April 29, 2020 (medium.com)<\/p>\n\n\n\n
Will Coronavirus Finish the Job of Killing the Struggling US Economy?<\/p>\n\n\n\n
See that chart above? The line plunging into the abyss? That\u2019s an economy having a heart attack and dying.<\/p>\n\n\n\n
The line is GDP. It just fell to about -5%, from 2%. That\u2019s a fall of seven percent in the first quarter of 2020. The first quarter of 2020 was of course just the very beginning of the crisis \u2014 to March or so, when lockdown weren\u2019t even fully in place. So just the beginning of the crisis cratered GDP by seven percent<\/em>. What about the second quarter \u2014 aka a whole nation paralyzed, at a standstill? How much more <\/em>will GDP fall when the reckoning finally comes? 15%? 25%? 35%? Bang!<\/p>\n\n\n\n The answer is: nobody knows, but it\u2019s not going to be pretty. <\/strong>Coronavirus is already<\/em> blowing past the worst expectations for economic damage. What\u2019s about to happen next, in my estimation, is going to be truly catastrophic.<\/p>\n\n\n\n There are two schools of thought on how history unfolds next. One \u2014 the one favored by pundits and American intellectuals says: the economy will bounce back magically, as soon as lockdown are lifted! There\u2019s nothing to worry about! And besides \u2014 working, even if your health still at risk, is what matters most, not your life.<\/p>\n\n\n\n I couldn\u2019t disagree more.<\/strong> I don\u2019t think the economy is going to bounce back, I think that this crisis shows us just how fragile the economy really was, and I don\u2019t think that putting people at risk by making them go back to work or get fired is a substitute for\u2026a working economy.<\/p>\n\n\n\n We are now entering the Coronavirus Depression.<\/strong> The economy won\u2019t bounce back, magically, once lockdowns are lifted. Why not? For many, many reasons. The most obvious is that waves of businesses are already closing. So many of the job losses America\u2019s suffering now \u2014 a record 26 million have filed for unemployment \u2014 are going to be permanent.<\/p>\n\n\n\n There\u2019s another way to to put that. Coronavirus is going to do the job of transforming the American economy. <\/strong>For decades now, it\u2019s been an economy where mega-monopolies offering people low-wage, dead end jobs have been replacing small and medium sized businesses \u2014 or even yesterday\u2019s industrial giants \u2014 offering people a secure, stable middle class living. By annihilating huge chunks of small and medium sized business, Coronavirus is offering mega-monopoly the economy on a platter. All those \u201cdistressed assets\u201d \u2014 whether storefronts or, well, unemployed people? Mega-monopolies can now buy them up on the cheap.<\/p>\n\n\n\n Think of who\u2019s really done well from Coronavirus: the answer is all mega-monopolies.<\/strong> Amazon. Facebook. Google. Netflix. And so forth. These businesses exist on a spectrum from predatory \u2014 Facebook and Amazon, who subsist by paying lower taxes than you \u2014 to merely benign, like Netflix. What they don\u2019t do, though, is employ masses of people in stable, secure middle class jobs, which provide decent lives. Instead, they lay the groundwork for an economy of technofeudalism \u2014 people eke out a living by driving an Uber tonight, selling junk on Amazon tomorrow, maybe delivering Instacart groceries the day after. The transformation of America into an economy of titanic mega-monopolies is going to be accelerated by Coronavirus, massively.<\/p>\n\n\n\n As people compete harder for a much, much smaller pool of jobs, another dismal American trend is likely to harden: wage stagnation. Real average American incomes haven\u2019t grown in fifty years<\/em>. But what do mega-monopolies really offer? Half of Americans work in \u201clow-wage service jobs\u201d \u2014 and that was before <\/em>Coronavirus. Think of it for a second: a full half of Americans effectively now form something like a class of servants to the upper ten percent or so, driving their cars, walking their dogs, cleaning their homes.<\/p>\n\n\n\n The lesson is: mega-monopolies don\u2019t just use their power, they abuse it. <\/strong>America\u2019s labour market, already beset by decades of underpaid wages and overworked lives, is going to harden along just those lines.<\/p>\n\n\n\n Think of your average owner of a small business \u2014 now wiped out by Coronavirus, since the stimulus and rescue packages were laughably small, offering just a week\u2019s worth of support to households and businesses. There she is \u2014 once following her passion. Now she has to spend months, maybe years, winding down debt, paying off what she can, negotiating with creditors. How likely is she ever to try her hand at entrepreneurship again \u2014 after being scarred by it for a lifetime?<\/p>\n\n\n\n But the effect is not just on her. It\u2019s on all those she might have employed \u2014 and tried to take care of, too. Maybe at her microbrewery or bakery, she tried to run it along ethical lines, paying people a decent wage, offering good healthcare and retirement, even childcare, so that everyone could really put their heart and soul into their work. Bang! There\u2019s a hundred jobs like that \u2014 which would have been a thousand in five years \u2014 vanished. Just gone up in smoke. Multiply that by a million, and you begin to see the devastating effect of Coronavirus on the economy.<\/p>\n\n\n\n All those people she might have employed in decent jobs \u2014 what happens to them? Well, since the economy base has now shifted decisively to mega-monopoly, that\u2019s what they have left to choose from. The pundits and economists who gush over that shift speak of \u201cfreedom\u201d \u2014 but all these people know is that they\u2019re eking out a living doing gig work. Driving an Uber today, delivering Amazon packages tomorrow, and so on. But this kind of labour rewinds centuries in time: like the stuff of Dickensian England, it\u2019s piecework, which offers no benefits, no guarantees, not even a stable income or wage.<\/p>\n\n\n\n People are plunged into fresh poverty \u2014 another trend that\u2019s been accelerating in America, which is now going to harden. <\/strong>The American middle class became a minority around 2011 or so, for the first time in economic history. The reason? Another gruesome trend \u2014 I call it invisible hyperinflation. Since the 1990s, the prices of basics in America have risen astronomically. Healthcare? Education? Food? Retirement? All these things now costs thousands of percent more than they did just a few decades ago. Americans tend to think hyperinflation is something that happens in poor countries \u2014 and they\u2019re right. The part they miss is that they\u2019re one, too, now.<\/p>\n\n\n\n So if your income hasn\u2019t risen in fifty years \u2014 but feeding your kid, educating your kid, providing healthcare for your family, each now cost as much as a home\u2026what the hell do you do?<\/p>\n\n\n\n You go into debt, of course.<\/strong> Which is why Americans now live and die in debt. But that, of course, is exactly what poverty is: being stuck perpetually trying to erase the burden of unpayable debts.<\/p>\n\n\n\n What Americans don\u2019t seem to understand is that on the incomes they earn, the debts they owe can never <\/em>be repaid. That is precisely why retirement and home ownership have become distant, impossible dreams, especially amongst young people, who speak of such things with irony, to distance themselves from the pain of living a life falling apart.<\/p>\n\n\n\n America was becoming a poor society long before Coronavirus \u2014 but Coronavirus is going to finish the job of driving the average American into deep, enduring, life-long poverty, from which there\u2019s no real escape. Translation: bills are going to go up, up, up, and wages are going to fall, so real incomes are going to go down, sharply.<\/p>\n\n\n\n What happens to societies that grow poor? They find themselves in a vicious spiral. <\/strong>People can\u2019t put food on their own table \u2014 so how are they to fund things like decent hospitals, schools, universities, parks, and libraries for everyone else? If you can\u2019t make ends meet \u2014 how can you look for anyone else, let alone everyone else?<\/p>\n\n\n\n So as societies grow poorer, their tax bases begin to decline. You can already see that effect at work in America\u2019s Red States. Deindustrialized, full of decrepit Rust Belt towns, they have to be subsidized by Blue States, which is where the work of technocapitalism goes on, from San Francisco to LA to Manhattan. But such states can\u2019t even really afford to run school systems or transport networks on their own at this point \u2014 which is why, incidentally, the whole country\u2019s are falling apart.<\/p>\n\n\n\n A country of people too poor to make ends meet can\u2019t afford an expansive social contract of generous public goods, like in Canada or Europe \u2014 good healthcare, education, retirement, childcare, for everyone. Instead, it sinks into the even deeper poverty of having no real functioning social systems.<\/p>\n\n\n\n By making America a society of poor people, Coronavirus is going to seal in its fate: it\u2019s already gone without European or Canadian social contract and public goods, and now things like public healthcare and retirement and childcare will simply become economic impossibilities.<\/p>\n\n\n\n Especially, when, remember, the Facebooks and Amazons of the world pay less tax than you<\/em> do.<\/p>\n\n\n\n What\u2019s the further political effect of that \u2014 sinking into a kind of irreversible decline, into deeper poverty \u2014 the poverty not just of one\u2019s own short-term personal deprivation, but of having no functioning social contract or social systems to support you, either? What happens when a whole society suddenly grows too poor to really act like a society?<\/p>\n\n\n\n Red States give us a clue \u2014 though the answer\u2019s already in the question. What happens as people get suddenly poorer \u2014 especially people who expected upwards mobility into stable, middle class lives \u2014 is that they turn ugly. Rage becomes hate. Frustration simmers over into vilification. They turn to authoritarians who tell them \u201cthey\u2019ll be Great Again!\u201d<\/p>\n\n\n\n How is it that Red States are subsidized by Blue States \u2014 but they\u2019re also <\/em>the ones who want less government and investment? What the? It makes perfect sense if you think about it this way: the poor Red Stater wants everything for themselves. They understand the economy is shrinking, and they are trying to claim what morsels are left for themselves. What they mean by \u201cless government\u201d is really \u201cI can\u2019t pay taxes on my tiny or nonexistent income \u2014 but I need as much support as I can get!\u201d<\/p>\n\n\n\n Red States, in other words, have been decivilized. <\/strong>Life has been reduced to a brutal contest for self-preservation \u2014 even at everyone else\u2019s expense. That is why the average Red Stater is a buffoon and a mystery to the entire rest of the world. What kind of person votes agains their own education, retirement, healthcare\u2026over and over again? A person who can\u2019t afford it, is the answer.<\/p>\n\n\n\n Being too poor to care about anyone else at all, though, is a terrible plight. <\/strong>That is the effect of poverty that American intellectuals and thinkers don\u2019t understand yet: they\u2019ve long thought of it as a necessary punishment, the handmaiden of virtue, doled out justly to the lazy and foolish. But they don\u2019t get that deep poverty of the kind America\u2019s fallen into decivilizes people, right back into superstition, rage, fear, authoritarianism, hate, and cruelty, as the desperate impulse for self-preservation overrides any \u2014 by now long-forgotten \u2014 sentiment of generosity, kindness, compassion, or sanity.<\/p>\n\n\n\n The world looks at Red State America and sees \u2014 bewildered, mystified, horrified \u2014 people who don\u2019t care if their kids have to do \u201cactive shooter drills\u201d or pay \u201clunch debt\u201d, if they have to go into \u201cmedical bankruptcy\u201d, who tote guns but don\u2019t read books, and so forth. The caricature\u2019s true, but in a sad, indecent way. They\u2019ve been left too poor by decades of neoliberalism and predatory capitalism to do anything but try to survive, by whatever means necessary.<\/p>\n\n\n\n Let me summarize.<\/strong> Coronavirus is going to finish the job of killing off the American economy. It will complete the transformation of a once entrepreneurial economy which, even if it lacked public goods, still offered people some semblance of mobility, stability, middle class life \u2014 into a kind of caste economy of new poor and ultra rich, without much in the middle. At the top, a tiny numbers of owners of capital \u2014 Bezos, Zuck, today\u2019s CEO of Goldman Sachs. Below them, a small 1% of their lieutenants. And then everyone else, trying to scrape together a living, whatever gig or low-wage service job comes their way today.<\/p>\n\n\n\n In such an economy, education doesn\u2019t count much \u2014 see how today\u2019s PhDs already face mass unemployment. Neither does hard work, because there\u2019s nowhere to go, really. What counts is being a certain kind of person. Brutal, selfish, greedy, avaricious, thoughtless, ignorant, foolish. Like a member of the Trump family, essentially. Such people will rise. And they will do what they do best, which is the only thing know how to do. Abuse their power for their own benefit and gain \u2014 at everyone else\u2019s expense, even if that \u201cexpense\u201d is, like right about now, death on an unimaginable scale.<\/p>\n\n\n\n Welcome to the Coronavirus Depression.<\/strong> It\u2019s going to be ugly. Brutal. Remorseless. And most of all, unnecessary \u2014 because the truth is that a stimulus response as big as the crisis would have stopped it dead in its tracks. But you already knew that, deep in your gut, didn\u2019t you? Now you know why there wasn\u2019t one, too. A cynic might even say: this is how historic catastrophes are exploited by fools, wise men, and preening monsters \u2014 and glittering dark ages are born.<\/p>\n\n\n\n Umair April 29, 2020 (medium.com) Will Coronavirus Finish the Job of Killing the Struggling US Economy? See that chart above? The line plunging into the abyss? That\u2019s an economy having a heart attack and dying. The line is GDP. It just fell to about -5%, from 2%. That\u2019s a fall of… Continue reading
April 2020<\/p>\n\n\n\numair haque<\/a><\/h2>\n","protected":false},"excerpt":{"rendered":"