In 1992, Bill Clinton’s campaign manager James Carville came up with one of the most famous campaign slogans in history when he pinned a note to the bulletin board of the campaign headquarters that said “It’s the economy, stupid.” There was a lot of stuff going on at the time, the tail end of the first Gulf War, the Rodney King Riots, Ross Perot’s quixotic campaign among other things. But we were in a recession that wasn’t particularly deep but it seemed to be hitting certain people very hard. Carville understood that everything flowed from being able to address that problem.
It seems that the Trump administration thinks that slogan applies to their circumstance. And it is true that the record high unemployment claims and the small business crisis is as acute as anything we’ve ever seen. They believe they can just “open the country” and everything will fall into place as people just go back to normal, maybe with a few adjustments and people over 60 staying inside their houses for the foreseeable future.
But, as always, they are missing the point. This piece in The Atlantic explains why:
“There is no good news in this jobs report, but it’s important to remember that these are not normal times, and these are not normal job losses,” Adam Ozimek, the chief economist at Upwork, told me. “The task for policy makers is to ensure that when the economy opens back up, these 20.5 million jobs and the companies that employed them have not disappeared. If even a fraction of them do not, a major recession will be all but unavoidable.”
This crisis represents a unique and existential threat to America’s small businesses. Almost half of all job losses in April occurred in leisure and hospitality, where small businesses are overrepresented in places such as restaurants and stores. The decimation of small business would have several long-lasting implications. It would destroy jobs that would be unlikely to return quickly, delaying a recovery and creating a crisis of economically and psychologically ruinous long-term unemployment. It would trigger an extinction-level event for entrepreneurs, who might be less likely to take a risk in the future. And restaurants, cafés, theaters, community centers, and specialty shops that embody the civic memory of a neighborhood would be wiped off the face of the street. This would be a first-order economic tragedy, but it would also be a social calamity.
How do we stop one horrible month from becoming a 10-year depression? The most obvious solution to bring the global pandemic to a halt would be a medical deus ex machina, like effective antiviral treatments or accelerated vaccine development and manufacturing. But pharmaceutical science works on a multiyear time horizon, and the survival of millions of American businesses and tens of millions of jobs is endangered right now.
The White House and most Republicans seem to think that this crisis will be solved by loudly announcing the reopening of the economy. But this is a dangerous misunderstanding of what’s actually driving the recession: It’s the pandemic, stupid. The shutdowns themselves had “little or no impact on economic activity” according to an analysis by a team of economists at Harvard. Several papers now show that the decline in spending and employment in most cases occurred before states officially shut down their economy. Governments didn’t close state economies on their own, and they can’t open the economies on their own, either.
Speaking to Americans as their economy was plunging into a depression in 1932, President Franklin D. Roosevelt said that the only thing Americans had to fear was “fear itself.” It was a lovely line, and it might have even been true once. But in the current crisis, there is so much more to fear than fear.
The virus is real, the hospitalizations are real, the deaths are real, the need for masks and social distancing is real, the threat to millions of restaurants and shops is real, and the incomparable levels of unemployment are real, too. The White House plan to reverse this cavalcade of horrors is to “reopen” the economy. But 20 million Americans just lost their jobs in the past few weeks, not because the government shut down the economy, but because a pandemic scared millions of American into staying at home. There is plenty to be wisely afraid of, but Washington thinking that a pandemic economy is like a garage door that it can reopen by pressing a button might be the scariest thing of all.
It is terrifying.
Of course people want to go back to work and resume their normal lives. I know I do. And businesses are desperate to re-open. Everything they’ve worked for, their livelihoods are in jeopardy.
But the only way to make that happen sooner rather than later is to get a handle on the fucking pandemic!
A competent government would have used the time since January to get money to individuals and businesses that need it so they can go into an induced economic coma while the government built up the health care system, put in place the testing and tracing regime, pushing the distancing guidelines as a social imperative for everyone and doing everything possible to make people feel secure enough to resume some semblance of normal life within those parameters.
Other countries are doing this. We, on the other hand, are making everything worse.
Published with permission of Hullabaloo