Category: Class Warfare Page 12 of 36

There is a vast amount of hand-wringing and angst going on about how we can either save the economy by re-opening, or we can let the economy crash and save lives. Of course, the economy crashing (and the US unemployment rate will probably hit 30 percent) will cause the loss of lives also.

This is a manufactured, completely unnecessary choice.

To understand why, you have to understand three facts about money:

1. Money is imaginary. It is a fiction created by humans. People are not fictions. Land is not a fiction. Buildings are not fictions and neither are physical objects. Money, even when it exists in paper form rather than 0s and 1s in a computer, is fictional. It has value only because we agree it does.
2. Money is used for two things: First, it determines who controls what. Can you control land, people, or objects? If you buy land or an object, you control it for as long as you own it. If you hire a person, you control their time. Money is control of people, land, and things.
3. Second, money is a feedback mechanism. If people who have money want less of what you offer, you get less money and control less people, land, and things. If people who have money want more of what you offer, you get more money and can control more people, land, and things. (What people who have no money think is of no concern.)

What Covid-19 closures are doing is providing feedback–“people with money want less of these things.” That causes the people who control businesses, or live in apartments, or have to pay mortgages to run out of money, and lose control of those things. Businesses go out of business. People can’t pay rent or mortgages or their employees.

That causes an economic crash.

This is 100 percent unnecessary. We want feedback in an economic system because we don’t want people doing things that other people don’t want or need (or, in Capitalism, other people with money).

But when a one-time event happens which does not reflect a fundamental shift in what people want (i.e., this pandemic will end) then you actually want to stop the feedback, because it’s bad feedback. You don’t want to change long-term economic arrangements because of something that is a one-time event.

So, because money is fictional, because we just create it out of thin air (central banks create trillions routinely), this means that we can do one of two things:

1. We can just give people who have lost their income due to Covid-19 enough income to pay their bills
2. we can freeze payments up and down the line – rent, mortgages, interest payments.

Or, of course, we can (and should) do a combination of these two things.

When Covid-19 closures have clearly run their course, we stop doing these things. If there are permanent changes (a lot of people keep working from home, or we don’t get a vaccine and restaurants aren’t going to be popular again) at that point the feedback is allowed to operate.

To allow a one-time event of limited duration to fundamentally reshape the economy means one misunderstands what an economy is. An economy is not money, it is people, land, and objects. Those are what must be preserved, not money. When the one-time event is over, if those objects still exist and are still controlled by people who can use them to create what other people want, then the economy has been preserved.

To allow people to die to preserve the economy is idiocy: It hurts the economy. People are the economy; it is people and natural resources which produce everything of value.

So, when people squeal about the economy vs. lives, understand that they don’t know what an economy is or how money works. Or, they do know how money works and what an economy is, but they are taking advantage of the situation to give themselves more money, and are good with other people dying while they get more money, because they are concerned with their relative position.

If the Fed and the government give rich people lots of money, and everyone else not much, and if assets become cheap and can be bought out, and if small businesses go out of business, at the end the economy is smaller, BUT the rich people control more of it

And that’s what they want. Too bad your grandma and your dad have to die for it, but that’s not their problem.

Almost every day this blog publishes the John Hopkins Covid-19 numbers. They are undercounts of both deaths and cases, but they give the trendline. Recently the trendline has very slowly started to move down.

Meanwhile, Trump and many governors have started to move to ease isolation requirements. This map shows that only five out of 50 states (and Puerto Rico) aren’t easing.

There are three problems here.

First, the curve hasn’t been crushed. In fact, in some states, it’s still increasing.

Second, even once a curve has been crushed, to keep it under control without a vaccine, you need to test and trace. The US would need to hire hundreds of thousands of tracers to do this, and would need many more tests than are currently available. If you don’t test and trace, one person can infect many other people, and then all those people infect many other people.

Third, Covid-19 takes about two weeks from infection before people show symptoms, and two weeks more before they start dying. During that asymptomatic period, carriers are contagious.

What this means is you can have a significant outbreak going on and not know it is happening. That’s why countries that got Covid-19 under control crushed it into the dirt, then put everyone coming in from outside the country into quarantine, and they test like mad.

Humans are really bad at making decisions where the consequences are delayed. (See Change, Climate). Even a two week- to month-long delay is more than the decision makers in many countries, including the US, can handle.

So, the numbers seem to be in decline, and there will be removal of restrictions, and then the numbers will start increasing again in two to six weeks. Because infection rates will be moving off a larger base, they will create a second wave where people start dropping like flies–much larger than the first wave.

This is acceptable to the people who run the US because they have jobs where they can work from home, and if they don’t, like in the White House, they can test every day. It is the lower class who will be forced to go back to work and to die.

That’s not a problem for American elites; killing unimportant people for money is pretty much what they do for a living.

It’s possible this narrative can be cut off if those states which are handling Covid properly close their borders to non-isolating states, presumably by calling up the national guard. There is also some hope because Americans are generally not flocking back to venues like restaurants–even in States which have re-opened.

But overall, this looks like the first wave passed its peak, is slowly declining, before the second wave comes in and culls the poor for the rich. Numbers of deaths will be in the hundreds of thousands at a minimum. If this is bungled completely, it could be that 80 percent of the population will have to get Covid-19 to create herd immunity, and that a little under one percent will die. The rich will isolate and test throughout all this, of course.

This is a worst case scenario, and many mocked the possibility even two months ago. Surely, they said, American elites couldn’t fuck this up that much?

They can, and they are. But it isn’t fucking up. They’re now isolated and in little danger. They’ve bailed themselves out, given themselves even more control over the economy than before. If ordinary Americans get sick, die, or can’t pay rent and go hungry, well, why should American elites care? It doesn’t effect them.

That’s their bet.

As for you, do what you can to prepare. We may get lucky and get a vaccine earlier than expected, but if not, the US has made the choice to let Covid-19 continue to wend its way through the population.

And remember, Americans, if you decide you’d rather not die so the top one percent can own more of the US, they have names and addresses.

Never riot in your own neighbourhood.

The Course of Empire by Thomas Cole

Covid is one of those disasters which tests whomever it happens to. Countries like Vietnam and Taiwan and even Germany stayed on top of it, or got ahead of it, and are doing fine. Those who mishandled it are taking some hard hits.

This isn’t primarily about deaths, though those are awful, it is about the mishandling of the economy. In Canada, there’s a benefit of $2,000 dollars per month for which most people who lost their jobs qualify. Other countries have done even better: freezing mortgage payments, rent, and so on, and organizing food delivery.

In the US, we have predictions of a 30 percent unemployment rate. I just saw that less than half of Los Angeles county still has a job.

The bailout for regular people is $1,200. In a place like Los Angeles, that won’t even cover most people’s rent.

There’s been a vast bailout, mainly–though not exclusively–through the Fed, for the rich. Basically, as much free money at the trough as they can gorge on.

But small businesses are toast. A third of households, at least, are on the verge of not just homelessness but not being able to eat.

Meanwhile we have a lovely display of typical US business incompetence. The US’s logistics system is a wonder of the world, but it was created in the 80s and 90s by people who are retired or dead now. Meat packing plants are shutting down because of multiple cases, truckers and warehouse workers are getting sick and scared. Farmers complain of problems getting workers. The price of beef for farmers has crashed through the floor, but they can’t get the animals to consumers.

Meanwhile, multiple states have not instituted isolation, and there are “protests,” backed by Republicans, to reopen states that have.

Not isolating nationally means there are pockets of plague which are still expanding exponentially, and which can reinfect the areas which did isolate. Coming out of isolation too soon will mean that cases will explode again a month to a month and a half after self-isolation ends.

The job issues mean trouble. People who can’t afford food become violent. Food riots bring down nations.

Assuming these storms are weathered, or that Americans are so beaten down they won’t riot even when starving, when the economy does re-open, many of the jobs will be gone. People who did not earn during the time down will still have to pay back-rent. At best, their spending is crippled, at worst they get evicted.

Many landlords will lose their property in any case, many small businesses will go bankrupt and never re-appear. The likely scenario, longer term “after” the Coronavirus is another ten-year depression, except this one is likely to be a deflationary depression: No one but the rich has money, and no one is spending.

But imagine the fairly standard scenario of multiple waves of coronavirus with multiple waves of self-isolation. No national policy, so some states stay open as others are closed. People in warehouses keep getting hit, logistics people get hit, migrant workers get hit or can’t even get into the country.

The system, already drawn tight to extract maximum profit and efficiency, starts breaking. Prices surge, there are actual shortages in many places.

This is some months out, I’d guess, although this is the sort of scenario that goes from “eh, it’s OK” to BOOM very, very fast when it does go.

The US is fragile. The choice to not freeze mortgages, rent, interest payments and so on, and to not bail out ordinary people as I instructed is going to explain to the rich that it is everyone else who makes the actual economy run.

There is a real economy, Virginia, and if it freezes up, there will be hell to pay. Logistics workers need PPE and they need them now. Freezes of rent, mortgages, interest payments, and so on, need to be done now. If a complete idiot wasn’t running the country, taking national control of when states close and reopen should happen now. I would suggest that if Americans don’t want their country in a new great depression, that they find a way to depose Trump now, and if Pence won’t be competent, ditch him too.

There is a chance that the US will fumble through, as governors and mayors who aren’t complete incompetents (and the rare, actual competent governor, which doesn’t include New York’s Cuomo), plus the rare competent CEOs, manage to hold thing together–barely.

But right now, this is looking like an epic clusterfuck.

Remember, however, when the riots come, if they do, if you won’t just die quietly for the peace of your masters, to go to where they live, or where the Fed employees live, and riot there. Explain to them about what people do to fat, happy, rich people when they can’t eat.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Or, I should say, rather, of the Fed and Congress’s actions.

The Federal Reserve has spent one trillion a day for 30 days (when this is over, they’ll have spent more) to prop up markets and financial firms. They’re buying debt, and making non-recourse loans (non-recourse means there is no penalty for not paying the loan back).

Congress’s deal, includes $350 billion for small businesses, and $1,200 for individuals, +$500 per child, and some excellent provisions for laid off workers–but this is a one time payment, and if things go on, how many more be passed when business has their bailout? It also has some fairly stringent restrictions on stock buybacks and executive compensation.

But most of the bailing out, in this crisis (as in 2008), will be done through the Federal Reserve, whose operations dwarf those of Congress and the Treasury department.

Assuming this crisis goes on for months, in waves, which is what the science seems to say, predicting the end result is simple: A lot of small businesses will go out of business. A lot of people will lose their homes, and a lot of small landlords (not large ones) will lose their property.

Companies which are bailed out, and companies and individuals with strong cash positions going in, like private equity, will then do what they did after 2008: They’ll buy up distressed assets for dimes on the dollar and wind up owning more of the economy than they did going in. Industries will consolidate, as smaller firms go under, and the remaining companies will be even too-bigger-to-fail.

Must it be this way? No. Will it be this way? Assuming the policies continue as they are, yup. But there’s a lot of road to go, and when people start dying in droves the calculus may change if the politics change. In particular, if people truly can’t afford to eat or pay rent, in large numbers, things may get nasty. It’ll be interesting to see just how whipped Americans are: Are there circumstances under which they’ll actually revolt in a way that hurts elites?

A lot of this depends on how the pandemic plays out. If Trump and idiot governors can be convinced to stick out isolation, probably they’ll be able to slide by. If not, things will get ugly.

Much will also depend on whether Republicans want more bailouts through fiscal policy for corporations. If they don’t, they will resist sufficient money for ordinary people, which will make things worse (and cause people to break isolation).

It’s going to be an interesting few months.

But basically, nothing has changed in ruling lass ideology: Every crisis is to be used to increase the share of the economy, national wealth, and the income that the rich control.

So for this crisis is no exception.

(Update: Matt Stoller reports there’s trillions more dollars of giveaways:

So that’s the stuff that’s been reported. Here’s what hasn’t, and why the bill goes up in value to $6-10 trillion.

• An additional $4 trillion from the Federal Reserve in lending power to be lent to big corporations and banks.
• Authorization to bail out money market funds, multi-trillion dollar unregulated bank-like deposits for the superrich.
• Authorization for the the government through the Federal Deposit Insurance Corporation to guarantee trillions of dollars of risky bank debt.)

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.