Populareconomicsblog

Financial FAQs

theverge.com

Is the era of trickle-down economics, of Reagonomics that saw so much wealth redistributed to the top 1 percent, finally ending? Yes, if we want to really ‘cure’ the pandemic decimating the U.S. and world economies, because the pandemic has brought out all the weaknesses of an economic system that has boosted the wealth of the top 10 percent of college-educated and left everyone else to the mercies of globalization and a service economy that barely pays living wages.

“For seven decades after World War II, the notion that global trade enhances security and prosperity prevailed across major economies,” said a recent Sunday NYTimes Op-ed by Peter Goodman, et. al.…”But in many countries—especially the United States—a stark failure by governments to equitably distribute the bounty has undermined faith in trade, giving way to a protectionist mentality in which goods and resources are viewed as zero-sum.”

So it turns out that to defeat the ‘novel’ coronavirus we must create a new sharing society and caring world that prevents the hoarding of the resources to defeat it, which will also preserve our democracy that was built in the seventy years after WWII expressly to prevent another Stalin, Hitler and Emperor Hirohito of Japan.

Americans are now staring at the possibility of another Great Depression because of Covid-19. The unemployment rate is expected to soar, as more than 20 million members of our 150 million work force will be out of work for a prolonged time due to COVID-19.

Unless we find a new capitalist model of sharing—that mitigates the record income disparities of rich and poor last seen before the Great Depression—neither a novel coronavirus solution nor a robust economic recovery is possible.

Compounding the problem of returning to economic health is that the ‘cure’ of a prolonged national lockdown will be worse than the ‘problem’ of returning to economic growth to achieve it.

There will be incredible suffering at the bottom rung of the economic latter, and it will be the communities and countries that know how to collaborate rather than compete with each other for resources and knowledge that will recover most quickly.

That is because in the words of Robert Shiller, the 2013 Novel Prize recipient, there is a second, anxiety pandemic that we must live through, and that white, non-college educated males, in particular, are still living through.

Princeton economists Anne Case and Angus Deaton, a 2015 Nobel Prize recipient, say such men are dying of drug overdoses, drink-induced liver disease and suicide — what they call Deaths of Despair and the Future of Capitalism—in their best-seller of that title.

“We are feeling the anxiety effects of not one pandemic but two,” said Dr. Shiller in a recent Project-Syndicate article. “First, there is the COVID-19 pandemic, which makes us anxious because we, or people we love, anywhere in the world, might soon become gravely ill and even die. And, second, there is a pandemic of anxiety about the economic consequences of the first.”

And that is what only governments can do—enforce the cooperation needed to defeat the virus and consequent anxiety. It is what President Roosevelt did in the New Deal, because of the necessity of recovering from the Great Depression and a 25 percent unemployment rate.

This is also what a historical study of the other major international pandemic in the past century—the Spanish flu pandemic—has shown. It was those communities and cities that learned the art of cooperation and banded together to help each other, pooled their resources that had the lowest death rates and recovered most quickly.

Like the Spanish flu, this pandemic has no borders that can be shut down, no particular region or ethnic group that is immune. This is a borderless disease that requires a borderless response from every member of humanity to defeat it.

Former Obama UN Ambassador Samantha Power sounded the alarm in a recent NYTimes Op-ed: “…despite Washington’s own bungled domestic response, we nonetheless must immediately begin to build a broad and determined global anti-covid coalition. Such a coalition must create hubs for sharing scientific data in the virus, testing and vaccine efforts, taking advantage of our ability to learn from infection cycles that have peaked earlier…Unless the United States exerts leadership to prevent Covid-19 from raging out of control abroad, the crisis will not end at home.”

So let us jettison the myth of self-reliance that ignores the welfare of others in the name of private ownership of everything, and the government ownership of nothing, except military weaponry.

Richard Geldard, Author of ‘Emerson and the Dream of America: Finding Our Way to a New and Exceptional Age’ titled this chapter “The New Self-Reliance”, “…because it is clear now that since Emerson’s first assertions of this theme 140 years ago, we may have assimilated personally and culturally some of the language and substance of his intention, but what remains is the actual work and its realization to a larger sphere.”

By that larger sphere, Geldard means self-discovery must lead to a larger meaning of life—the recognition we all belong to one species, and only as one family of nations can we survive a worldwide pandemic—whether it is COVID-19, or the lingering effects of overwhelming anxiety—by recognizing our inter-connectedness.

Harlan Green © 2020

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