https://socialistaction.org/2020/03/26/capitalisms-coronavirus-response-bail-out-the-rich/
Capitalism’s coronavirus response: Bail out the rich!
Socialist Action / 21 hours ago
Senate Majority Leader Mitch McConnell gives the thumbs up after
speaking on the bailout bill in the Senate on Wednesday. (Getty Images)
By JOHN POTTINGER
Faster than a speeding bullet. More powerful than a locomotive. Able to
leap off tall buildings in a single bound! Superman? No, it’s the U.S.
and the world capitalist economies. Or is it?
As more states and more counties mandate stay-in-place orders more and
more people are out of jobs to the tune of perhaps 13 to 20 percent,
compared to ten percent unemployment at the nadir of the 2008 Great
Recession. Additional millions were rendered partially employed. As for
the Gross Domestic Product (GDP), an optimistic forecast (optimistic is
a relative term) by Warwick McKibbin, an economist at the Australian
National University who modeled the SARS pandemic, estimated that the
coronavirus might kill 236,000 people in the US while shrinking the GDP
by 2 percent.
But if the Centers for Disease Control and Prevention numbers are
correct 1,000,000 people could die and the GDP could fall by 8.4 percent.
Goldman Sachs, not to be outdone, said GDP could drop 24 percent for the
second quarter. (Goldman Sachs counts dollars not lives.) Donald Trump
suggests the same. “Restart the economy by Easter, he states (NYT, March
25.) Profits before people!
For now, millions of people staying home with no paychecks. It means
schools, libraries, restaurants, bars, all sporting events, concerts,
dentist offices, barbers, hairdressers and many more are closed. Better
this, of course, than Trump’s unthinkable back to work solutions – at
the peak of the curve, no doubt!
The pandemic also brought on a stock market crash which means among
other things that people who were going to buy a house or to a lesser
extent a car or SUV, won’t be able to do so because their down payment
had been in the stock market. On the up side the air is cleaner because
no one is driving or flying.
So what’s the response from the federal government? Well the Democrats
and Republicans knee-jerk response is to throw money at the big banks.
The New York Federal Reserve is offering $1 trillion for overnight loans
and $1 trillion more in 14-day loans. All for the corporate elite at
near zero percent interest rates. The Fed is also buying $500 billion in
Treasury bonds and snapping up mortgage-backed securities – all with
printed paper money, as usual.
Meanwhile on Capital Hill Congress plans a $2 trillion stimulus package;
$425 billion for “distressed companies,” $75 billion to airlines and
hotels, $100 billion for hospitals, $150 billion to state and local
governments, $350 billion in loans for small businesses, oh, and yes,
$1,200 to workers who make up to $75,000, plus $500 per child. Don’t
spend it all in one place.
So quite unlike Medicare for All, the bourgeois press and the bourgeois
politicians seem to think turning on the tap and printing money is now
OK. While $1,200 checks are a start and more money for the poor and
unemployed is good, where will the rest of the cash go?
Will the airlines spend it on wages or perhaps on buying a “distressed
competitor?” Will it prioritize jobs that produce real value or the
further concentration of finance capital to eliminate competition to
drive up declining profit rates?
Where’s the $500 billion the Fed spent on Treasury bonds going? Are they
going to tip the waiter or fund the big corporations’ line of credit?
Will printing more money lead to inflation or perhaps an asset bubble
more likely to burst? Ernest Mandel had the answer in his “Marxist
Economic Theory Vol. 2,” page 527, “The increase in the public debt has
simply replaced (concealed) direct currency inflation. Instead of
appearing in the form of an increased amount of fiduciary money* in
circulation, it appears in that of an increase in the fictitious
capital** constituted by public debt securities. But the total stock of
currency is swollen exactly as if there had been an issue of paper
money.” In other words, all this money being thrown at the bourgeoisie
over the course of time will end up in speculation – in capitalism’s
ever increasing casino-like economy of over priced shares,
mortgage-backed securities, assorted financial instruments, and who
knows what. The capitalist could invest in making widgets but with mass
unemployment who will buy them?
What now? In the short term working people need a moratorium on all
evictions, foreclosures, rent, mortgages, utility payments, debt
payments, credit card payments and student loan payments. But we will
never be really safe until the banks and big corporations are
nationalized under the control of working people, where we can
collectively and democratically construct a planned economy that
operates for human need not capitalist profit. We need a workers’
government that plans for socialism and for that we need a revolutionary
party. Join us!
* Fiduciary money is money backed by trust between the payer and payee,
like the $20 bill that was in your pocket until you were lay off.
** Fictitious capital is value, in the form of shares, debt, speculative
instruments, etc., above and beyond what can be realized in the form of
commodities. With average profit rates derived from workers’ labor power
consistently in decline over the past several decades, capitalists
increasing invest their profits not in new production that creates real
value but rather in banks and related financial institutions that
“invest” in speculative instruments that have little or no
correspondence to the production of commodities.
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March 26, 2020 in Uncategorized.
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Neil deGrasse Tyson
“God is an ever-receding pocket of scientific ignorance.”
― Neil DeGrasse Tyson
