[Pod] Putting People to Work
To save our population from the virus and our economy from collapse, we must do away with corporate bailouts and return to the New Deal values of putting people to work.
For those who want to listen to the audio, you can find the podcast here!
Corporate Socialism
The reality of pandemic in America has definitely set in. No one can deny anymore that this is a widespread problem that needs to be addressed. Even Fox News had to fire one anchor who in her reporting in the early days of this crisis (which were the days we needed to act fast if we were going to get a grip on this) claimed essentially that coronavirus was an “impeachment scam.”
With each passing day, we feel the weight of the uncertainty about our economy and how that will impact our lives, and more importantly uncertainty about our health, because our system simply has not mobilized coordinated testing quickly enough so we still live in fear of contracting and spreading the virus. Our society is just now starting to realize that this situation is going to last much longer than any of us expected. The response so far from our government clearly does not address the structural issues in our economy and public health system that have made this situation so precarious in the first place. Like I mentioned in last week’s show, the decisions being made in this response effort will be remembered for decades to come.
The biggest update this week was the $2.2 trillion bi-partisan stimulus package which was finally passed by Congress and signed by the president; the biggest economic package in American history.
The bill certainly didn’t pass without contention from both sides. In the Senate, Republicans like Lindsey Graham came out in the final hours before the vote to complain that the expanded unemployment benefits amounting to $24/hour was too generous and would “incentivize taking people out of the workforce.” Bernie Sanders was quick to respond to this motion, calling out how ridiculous it was for them to fear that workers might make a little bit more money under the plan for a few months. He also called for provisions to put stronger conditions on the $500 billion which he called a “corporate welfare fund” included in the bill. As it made its way to the House, NY Rep. Alexandria Ocasio-Cortez joined in the critique of this part of the bill correctly saying that they have been cornered into passing “one of the largest corporate bailouts with as few strings as possible in American history.”
They are of course referring to the “corporate liquidity fund” which essentially has given Treasury Secretary Steve Mnuchin control over $500 billion to pick which large corporations need assistance (remember this is the same person who was dubbed the ‘foreclosure king’ during the last financial crisis as he and his firm illegally foreclosed on thousands of homeowners). That’s nearly a quarter of the bill being handed to often profitable businesses with no provisions to protect workers’ employment status through the pandemic or to keep their jobs in America, nor anything requiring them to give the public an equity stake in return for yet another bailout check. In the same bill, hospitals, who are literally the front lines of this battle with coronavirus, only got $100 billion of additional funding. The working people who are suffering the most will only get a one-time payment of $1200 dollars, which won’t be enough to hold them through the coming months and for many will likely not arrive in time to help pay the rent and other bills on April first.
So how historic was this bill really and will it actually stimulate the economy?
Well, it is the largest economic stimulus package we’ve ever passed; the total price tag on this particular bill was nearly as high as the total cost of the Iraq War. It did include more than $350 billion for small business aid and $200 billion for “domestic priorities” like child care and assistance for seniors, so some of this bill is somewhat commendable, and I understand why congress voted it through. But these squabbles over the federal budget are a bandaid on what is a gaping infected wound on our economy. It is not a creative new approach that meets the gravity of the crisis.
Matt Stoller of the American Economic Liberties Project explained a few details about how this bill was negotiated during his recent appearance on Hill TVs Rising. He explains that remote voting was not allowed for congress, even in the midst of the pandemic, essentially so senate leadership could retain most of the control over the deal that was being struck. Generally, this is how congress is organized because of how much power leaders like Mitch McConnel and Nancy Pelosi have over the representatives in their respective parties.
Mitch McConnel, Chuck Schumer and Steve Mnuchin and some policy aides were essentially negotiating [the deal] over a weekend and left everyone else out, left all of the committees out, left all of the members out and their staff out, and left the public out.
Party leadership made sure to keep provisions in for Wall Street and large profitable companies, while controlling the messaging that this deal was for direct pandemic relief, making it impossible for members of Congress to vote against it without incurring a severe political cost; a clever way to sneak in one of the largest corporate handouts in history. Over and over again even the well-intentioned politicians have to use all their political capital to fight for bare-bones relief for people, while financial institutions and these large corporations have guarantees built-in.
As they take the victory lap for passing something with a headline-generating pricetag, what the Senate majority also conveniently leaves out of the story to us is the trillions of dollars we poured into the markets just a few weeks ago. Last week on the show I covered the $1.5 trillion in “short term loans” that the Fed offered to Wall Street while lowering interest rates to near zero in an attempt to stimulate investment. For those of you familiar with the 2008 financial crisis and the abysmal response we had then, you’ll recognize this combination of direct cash injection into the market and a slashing of interest rates as quantitative easing.
Essentially we are taking advantage of the fact that we can print our own currency and we provide any figure that we deem necessary to offer more liquidity from the government. This is something even Trump understands. Of course, the markets continued to plummet so I’m not so confident that those loans will be paid off anytime soon. Funny how we only do this when the financial markets need us to buy their debt or make up for their losses during recessions while we tell our citizens that we can’t afford to provide healthcare and address climate change. We already know from the last financial crisis, that this move really only benefits the capitalist class and will likely have little material impact on the economic reality for most working Americans. The slashing of the interest rates also doesn’t help because nobody is taking out new loans to invest in new projects during the pandemic. People can’t work physically together for the foreseeable future and many companies are already laying people off because of all the uncertainty.
So they were so proud of themselves for passing a $2.2 trillion package, but in the last few weeks, they essentially flushed trillions of dollars down the drain, as the market continued to collapse. When we tried it a decade ago, this kind of meager response to the crisis lead to a devastation of the working class was so great that we got Donald Trump. We are now living with the consequences of the precedent we set in 2008. When financial investors make risky bets in their de-facto casinos, they know they can look to the Federal Reserve and the taxpayer for loans to keep their over-leveraged, financialized system intact. In this case, they were not at fault for the crash and collapse, coronavirus is the culprit; however, this crisis exposes the fragility of our economy that has become so reliant on these financial markets.
Again, it appears in the face of economic collapse, our managers opt to save Wall Street while leaving American workers out to dry. While they fearmonger about socialism, they implement historic corporate socialism. With the collapse and unemployment numbers being even worse than 2008, and the unique situation of the pandemic, I expect that this will not be a package that will not meet the needs of working people and there will be more radical populism to come.
As you can see in the cartoon I included above, history continues to repeat itself, and today we have robber barons of our own, repeatedly coming back to the taxpayers to socialize their losses. History will not look back upon both Republican and Democratic leadership from today’s age, fondly. They will be remembered for their historic failure to learn from their mistakes, and for their incessant need to keep financial elites in control of the global economy. When people do rise up as our situation gets grimmer and we have less and less to lose, we will be calling for these leaders to take their walk of atonement, and we will join AOC in her call: “SHAME!”
It is clear that we need public health infrastructure, yet we still refuse to implement, or even debate, single-payer Medicare for All, even in the midst of a pandemic. It is also clear that our economy is based on a very delicate balance of highly leveraged financialized assets, consumer spending on endless material products we don’t need, and a service sector which provides incessant travel, and urban leisure like bars and restaurants; this kind of economy completely unprepared to handle anything that upsets that balance.
If we are going to survive this virus and economic devastation, we will need to use the power of the purse and spend public money on a historic scale on specific, comprehensive solutions that address the structural issues of our systems. Our approach for today’s challenges needs to be comprehensive and realistic at this moment, but we need to start preparing to stave off the next crisis. We will have to build out public health infrastructure and re-tool the economy. We, as a nation, are going to need to put people to work.
Social Democracy
The last time we faced an economic collapse that was on par with something like this was during the ’30s in the Great Depression. When FDR was elected in 1933 and he inherited an economy with 25% unemployment and a plummeting GDP. After the famous stock market crash of 1929, the nation finally had to face the consequences of limitless speculation of imaginary shares while laborers and farmers in America plunged into poverty, living in Hoovervilles with cardboard shelters much like the homeless tent communities we see in our modern cities.
To tackle this reality and this stagnant economy, Roosevelt laid out a vision for a new way of using the government to take bold and decisive action. In the First New Deal, his administration ushered in new national labor standards, allowing unionization and collective bargaining for higher wages and better working conditions. He called for a bank holiday to suspend the speculation and bring things under control and brought forth banking reform like the famous Glass-Steagall Act which prohibited banks from gambling with depositors money (today we no longer have this protection). He established new federal agencies to help more people in America buy a home, and he even made it legal again for Americans to buy beer.
In the Second New Deal, he established the Works Progress Administration to employ people to build out the nation’s post offices, bridges, schools, highways, and parks and even gave work to artists, writers, musicians and other creators. He continued to expand workers’ rights protections with the National Labor Relations Act and introduced the social safety net with the Social Security Act and setup unemployment insurance. He recognized that economic stimulus was about people and the middle class and he understood that capitalists had used financialization to hold the public commons captive to their industries’ interests. He was willing to oppose those “old evils” and bring structural change to the economy, reviving public institutions; this was the only way to resuscitate a society and to ensure lasting solutions.
This week I wanted to share a few excerpts from FDR’s first inauguration speech in 1933 in his first days attempting to lead America through the biggest financial crisis in its history. In it, we can find many parallels to our reality today that I think we can and should learn from.
Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind's goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.
True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.
Today, we are the richest country on the face of the Earth, so I think we can definitely say that plenty is at our doorstep as well. We too have reached a point where most people America have rejected the political and financial elite so much that many voted for Donald Trump or sat at home in 2016 because of their complete lack of faith in those people. Those “rulers of the exchange of mankind’s goods” have completely failed in serving the needs of the people, though today they have not in any way admitted their failure; they still remain stubborn and, just as they did in the ’30s, the capitalist class offered “lending of more money” with the new jargon of quantitative easing. This bill proved that the managers we have today do not have a vision for a new America, they want to keep patching up our old and dysfunctional ship as we are sinking.
We need to offer a vision for a new America and hire Americans to build it.
Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the Government itself, treating the task as we would treat the emergency of a war, but at the same time, through this employment, accomplishing greatly needed projects to stimulate and reorganize the use of our natural resources.
As Yuval Noah Harari said in his Time magazine piece which I mentioned last week, we are, in a sense, at war with pathogens. Our healthcare systems, he says, serve as our wall on our border with the ‘virus-sphere’ and our nurses, doctors, and scientists are the patrol guards. In this kind of emergency, I would expect a full-scale mobilization to fortify that wall and bolstering the support for, and numbers of front line workers. This would be the perfect time to implement Medicare for All, build more hospitals and invest in medical schools. We could provide debt relief for medical students and offer more grants to allow more people to become nurses, doctors, and scientists. We could establish new national protocols for dealing with a pandemic and new public economic safeguards that would allow us to effectively “pause” the basic elements of our economy in a case where we all need to stay inside. We would be creating jobs for people to handle the administration and conception of these new systems and we could pour our money into making sure we have the best-trained fleet of medical professionals and health researchers in the world.
Furthermore, we could have our own public works projects to reinvigorate the economy and repair our crumbling infrastructure, which gets a grade of D from the National Council on Public Works’ infrastructure report card (obviously, in this case, we would have to wait for the pandemic to pass so we know its safe for workers to be outdoors and working near each other). We could hire public workers to build-out high-speed rail systems and our airports, roads, bridges, schools, sewage systems, public parks, and energy infrastructure. We could go clean the water in counties across the country which house cities like Flint Michigan who are living with poisoned water. We could focus on sustainable infrastructure and implement projects under the Green New Deal so we can start to transition away from fossil fuels toward renewable energy, and fortify our cities to be ready for extreme weather and rising temperatures and sea levels. We can make public college education tuition-free and send people to school to become teachers, engineers, climate scientists, psychologists, researchers, and astronauts. This would create millions of jobs, spread spending money in the economy, and lay the groundwork for a new America that reflects how wealthy and resourceful we actually are as a nation.
If I read the temper of our people correctly, we now realize as we have never realized before our interdependence on each other.
If there’s anything this pandemic has taught us, it is that humans are more interdependent than we want to admit. Our old systems separate us with borders and tribal differences, but the way forward is one of solidarity and collaboration. We have no more time to waste placating the capitalist class and their system that has made us all vulnerable; we need to be bold like FDR and call out corruption while embodying a new vision for America, just like the New Deal generation did almost a century ago.
For me, the most obvious solution to the coming economic collapse is to spend money on actual projects that will materially improve the lives of all Americans and put people to work. Corporations are obviously finding that their margins are tighter and they have a legal obligation to make a profit, so many are laying people off. This situation is also unique because of the limitations coronavirus has put on our economy, but we need to use our government to mobilize people and create new structures and systems to address the vulnerabilities in our society.
History indeed does rhyme. We have a chance to remember our truly American roots and try once again to rhyme with FDR and his quest for a better world for us and our descendants.