We’re all aware of the viral apocalypse called COVID-19, and the pandemic is also crashing the stock market. Naturally, our government is focusing on the latter.
President Donald Trump invoked the Defense Production Act, allowing him to prioritize the production and distribution of scarce materials such as masks. It’s unclear if he has - Trump since tweeted that he “signed” the act to “combat the Chinese virus [...] in a worst-case scenario in the future. Hopefully there will be no need.” The government regularly uses this power with military contractors, but holds back in public crises, which is quite revealing.
Five weeks before COVID-19 hit the US, the first diagnostic test kit was developed in Germany and subsequently approved by the World Health Organization. The United States refused the provided tests, instead offering $1,000,000,000 of taxpayers’ money for the rights to the test “only for the United States.” Thankfully, the Germans refused.
We know that the test works. Why it was rejected remains unanswered. Instead, the FDA had to create their own test - which was found to be faulty after distribution. This prompted corporations to privately produce tests for profit. These will take time to design and pass FDA inspection, and people die in the meantime.
Trump supported these market-based plans to create tests. This “free trade” strategy forces states to compete with each other for supplies, increasing profits, whereas a federal contract would save taxpayer money.
These approaches rely on capitalist ideology. The administration hopes profit will incentivize production of medical supplies such as diagnostic tests or biomedical masks. After all, as profit increases, the quantity supplied increases, and the price reaches an equilibrium. This “law of supply” is driven into the head of every first-year economics major.
Richard Wolff, an actual economist, disagrees. As he explains, the quantity supplied will not increase, because the medical-industrial complex is a state-sponsored oligopoly, similar to the pharmaceutical markets. Instead, firms will keep supply low, so as not to spoil their potential for price-gouging. These sky-high profits are then used to purchase Congress.
He said: “Ask them: How did nationalization of their businesses work out? Not too well. The concept of nationalizing our businesses is not a good concept.” Similarly, Trump’s top economic advisor said: “The virus is not going to sink the American economy. What is or could sink the American economy is the socialism coming from [Democrats].”
Of course, the economy was sinking before any action was taken. Ironically, socialist state Cuba leads in overseas humanitarian intervention, just as we bungle our own backyard.
Covid-19 hit workers the hardest, as our government focused on Wall Street. Trump has announced the Federal Reserve will “buy as much debt as needed.” (It’s not clear who decides how much is “needed.”) The working class feels the sudden change to our material conditions. Many workers with low wages or part-time gigs lost their job, and are the least likely to be able to afford rent, bills, and food without immediate pay.
If we want a world that can battle pandemics, a country where lives aren’t measured in dollars, or a university that remains open all semester, we need to seriously rethink our economic perspectives.
Leo Niehorster-Cook is a senior from Leawood studying philosophy and cognitive science.