There's No Neoliberal Fix for the Covid Economy
Biden may be the pooch that caught the car
Joe Biden may be the pooch that caught the car. Yes, he has captured the power of the executive branch of government, and yes, he has vanquished his Sanders-style enemies in the Party. But in doing so, he's divested himself of most of the FDR tools available to him. Once he enters office, he may find he has a problem he can't solve.
I'm referring, of course, to the ever-growing disaster called Coronavirus, both in its medical manifestation and its economic manifestation. For today let's look at just the economic problem. The medical problem will be addressed later.
Letting the Market Decide Who Falls into Despair
In an earlier piece about adding ventilator capacity to hospitals, I said the main pushback would come from free-market enthusiasts who don't think hospitals will purchase many more additional ventilators because they don't see an incentive to buying equipment they won't need in the long run.
As one Boston University professor, quoted in the article, put it: "Who will pay for all the extra ventilators even if the company can ramp up? Presumably at some point this crisis will play itself out and the hospitals will have far more ventilators than they need until the next crises."
Who will pay for all the extra ventilators? The answer, of course, is not the "market" with its magic hand, nor the government (which is the hidden ask), but the flush-with-money hospitals themselves, because government forced them to:
The other answer [to the "who will pay for it" question] is the Sanders solution: It's an emergency; government steps in and does the job only government can do. Government funds the ventilator company and mandates the ventilators be purchased by hospitals and made available. After all, during World War II the investment community didn't decide how many jeeps GM would produce — GM was told what to produce and complied....
All this leads to a general observation about the Covid crisis:
There is no neoliberal solution to this problem. Barring a miracle cure, we'll solve it the Sanders way or we won't solve it at all.
That is, if government doesn't step in and mandate required actions in a Sanders-style, FDR-style, World War II emergency way, none of what's needed to pull the nation out of the hole we're diving into will occur. The nation will fall further into decline, and the people will fall into despair.
The Non-Neoliberal Solution
So what does a "Sanders solution" look like? Fortunately, the invaluable Peter Daou has answered that question, at least in large part (formatting mine):
Here's what we need, Joe:
MANDATE MASKS
CANCEL MORTGAGES
CANCEL RENT
CANCEL DEBTS
CANCEL TAXES FOR WORKING PEOPLE
PAY THEM $3,000 PER MONTH FOR THE DURATION
STOP BAILING OUT BILLIONAIRES
TAX WEALTH ABOVE $10 MILLION AT 100%
CLAW BACK THE RICHES OF THE OBSCENELY GREEDY
While this may not look like a list of Covid responses, all of it is. The mask mandate is obvious — though I'm not sure Biden will do it. He may opt for a "suggestive mandate" instead so as not to offend the Republicans he imagines voted for him.
But the next three items — cancel mortgages, cancel rent, cancel debts — and even the fourth, cancel taxes, are going to be critical to any economic recovery. People are losing jobs, their employers are going out of business or cutting way back, their deferred rent (including unpaid back rent) will start coming due after the first of the year, their mortgage payments haven't been stopped, and the Trump administration's delay in student debt collection doesn't make student debt go away, any more than his rent moratorium made rent go away.
By early next year, millions may be facing the edge of an economic cliff with no way to step back. This proposal — in broad terms, debt cancellation — offers a way for people to return to something like safety.
In addition to debt relief — not moratoria, but annulments — people will also need a renewal of income support (as will small businesses, by the way). Is Daou's proposal of $3,000 a month too much? The last round of Congressional negotiations couldn't agree on a number above $500. If you had just lost your job, had no income at all, would $500 a month keep you and your kids off the street? What would it take to save you from economic tragedy?
The Real Collapse Will Come on Biden's Watch
Right now, the collapse of the lower part of the working class into poverty and homelessness, while noticeable, hasn't hit the papers and the TV screens. It's too much of a trickle to make more than passing news.
But Covid relief is Biden's problem now. What if a solid third of the precarious class collapsed at once, fell into the ocean with a splash like a massive calving ice shelf, and Biden failed to respond with real relief, a response that killed the wolf at the door instead of just giving it a rain check to come back?
What if economic collapse, a real one, hits on his watch and he fails to "FDR" his way out of the mess? What if he chooses mainly "market solutions" instead of broad-based deficits-don't-matter government help, and those solutions fail?
I know Congress will have a hand in what happens, but Biden's name will be on the package itself, and Nancy Pelosi is synonymous with the House. Will only Republicans be blamed if Democrats aren't bold enough? Or will the pitch of a failed and inadequate response tar everyone in office?
If the government's next Covid response fails and Democrats didn't offer an FDR solution like the one above, regardless of what Republicans do, who would vote for them again? The answer is clear: Only the loyalists, those with Democratic Party histories and affection.
Yes, there are plenty of those, but not enough. Angry independents, if they ever become a genuine voting bloc, will vote for the angriest "screw them all" candidate they can find, whether Trump-like or not. When will the Democrats offer — in the general election — a genuine angry-with-the-system candidate who promises, Sanders-like, real change?
The answer may be never; they certainly haven't yet.
Facing a Failing Electorate
If Biden fails in his Covid economic response, angry independents will quickly move to the most credible change candidate either party puts up. Who's more likely to rabble-rouse the people, Democrats or Republicans, especially if the donor class keeps the circle of Democratic leaders "socialist free"? Doesn't that open the door to a smarter Trump (who will also fail, just as the last one did)?
There's no neoliberal solution to this problem, none that keeps the donor class in charge. Which accounts, finally, for the last four items on Peter Daou's list above — each is a lever to remove the donors from power. If they're still in charge, the people will never be.
It's a clear and interesting program: save the people, neuter the donor class.
It's also a handy list to hold onto, if for no other reason than to see if it's ignored, item by item, as the tragedy only the rich can escape from swallows the rest of us whole.