The COVID-19 Economy: What Can We Do?

By James Kwak

Today, the Washington Post’s Outlook section published my article on the future of the American economy in the wake of the pandemic. They invited me to write it because of my earlier blog post on “Winners and Losers.” (Hey, despite all appearances, maybe blogs are still worth writing.)

Photo by skeeze

The article is pretty gloomy. The short summary is that the COVID-19 pandemic will accelerate and reinforce the two primary economic trends of our time: consolidation and inequality. At this moment, I believe that more strongly than when I originally drafted the article two months ago. It seems to me that, as a society, we are caught between two unacceptable outcomes: either we reopen elementary schools (at least) so that parents can go to work, adding fuel to the epidemiological fire that is already burning throughout much of the country; or we keep schools closed and millions of predominantly low-income workers lose their jobs because they have to take care of their children. Choosing between your job and your children is not something that should happen in a supposedly rich society, yet there we are.

A few friends have asked me what I think the solution is. Here are the last three paragraphs of my first draft, which ended up on the cutting room floor:

“Things don’t have to turn out this way. Perhaps the experience of this pandemic—a disjointed health care system, poor people forced by poverty to fight on the front lines of a war, an unemployment rate that could reach 25 percent—could inspire a new New Deal, or a rethinking of the kind of society we want to live in.

“The prospects for a resurgence of social solidarity seem dim, however. Remember, the political legacy of the financial crisis—an example of the dangers of greed and deregulation if there ever was one—was the Tea Party and, arguably, President Donald Trump. It is more likely that the deficits that the federal government has incurred to mitigate the economic damage so far will be used to justify austerity in the not-too-distant future. Robert Rubin—President Clinton’s treasury secretary, and to all appearances still the holder of a veto over Democratic economic policy—already could not resist using pandemic spending to call for action to reduce the national debt in the long term. Republicans will be far less nuanced. Deficits will be the trump card played—by moderate Democrats if necessary—to block universal pre-K, free college, expanded Social Security benefits, or Medicare for All.

“This is the future we are headed for. But there are no immutable laws of economics. We could choose to break up large companies, enable workers to unionize, mandate paid sick leave, and tax rich people to provide capital to young entrepreneurs. If we fail to make a choice, however, COVID-19 will cast a long shadow over our economic future.”

(You see, even when proposing solutions, I can still be gloomy.)

I think the policy solutions are obvious. We need to commit to an all-out-effort to contain the coronavirus—which can be done, as most developed countries, as well as New England, have proven. In the meantime, we have to provide unlimited emergency support, in the form of cash and health care, to people who cannot work, as well as bonuses to the essential workers who keep the rest of us alive. We pay for it by issuing bonds at negative real interest rates—10-year Treasuries are yielding 0.65%, which is about half the market-implied inflation rate—and we pay back those bonds later by raising taxes on rich people and corporations. We need stronger antitrust policies to break up large corporations. We need capital grants—paid for by inheritance taxes—such as those proposed by Thomas Piketty in his new book, to enable people to start small businesses to replace the ones that will be wiped out this year.

That is not a complete solution to all the problems we faced on January 1, 2020. But it will help hold the line against the changes being wrought by a virus.

The problem, of course, is the politics—not just President Trump and the Republicans, but a Democratic Party controlled by its conservative wing, defined primarily by its insistence on fiscal responsibility, and terrified of doing anything that anyone might call socialist. Perhaps this crisis will push Joe Biden to embrace the progressive agenda of Bernie Sanders and Elizabeth Warren. Perhaps not. That, of course, is the subject of another book.

10 thoughts on “The COVID-19 Economy: What Can We Do?

  1. THE LEGITIMATION OF AUSTERITY IN THE FACE OF A FUTURE “DEBT” CRISIS is a shadow tactic that has already created repulsive rebounds and neofacist concentration. But in truth, the pandemic has actually stalled that scenario and exposed all the weaknesses of a capital intensive dependency path that ignores poverty and sees wealth as the promised land. Only if we attempt to sustain that delusion is the future really a dismal failure waiting for pain to reinstate gains. The slowdown has created the first “bottom -up” reorganization potential. But if the so-called elites attempt only to reinstate the private class silver cloud strata; than it will be the attempt to recoup a stratified system of inequality that will find itself holding turnkey liabilities and an economy they can not readily rebuild in their favor,to their advantages, and in their image. If this was war, the profiteers would be considered corrupt, But instead it is a pandemic and the profiteers are considered opportunists only.But one could lose a pandemic just as readily as a war. So the question really becomes are we ready to build from the bottom up? Or; are we locked in step trying to get the best restaurants back open for the leisure class. It’s areal question; and ithe fact is that the restaurants will come if the bottom up is the emphasis; But not the other way around. Every sector must be retrofitted over again as we reopen in ways that work. School systems need to be decentralized and sent all over a scattered plot of localized options rather than to one giant factory building. Infrastructural changes should be more concentric rather than global; And an entire industry is needed to begin to reverse ecological trauma to our environments beginning with a serious benchmark study of how the pandemic stopped the clock and where these opportunities could be modified and sustained. The medical system, as a private system, is a failure. It porves that bigger is definitely not better. Advance the qualified nurses into general practice and establish a National Medical Force that isn’t terrified of bankruptcy as soon as they get into the field to do business. More Physicians are needed, and it is about time that we guarantee them a wealthy wage so they don’t have to keep their own numbers down to protect their markets. People, it turns out, should not be market commodities and either should students or healthy labor standards.
    We can fix a democratically shared economy that coordinates contract capitalism as a social tool for transactive engagements, but now if we start by recreating all the faults. WE have the opportunity, as soon as Trump D-dumpty takes his great fall;…and we can build this democracy with the healthiest economy ever established. We still have it all, we just need to face the corruption head on and admit that power, wealth and greed are not the directives that shape a nation. We have the best people in the history of culture. But if Faso can’t do his job because Trump wants to build sand castles…well there’s the real problem at the heart of the crisis of legitimacy,

  2. Notes; “Faso” should have been Dr. Fauci…for the point.
    “…, but now if we start by recreating all the faults”
    Should, of course, be But NOT if we start by recreating all the faults. (I should add that if we follow the money and the power of the money as it is distributed right now, we still will end up prioritizing a status quo focus on preexisting patterns that brought us a 1% wealth economy. And that very same minority must grow and expand each year by it’s own 1% intensified expansion at the expense of the global ecology and the real economies that feed that growth differentially and at odds with itself doing so.

    Clearly an infrastructural revolution should be engineered and constructed for a new economy of distributed resources. I would propose that a water works engineering network would be feasible from state to state creating a National water supply, retrieval and regulatory foundation. We do it for oil and gas! There is no reason why a water works grid across this country would not become an asset of future national wealth. Most presently, it should create jobs in every state.In a short time it will relieve flood areas and supply draught areas and assure our farm lands a steady and reliable all season water supply. In a globe where we already know that water is becoming a scarce and exploited resource, a National waer supply would be a miriacle to future generations. And think about the fact that contracts and liquidity will flow to the working forces; and bigger corporations would do well state by state to compete for the jack pots. This is green all around. .

  3. President Biden will have no choice but to embrace the policies of Sanders & Warren. And no choice is always the easiest one.

  4. HERE>>
    July 20, 2020 Issue: The NEW YORKER
    How Trump Is Helping Tycoons Exploit the Pandemic
    The secretive titan behind one of America’s largest poultry companies, who is also one of the President’s top donors, is ruthlessly leveraging the coronavirus crisis—and his vast fortune—to strip workers
    ———-—to strip workers of protections————
    “It’s all hush-hush.”
    Blackrock the Giant Squid
    The COVID-19 crisis presented the perfect opportunity to execute this proposal in the US, with BlackRock itself appointed
    to administer it. In March 2020, it was awarded a no-bid contract under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to deploy a $454 billion slush fund established by the Treasury in partnership with the Federal Reserve.
    This fund in turn could be leveraged to provide over $4 trillion in Federal Reserve credit. While the public was distracted
    with protests, riots and lockdowns, BlackRock suddenly emerged from the shadows to become the “fourth branch of government,” managing the controls to the central bank’s print-on-demand fiat money.
    How did that happen and what are the implications?
    BlackRock first grew its balance sheet in the 1990s and 2000s by promoting the mortgage-backed securities (MBS) that brought down the economy in 200
    In March 2020, based on its expertise with the Maiden Lane facilities and its sophisticated Aladdin risk-monitoring software, BlackRock got the job of dispensing Federal Reserve funds through eleven “special purpose vehicles” authorized under
    the CARES Act.
    Like the Maiden Lane facilities, these vehicles were designed to allow the Fed, which is legally limited to purchasing safe federally-guaranteed assets, to finance the purchase of riskier assets in the market.
    Blackrock Bails Itself Out
    The national lockdown left states, cities and local businesses in desperate need of federal government aid.
    But according to David Dayen in The American Prospect, as of May 30 (the Fed’s last monthly report), the only purchases made under the Fed’s new BlackRock-administered SPVs were ETFs, mainly owned by BlackRock itself.
    Full report>>Full Article>>

    Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling WEB OF DEBT. In THE PUBLIC BANK SOLUTION, her latest book,
    she explores successful public banking models historically and globally. Her websites are,, and
    Related Topic(s): Bailout; Blackrock; Financial; Politics,
    OpEdNews Op Eds 7/2/2020 at 22:46:44 H1’ed 7/2/20
    Meet BlackRock, the New Great Vampire Squid
    By Ellen Brown (Page 1 of 2 pages) 1 comment
    Posted on June 22, 2020 by Ellen Brown
    Blackrock the Giant Squid

  5. William Barr’s ties to Russia via D.C.’s Kirkland Ellis Law
    READ ALL HERE>> ……
    When Barr sent a 19-page memo to the Justice Department on June 8, 2018, he was a partner with the Kirkland Ellis law firm.
    This much is known: On Barr’s public financial disclosure report, he admits to working for a law firm that represented Russia’s Alfa Bank and for a company whose co-founders allegedly have long-standing business ties to Russia. What’s more, he received dividends from Vector Group, a holding company with deep financial ties to Russia.

    Barr’s ties to Russia have roots in his work at the Kirkland Ellis Law Firm, according to a new report at Newsweek. In an article titled “Should William Barr Recuse Himself From Mueller Report? Legal Experts Say Attorney General’s Ties to Russia Are Troubling,” reporter Christina Maza writes:

    . . . .some experts argue that Barr’s previous work in the private sector could conflict with his continuing supervision of the investigation into Russian tampering in the 2016 election campaign.
    Kirkland & Ellis LLP is an American law firm. Founded in 1909 in Chicago, Illinois, Kirkland is the largest law firm in the world by revenue (US$4.16 billion in 2019), and the seventh largest in terms of number of attorneys (2,307 in 2019).[1] Kirkland is the first law firm in the world to break US$4 billion in revenue. [3]
    In addition to being the highest-grossing law firm in the world, Kirkland is ranked second globally with respect to estimated profits per equity partner (US$5.195 million in 2019). [4]
    While Kirkland was historically considered a firm focused on litigation, the past decade has seen the firm gain worldwide renown for its private equity and restructuring practices, which together with large-scale commercial litigation, comprise the core economic “pillars” of the firm. [5]
    Kirkland has represented many prominent and controversial clients, such as British Petroleum (in relation to the 2010 Deepwater oil spill), billionaire and child-sex trafficker Jeffrey Epstein, Bain Capital, and a group of major investors in the international fishmeal industry, in relation to their claims against China Fishery.
    Prominent attorneys of the firm have included Supreme Court Justice Brett Kavanaugh; former White House Counsel Neil Eggleston; former appellate court Judge Robert Bork; Clinton-era Special Counsel Ken Starr; and various Trump administration officials, including former National Security Adviser John R. Bolton, Attorney General William Barr, former Secretary of Labor Alexander Acosta, and Secretary of Health and Human Services Alex Azar. Contents
    1 Firm history2 Notable clients and cases
    3 Notable attorneys and alumni

    Brett Kavanaugh – Associate Justice of the Supreme Court of the United States[23]
    Neil Eggleston – former White House Counsel under President Barack Obama[24]
    Dan Bress – Associate Justice on the United States Court of Appeals for the Ninth Circuit[25]
    Robert Bork – former Judge of the Court of Appeals for the D.C. Circuit and former Solicitor General under President Richard Nixon[26]
    Jeff Wall – Principal Deputy Solicitor General under President Donald J. Trump and former acting Solicitor General[27]
    Paul Clement – former Solicitor General under President George W. Bush[28]
    Ken Starr – Whitewater special prosecutor and former Solicitor General under President George H. W. Bush[29]
    William Barr – 85th United States Attorney General under President Donald Trump and former 77th United States Attorney General under President George H.W. Bush.[30]
    Pat Cipollone – White House Counsel under President Donald Trump[24]
    Alex Azar – Secretary of Health and Human Services[31]
    Alexander Acosta – former Secretary of Labor under President Donald Trump[32]
    John R. Bolton – former National Security Advisor under President Donald Trump[33]
    Jeffrey A. Rosen – Deputy Secretary of Transportation and Deputy Attorney General[34]
    Nathan Sales – Coordinator for Counterterrorism and Acting Under Secretary for Civilian Security, Democracy, and Human Rights[35]
    Mark Filip – former Judge of the District Court for the Northern District of Illinois and former Deputy Attorney General under President George W. Bush [36]
    Viet D. Dinh – Chief Legal Officer at 21st Century Fox,[37] former Assistant Attorney General under President George W. Bush and chief architect of the USA PATRIOT Act[38]
    Robert S. Khuzami – Deputy United States Attorney for the Southern District of New York,[39] former Director of the Division of Enforcement of the Securities and Exchange Commission and former General Counsel of Deutsche Bank[40]
    Jay Lefkowitz – former Special Envoy for Human Rights in North Korea and Director of Cabinet Affairs under President George W. Bush [23][41]
    Dallin H. Oaks – First Counselor of the First Presidency of The Church of Jesus Christ of Latter-day Saints[42]


  6. AG William Barr, CIA Asset and Deep State Impresario – Dr. Rich Swier ……
    In 2007 and again from 2017, Barr was counsel for politically-connected international Chicago law firm Kirkland & Ellis. Among its other notable attorneys and alumni are Kenneth Starr, John Bolton, Supreme Court Justice Brett Kavanaugh,
    and numerous Trump administration attorneys. Stay tuned, there’s much more to come on AG Barr.
    William Barr’s ties to Russia via D.C.’s Kirkland Ellis Law
    READ ALL HERE>> ……
    When Barr sent a 19-page memo to the Justice Department on June 8, 2018, he was a partner with the Kirkland Ellis law firm.
    This much is known: On Barr’s public financial disclosure report, he admits to working for a law firm that represented Russia’s Alfa Bank and for a company whose co-founders allegedly have long-standing business ties to Russia. What’s more, he received dividends from Vector Group, a holding company with deep financial ties to Russia.

    Barr’s ties to Russia have roots in his work at the Kirkland Ellis Law Firm, according to a new report at Newsweek. In an article titled “Should William Barr Recuse Himself From Mueller Report? Legal Experts Say Attorney General’s Ties to Russia Are Troubling,” reporter Christina Maza writes:

    . . . .some experts argue that Barr’s previous work in the private sector could conflict with his continuing supervision of the investigation into Russian tampering in the 2016 election campaign.

    in fact, they habitually deflect that sacrifice to the mass populations that they exploit. As a rule, they will also expect to gain from the chaos and crisis resolutions, taking the bulk of reparations for their own security; enhancing the insecurity at the lower stratification levles differentially; and in that process assure that the crisis and demands will continue to furnish them with warranted justifications to do more ‘austerity” measure and constrictions while legitimating greater concentration of power to keep “law and order” in line (the assembly line or wealth that is…).
    It is far beyond teaching these ritual exploits, and half too late simply to reach people at educated middle class levels to get them prepared to defend against these new regressive party operatives acting in place of what stood as conservatives in earlier decades. We utilize 18th and 19th century terms that have meandered in meaning and membership and take advantage of the menace from the histories of these terms to confuse and rule the public. Misinformation is considered standard fare, and disinformation has now become pretty routine and dangerous ground to tackle and deconstruct.and It wastes a great deal of time; so delay, distract and deny is the ritual practice under leadership that is essentially bankrupt of morals. But where hae we seen that before? Union Busting of course. So the corporate structure of the up and coming superstructure survives on the tactical application of Union Busting strategies; but we never seem to ask…what UNION is being busted up?
    Well it seems that it is the UNION that was preserved once before that is targeted. The Democratic ‘Union” of the United States of America” and in that scenario, we are looking at a ‘liquidation’ process: 21st Century style. The real players seem to be The Corporatist liberarian anarchists; the anti-progressives; the status quo diversified moderates; the hard core Reactionaries; and the core radicals of every flavor and factional favor.In the meantime, a pseudo populism is identified for the mass mob appeal whenever a popular issue gives support to brute force as a social rule. But let’s just call it all Democrats and Republicans to keep things curtain friendly;
    What could go awry? The appeal will not be to austerity in this manipulation of a crisis of legitimation justifying restraint and constraints on the public sector so that the healthy private sector can rain down its benefits; it will be the older LAW & Order security systems that will be called on justifiably to .regain a new level of security assurances. But the cost is yet to be estimated; surely the first to go will be real Democracy and an equitable economic parity between ranked and stratified- fortified nested & vested interests to sustain.

  8. This promises to become an endemic, once their, the cards are reshuffled and the game of reaction to the new circumstances begins again.

  9. It’s much worse James. It’s us or them. The predatorclass is intent, or bent on enslaving, incarcerating or exterminating most of the earths population. These nefarious processes are highly developed and advanced as governments globally (and particularly here in Amerika) are infiltrated by predatorclass operators who work like fiends to restructure and reshape the basic architectures of governments to shield, protect, advance, and advantages the interests of the predatorclass and predatorclass individuals and oligarchs exclusively. The idea of governments working toward the best interests of the people has been intentionally shapeshifted over decades into solid political and economic structures and architectures that undermine, degrade and diminish the people’s best interests in favor of singular focus on the interests of the predatorclass and predatorclass oligarchs.

    Democracy is a form of government wherein the authority of the government is derived from the consent of the governed. We inhabit a government of, by and for the predatorclass and predatorclass oligarchs – which is fascism! Fascism!!!

    Get stocked, locked, cocked, and ready to rock! We have no other options.

Comments are closed.