Current Affairs

The False Dichotomy

Workers’ mass financial distress is not a given. It is a policy choice.

The unemployment numbers are horrifying. The worst since the great depression. Tens of millions of people out of work. 9 million have lost their health insurance. It’s bad out there. The positive spin is that much of this unemployment should be temporary, lasting only as long as the pandemic. But as left financial analyst Doug Henwood notes in a dispiriting analysis, “thousands, maybe millions, of small and mid-sized businesses won’t be able to survive months with no revenue, and so won’t be around to reopen,” plus “second and/or third waves of viral attacks, which are quite possible, would make a quick rebound even less likely.”

If you consume conservative media, as I regrettably do, you hear constantly about the mass unemployment. In fact, they seem to talk about it much more than about the human toll of coronavirus itself. Over and over again on the Wall Street Journal op-ed page, for instance, you hear the same talking point repeated: The economy is being killed, people are suffering, and thus everything must be reopened, virus be damned. Here is a representative excerpt from a recent editorial: 

When we wrote on March 19 about “Rethinking the Coronavirus Shutdown,” the reaction in elite media quarters was horror and denunciation. Well, after Friday’s horrific jobs report, how do you like the shutdown now? The people who said we have to sacrifice the economy to crush the virus have succeeded in the former even as the virus will be with us for many more months or longer. Unemployment in April soared to 14.7%—the highest rate since the government started keeping records in 1948—while employers shed 20.5 million more jobs after losing 870,000 in March. The labor-market bleeding is even worse than those numbers suggest since 6.4 million workers left the workforce. Much of the media continue to treat the economic destruction as a sideshow and present a false choice between saving lives and jobs. But this is the fastest jobs collapse in modern history. The Great Depression drove millions of Americans into poverty and caused many suicides, and there’s a substantial risk this could happen again. Mental-health crisis hotlines are reporting spikes in calls… Many in despair will probably turn to alcohol or narcotics… Businesses are also going under. This week J.Crew and Neiman Marcus filed for bankruptcy, and many more will follow. Some over-leveraged companies may have failed anyway, but many small businesses that were healthy before the government-induced coma are closing permanently. 

The Journal also suggests that the lockdowns are pointless: “most Bay Area counties have extended their lockdowns through May 31 even though they have relatively few deaths and thousands of unused hospital beds,” and…

 “after a seven-week lockdown, thousands of New Yorkers are still testing positive and hundreds are hospitalized each day. ‘Government has done everything it could. Society has done everything it could,’ Gov. Andrew Cuomo said. He’s right, but then why not reopen? Americans need to work to make a living, and they want to work. But the longer the shutdowns go on, the more furloughs become long-lasting unemployment. 

The Journal concludes that “the virus will be with us for a long time unless there’s a vaccine, so we have to learn to live with it and have a functioning economy.” See? “Open the economy, virus be damned” is not an exaggerated description of the position. (The Journal also says that we should not worry about businesses endangering their employees because they have “no incentive” to do so. This is false: If 1) businesses have no liability for harm done to employees—as conservatives would like to see happen—and 2) employees are easily replaced—as they are during times of high unemployment—and 3) endangering them is less costly than protecting them, then businesses have a very strong incentive to endanger employees. The Journal editorial board should be forced to take a remedial economics course.)

Part of the argument, as you can see, is just unfathomably stupid. Governments are choosing to continue lockdowns even though they don’t have many deaths—this sounds like an LSAT “spot the flaw in the reasoning” test. “Why not reopen?” Because—I patiently explain to the editorial board of one of the nation’s most prominent newspapers—that risks massively escalating the transmission of a virus that already kills thousands of people every day. Now, you can make an argument about the impact of the lockdowns on the spread of the virus, which is still contentious among experts, but what you cannot do is simply say “Gosh, the virus seems to be slowing down its spread, looks like all these drastic public health measures were for nothing!” 

But I will leave the debate over the efficacy of lockdowns to the epidemiologists who actually study such things. Here I want to draw your attention to a more insidious part of the right-wing argument: the use of joblessness and its effects as an argument for reopening the economy.

The Wall Street Journal wants you to think that “logic” demands we think the following way: If the shutdown has produced joblessness, and joblessness causes misery, we must end the shutdown. It’s simple. But simple thinking is often stupid thinking. The argument is premised on the idea that the economic misery people are suffering right now is the unavoidable effect of shutting down parts of the economy. But that’s not the case: There is a giant part of it that is indeed avoidable. And what the right doesn’t want you to understand is that there is a completely different possible way of thinking about it. Because if you thought about it differently, you might question many of the foundational premises of laissez-faire capitalism. And that would be a very bad thing indeed! 

The causal chain is clear: If businesses are required to temporarily reduce or suspend operations, workers will lose their jobs, and if workers lose their jobs they will lose their health insurance and their paychecks. But do these things have to follow from businesses having to reduce operations? No, they don’t. The health insurance piece of it is clearly not necessary—the only reason workers lose their health insurance when they lose their jobs is because the United States has an incredibly dumb way of financing healthcare. If we had a universal government insurance program, nobody would have to fear that reduced employment would have any consequences at all for their healthcare. Britain, for instance, has had a terrible response to the coronavirus under Boris Johnson’s Conservative government, but even though the economic effects of the crisis have been very bad, not a single person there has to worry that they won’t be able to afford healthcare as a result. Britain’s healthcare is nationalized and free at the point of use. So every single worry people have in the United States about not being able to afford medical care is a completely avoidable form of suffering. It is imposed on them by their government due to the prevailing free market ideology. We could get rid of it entirely if we had a National Health Service like Britain does. But we choose to put people in financial distress.

The Wall Street Journal obviously does not want you to think about it that way. They want you to think that the way in which the government has caused your troubles is by imposing the economic shutdown. But that’s not true. The government has caused you trouble by imposing the economic shutdown without introducing the kind of policies that would successfully make a shutdown tolerable. The people of Britain are not out protesting for their government to lift lockdown restrictions. They are overwhelmingly in support of a long lockdown. (Actually, despite propaganda efforts by the right to suggest that Americans are sick and tired of the lockdowns, the public here has been largely supportive of the public health measures taken. It’s just even stronger in Britain.) In part, British people can better afford to be supportive of these measures, because they don’t have to worry that they’re going to lose their insurance if their job goes. (There have been some protests in France, but they have not been because the government cares too much about public health. They have been because their neoliberal government, like ours, does not care about making sure vulnerable people come out of this okay.) 

But parts of the unemployment may also be a choice. The United States has done an absolutely abysmal job of protecting people’s employment. The “paycheck protection program” has been an administrative nightmare, funneling money to companies that don’t need it and saddling small businesses with new debt. The government could have simply paid salaries during the crisis, but a choice was made not to do this, in part because people in government have a pathological hatred of “handouts” and would rather other people die needlessly by the thousands than give an inch on their ideology. Republican Senator Lamar Alexander, for example, said that there is simply “not enough money” to help people through the crisis. This is false; the U.S. government prints its own money. What he is saying is not that there is not enough money, but that he personally does not want the government to spend the money. And instead of giving a reason (the reason is free market Social Darwinist ideology that sees helping the vulnerable as rewarding weakness) he has to pretend it is impossible. 

The only way that American politicians can maintain the fiction that this country “cannot have nice things” is by doing whatever they can to keep Americans ignorant of the existence of other countries. Two excellent Foreign Policy articles over the last month have discussed the differing responses between America and European countries to combat the economic effects of coronavirus. In the United States, accountants trying to help small businesses with rescue aid ran into “a blizzard of obscure rules, changes, exceptions, and a general lack of cooperation from major banks left [many] clients empty-pocketed.” Of course, this was needless. They could have simply “directly reimbursed businesses for maintaining their workforce during the shutdown, as was done in Europe.” See, for example, the German Kurzarbeit program:

Germany had little difficulty in responding to the labor market shocks unleashed this spring by the coronavirus. Thousands of German companies, compared with just a trickle before the pandemic, applied to the government to take part in the program, which now offers families with dependents about 67 percent of their former salary and other short-time workers a little more than 60 percent. Since the pandemic began, Germany has fine-tuned the program to offer more benefits and make sure more companies qualify.” “The European model, where you have free markets but with a huge state framework … you can definitely say this crisis shows the benefits of that approach,” Hackenbroich said. “Kurzarbeit is a specifically German concept that’s been very successful.”

Unfortunately, the words “huge state framework” are anathema in this country, and both parties have spent the last 40 years pushing an ideology that says government is the problem, not the solution. In parts of Europe, it is much better understood that government is a vital institution that we use to implement collective solutions to collective problems, rather than some useless parasitic entity that just dips into your paycheck for no good reason. 

It didn’t have to be this way. That is important to emphasize. The United States makes the choice not to have much of a social safety net or have an effective central government apparatus. The charge to “drown the government in the bathtub” is led by the Wall Street Journal editorial board, and then they have the audacity to point to all the economic misery around them during a disaster—misery that would be much less bad if they hadn’t spent so long trying to drown the government in the bathtub! We are only faced with the horrible choice “stay locked down and suffer or open up and have the virus wreak havoc” because there is an implicit premise: no choice must involve questioning the foundations of laissez-faire capitalism. If we were a sensible country, what we would instead be asking is: How do we stay locked down as long as public health experts think is necessary, while mitigating the economic consequences? If mitigating those consequences would require massive ongoing handouts, or a nationalized health insurance system, or would eat into corporate profits, it becomes unthinkable and cannot be discussed. 

Now, I don’t mean to say that all of the economic misery can be mitigated. The economic downturn crosses borders—even Sweden, whose “laissez faire” approach to the coronavirus has been praised by conservatives (and resulted in thousands of unnecessary deaths) is not feeling much of an economic benefit. A pandemic is inevitably going to disrupt and reduce much ordinary economic activity, but it’s perfectly possibly to imagine a world in which we consume less for a time yet do not suffer nearly so much actual distress, because we have a society that is organized to take care of people when emergencies come, rather than a Social Darwinist world in which corporate profits and shareholder value are protected at all costs.

There is a fundamental lie that is being told, and we have to break free of it. The lie is that unless ordinary business activity resumes immediately, there is simply no way to avoid colossal suffering. This is true only on the (incorrect) free market dogma that “price” and “value” are the same thing, i.e., that if you reduce consumer spending you inherently reduce consumer welfare. But look at the things the Wall Street Journal cites as problems: They say that people’s mental health will deteriorate under lockdown, that they will have drug problems. This is true, but what they want us to do is assume there is no way to fix this other than buying more consumer goods. You can see that this is a very dangerous time for free market ideology actually, because if it did turn out that it was possible to consume less and have one’s welfare be taken care of, if certain sectors of the economy were deemed “non-essential,” meaning we could live without them, it would suggest that perhaps we can, in fact, live differently. Thus there is a very strong interest in telling us all to “Move along, back to work, nothing to see here,” even if it is against the wisdom of public health experts, because the people who own the country do not want you to find out that we do, in fact, have enough money to take care of everyone. 

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