Incompetent Hubris

27 July 2020

 

Cogito Ergo Non Serviam

Loss of Unemployment Payments, Eviction Protections Threaten US Economy

 

The Republican Party poses as the party that knows how to run the economy. What they really know how to do is transfer wealth up the economic ladder. The trouble with that approach is that an economy that is 70% consumer spending requires the cash to be toward the bottom of the scale. That is why they have to run a trillion-dollar deficit with interest rates near zero to keep the US afloat. Now, they are endangering that with their unwillingness to extend the unemployment payments they agreed to in the spring. When consumer demand shrinks, the economy will go with it.

The main issue for the GOP is the $600 a week payment that enhances traditional unemployment insurance. This Pandemic Unemployment Assistance payment expires on Friday, along with a moratorium on evictions that has already lapsed. At a stroke, the US is about to have $2400 a month per unemployed person taken out of the economy, meaning it is even more unlikely that rent and mortgages will be paid.

Among the Republican complaints is the fatuous claim that people are not returning to work because they are making more staying at home with the $600 a week. The $15 an hour for a 40 hour week that that sum represents should be the national minimum (which hasn't gone up in almost a decade). So the fact that any employee is better off at home suggests that the wage being paid was inadequate anyway.

Yet, that is not the reason that most people are not returning to work. Many of the jobs that existed in March are now gone. There is no job to which the worker can return. Waiting tables in a city where indoor dining is forbidden is not a job one can return to doing. Many small businesses have failed despite the various federal attempts to keep them afloat (the Payroll Protection Program loans and grants for instance).

However, the biggest reason that people are hesitant to return to work is not an economi issue. In most cases, returning to work is a health risk. The Covid-19 outbreak is not under control, and it is spreading faster and faster. Under these circumstances, sitting in an office is a bad idea. Equally bad is working in a shopping mall or other retail environment. This journal has maintained for months that the key to fixing the economic problems is to fix the virus outbreak. Control the spread of the disease, and the economy will recover on its own. Failure to control it means the economy will not be able to right itself.

The Trump administration's response to the virus has been pathetic. The 150,000 or so deaths the US has experienced thus far is well beyond what a coherent and scientific response would have brought by a factor of 10 or more.

Since that is the case, the induced coma that the US economy has been in since April needs to continue until such time as the virus is in retreat. Remove the PUA funds and allow for evictions, and the misery that the pandemic has brought will soar. There will be people on the streets in huge numbers, local social services will be overwhelmed, and the costs will vastly exceed the price of the PUA in the long run.

As usual, though, the Republican Party knows the cost of a few things but the value of nothing. The bickering among them has brought the country to the brink of economic disaster, and their continued inability to act is pushing everyone over the edge.


© Copyright 2020 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.



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