This massive shift to hoarding cash by businesses and consumers will not get relief quick enough, or at all if workers in businesses cannot produce and are unemployed.
No amount of tax cutting will lead to re-investing in production, as demand dies off. Further tax cuts to the wealthy will simply be hoarded, re-invested, or not spent. For households and consumers, job-related tax relief will enable people to continue paying absolute necessities such as mortgages and car loans -- assuming people still have jobs. Without jobs, what money there is will be spent on trying to maintain current consumption, not increase it.
The same applies to interest rate reductions by the Federal Reserve. Why will businesses borrow even at a lower rate or zero percent interest to expand production, when consumers are buying less of their goods and services, or if they can't get parts from abroad with which to manufacture? And why would households borrow to take the risk to purchase a new auto or even a new home given the current direction of the economy? Cutting the costs of business investment is now the least important variable determining the outcome of investment. Expectations of a collapsing economy and thus falling profitability is what's driving investment now -- and the anxiety of being able to continue to pay for debt accumulated in recent years in order to avoid default and bankruptcy.
Broken System
The system is and has been broken since the American Industrial Revolution in that it favors a tiny minority of wealthy capital asset owners who control the corporations that produce goods and services. The system from which they benefit disproportionately denies the vast majority of Americans, the 99 percent, equal opportunity to become fully productive and earn income from productive capital asset ownership, the same source of productive power that makes a few people extremely wealthy.
When America's Industrial Revolution began and subsequent technological advances amplified the productive power of non-human capital, as it has to this day, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels. While historically, the expansion of productive technology had created jobs, today the trend is that the new jobs being created are increasingly being filled by a "machine" at inception, while the jobs remaining still rest in the crosshairs of technological development and application.
Americans are worried about their futures and how they will "make it" in the COVID-19 post-pandemic economy. People need to know that they can be productive and meet their own and their family's needs and wants. They need to know that they will be able to produce and earn consumption incomes. In our modern economy, that means progressing from dependency on wage system jobs and welfare support to access to ownership of the capital assets now and in the future that produce the goods and services needed and wanted.
A highly complex set of laws, exemptions and loopholes from laws and taxes, has been enacted by politicians who are beholden to those in the uppermost reaches of our financial system and business world. This corporatocracy controls vast amounts of land, resources and productive capital around the globe -- as well as the politicians they manipulate. Exemptions and loopholes allow the wealthy capital ownership class to protect and increase their wealth and significantly affect United States political and legislative processes. They have real power and real wealth. Ordinary citizens in the bottom 99.9 percent are largely not aware of these systems, do not understand how they work, are unlikely to participate in them, and have little likelihood of entering the top 0.5 percent, much less the top 0.1 percent. Moreover, those at the very top have no incentive whatsoever for revealing or changing the rules or educating others who are ignorant of this essentially invisible apparatus.
The system perpetuates gross economic inequality in that it allows some to benefit disproportionately to the rest of the population, particularly in how the money creation and banking systems are able to be manipulated by government to prop up Wall Street.
The situation is distressing and it will impact the economy for several years before "normalcy" returns and our future is secure and prosperous. "Normalcy" or living as if there never was a pandemic, will not happen until rapid testing and investigative contact tracing is widespread and there are treatments and a vaccine to halt the spread of COVID-19. Even then, how we function, as a society, will be much different and present new opportunities.
According to a report by a cross-disciplinary team of experts, the United States will need "20 million tests per day by mid-summer to fully re-mobilize the economy." "Broad and rapid access to testing is vital for disease monitoring, rapid public health response, and disease control," reads the report, assembled by Harvard University's Edmond J. Safra Center for Ethics. This is a massive challenge considering an average of 146,000 people per day have been tested for COVID-19 in the United States in April. But implementing such a plan would prevent cycles of opening the economy and shutting the economy down because those who are affected could be identified and their contact movement traced, and those identified quarantined and isolated. According to MIT researchers, should quarantine measures be relaxed or reversed prematurely an exponential explosion in the infected case count would result.
What To Do NOW
The coronavirus pandemic has uncovered the failings of our private insurance-based and employee benefit healthcare system and the need to guarantee healthcare to ALL our people -- EVERY child, woman, and man. A universal-coverage, not-for-profit health insurance system financed by taxes to provide essential healthcare to EVERY citizen is requisite and must be available to ALL people employed or unemployed, and every age. This is necessary to replace an extensively complicated network of medical institutions dominated by the profit-making interest of insurance and drug companies. Already, 87 million people living in the United States are uninsured or underinsured, with tens of millions more losing their current insurance due to job layoffs.
Decades ago, there were 1.5 million hospital beds and an extensive non-profit public hospital system. Before 1980, there were 100 million fewer citizens for those 1.5 million beds. Today there are 100 million more Americans, but only 925,000 hospital beds -- 500,000 fewer. The reduction was due to the shutdown of much of the non-profit public hospital system by narrowly owned, for-profit hospital chains, which bought the non-profits to reduce competition so they could raise prices. Now, as the current health crisis deepens, the emergency requires cots to be set up in auditoriums and college dorms, even parks, because hospitals are overwhelmed with COVID-19 patients.
Manufacture Medical Equipment And Supplies
The first priority is to start manufacturing the goods essential to survival, especially specialty healthcare equipment like protective N95 face masks, shields, gowns, gloves, lifesaving ventilators, hospital beds, infrared temperature measuring devices, medicines, ethanol disinfectants and other medical supplies. We must develop and install a national monitoring program to track the disease. Where necessary, we also must convert adaptable buildings into short-term hospitals and emergency shelter to ensure everyone is safely housed during this crisis. The homeless, survivors of domestic violence, people in prisons and college students quarantined off campus must be able to receive the shelter, the protection, the healthcare and the nutrition they need. Those individuals must be connected with social services to ensure nobody is left behind. Those providing frontline and essential services also must be protected and served.
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