Yesterday The Washington Post published my latest article, about how the reality of voter suppression has been completely swamped by Donald Trump’s fantasy of a vast international conspiracy to steal the 2020 presidential election.

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Image by John Mounsey

The basic idea is this: For years, the battle for American democracy has centered on Republican voter suppression campaigns (and related efforts such as gerrymandering). Republicans in state government dilute the vote of racial minorities, the poor, and other Democratic-leaning groups; Democrats fight back through community organizing and lawsuits. In a matter of weeks, however, President Trump has completely changed the conversation: while Republican voter suppression actually works, all debates about the electoral process boil down to (a) “The election was stolen!” or (b) “That’s ridiculous, the election was just fine.” Only Trump could create a situation in which Democrats are applauding people like Georgia Secretary of State Brad Raffensperger—who purged hundreds of thousands of people from the voter rolls just a year ago. …


Now that Joe Biden has won, I can tell you what I’ve been saying to my friends but promised not to say in public until the election was over: This was not the most important election of our lifetimes.

The most important election of our lifetimes was four years ago. And we lost.

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Photo by 58th Presidential Inaugural Committee

Of course it matters that Biden won or, more to the point, that Donald Trump lost. But fascism is not defeated so easily. I was less panicked than most of my friends about this year’s election for two reasons.

First, the real damage to democracy has already been done. …


One of Congress’s top priorities this week and next is to pass some kind of funding bill that will keep the federal government operating past December 11. There are basically two ways this could happen. Option A is that Congress could pass a continuing resolution that maintains funding at current levels until, say, the end of January-that is, when we’ll have a new Congress and a new administration. Option B is to pass an omnibus fiscal year 2021 spending bill that determines discretionary spending levels through September of next year when the federal government’s fiscal year ends.

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Photo by 1778011 from Pixabay

The Democratic leadership apparently is pushing for Option B because-well, probably because they think it’s the responsible thing to do and will make them look good with that tiny but all-important segment of voters who know the difference between a continuing resolution and a proper appropriations bill. But, in doing so, they could be throwing away one of the few levers that Democrats will have to actually accomplish anything during the next congressional term. …


I think it’s highly likely that the dust will clear eventually and that our economy will come back to life at some point in the next two or three years. I know there are certain disaster scenarios that can’t be ruled out, but I think they are unlikely. I’m not going to guess when things will return to a semblance of normal. Really, no one knows.

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Photo by Free-Photos from Pixabay

The question for now is: what will that economy look like?

A few things, I think, are clear. The economy will not grow back up to its trend line prior to the pandemic. This, for example, from the Center on Budget and Policy Priorities, is what happened after the financial crisis and Great…


By some measures, in the short term, COVID-19 will surely reduce inequality of wealth, and probably inequality of income as well. As a purely mechanical matter, the rich have a lot more money to lose when the stock market crashes and most sectors of the economy grind to a halt.

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Photo by Free-Photos from Pixabay

At the same time, however, this pandemic is throwing into stark relief how unequal the lives of Americans are today. Most of the upper-middle class and rich seem to fall into one of two categories. Those without children in the house trade suggestions on how to fill their time: virtual happy hours, virtual yoga, free streaming opera, binge TV-watching, etc. …


“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

—Adam Smith, The Wealth of Nations

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This is the most famous line from the most famous justification of market capitalism. Smith’s point is that it is individual self-interest that drives the economy. In the next paragraph, he goes on to describe how gains from trade explain the division of labor in a modern economy:

“The certainty of being able to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he may have occasion for, encourages every man to apply himself to a particular occupation, and to cultivate and bring to perfection whatever talent or genius he may possess for that particular species of business.”


It seems that social distancing is the primary strategy for slowing the propagation rate of COVID-19. That and widespread testing are the key tools for containing an outbreak, for reasons discussed repeatedly in the media.

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Photo by Hans Braxmeier from Pixabay

But does it work? Or, more to the point, how well do different degrees of social distancing work? How strict does it need to be, and how tightly does it need to be enforced? It seems to me that this is an important and at least theoretically answerable question.

Thanks to ubiquitous commercial and government surveillance, there are staggeringly comprehensive databases of exactly where people are at all times. Google has one, for example. Picture for yourself an enormous aerial picture of some metropolitan area with a dot for every person’s location; then picture those dots moving around as time passes. That’s more or less what is available. (Some people are blocking their location data, and some people don’t have p̶e̶r̶s̶o̶n̶a̶l̶ ̶s̶u̶r̶v̶e̶i̶l̶l̶a̶n̶c̶e̶ ̶d̶e̶v̶i̶c̶e̶s̶ smart phones. …


The airline industry is trying to hold up the federal government for $29 billion in grants and another $29 billion in loans. They threaten that if they don’t get the grants they will lay off employees, and that if they don’t get the loans they will use their remaining cash on dividends and stock buybacks.

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Photo by Júlia Orige from Pixabay

First of all, the second threat is staggering in its audacity. At current course and speed, the airlines will go bankrupt. When you are in financial distress, the last thing you should do is take your scarce cash and hand it to your shareholders. That meets at least the spirit, and perhaps the letter, of a fraudulent conveyance in bankruptcy law. …


Our business and household sectors are losing lots of money every day, and will continue to lose money for the foreseeable future. People no longer spend money at restaurants. Restaurant owners can no longer pay the rent or pay back their business loans. Restaurants fire their workers, who lose their paychecks and can no longer pay their rent, or their credit card bills, or their student debt. In an economic crisis like this, the overriding question is: who ultimately bears the losses?

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Photo by skeeze from Pixabay

We’ve been through this before. In the 2008 financial crisis, we applied the usual rules of capitalism-unless you were a large bank. Businesses failed and their owners (including shareholders, for corporations) were wiped out. Renters were evicted. Homeowners lost their houses. Investment funds that had bought mortgage-backed securities and collateralized debt obligations lost their money. Workers lost their pensions. Small banks were shut down by the FDIC. Big banks, however, got unlimited cheap credit from the Federal Reserve to stay afloat, thanks the the people we all know. …


PPE, as we now know, stands for Personal Protective Equipment, like face masks and gloves. Right now there isn’t enough of it, and that’s one of the constraints on being able to test people, which is one of the biggest problems we face.

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Photo by ehpien (CC BY-NC-ND 2.0)

The only point I want me make here is this:

This is how capitalism is supposed to work.

If you’re a for-profit healthcare provider-or any kind of provider that is trying to provide the most value, however defined, with limited resources- you are not going to stock up on enough PPE to handle every possible scenario you might face. This is what management consultants and business school professors have been saying for decades. PPE, like inventory, is a form of working capital. If you can reduce the amount of working capital you need, you can translate that dollar-for-dollar into cash for your shareholders-or, if you’re a non-profit, into clinics for poor people, salaries for your executives, or that next gorgeous building you’re going to put up. …

About

James Kwak

Books: Take Back Our Party, Economism, 13 Bankers, White House Burning. Professor, @UConnLaw. Chair, @southerncenter. Co-founder, @Guidewire_PandC.

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