What The Coronavirus Teaches, And What Trump Won’t Learn, About A Free-Market Economy

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Republicans continue to block legislation to provide relief to tens of millions of Americans as well as the state and local governments that provide services and employment to them. Their hand-wringing, it seems, is rooted in the worry that providing relief, such as extending enhanced unemployment benefits, will eliminate any incentive, or coercion, for people to seek employment and return to work.

Yet, we know that for every job opening, there are roughly five people enduring unemployment.

So why do Republicans cling to their strange reasoning in the face of reality?

It’s hard to know exactly. But if it’s more than pure callousness and maliciousness toward the American people, we might do worse than suggest their stubbornness about passing a relief package rests in their hallmark antipathy to government-run anything and their bedrock commitment to the belief that a free market can solve and address all problems, that private industry, guided by the pursuit of private interests and the profit motive, leads to the most efficient and effective economy to meet human need.

Trump’s recent announcement of his intention to end the payroll tax, which funds Social Security and Medicare, is in line with this school thought, advocated by such free-market zealots as Milton Friedman and his predecessor F.A. Hayek, who viewed virtually any government intervention or socialization of the economy as leading us, to use the title of his famous book, on The Road to Serfdom.

The coronavirus, however, seems to provide a powerful counter-argument to this school of thought.

The free market seems in this situation to achieve outcomes hostile to the public good and to the needs and interests of Americans.  If the free market is supposed to offer the most effective and disinterested means of allocating resources effectively to meet need, it is failing abysmally.

First, let’s just consider how private industry worked cooperatively with the government with regard to CARES Act funding. They had no intention of addressing the needs of the people but only with lining their own pockets.

For example, from these relief funds millions, nay billions, of dollars are being distributed to the wealthiest among us who are doing just fine. Nicholas Kristoff reported in The New York Times that last relief package provided $135 billion dollars in “relief” for real estate developers, offering retroactive tax breaks for periods that preceded the coronavirus outbreak.  As Jason Easley has reported for PoliticusUsa.com, businesses connected to the families of Donald Trump and Jared Kushner have also received millions, as have businesses of families connected to Mitch McConnell.

It’s not at all clear how these companies pursuing their greedy private interests really helps us solve a public health crisis or meet the most urgent and desperate needs besetting Americans now.

We have to call bull where we see it.

A for-profit economy, rooted in the belief that the pursuit of private interests, free of government intervention, will inevitably serve the public good most efficiently, just isn’t borne out by what we are seeing.

New York Governor Andrew Cuomo has been a powerful spokesman for the virus’s position against this worship of a free-market economy. Consider how he spelled out the problem of the lack of hospital capacity to address the pandemic:

“You only have 53,000 hospital beds. You only have 3,000 ICU beds. Why? Because our health care system is basically a private system. They don’t build capacity that they don’t need. They don’t build extra ICU beds just in case. An intensive care bed is very expensive. They don’t build a wing of ICU beds that sit vacant for 10 years on the off-chance that there’s going to be a public health emergency and you’ll need the beds… so we don’t have them. We have the capacity that people use day-in and day-out. And that’s not just New York. That’s every state in the United States. You now have this influx, you can’t handle it.

You will have people on gurneys in hallways,” Cuomo told reporters. “That is what is going to happen now if we do nothing. That is what is going to happen now if we do nothing. And that, my friends, will be a tragedy.”

He diagnoses the problem as precisely one of the privatization of public health services, which means these services organize their operations from the economic standpoint of business, not the economic standpoint of meeting human need.

And what has he called for in a letter he wrote to President Trump? He called for Trump to send in the Army Corps of Engineers to build temporary medical facilities to meet the surge in patients needing treatment for the coronavirus.

He called for government intervention, for a public sector response, precisely because the private sector has failed abysmally; its so-called best business practices, in fact, forecast, inherently entail, the private sector’s failure to meet human need.

When it comes to food production in the U.S., we also see that in fact the operations of private industry greatly depend on the effectiveness of the government public sector.

 

Kansas Governor Laura Kelly’s plea to the White House early last April highlights this point.

According to reporting from The New York Times, “About a week after the first report of a Covid-19 case at a meatpacking plant in southwest Kansas in early April . . . Kelly, issued a pointed warning to President Trump: Without test kits to separate the well from the sick, a fast-moving outbreak could idle facilities that produce roughly one-quarter of the nation’s meat supply.”

Providing test kits really required a national coordinated effort, meaning one led by the federal government.

But as The New York Times reported:

“On top of all that, the administration has resisted a full-scale national mobilization, instead intervening to allocate scarce equipment on an ad hoc basis and leaving production bottlenecks and shortages largely to market forces. Governors, public health officials and hospital executives say they are still operating in a kind of Wild West economy that has left them scrambling — and competing with one another — to procure the equipment and other materials they need.”

This quote from Governor Kelly sums it up:

“You are using a free-market model in a public health emergency, and I’m not sure those two go together particularly well.”

As we see tens of millions out of work and unable to meet food, housing, and other basic needs, we have to question this free-market model.  Leaving people in desperate straits, the free-market model seems more clearly to be the road to serfdom.

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