Early Lessons from the Coronavirus Pandemic
April 10, 2020
Covid-19’s shock to the U.S. economy has been extraordinary. It took roughly four years in the Great Depression for the number of unemployed workers to crest between 14 and 15 million but a mere three weeks for 16.78 million workers this year to be laid off. While the U.S. population is now 2.6 times greater than it was in 1933, the contrast between four years and three weeks more than compensates for that discrepancy. The current labor market shock takes a backseat to no other.
To be sure, the backdrops to unemployment in the Depression and now are very different. Economic imbalances that were woefully under addressed were the problem then. New York Times columnist and Nobel Prize winner in economics Paul Krugman has aptly compared the present situation of high unemployment amid rapidly contracting economic activity to a sick patient induced by doctors into a brain coma to allow time for the body to heal and allow survival again on its own. One never knows in advance how a patient treated in such a manner will recover, if at all. Some never regain a conscious state, and in the U.S. economy’s case, there are a number of unknown knowns — both medical and economic — that will decide the outcome. How long must the stay-at-home state be maintained? Will there come a time relatively soon when a vast number of the population can be tested to decide who has anti-bodies, who is infectious, and who remains vulnerable if they catch the virus? Under such conditions, it could be safe to re-fire America’s economic engines without risking a serious relapse in public health.
In the best of circumstances, a lot of consumers will be hesitant to get out before a vaccine can be developed and safely tested. The government may have only one good chance to restart growth before then without irrevocably damaging consumer and business sentiment. That said, great damage to the supply side of the economy may happen if the induced coma is maintained too long. The great mistake of the Depression was a failure of the public sector not to substitute the collapse of private-sector demand with commensurate public spending, and an analogous error is possible now if the Trump Administration and the Republican-controlled Congress deprive the comatose American economy of enough life support. This can happen as a result of insufficient follow-up stimulus packages, poorly designed stimulus, or incompetent execution of planned programs.
The pandemic also has exposed a terrible misallocation of government resources to “provide for the common defense.” The preamble to the U.S. Constitution identifies broad goals of government in a single sentence. The rest of the Constitution lays out a blueprint for the new government both in terms of its architecture and granted powers of each element of the public sector. The designers of the Constitution felt that their blueprint had a chance of success but understood inherent limitations could arise over time to achieve the kind of society they sought. Above all else, the constitution would succeed or fail in how well it allowed America to achieve a few basic objectives, and those goals are the part of the Constitution that would hold true for decades, if not centuries, to come. The third explicitly named priority is to “provide for the common defense.”
From America’s beginning in armed revolution against a far-away despot, U.S. politicians have predominantly thought of defense as a military matter. Since 1950, the U.S. military has endured over 400,000 casualties and suffered more than 100,000 deaths in a variety of conflicts, most notably but not exclusively the wars in Korea, Vietnam, Iraq, Afghanistan, and against ISIS. With hindsight, one has to wonder just how compromised U.S. safety would be in 2020 had not so much manpower and domestic resources been deployed in those endeavors. And way back on January 17, 1961 in his farewell address to the nation, Dwight D. Eisenhower, the 34th president and commander of U.S. European forces in Europe during WWII, warned,
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.
The Coronavirus pandemic offers a whole different kind of assault on life in America than envisaged by those who interpret “defense” only in a military way. It is likely that it will end more American lives than died in all the U.S. wars since 1950. Claiming that nobody could have imagined the devastation of Covid-19 is no excuse for being so poorly prepared. What about the Black Plague, the Spanish Flu, or the hospital scenes from Wuhan seen on TV in December? A gigantic pandemic was always a matter of when, not if. For decades, the United States political leadership left itself ill-prepared with insufficient funding and research to handle a health pandemic, and the current administration compromised defense further by culling the leadership ranks responsible for defending against an outbreak of a highly infectious and transmissible disease. With only 23% of China’s population and 24% as many people as India, America has far more infections that those countries at this point.
It is regrettable that the coronavirus pandemic arose at a point in history when democratic freedoms in the so-called “free world” are under attack from populist autocratic leaders. At this early stage of the fight against Covid-19, basic liberties are being curtailed as governments scramble to contain the infection. It could be that the fight against the virus becomes a pretext used by authoritarian leaders to advance their agendas against democratic rule of law. Then defense will not be the only squandered goal of America’s framers. The Constitution’s preamble states that government is the people, meaning a democratically elected form of government with majority rule but also protected minority rights. Other enumerated objectives — domestic tranquility, fair justice, general welfare, and liberty — could be imperiled, too, for not only those alive now but also their posterity.
Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Covid-19 repercussions
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