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Pandemic Depression

from David Ruccio

U.S. billionaires have recouped all of their wealth—and more—during the Pandemic Depression. Meanwhile, since May, the number of poor Americans has grown by about 8 million. And the number of American workers applying for and receiving unemployment benefits continues at record levels.

According to Forbes,

Pandemic be damned: America’s 400 richest are worth a record $3.2 trillion, up $240 billion from a year ago, aided by a stock market that has defied the virus.

When the Covid-19 pandemic began to sweep the world earlier this year, the wealth of U.S. billionaires plummeted in lockstep with the stock market. Yet, just six months after the market bottomed out—with hundreds of thousands Americans dead and the coronavirus still to be contained—the wealthiest Americans are doing better than ever. In other words, the pain, at least for the ultra-rich, was remarkably short lived.

Meanwhile, more and more American workers, who have lost their jobs or been furloughed, are attempting to survive on meager unemployment benefits. And many of them and their families—especially Black people and children—are now falling below the poverty line.

Part of the reason for this obscene growth in poverty is the expiration of the CARES Act’s $600 per week unemployment supplement. The other reason is that the number of American workers who are applying for unemployment benefits continues at elevated levels.

This morning, the U.S. Department of Labor (pdf) reported that, during the week ending last Saturday, another 898 thousand American workers filed initial claims for unemployment compensation. While initial unemployment claims remain well below the peak of about seven million in March, they are far higher than pre-pandemic levels of about 200 thousand claims a week.

The number of continued claims for unemployment compensation, while also below its peak, was still more than 25 million workers—a figure that includes workers receiving Pandemic Unemployment Assistance.*

To put this number in perspective, consider the fact that the highest number of continued claims for unemployment compensation during the Second Great Depression was 6.6 million (at the end of May 2009), and in the week before the Pandemic Depression began there were only 1.6 million continued claims.

In the meantime, at least 1,011 new coronavirus deaths and 59,751 new cases were reported in the United States yesterday. As of this afternoon, more than 7.9 million Americans have been infected with the coronavirus and at least 217.1 thousand have died—more than any other country in the world, grotesque outcomes that continue to receive barely a mention from Trump or anyone (aside from Dr. Anthony Fauci) in his administration.

Meanwhile, many colleges and universities that have attempted to reopen with students in residence are reporting hundreds of (and, in some cases, more than a thousand) novel coronavirus infections.

The result will be new waves of business slowdowns and closures, which in turn will mean millions more U.S. workers furloughed and laid off. Unless there is a radical change in economic policies and institutions, Americans can expect to see steady streams of new COVID-19 infections and deaths, initial and continued unemployment claims, and growing poverty in the weeks and months ahead.

As for those at the top: during the first six months of the pandemic, the United States added more than 29 more billionaires, increasing from 614 to 643. The Pandemic Depression has been a boon to their fortunes.

———

*This is the special program for business owners, the self-employed, independent contractors, and gig workers not receiving other unemployment insurance.

  1. Ikonoclast
    October 17, 2020 at 12:30 am

    The correct policy at the start of this pandemic should have been lock-down to effective elimination. Once effective elimination is achieved, the economy can reopen with the minimised dangers of second and subsequent waves held off by a major contact tracing program. This has been the policy pursued by China. China was initially slow to identify and admit its novel coronavirus problem to itself and to the world. This is understandable to some extent. The country where a novel disease arises faces the most problems early on in terms of identification of the new pathogen and assessment of its virulence and lethality. On the other hand, China and north-eastern Asia had experience with SARS 1 and this new COVID-19 disease is caused by SARSCoV2: another coronavirus causing Sudden Acute Respiratory Syndrome (SARS), formerly termed Sudden Adult Respiratory Syndrome.

    China’s experience of SARS1 should have primed China’s scientific, epidemiological and political systems and China should have done better in suppressing SARSCoV2 earlier and aiding in preventing international transmission. At the same time, the failures of the WHO and the international community have been even more egregious.

    After the initial stumble, China picked up its game and locked down to effective elimination, with small continued outbreaks now being rapidly contained. This statement holds If China’s official statistics are accepted. Even if China is under-reporting its cases by a factor of ten, its total cases to date would be 856,460 compared to the USA’s total cases of 8,279,427 to date. That is still a factor of ten difference or close enough. In other words, the USA is doing 100 times worse than China if we accept the figures of both nations and 10 times worse if we suggest China is under-reporting by a factor of 10. If China was under-reporting by a factor of 100 the evidence simply would not be concealable.

    The bad numbers in the US and in much of the rest of the world, meaning in Europe, the UK, India and South America in particular, should have us wondering at the chasm between the competence of China and the incompetence of the rest of the world. The Chinese system has succeeded against this exogenous challenge. The neoliberal capitalist system in the developed West in particular has failed and failed abysmally. If this is not cause for soul-searching and radical political action against neoliberal capitalism, I don’t know what is. This has been a signal and diagnostic failure on a near-global scale; a failure from which we can diagnose the highly fragile, or non-robust, nature of the entire neoliberal capitalist system.

    This does not mean we ought to immediately imitate Chinese totalitarianism or “socialism with Chinese characteristics”. Modern China is not a genuine communist or socialist system in any case. It is rather what is properly termed a mixture or state capitalism and oligarchic capitalism governed by a single authoritarian party system. What it does mean is that we should take action from within our own best traditions. In the absence of anything better, it means a return to true Keynesian economics bolstered by new understandings from the new heterodox proto-traditions from MMT to bioeconomics.

    It will mean necessarily a vast increase in genuine democracy, which in turn means governments responding to the masses and not to the oligarchs. We need a Green New Deal, a Public Health New Deal and so on. It should mean remaining democratic and yet becoming, in many but not all respects, socialist. A new balance of the mixed economy is required with many socialist elements combined with individual liberties but tempered by an understanding of the need to consider the common good and not just the good of the elites.

    How to arrive at that will be a complex process. Clearly, the power and riches of our wealthy elites WILL have to be vastly reduced. True socialist freedom will be about a realistic freedom with limits for all and not about freedom without limits for a few. “Freedom with limits” is the left realist position. Nothing, including humans, has or can have absolute freedom in a complex, interacting system be that system the real society, the real economy or the real environment. The issue is to maximize the rights of the individual up to but no further than the point where his or her rights reduce the rights of another.

    In economics, this could be implemented by the ideas of a minimum wealth condition and maximum wealth condition for all citizens. Well-regulated markets are required (given or accepting that markets are required). Within the regulated market space(s), a minimum wealth condition is required to make freedom of choice operable. In addition, within the political-economy space, a maximum wealth condition is required, for individuals and for firms: a different wealth limit obviously. The maximum wealth condition or wealth limit for individuals would counter inequality in purchasing power in general and inequality in the purchase of political influence in particular. The maximum wealth condition or wealth limit for firms would counter oligopoly and monopoly. The only permissible monopolies would nationalized natural monopolies. The need for a strong state and statism (statist planning) is unavoidable in a mass civilization. Strong and well educated citizens can control the strong state. That has to be our hope and it is our only hope. We have strong states anyway. Either we have a strong state which favors elites or we have a strong state which treats all citizens equally. Those are the realistic choices. The strong state which favors the elites is on a trajectory to collapse. The strong state which is of all the people is the only state which can hold together long term.

    If you don’t want a state, then by all proceed with neoliberal capitalism, its undermining of the democratic state and its transfer of power to the corporates and oligarchs. What you will end up with is oligarchic warlordism, descending into barbarism, descending into civilizational collapse. Socialism or barbaarism! This prediction is truer than ever as we approach planetary ecological and climate limits.

    • Craig
      October 17, 2020 at 2:56 am

      I disdain neo-liberal capitalism and I freely admit that a democratic socialist economy would likely be much more humane. The latter however is neither politically likely to happen nor will it stabilize the economy.

      What is required is a mass movement whose policies change the monetary and financial paradigm and integrates the self interests of the traditionally opposed constituencies of labor and management. In other words a true “bourgeois revolution” plus attending policies that also enable ecologically sane actions.

      Direct and Reciprocal Monetary Gifting leading to a thirdness greater oneness system of Humane Direct Monetary Distributism.

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