While theres widespread agreement that we need an immediate, massive stimulus and targeted economic supports to deal with the economic collapse caused by the coronavirus, theyre clearly not enough. We also urgently need to think long-termboth about the all-too-predictable things that got us into this crisis, and how we can refashion our economy and society as we eventually emerge.
Guiding our own thinking is a basic public-health principle that should have long been our standard for all economic and social policy: We protect ourselves when we protect others. We are being asked right now to limit contact, to work remotely, and to do this mostly to shield those who are most vulnerable. We are being asked to dig deep into government coffers and bear the future burden of debt so that we can bring quick relief for those often left at the margins. And we are asking businesses to step up (or forcing them to step up) to their responsibilities and adjust schedules, offer paid sick leave, and understand family demands.
But why is this good for a crisis and not for daily life? While we should stand together by staying physically apart in this time of pandemic, we need to give up the sort of social distance that has allowed so many to ignore homelessness, immigration uncertainty, and rural poverty. We need to come out of this troubling moment with a deeper commitment to each other. We need to realize that an ethos of mutual caring and support not only leads to better health outcomes, but also helps to generate a more vibrant and resilient society.
We need a new solidarity economics.
Our lack of social solidarity has been a key contributor to our vulnerability to the coronavirus outbreak.
Unprecedented levels of inequality have left large numbers of Americans unprepared for an emergency, with nearly half of the U.S. population unable to handle just a $400 emergency expense. That inequality has also distorted our health care system, where we can provide world-class end-of-life care to the wealthy, but have underinvested in the basic infrastructure of our public-health system, leaving us dangerously unprepared for massive testing and waves of hospitalization.
Partly driving that inequality and partly resulting from it has been a low level of inclusion. Long before we were told to practice physical distance, we were already practicing an acute form of social distance: Increasingly, we have been sorted by income, race, and politics. It has become easy for some groups to ignore homelessness or incarceration or economic despair, seeing those as issues facing others. And that hurts all of usfor example, research shows that when there is a rise in the racial generation gap (the difference between the racial composition of the old and the young), public investment in education falls. That damages the economy as a whole.
Exacerbating the gaps between groups has been a problem with information. The lack of accountability of our social media systems, driven by the drive for super profits in winner-take-all markets, has contributed to the proliferation of misinformation and conflicting advice. Fake news crosses the ideological spectrumno, Donald Trump does not actually own stock in a company the Centers for Disease Control uses for COVID-19 tests, nor did U.S. House Speaker Nancy Pelosi hold back coronavirus funding to run negative ads about Republicans, both popularly shared stories. But profiteering from political and social polarizationthe basic business model of Fox Newshas been allowed to take deep root.
Not entirely new but certainly pushed along by the factors above has been a miserly commitment to social insurance. We have looked the other way as businesses expanded gig jobs with few if any benefits. We have settled for a limited social safety net that seems more aimed at saving dollars than saving lives. As a result, we have 28 million people without health insurance, and 44 million more with inadequate health insurance that imposes high deductibles and co-pays, preventing people from getting the treatment they need. With no mandated policies for paid sick leave, millions of people continue to have to work while ill, disproportionately including many workers in our restaurants and grocery stores, which contributes to the rapid spread of the coronavirus.
And while it may seem odd to say about an economy that has spawned Google, Facebook, and Amazon, we have a serious problem with innovation. We spend billions on speeding up the delivery of consumer goods but have failed to mount the infrastructure needed to solve the problem of homelessness. We are developing medicine to treat diseases of the wealthy, but neglect research on infectious diseases that kill millions in poor countries of the global South. We are forging ahead with the development of high-end electric vehicles even as we continue to allow environmental hazards to wreak havoc on the health of marginalized communities.
In short, just as Hurricane Katrina revealed the underlying inequities and vulnerabilities baked into the economic, social, and physical landscape of New Orleans, the COVID-19 crisis is shining a light on deeply rooted problems in America. Moving forward will require not just emergency actions but attention to and alignment with efforts to fundamentally restructure how we build and sustain our economy.
We offered the starting frame for solidarity economics in our 2018 publication From Resistance to Renewal: A 12-Step Program for Innovation and Inclusion in the California Economy. There we pointed to a range of policy solutions that seem almost prescient today: Among them were universal basic income funded by a technology dividend, increased investment in basic science, expansion and improvement of the caring economy, full immigrant integration to bring people out of the shadows, rapid de-incarceration and re-entry of the formerly incarcerated, universal health insurance and portable benefits, social-housing programs to ensure long-term affordability, industry-wide wage boards to coordinate labor and business, and realigned tax systems that were both more progressive and more stable.
Just as important as the policy package were our philosophical starting points. We had three central pillars to our thinking.
The first was that the standard economic models of human behavior were outdated. The general assumption by most economists has been that people act purely (or at least largely) out of self-interest. For conservatives, the good news is that the market will coordinate all that selfishness to a blissful outcome, and so limited government is the best recipe. (Hows that working for you today?) On the left, there has been a corresponding take, in reaction to the dominance of laissez-faire. It has featured a strong belief that the state must act to constrain the worst instances of bad behavior and corral the economy into serving the common good.
But as has become evident in this and other crises, people also act out of impulses of solidarity with one another. The challenge is that we have structured our economic and political systems to either reward or tame self-interest rather than to promote our connection with one another. We will obviously need enforcement for people to stay home, but the differences in containment by countries in this crisisChina and South Korea versus Italy and the U.S.have resulted not just from such factors as the strength of government and the social safety net, but also from the balance that different societies strike between communitarian and individualistic values.
The second pillar of our thinking actually flows from the first: The old canard that inequality is perhaps politically unpopular but economically necessary is just thata canard. In fact, a wide range of research studiesincluding from such unexpected sources such as the Cleveland Federal Reserve and the International Monetary Fundhave shown that high levels of income disparities, racial segregation, and social fragmentation actually tend to limit the sustainability of growth in income and jobs. It turns out that mutuality matters.
We have, of course, been practicing just the opposite. Weve had a dog-eat-dog economic system in which short-term thinking dominates and venture capital is too often vulture capital. When societies and regions invest in all their members, by contrast, basic productivity rises. When there are trusting relations between economic and social actors, consensus on how to grow the economy increases. When businesses treat their employees, customers, and suppliers with dignity and respect, profits are stable and consistent. And as we now know from the principle of public health, when we protect the most vulnerable, we protect everyone.
The third pillar of our thinking was that the purpose of our economy is not just to generate GDP. Prosperity mattersbut so do security and community. Indeed, that was the secret of getting out of the Great Depression: Keynesian demand management to drive growth; the extension of a sense and the reality of security through, well, Social Security, unemployment insurance, and, eventually, the adoption of employer-based benefits like health insurance; and the reconnection of disparate parts of the nation through investments like the Tennessee Valley Authority.
We need that sort of triadprosperity, security, and communityin what will amount to this generations version of economic catastrophe and New Deal response. That response needs to be altered to fit our times. Growth can no longer come at the cost of the environment. The safety netas is evident from this crisisneeds to be universal and not employer-based, especially given the changing nature of work. And while the New Deal excluded African Americans and other people of color from a range of protections, partly to secure the support of Southern Democrats, this time we must ensure that community means all of us.
We are facing an immediate need to think long-term. In the same way that we need to flatten the contagion curve by spreading out the impact of the coronavirus, we also need to flatten the economic curve, linking short-term interventions with longer-term programs that provide security for families and community, strengthen connections between people and places, and grow employment and the economy.
To do this, policy needs to be brought together under another three-part frame: Lift the bottom, grow the middle, and tame the top.
For lifting the bottom, we need to provide immediate assistance to the most vulnerable among us, while using those interventions to build support for longer-term solutions. In the field of health, for example, we need now to provide a guarantee that everyone, regardless of income, availability of insurance, or immigration status, will be fully covered for the costs of testing and treatment for COVID-19, while using this to build the case for universal health insurance. We need targeted interventions for those most vulnerablepeople with disabilities, seniors, those with chronic illness, the poor, the homeless, and those incarceratedto build back the social safety net ravaged by Democrats and Republicans alike. Moreover, we should devise programs that include the undocumented and stress the public-health risks that have resulted from a broken immigration system that forces so many families away from needed services and into the shadows.
We should also now be providing paid sick days for everyone, including home health care providers, food-chain workers, and delivery drivers, who are providing essential services in our crisis, and are also highly vulnerable to being infected and further spreading the virus. But we should just as urgently stress that paid sick days and paid family leave be made permanent. Cash payments now are critical for people in need, as leaders across the political spectrum apparently realize. But rather than one- or two-time payments, we can and should guarantee a minimum basic income to all in need through the end of the economic crisis. That, in turn, can help us better understand the long-term benefits of some form of universal-income guarantee. Housing for the homeless, eviction moratoriums, and rent freezes are also needed now and can become the basis longer-term for much-needed rent stabilization and social-housing policies.
We need to think, too, about all parts of the working classfor example, those who work in what we call the caring economy. The coronavirus has made clear that those caregivers taking care of the most vulnerable are some of the most vulnerable themselves. What if we recognized and invested in them, providing training and better access to telemedical care and advice, and raising professional standards and wages. Wed improve our health care provision, reduce our vulnerability to future disease outbreaks (including simply the seasonal flu), and grow middle-wage jobs.
Or what if we devoted serious attention to the potentials of remote education and lifelong learning? The coronavirus crisis has made clear how not to develop remote-education opportunities, throwing teachers and professors immediately into having to run classes online with few resources, training, or curriculum support. But if done properly, remote education can play a critical role in making lifelong learning accessible to working people. As a percentage of GDP, we spend the lowest on adult workforce education out of all but two OECD countriesMexico and Chile. Most European countries spend two to five times as much as we do; Denmark spends nearly ten times as much. Investing resources here could both help our immediate education crisis and expand our middle class long-term.
Finally, we also need to tame the top. In the short term, that means ensuring that any public benefits to major corporations are conditioned on their maintaining employment levels; these should be in the form of loans, not grants, and should eliminate buybacks as an option for any company receiving assistance. A repeat of the financial crisis bailout is neither viable not desirable. Any stimulus legislation needs to prioritize employees, not profitsnot just now but in the long run.
Taming the top also means ensuring that the American public actually benefits from our nearly $700 million collective investment in coronavirus research that constitutes the basic science for developing a vaccineand that the results of such research be guided by policies of global solidarity and public health, rather than narrow nationalism and profiteering, which are already beginning to raise their ugly heads. In the longer term, it means restoring reasonable tax rates for our top-income earners, which were at 70 percent at the height of American prosperity in the 1950s and have now dropped so low that the top 400 income earners pay a lower tax rate than anyone else.
Ultimately, what a solidarity economics framework reminds us is that caring for others is not just the morally right thing to do. It both reflects our better angels and provides better outcomes for society at large. Whats true in a crisis is also true in the long haul: A deep commitment to mutuality and the common good is the right thing to do for both public and economic health.
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