to the people. Very few Americans actually are sufficiently invested in those public markets to make stock prices much of a difference to their total economic well-being. Most seem to be more likely to live from paycheck to paycheck even in normal times. And these are hardly normal times.
Federal management of the economy is not comparable to the profit and loss vectors of running a private sector business. The government is not a business. It is a service to its people and is not required to generate a profit. Donald Trump’s complete absence of prior experience with government services and his knee-jerk proclivity to apply business principles to political governance cannot begin to address the “big fix” needed to get America back on a solid economic path to recovery. It’s apples and machine parts. Doctrinaire responses – like “trickle-down economics,” “incentivize the job creators,” “reopen the economy without restrictions and let people decide whether they want to participate,” etc. – are all failed policies.
It's hard to implement the controls needed to stem the tide. China used out-and-out brutality. For those found to have a fever at the many checkpoints located in hotspots, they were instantly carted off for restricted quarantine. Instantly. No mask in public, instant arrest. Thus, the nation that was the source of the virus contained the damage, reimposing harsh controls at any resurgence. The net result, as Western democracies reeled from citizens’ objecting to lockdowns and restrictive measures, is that those nations (with the United States far and away still producing the most infections and deaths) are struggling with the Second Wave. Among the largest nations on earth, however, China is the only country with an IMF-projected positive growth rate, a staggering 4.9%. For those nations unwilling to impost those drastic controls facing citizen rebellion, all those economic numbers are negative.
Picture an office or factory opened wide with no precautions. The Trump vision. Clearly, the virus will explode (as it has in comparable situations all over the country) among workers. Some will be unable to work if infected. Others will take the virus home with them. Some may die. But if they do not go back to work and take the risk, they will be fired. If individuals could just choose for themselves without impacting others. But they cannot. So we cannot fix the economy without fixing the pandemic, and as doctors tell us, we are absolutely miles and miles from generating infection/vaccination rates that create herd immunity.
I’m Peter Dekom, and I have yet to hear a coherent and workable Trump plan to restore our nation, unified, with a genuine and credible path to economic recovery.
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