U.S. Fat Cats Consider a "Virus Be Damned, Get Back to Work!" Policy
As the Coronavirus crisis intensifies globally, the U.S. elite are growing increasingly concerned about the impact that this pandemic will have on the economy and their wealth. Last week James Bullard, President of the St. Louis Fed, said that GDP could contract up to 50% in Q2 2020, and that unemployment could reach 30%. Major banks have put out similar analyses. The impact of the economic downturn and work interruptions are being felt across all sectors of the economy. Last week U.S. unemployment claims skyrocketed to 3,280,000, a 3 million increase over the previous week. This means that around one percent of the entire U.S. population filed for unemployment last week. This shattered the previous record of 695,000 unemployment claims in a week, which was set in 1982.
The number of unemployment claims will likely increase in the coming weeks. The numbers from last week are from the claims that were filed on the week ending March 21st, and therefore do not reflect the number of people who filed last week. During the week of the 21st, many state unemployment websites crashed, preventing people from filing online. As a result, many of these people ended up filing for unemployment this past week. What’s more, the $2 trillion stimulus package includes provisions which allow gig workers such as Uber drivers to file for unemployment benefits as well. This is a welcome change, and long overdue, but it does mean that we can expect that unemployment claims will continue to climb in the coming weeks. And we are still only at the beginning of a crisis that is expected to last for 18 months. Italy was unable to contain the spread of the Coronavirus even after imposing social distancing measures similar to those in effect in the U.S. right now. In a last ditch effort to stop the spread, they ultimately decided to shut down all industrial production for at least 15 days.
While the measures taken here in the U.S. do not entail a complete shutdown of industrial production, the U.S. elite and especially the big capitalists are not thrilled about the prospect of a similar shutdown. Last week Trump said that “America will again and soon be open for business. Very soon. A lot sooner than three or four months that somebody was suggesting." He also stated that he wants to see “packed churches” on Easter. He has since walked back this goal. Despite this reversal, Trump has not been the only one pushing to rush everyone back to work during the pandemic. His statements are not isolated incidents, but represent a growing trend among the U.S. elite, who stand to lose billions in future profits and lose global influence if the shutdown continues.
For example, former CEO of Goldman Sachs, Lloyd Blankfein, recently tweeted that ‘Extreme measures to flatten the virus “curve” is sensible-for a time-to stretch out the strain on health infrastructure. But crushing the economy, jobs and morale is also a health issue-and beyond. Within a very few weeks let those with a lower risk to the disease return to work.’ On Fox Business, White House economic adviser Larry Kudlow recently stated that, “There’s no question we have to think seriously. I would say, after the 15-day period is over, which I guess ends after this weekend, we will take another look at targeting areas [to reopen businesses] that are safe enough." Big capitalists like Bob Luddy (founder of CaptiveAire systems) have argued that if the U.S. doesn’t “get back to work” by March 30, it will be a total disaster. Right-wing talkshow host Glenn Beck, even went so far as to state, "I would rather have my children stay home and all of us who are over 50 go in and keep this economy going and working[...]Even if we all get sick, I'd rather die than kill the country." He also noted that he hoped his comments trended on social media.
It’s not just billionaires, libertarians, and right-wing news networks who are pushing these ideas. The New York Times recently ran an opinion column by Thomas Friedman, a columnist at the paper, in which Friedman made similar arguments. A few days before that, the Times ran a similar opinion piece by David L. Katz, president of True Health Initiative and the founding director of the Yale-Griffin Prevention Research Center. The editorial board of the Wall Street Journal recently published an opinion piece that made a similar argument.
While there is not yet a complete bipartisan consensus on this issue, it is concerning to see a large section of the U.S. elite so openly proclaiming their willingness to let millions die to further their political and economic interests. If people are rushed back to work before the pandemic has died down, or before there is a vaccine, this will lead to a massive outbreak and the unnecessary deaths of millions of people. This would be akin to responses during the 1918 Flu pandemic in which some places rushed people back to work and hosted big public gatherings, which led to massive spikes in the weekly death rate.
Criticism of this push to get people back to work during the pandemic have primarily focused on how this prioritizes profit over the lives and well-being of people. This is an important criticism. It exposes the logic of the present social system which serves the interests of the wealthy and powerful at the expense of the poor and oppressed people. These exposures are all the more important during times of crisis when so many are in dire straits both from the virus itself, and also the looming economic depression. However, it is also important to see that push to get everyone back to work is not just about driving the stock market higher and maximizing corporate profits. The U.S. elite have a series of economic and political interests which are related to, but not reducible to maximizing their profits and driving the stock market higher.
For example, competition between the U.S. and China has been intensifying in recent years. This has manifested in many ways including the military build up in the South China Sea, and the ongoing trade war. Right now, the U.S. elite are worried that the Coronavirus could reshape the global order and allow China—which seems to be recovering from the virus—to overtake the U.S. as a the dominant global superpower. Major think tanks and policy circles have speculated that if China recovers from the virus before the U.S., then the former will make big political and economic inroads into regions like the Middle East at the expense of U.S corporations. They are also concerned that China could strengthen its relationship with European countries like Italy by providing them with economic and medical assistance during this crisis.
The push to get everyone back to work is also related to the U.S. elite's concerns about major disruptions to global supply chains. Some key industries are already shutting down some production due to supply shortages. There is growing concern about what is known as the bullwhip effect in supply chain engineering. The basic concept is that as one supplier attempts to adjust to new changes in demand and available parts, like those caused by the present crisis, relatively smaller misadjustments by this initial supplier can lead to even bigger miscalculations down-stream or upstream. The metaphor to the bullwhip is that a small change/disruption—like a flick of the wrist—leads to bigger changes down the line, like the movement at the end of the whip. This is already playing out in multiple ways throughout the economy.
For example, many hospitals have urgently been requesting supplies of personal protection equipment, such as masks and gloves. While there have been steps to address these shortages—such as automanufacturers shifting production to make ventilators and masks—other shortages throughout the medical system have been neglected, including medicine and many other medical devices. In the end it is likely there will be an oversupply of gloves, and undersupply of these other products.
On a larger scale, the initial outbreak of Coronavirus in China and the related economic downturn there led to major disruptions in production and supply of made goods made in China. This led to a significant loss of profits to producers there. It also led to major disruptions in supply for manufacturers around the world who rely on parts and equipment made in China. Following a partial recovery from the pandemic, many businesses and factories in China have quickly invested in the reopening of operations throughout the country, assuming that their international customers would purchase the same approximate quantity of goods that they did before the crisis. However, faced with declines in demand because of economic crises in the U.S. and Europe, these factory owners may experience even further losses on investments. They are already beginning to face issues due to reduced demand from Europe, the U.S., and other parts of the world. In the face of this downturn, some may overcompensate in other direction and drastically cut back production to a degree that leaves those who require their products with no choice but to look elsewhere, or to go out of business.
Howard Shatz, a senior economist at the Rand Corporation recently noted that the impact of production disruptions in Europe on the U.S. economy will be even more significant than the impact of earlier disruptions in China. He stated, “Think about this: China is a major trading partner, and its shutdown negatively affected a lot of U.S. businesses. But the United States receives only 15 percent of its imports from China and sends only 7 percent of its exports to China. We send 34 percent of our exports to the EU and receive 30 percent of our imports from the EU. Now those economies are shut down. Our neighbors Canada and Mexico are also major trading partners with us, so our economic health will depend in part on theirs as well.
Given the non-linear nature of supply-chain disruptions, there is growing worry that economic disruption from the virus will lead to major shortages of important goods, including a possible world-wide shortage of food. This is growing concern because workers in key food industries are falling sick with the virus. Close quarters and dangerous working conditions make many food factories and slaughterhouses especially dangerous environments during a pandemic. Government officials around the world are already expressing concern about food riots, and last week the Red Cross agency warned that the Coronavirus could spark mass unrest among West's urban poor. The U.S. elite are especially worried about their ability to contain this unrest, given that police forces across the country and members of the military are falling sick.
These are just a few example of the complex series of reasons that Trump and other members of the U.S. elite are pushing to get everyone in the U.S. back to work. The capitalists and politicians are of course concerned about the stock market and corporate profits, and it is important to critique them for prioritizing profits over human lives and well being. This is an essential feature of capitalism, even during periods of relative stability. However, during a crisis the contradictions of the system intensify, and its logic is laid bare. It’s important to understand the complex dynamics at play and not oversimplify the situation. The maneuvers of the ruling elite not only show that they value profit over the lives of the poor and oppressed people—something which they have made abundantly clear long before this crisis—but also that they are deeply concerned about how this crisis will impact their power, both geopolitically and domestically. In other words, the U.S. elite’s response to this crisis shows not only their greed and callous indifference, but also the fragility of their rule.