'Market logic' is killing us

http://inthesetimes.com/article/22558/COVID-19-free-market-capitalism-killing-pandemic



Historically, during national emergencies like World War II, the U.S. government subordinated business interests to the public good. Why can’t it do so in the Covid-19 crisis?

BY RICK PERLSTEIN





Las Vegas Mayor Carolyn Goodman, a former Democrat (now Independent), sat down with CNN’s Anderson Cooper on April 22. Goodman had been attracting attention by loudly asserting her city’s famous casinos should open as soon as possible. “Is that,” Anderson asked, “a responsible call to make?” Goodman’s unhinged response has since become legendary.

“I’d love everything to open,” she began. “We’ve never closed down the United States.”

Cooper raised the obvious objection that people from all over the world pawing slot machines, breathing recirculated air, impairing their judgment with drink and returning to homes across the United States and the world would spread the disease. “Doesn’t that sound like a virus petri dish?” he asked.

“No, it sounds like you’re being an alarmist,” Goodman retorted. The casinos, she insisted, could enforce social distancing.

“How do you do that?”

“That’s up to them to figure out,” Goodman said. “I’m not a private owner of a hotel. I wish I were.” So she had no plan for rules, laws or recommendations to get private owners to do anything, nor did she intend to pursue one.

Cooper asked whether Goodman stood by her earlier assessment that “competition will destroy [businesses] if it becomes evident that they have a disease.” In response, Goodman doubled down by offering Vegas as a “placebo … to measure against” cities that stay closed. Her bottom line? “Let us get back to business!”

In 1906, the psychologist and pacifist William James gave a speech in search of “the moral equivalent of war,” a phrase that has lived on indelibly ever since. “All the qualities of a man acquire dignity when he knows that the service of the collectivity that owns him needs him,” he noted, lamenting that war has functioned like no other human activity to motivate the “surrender of private interest” and spur “the supremest out of human nature.”

So, the pacifist wondered, what might be substituted for war that would still call nations toward likewise noble sacrifice—something that could build and heal, rather than kill and ruin? The charge has haunted us ever since. In 1977, President Jimmy Carter thought he had found one, and gave his own historic “moral equivalent of war” speech, asking America to wean itself off fossil fuels. Carter’s fellow citizens largely rejected his quest. A moral equivalent to war continued to elude us.

Until now. Enter the Covid-19 pandemic. Except now that an existential threat on par with war has come, America has refused the challenge—choosing for its battle cry: “Let us get back to business!”

Covid-19 has sucked the world into a vortex of interlocking crises that demand collective sacrifice to resolve. The world’s most powerful nation has revealed itself as tragically unequal to the challenge—unwilling to transcend private interest. From the deranged Republicans running the White House and the Senate to the penny-pinching Democrats running the House of Representatives, from ordinary folks who can’t be bothered to wear a mask to corporate titans scouring the horizon for profit-taking opportunities—it all marks the distillation of a national ideology: selfishness, über alles. As long as this creed unites us, no war, moral or otherwise, has ever—can ever—be won.



Capitalist societies have regularly reorganized themselves for collective sacrifice during national emergencies. Once upon a time, it happened all the time. The question is whether America’s embrace of individualist marketplace logic has become such a death grip that such reorganization is no longer possible.

Napoleon supposedly labeled England a “nation of shopkeepers” and, therefore, ripe for conquest. Englishmen, instead, rallied to enlist, and historians have credited the “total war” that followed the French invasion with the first forging of a true British national identity—a collectivity worth surrendering private interest for, even unto death. If England had proven merely a nation of shopkeepers, it might not exist.

One hundred forty years later, another tyrant learned a similar lesson. Shortly before Pearl Harbor, Adolf Hitler observed, “I don’t see much future for the Americans. It’s a decayed country.” His first reason was the predictable one: The United States was “half Judaized, and the other half Negrified,” he said. But his second one paralleled Napoleon’s remark about England: In America, “everything is built on the dollar.”

Hitler had another thing coming. I once spent a riveting afternoon working my way through the 1943 University of Illinois yearbook. Every club, team and university unit competed to one-up the others in sacrifice for the common good. At the time, meat, butter, coffee, tires and gasoline were all rationed. The production of private automobiles was banned. Industry surrendered basic direction to the government about what to produce and how, as determined by Director of the Office of Economic Stabilization James Byrnes—who had himself sacrificed a Supreme Court appointment to take the job.

There was, it is true, plenty of profiteering in the war industries. (One Democratic senator from Missouri, Harry Truman, turned himself into vice presidential timber by ruthlessly investigating it.) And the purity of sacrifice is complicated by the fact that war production ultimately enriched consumers and corporations enough to end the Depression.

But for the most part, sacrifice for the common good was everywhere—viral, you might say. Labor agreed to, and mostly honored, a no-strike pledge. The Revenue Act of 1942 doubled income taxes, with the system of automated payroll deductions beginning in 1943. Before the war, only 4 million Americans paid income tax at all; by its end, 42.8 million did—and were generally proud to do so. They sang along with a hit Irving Berlin song, “You see those bombers in the sky? Rockefeller helped build them and so did I. I paid my income tax today!”

America proved itself far more than a nation of shopkeepers, at least for the duration of that existential crisis. During our current one, our leaders think of themselves only as shopkeepers, and the nation as a mall—which need only “open up” to win the war.

Take a moment to again review that list of collective sacrifice during World War II—the rationing, the idea that industry would take orders from government, the paycheck deductions. Compare it to now.

Payroll taxes, for example. The president wants the opposite. “We’re not doing anything without a payroll tax cut,” Trump intoned in front of the Lincoln Memorial, rejecting the idea of more federal relief. In a follow-up tweet, he added the elimination of the capital gains tax to his wish list, along with new business tax deductions and lawsuit indemnification for businesses open during the pandemic.

Wartime-style industrial conversion? We all know the story: For months, governors and public health officials begged Trump to invoke the 1950 Defense Production Act to command industry to mass produce affordable medical supplies, such as ventilators. Finally, an actual opportunity to wrench the tools of a permanent war economy into service for its moral equivalent! But for the titans of industry, that wrenching would mean they would have to sacrifice—and set the dangerous precedent that their property was anything other than theirs, to use as they wished. Such a notion was to them inconceivable.

And what about rationing? The opposite, of course. In fact, Trump deployed the Defense Production Act to ensure the steady supply of an agricultural product people can live healthily without: meat. An investigation by liberal emergency preparedness website The Prepared found that “many large U.S. meat processing plants,” including some shut down after workers contracted Covid-19, “have sought and obtained permission from the Food and Drug Administration (FDA) to increase their line speed.” Outbreaks among line workers have continued, and at least 300 Department of Agriculture meat inspectors are unable to work because they have contracted Covid-19.

Instead of sacrificing business interests for the public good, a darker precedent has taken hold: Bosses taking every opportunity to display that their workers are theirs to sacrifice, to prove that no collectivity owns them. During World War II, to free up resources for the war effort, the government prevented the production of private automobiles. Now, the online automobile retailer Carvana writes its employees, “If you are not comfortable and opt not to return to your scheduled hours, we will consider you to have abandoned or resigned from your job.”

The market knows best, they say. In March, Trump pushed to circumvent FDA trials and allow the use of the drugs hydroxychloroquine and chloroquine as a coronavirus treatment, though there was little evidence they work. Public health experts rebelled against using the free market as a testing ground and risking people’s deaths, but Trump prevailed, and the federal government has purchased and distributed more than 30 million doses to states.

It’s not just Trump. Something very deep has changed in our nation since World War II. The madness has been stealing upon us for some time.

It once seemed obvious, for example, that a purely “free” market in medicine made no kind of sense: People shouldn’t have to wait for corpses to show up on the news to know they shouldn’t purchase a product. That common sense received legal codification in 1962 when President John F. Kennedy signed an amendment to the Federal Food, Drug and Cosmetic Act. Sponsored by Sen. Estes Kefauver (DTenn.), the law required all drugs be tested and certified as safe and effective by the FDA before they could be sold. In 1978, however, the second-place finisher in the last Republican presidential nominating contest, Ronald Reagan, argued such regulation was more sacrifice than a corporation ought to bear. Reagan complained in one of his daily radio commentaries that the Kefauver amendment had been the product of undue “hysteria” over birth defects caused by thalidomide and caused “a toboggan slide for the United States pharmaceutical industry.” The law ought to be repealed, Reagan said. Rep. Steve Symms (R-Idaho) sponsored a “medical freedom of choice bill” to do so, insisting, like our current president after a hydroxychloroquine binge, that doctors and patients, acting as individual consumers, “should have the freedom to decide which drug might be useful, which might be dangerous.”

Symms’ bill failed, but the attempt marked a bellwether of the coming elevation of commerce as the measure of all value. President Carter had just declared, in his 1978 State of the Union, “Government cannot solve our problems, it can’t set our goals, it cannot define our vision. Government cannot eliminate poverty or provide a bountiful economy or reduce inflation or save our cities or cure illiteracy or provide energy.” Two years later, Carter ran for reelection against Reagan by holding himself up as Reagan’s deregulationist equal: The party of FDR now believed, “We ought to get the government’s nose out of the private enterprise of this country. We’ve deregulated rail, deregulated trucking, deregulated airlines, deregulated financial institutions, working on communications, to make sure that we have a free enterprise system that’s competitive.”

That larger project, of writing public obligation out of business’s social contract with the people, was bipartisan. “Business is entitled to its decade, and I will try to help them get it,” the Democratic chair of the House Ways and Means Committee, Dan Rostenkowski, told a business association in 1981. By 2020, the surrender to market logic had advanced so far along that when the moral equivalent of war came, America’s arsenal to fight it proved quite nearly bare

Consider one of the major reasons that ventilators were in short supply to treat Covid-19 patients in America. In 2007, the Department of Health and Human Services—after the pandemic near-misses of SARS, MERS, the bird flu and the swine flu—commissioned the design of a new ventilator that would cost $3,000, instead of the going rate of $10,000. The project would address the ventilator shortage in the national stockpile. Unlike the 1940s, it was by then inconceivable that government might order industry to do so; only commie countries did that. Instead, the project was entrusted to the market.

At first, it worked out. A small, nimble firm specializing in ventilators, Newport, won the contract and had a working prototype by 2011. Then, however, the company was swallowed up by a giant, multinational, publicly traded medical device company with a now-ironic name: Covidien. “Government officials and executives at rival ventilator companies,” the New York Times reported, “said they suspected that Covidien had acquired Newport to prevent it from building a cheaper product that would undermine Covidien’s profits from its existing ventilator business.” Covidien wriggled out of the government contract. As of this writing, the company that replaced Covidien has produced a prototype—but not even one has shipped.

The Centers for Disease Control and Prevention should have anticipated this eventuality, for it is typical of how our radically deregulated system of capitalism now functions. If a company is publicly traded, like Covidien, its investors—including its own executives, paid in stock options— ruthlessly demand consistent quarterly profits. One big institutional investor can demand all companies in its portfolio steer clear of any project (like affordable ventilators for pandemics) that doesn’t realize profit within five years.

If a company is owned by a private equity firm, it’s even worse. Private equity firms borrow money to buy companies, then often pay off the loans with money sucked from the purchased company—sometimes intentionally driving them into bankruptcy. It all happens without any incentive whatsoever to see the purchased company succeed, because partners in private equity firms earn so much of their income from fees they receive regardless of what happens to their purchases. Often, private equity firms end up effectively restructuring (read: downsizing) entire industries, with no legal liability for the damage they do—because, in a neat legal shell game, the firms are “only” investors in the businesses.

No matter who owns the companies we rely on to make our society run, any practice that might shore up their resiliency in crisis is considered anathema—like building cash reserves for a rainy day (instead of, say, using excess cash to buy back their own stock, thereby boosting executive compensation while giving even a poorly operated company an artificial glow of health), or making employment anything other than contingent, or providing paid leave.

Or building flexibility into their operations.

We have all heard by now about the food companies destroying food, to the tune of 3.7 million gallons of milk a day and 750,000 eggs a week (at a single chicken processor). The major reason? According to Claire Kelloway of Washington Monthly, “Beginning in the 1980s, the federal government allowed more agribusinesses to merge and grow largely without restraint.” With that came the imperative to squeeze every possible profit-denuding “inefficiency” out of the food supply chain. It could easily have been prevented, had antitrust laws meant to keep any individual corporation from attaining just that kind of market power been adequately enforced in the 1980s, 1990s and aughts. Instead, producers were forced by their ravenous corporate customers to become hyperspecialized, with Big Ag conglomerates specifying everything from the (genetically engineered) seeds a farmer must use to the size of their hogs. Each link in the chain was tightly calibrated to fit a single niche in a vertically integrated system—such that, in one now-infamous case, eggs produced to be liquified for industrial use cannot possibly be sold in grocery stores without colossal expense. That tightening becomes a noose when the system is asked to convert to any goal other than profit maximization—like actually feeding people.

The Soviet-like rigidity in supply chains—all industrial supply chains, not just agricultural ones—happened because of investor demands. The reasons are many and complex, but it comes down to this: New Deal regulation sharply limited opportunities and incentives for financial speculation. After those laws were rolled back, companies that couldn’t ostentatiously prove they were squeezing out every last penny were in danger of losing the favor of their investors, whose greed now had no bounds. Speculators turned into dictators. The pandemic reveals an unintended tragic consequence: All that efficiency they demanded was purchased at the cost of resiliency. The results are everywhere to be seen.



Look at the problem of inventory. The author Max Brooks— who has become a respected real-world consultant on disaster resilience based on the expertise he developed writing realistic zombie fiction—has described how, after the Cold War, the Pentagon gave up its stockpiles of emergency equipment around the country, reasoning that the state National Guard units could, instead, just purchase equipment at big box retailers as needed. What the Pentagon discovered during Superstorm Sandy, however, was that such stores don’t have warehouses anymore: “So these huge stores need to turn over their stock every 24 hours,” Brooks explains. That’s how investors now demand it—with “just in time” delivery being profitable come, you might say, hell or high water.

Or come Covid-19, when the nation found itself woefully short on personal protective equipment (PPE). The PPE supply problem had already become evident, by midMarch, to a group of specialists in medical logistics at MIT called the Covid-19 Policy Alliance. Policy Alliance member Valerie Karplus recommended a coordinated system of airlifts to get supplies where they were needed, and offered MIT professors as a cadre of experts to devise and administer the plan, much how James Byrnes administered distribution during World War II.

Jared Kushner, the administration’s Covid-19 distribution czar, ran with the memo but tossed aside the suggestions on how to staff the project; Kushner recruited his investment world buddies and medical-industry execs instead. “True patriots,” Kushner called them. The result was Project Airbridge, a public-private partnership with six medical supply companies. It has delivered a fraction of the equipment promised. Meanwhile, a baffling and still opaque system saw cities and states securing supplies for themselves and then having them waylaid by federal officials, apparently redistributed to politically favored parties for the financial benefit of private interests.

The “true patriot,” these days, turns an existential crisis over to the free market. Consider the matter of developing a safe and effective test to determine who carries Covid-19 antibodies (and therefore might be immune). This test could determine whether the world returns to some semblance of normalcy or descends further into a hellscape. In April, the New York Times reported, the FDA “allowed about 90 companies, many based in China, to sell tests that have not gotten government vetting.” Hospitals and municipalities began deploying these products to decide whether it was safe to do things like keep firefighters on the job.

It proved a disaster. The ones purchased by Laredo, Texas, were found by public health officials to have a reliability of 20%, when the company claimed it was 93% to 97%. (The state stepped in to save the day, as ever in the case of catastrophic market failure: “A police investigation,” the Times noted, “led to a federal seizure of the tests.”) After the Times published its report, a study by independent researchers discovered only three of the 14 tests it tried could deliver consistent results, with some showing false positives 16% of the time.

Again, it’s not just Trump. It’s the system. When the profit motive faces off against human need, profit wins every time.

In his 1906 address, William James quoted fellow pacifist H.G. Wells: “When the contemporary man steps from the street, of clamorous insincere advertisement, push, adulteration, underselling and intermittent employment into the barrack-yard, he steps on to a higher social plane, into an atmosphere of service and cooperation and of infinitely more honorable emulations.” The vision, there, is that collectively committing to the public good can raise a person above everyday vanities and frivolities, pushing us toward a better society.

And here’s our president in May, who loves “freedom” as much as he does fried chicken: “The people of our country should think of themselves as warriors.” Trump made the statement just after sending workers as cannon fodder into the breach to pluck chickens on sped-up production lines, while stepping onto his own higher plane—Air Force One.

They’re warriors, those brave shopkeepers, forcing their employees to work or starve.

“We sent our young men during World War II over to Europe, out to the Pacific, knowing that many of them would not come home alive,” Chris Christie said in the beginning of May, because “what we were standing up for was the American way of life. In the very same way now, we have to stand up for the American way of life.” But for the parallel to hold true, he could follow the example of the many politicians who volunteered to fight in World War II. He could line up to pluck chickens himself.

Americans are being conscripted, but not for a war against Covid-19. Other governments have kept workers at home by paying 80% of their salaries from the public purse. This idea is a logical outgrowth of employment systems, like the one in Germany, that keep workers on payrolls as long as possible, independent of commerce’s ups and down. Denmark announced it will “freeze the economy in place”—recognizing that economies exist to serve people, and not the other way around.

Here, on the other hand, we moan about our supposedly disastrous “unemployment rate,” as if keeping people home in a pandemic was bad instead of good, as if it were impossible for human beings to derive their sustenance in any way other than “normal” during an emergency (while other nations deftly prove us wrong). And so workers are ordered back to work like livestock herded back into their pens. And White House toadies celebrate like characters in some forgotten George Orwell novel: “Our human capital stock is ready to go back to work,” said Kevin Hassett of Trump’s Council of Economic Advisers.

They say we have to do it “to save the economy.” But as social critic Douglas Rushkoff notes, “They’re not talking about the real economy of goods and services.” It’s the investment economy, which, it turns out, is humming along. In contrast to mistaken indications that business executives were selling shares of their companies, “the recent period is characterized by abnormally high purchases,” according to a paper by economists Renée Adams and Attila Balogh. If you believe Covid-19’s stakes are life and death, the government and its corporate henchmen are failing us. But if you believe the stakes are bulls and bears, we’re doing just fine.

So industry will keep leading the rest of us to the slaughter. What Hitler said roughly 70 years ago, that in America, everything is built on the dollar? Our lives depend on proving him wrong.