In many ways, the same impulse that drove Make America Great Again Trumpism is driving the protests to reopen the economy. MAGA was all about returning to a period of white Christian dominance that no longer exists. Similarly, the drive to lift stay-at-home orders is largely about returning to a world that also no longer exists and to which we will never return. As with any period of great disruption, those who emerge stronger have an opportunity to improve the world or to make it work even more fully to their benefit.
Michelle Goldberg’s recent opinion piece is one of the few that openly addresses just how damaging this pandemic will be to not just economies but societies as a whole. She writes, “Covid-19 has killed more Americans than died in the Vietnam War and led to unemployment numbers that are likely worse than those during the Great Depression. Implicit in Joe Biden’s campaign was a promise of a return to normalcy. That may have always been illusory, but now it’s been revealed as an impossibility. As we approach this year’s election, we’re looking at an abyss. The question is what will fill it. Societal disaster can have horrific political consequences: Around the world, despots are using the pandemic as an excuse to grab ever more power. But the need to rebuild the country comes with opportunities”.
The abyss that Goldberg references is foreshadowed in a number of recent economic reports. The CBO currently estimates that unemployment will still be hovering at near 10% at the end of 2021. That estimate may not only be optimistic but also assumes millions of other workers will have simply given up looking for jobs. According to the US Chamber of Commerce, over 40% of America’s small businesses may fail over the next six months. As they fail, so will the landlords of those businesses. 30% of renters missed April’s payments and the numbers for May will probably be even higher. A number of large retailers are likely to go bankrupt, with Nieman Marcus already taking that route, and many that survive will have far fewer brick and mortar stores. That, along with continued social distancing, will further accelerate the collapse of malls, which will in turn take down those smaller retailers that depend on business drawn by the anchor tenants.
Entire supply chains have been broken or are under severe strain. The medical supply chain, especially related to personal protective equipment, has failed, primarily due to a reliance on either single sources or foreign producers, as well as just-in-time delivery policies. We are seeing a similar breakdown in the food supply chain. As the pandemic races through food processing plants, the head of Tyson Foods warned “The food supply chain is breaking”. Trump’s order to keep those meat processing facilities open, at the cost of untold lives of underpaid and underprotected workers, some of whom are forced to wear diapers because they are denied bathroom breaks, is designed to avoid potential food riots. Again, much of the reason for this breakdown is the consolidation in the food processing industries has created a limited source of supplies. Even as food banks are being overwhelmed with requests, farmers are destroying crops and livestock because of a lack of markets and declining commodity prices. Farm bankruptcies were already increasing at the highest rate seen in eight years even before the crisis. It will only get worse. Lastly, it appears that the supply chains are different and not easily adaptable between commercial and retail for a number of industries, as evidenced not only in certain foods but also toilet paper.
The pandemic has created an economic death spiral that will continue at varying rates probably until a vaccine is available. For progressives, the pandemic has become the real-world illustration of why the US needs the big structural changes that both Warren and Sanders were focused on during the Democratic primary campaign. It has exposed the underlying and now deadly weaknesses and inequality in virtually every aspect and sector of our society.
Nowhere is that more evident than in health care. It is no coincidence that the death toll is far higher among poor and minority communities that have long been underserved by our healthcare system. The pandemic has highlighted both the dangers of not having universal health care coverage and, with 30 million newly unemployed in just six weeks, the absurdity of having health care linked to employment. A report from early April showed that over 9 million Americans had already lost their health insurance. That number is certainly much higher today. (I wonder how many of those newly unemployed are happy with their employer-provided health insurance now?) A concomitant investment in public health also seems like a no-brainer. That means rebuilding the network of rural hospitals and a putting a far greater focus on preventive care.
Indeed, the health care sector may soon be uniquely vulnerable to major reform. The health insurers, whose immense political power killed the public option in the ACA, will be in desperate straits next year. One estimate shows that insurers may need to hike their rates by 40% for 2021 to deal with the fallout from the pandemic. In theory, the insurers would be in a worse position if the pandemic eases by the end of the year because they are barred from using future rates to pay for prior losses. Ironically, and illustrative of just how fouled up America’s health system is, the insurers are actually flush with cash right now as their costs have plummeted with the cancellation of most elective procedures. Along with the millions losing health insurance, the decline in utilization is a veritable short-term windfall for health insurers. Eventually, however, the insurers will have to deal with the hundreds of billions of dollars in increased costs associated with the pandemic
Even as they pocket windfall profits now, health insurers are looking to deal with their future losses by cutting payments to doctors. According the Alexander Salmon, “Specialists, physicians, emergency room employees, and even nurses and technicians treating COVID-19 patients have seen salaries slashed in recent weeks. Meanwhile, those same insurers have severed contracts with anesthesiology and neonatal care providers, also in the name of cost-cutting. A recent survey by the American Society of Anesthesiologists found that 42 percent of anesthesiologists had contracts terminated in the previous six months, while 43 percent of respondents experienced payment rate cuts from insurers of as much as 60 percent”. Because of the absurdities of an assembly line health system that pays physicians on how many clients they see and offers smaller reimbursements for telehealth, many primary care practices may soon be forced to shutter.
Hospitals, too, will be under enormous financial pressure. The cessation of elective procedures may be a boon to health insurers but it is a disaster for hospitals. Hospitals were already under strain coming into the pandemic and many, especially smaller rural hospitals, are now facing financial ruin.
Bizarrely, and perhaps yet another indication of the absurdities of our health care system, the decline in health care spending alone was nearly half of the total decline of GDP in the first quarter. Even with the billions of dollars in support coming from the federal government, some of the major powers that have limited health care reform in the past will be severely weakened as we emerge from this crisis.
With the CBO predicting a near 10% unemployment rate even at the end of 2021, the long-awaited effort to finally rebuild our aging infrastructure should begin. The American Society of Civil Engineers estimates the country needs $5 trillion in spending to bring our roads, bridges, levees, dams, rails and water systems into good repair. With real interest rates negative and millions of unemployed workers, the Green New Deal that focuses on a more sustainable infrastructure makes more and more sense and, as Goldberg notes, is now polling with nearly 60% support. Here again, the major obstacles to reform, the fossil fuel industry, will be in a far weaker position than it is already, threatened by clean energy options. Despite the Trump administration’s efforts, the coal industry has basically disintegrated in this country. Historically low demand and corresponding prices are devastating the oil industry, with many smaller oil companies expected to go bankrupt and the major oil companies relying on a government bailout.
Telehealth and telelearning have both been widely adopted because of the pandemic, but around 30% of American households are estimated to still have no broadband access. In order to ensure broadband access to all their students, school districts across the country have been deploying their school buses as wifi hotspots in communities lacking access. Any major infrastructure plan needs to include providing broadband access as the basic human necessity that other countries have already recognized.
The government is already sending $1200 to every taxpayer and everyone knows that more direct payments will probably be in the offing. There are now proposals in Congress to provide $2000 per month to US citizens until the pandemic subsides and unemployment reaches more normal levels. This will potentially be a first step in instituting something along the lines of a universal basic income (UBI). Even the ever-cautious Nancy Pelosi at least flirted with the idea recently. Instituting some form of UBI would be an important step in reducing the rampant inequality in our society.
Similarly, we may finally see the federal minimum wage rise to $15 or above, about where it should be if it was inflation adjusted. Mitt Romney has even proposed an additional $12/hour raise for “essential workers” for the next three months. It’s hard to see the additional $600 in unemployment benefits that is set to expire in June not being extended, even with Republican opposition. As AOC has so aptly pointed out, the GOP’s complaint that the $600 means some people are making more unemployed than they would working only indicates how low their initial wages were before. In addition, the pandemic has finally highlighted just exactly who are the “essential workers” in this economy and there should be enormous pressure to treat them accordingly going forward. That would also include a real policy of universal sick leave.
The disaster of the Wisconsin election will also finally create some movement toward electoral reform. Every study has shown that voting by mail increases turnout significantly. As the pandemic rages, we will find more and more states at least trying to move to either voting by mail or expanded no-excuse absentee ballot access. Even if Republicans object, local Democratic-controlled counties can make absentee voting much easier, increasing turnout there and accordingly putting pressure on Republican areas to do the same. In Milwaukee, the city government just passed a law that will require an absentee ballot with prepaid return postage to be sent to every registered voter.
With the pandemic exploding in jails across the country, the small beginnings of criminal justice reform may blossom into a real effort to eliminate the incarceration state. That would certainly include expanding the initial efforts at both bail reform and criminal justice reform more generally that we were seeing before the pandemic hit. Courts have already freed thousands of non-violent prisoners who were simply awaiting trial as well moving more vulnerable older inmates out of jail and into home detention. Both of these practices may become more common after the pandemic is over.
Post-pandemic America will look even more oligarchic than it does now. Back in 2016, four airlines controlled 80% of domestic airline travel; five health insurers controlled 80% of that market; three chains controlled almost 100% of drug stores; five banks controlled nearly half the assets held by all US banks; four companies controlled 80% of the beef and 65% of the pork slaughtered in this country; four companies controlled over 60% of the chicken market in this country; today, five tech companies alone make up over 20% of the S&P 500. Most of these already dominant companies will emerge from the pandemic in an even stronger position.
This level of consolidation is one of the reasons that we are currently facing a meat shortage. Today, just 50 factories process almost all of America’s beef and just 40 plants process around 90% of our pork. If any one of these plants is taken off-line for any reason, not just from the impact of the pandemic, it immediately effects the meat supply chain. According to Claire Kelloway, “Ranchers got a taste of such slaughter disruption last summer, when a fire took out one of Tyson’s beef processing plants and created a glut of slaughter-ready cattle. Packers made a then-record $415 per head, up from around $150 before the fire, while cattle producers lost an average of $200 per head”. Today, the USDA is scrambling to find meat processors to fill the void created by processing plant closures related to the virus, but those alternatives just don’t exist, having been driven out of business by the larger conglomerates a long time ago.
The pandemic has been a boon for Amazon’s further dominance in the retail sector. The company has hired nearly 175,000 new workers as the demand for products from quarantined users skyrocketed. Consumer spending on Amazon is up 35% and it no longer accepts new members for food delivery. Demand is now so enormous, the company has largely abandoned one or two day delivery for its Prime members. It changed its systems to increase its stock of what it deemed as “high priority” products but then “accidently” changed its algorithm to deem all Amazon-branded products as high priority, disadvantaging third party sellers. Shaoul Sussman writes, “Amazon is seizing the moment by leveraging its position as intermediary between quarantined consumers and distressed merchants to bolster its grip over the retail sector”. As we noted earlier, that retail sector will be decimated by the pandemic, providing Amazon with even greater market power.
One of the lessons from 9/11 for many New York companies was you simply could not rely on just one internet provider. Firms soon diversified not only their providers but ensured their backup sites were on a separate grid. A similar lesson will be learned from this pandemic, where reliance on cheap Chinese manufacturing was a key for many US firms. Going forward, those firms will need to diversify their production locations. Similarly, the government needs to consider what national defense really means. Spending $700 billion plus on bullets and bombs while leaving the country unprotected from what is essentially a biological attack has now been shown to be a deadly miscalculation.
All of this speaks to a need for real antitrust reform across some of the largest industries in America. Accomplishing that will be difficult because the oligopolies that remain after the pandemic subsides will be even more powerful, both economically and politically, than they are now. Many of these companies are already sitting on mountains of cash and will easily be able to pick up smaller competitors that manage to survive at bargain basement prices. The barrier for entry for new companies emerging after the pandemic will be even higher than they are today.
The pandemic will create enormous destruction but the rich will be richer and the poor will be poorer when it is all said and done. And what’s left of our economy will highlight the increased inequality. As Annie Lowrey writes, “But the decimation of American small businesses will inflict more insidious, long-lasting harm too…The pandemic will mean the triumph of franchise chains over mom-and-pop shops, of C-suite executives over entrepreneurs working in their basements. It will mean town centers filled with banks and 24-hour pharmacies rather than bookstores and nail salons and takeout counters. It will also mean fewer start-ups competing with incumbents. Ultimately, this means a less competitive American economy. New companies and small businesses drive net job growth in the U.S. They generate more productivity growth than bigger and established businesses. The great small-business die-off will fuel industry consolidation, which will both depress wages for workers and increase prices for consumers. More inequality, more sclerosis, and a smaller GDP: These are some of the legacies the coronavirus pandemic is leaving”.
All of the above may seem like a progressive wish list. Yet the pandemic has exposed the need for everyone of these policy initiatives in stark and deadly detail. During the Democratic primary, progressive policies were still remarkably popular even as the candidates supporting those policies were not winning. Those policies are even more popular today. Of course, getting any of these policies enacted, much less all of them, will require winning the House, Senate, and White House in November. It will probably take eliminating the filibuster in the Senate and finding some way to restrain the courts which have become highly politicized through the extraordinary efforts of Mitch McConnell. It will take enormous courage from vulnerable Democrats. It will be an enormous political lift even in the areas where the traditional obstacles to those policies have been weakened by the pandemic.
The leaders of the oligopolies that dominate the US economy have done little to stand in Trump’s way as he has dismantled our democracy. Many of them have actively worked with the administration in that endeavor, willingly participating in Trump propaganda events. Others preferred to remain silent in order to pocket the windfall from the Trump tax cuts. But many of them will also be out there whining about “socialism” and predicting hyperinflation when forced to pay their fair share or actually implement the policies mentioned above.
The aftermath of any crisis usually provokes a reactionary response as evidenced by the emergence of the Tea Party. Certainly the armed protesters invading state capitols is just the vanguard of the reactionary response we are likely to see from this pandemic. The Trump era had already seen a significant rise in hate speech and hate crimes. The pandemic has only exacerbated that trend, with anti-Chinese and anti-Semitic hate speech spiking. White supremacists have discussed trying to harness the virus as a bioweapon. Similarly, international terrorists have not only seen the damage that the virus has created but also noted the United States’ inept response.
Internationally, the pandemic is expected to decimate poorer countries, overwhelming their already limited health care systems and crushing their already weak economies. High unemployment in the developed world will also lead to a reduction in the remittances that help stabilize those economies. This, combined with the increasing effects of climate change, will end up creating even more migration to the developed world, potentially leaving behind failed states, and creating security issues in both areas. The response from the developed world will increasingly move toward isolationism and nationalism. We see the nationalism expressed in Hungary and Poland where their leaders have used the pandemic as an excuse to cement their near-dictatorial powers even further. And we are already seeing a more benign example of the new isolationism with the discussions about the Australia-New Zealand travel bubble.
Natascha Strobl, who tracks right-wing ideology and rhetoric in Europe, recently wrote about how far-right groups look at the pandemic as a way to cull the weak and infirm. She writes, for these right-wing, “Uncontrolled infection seems to be the preferred approach…This is interesting because we might speculate that the extreme right might want to protect its own people. However this doesn’t hold true if it is about its weak parts. Weakness is never worthy of protection and has to be cast out. This is fascism. Accordingly, in the intellectual treatment of it there are no innocent calls for the protection of grandparents…but only confirmation that the weak pulled the short straw. And should carry their burden with dignity”.
We can see these kinds of proto-fascist expressions coming out of the Republican party today. The Texas Lt. Governor suggested that “lots of grandparents’ would be willing to sacrifice themselves and die from the virus in order to save the economy for their grandchildren. A Wisconsin Supreme Court justice just opined that the state should reopen its economy because the “These [new infections] were due to the meatpacking, though…It wasn’t just the regular folks in Brown County”. Meatpacking workers are, of course, primarily low-wage immigrants and are therefore not “regular folks” in the fascist mindset. The so-called moderate Chris Christie just stated, “Of course, everybody wants to save every life they can — but the question is, towards what end, ultimately?…Are there ways that we can thread the middle here to allow that there are going to be deaths, and there are going to be deaths no matter what?”, adding that it is important to “let some of these folks get back to work, because if we don’t, we’re going to destroy the American way of life in these families — and it will be years and years before we can recover.” In other words, “others” must be sacrifice to protect our way of life. This is rhetoric straight out of the fascist playbook. And with the admission that the administration’s pandemic task force will soon be dissolved, uncontrolled infection is exactly the approach Trump now prefers. He will be abetted in that effort by red state governors, legal challenges to stay-at-home orders, and paramilitary protests against governors that maintain those orders.
In Goldberg’s piece, she quotes Andrew Yang as saying, “We are going to be faced with a national rebuilding project at a scale that has never existed in our lifetimes”. That was probably true even before the pandemic hit. For 40 years, Republican have been dismantling government brick by brick. Trump has taken a wrecking ball to it for the last three and a half. Simply restoring effective government was going to be a mighty challenge. Implementing a new New Deal makes it even more daunting. The intellectual bankruptcy of the Republican party has been on full display for more than a decade, offering only bailouts and tax cuts for the wealthy as a response to two of the greatest financial crises we have faced. They offer nothing more than culture war and the raw expression of power they are desperate to hold on to.
Progressives have spent years crafting policies that perfectly match the moment and the need. While Goldberg hopes this may be the time for those ideas to become ascendant, echoing FDR’s New Deal, it is important to remember that Roosevelt battled with the Supreme Court for years as the Court undermined his programs, forcing his failed attempt to pack the Court, but successfully intimidating it. And it is also noteworthy that his efforts at unionization created violent backlash, as evidenced by the Memorial Day massacre in Ohio in 1937. Democrats should expect similar opposition today.
Goldberg may look to the FDR analogy, but the aftermath of the 1918 Spanish Flu and the end of World War I provide a more frightening comparison. As Colin Kahl and Ariana Berengaut write, “[I]f we want to understand the even darker direction in which the world may be headed, leaders and policymakers ought to pay more attention to the two decades after the influenza pandemic swept the globe. This period, often referred to as the interwar years, was characterized by rising nationalism and xenophobia, the grinding halt of globalization in favor of beggar-thy-neighbor policies, and the collapse of the world economy in the Great Depression. Revolution, civil war, and political instability rocked important nations. The world’s reigning liberal hegemon — Great Britain — struggled and other democracies buckled while rising authoritarian states sought to aggressively reshape the international order in accordance with their interests and values. Arms races, imperial competition, and territorial aggression ensued, culminating in World War II — the greatest calamity in modern times. In the United States, the interwar years also saw the emergence of the ‘America First’ movement”.
Goldberg is right when she summarizes, reflecting on Yang’s comment, that “The biggest battle in politics now is over who will control that [rebuilding] project, and whom it will prioritize”. I fear that battle will be far more contentious and fraught than she imagines. And the world itself will be a far more dangerous, unstable, and, sadly, more violent place than most of us are prepared for.
Originally published at https://thesoundings.com on May 6, 2020.