We're already in a Great Depression
Opinion by
Jeffrey D. Sachs
Updated
1145 GMT (1945 HKT) May 18, 2020
Jeffrey D.
Sachs is a professor and director of the Center for Sustainable Development at
Columbia University. The opinions expressed in this commentary are those of the
author; view more opinion articles on CNN.
(CNN)Instead
of an imagined "tradeoff" between reviving the economy and
safeguarding health, President Donald Trump's policies are delivering both a
great depression and tens of thousands of deaths at the same time. That's
because a tradeoff between economy and health doesn't exist, except in Trump's
fantasy. Unless people are confident about their safety in the midst of the
pandemic, they will not resume normal life. By allowing a premature reopening,
which ensures that the epidemic will rage, Trump most likely has condemned
America to economic collapse.
The
fantasist promotes magical thinking, and perhaps even believes it himself.
Trump said that the virus wasn't a threat. He said that it would go away by
April. He said that it was fully under control. He said in March that we have
all of the testing we need.
The
epidemic is controllable when government is serious. Australia, China, Japan,
South Korea, New Zealand, and Taiwan, among others, all have kept deaths below
10 per million population, compared with 271 per million in the United States.
Those other countries implemented public health policies at national scale; the
US did not.
With US
reported Covid-19 deaths nearing 90,000 -- and almost certainly higher based on
a comparison of deaths this year and last year -- Trump now tries to discredit
the death count. In Trump's fantasy world, there are no deaths if they are not
reported.
Trump's
maneuverings also won't save the economy, which is in a free fall. States can
open now and thereby spread more disease and death. But again, economic fantasy
won't replace reality. Consumers will not suddenly start buying. Builders will
not suddenly build buildings when so many stand to be empty or underutilized.
Some of Trump's followers may head to crowded places -- and if so, many will
contract the virus -- but most Americans will not.
Of the
record 20.5 million jobs lost in April, most will not come back any time soon,
whether or not states declare their economies open. The continued spread of the
virus itself will block any meaningful rapid recovery. So too will deep
structural changes that will cause a significant, albeit unknowable, proportion
of today's job losses to be permanent.
Opening
America now is ludicrous
Here are
some of the jobs that are not returning: E-commerce will displace many
brick-and-mortar retail jobs. Big name retail chains are now going bankrupt
week after week. The result is that many retail jobs, down 2.1 million
comparing March and April 2020, will likely not return. Jobs created as a
result of online shopping won't equal those lost in brick and mortar stores.
Many
business firms will reorganize their workflows to allow for far more work from
home, and this will leave office complexes sparsely populated. Many companies
will downsize their space, meaning new commercial construction will remain
depressed for years to come.
New oil and
gas drilling has collapsed and will not recover to past levels given the
long-term glut in world oil markets and the collapse in oil and gas prices.
Travel and tourism will remain depressed as long as the epidemic is
uncontrolled, keeping down employment numbers in accommodations, leisure,
entertainment and restaurants
Trump's
remaining idea is to force companies to return home from China and rebuild
their supply chains at home. This is yet another fantasy. By intensifying the
attacks on China -- including new measures to cut off Chinese companies from
American semiconductor technology -- Trump will crush the growth prospects of
much of America's high-tech industry, whose business includes international
markets, including China's vast population. Trump's moves will invite Chinese
retaliation and hasten the day when China competes with the US in various
dimensions of semiconductor manufacturing and design, such as specialized chips
for artificial intelligence and 5G.
One obvious
area of retaliation will be for China to buy planes from Airbus instead of
Boeing. Even before the pandemic, Boeing was in a very deep crisis because of
its flagrant mismanagement of the 737 Max. Trump's failure to contain the
epidemic and his intensified attacks on China will deepen Boeing's woes. Boeing
stock fell 2 percent on May 15, the day after Trump's new anti-China measures,
and Boeing stock is down by more than 70 percent from the peak on March 1,
2019.
To recover
from Covid-19, let's build on US history of citizen-led service
To recover
from Covid-19, let's build on US history of citizen-led service
Trump will
try to save moribund companies, no doubt including his own family business. He
will try to save the oil and gas sector, though no banks will touch it. He will
prop up the failing companies of friends, cronies and campaign contributors. He
will lie, try to hide data, blame others, and produce a deepening disaster.
But there
are three true steps out of the new great depression.
First, and
most urgently, we must end the epidemic through the public health measures --
testing, tracing and quarantining -- that Trump has consistently neglected.
Second, we
must work with other countries, including China, to stop the epidemic
everywhere in the world so that trade and travel can safely resume, and so that
the millions of jobs dependent on trade, transport and tourism are at least
partly restored.
Third, we
must build new industrial and service sectors, not prop up the old and moribund
ones. Recovery will come not through oil and gas fracking, but through a boom
of US companies producing solar panels, wind turbines, advanced batteries,
advanced electric vehicles and the hardware and software of smart grids; combined
with a service industry boom based on new models of low-cost healthcare,
education and office work, that combines online and in-person service delivery.
By being
smart and fair, we could look forward to new high-tech industries, more shared
leisure time, shorter commutes, cleaner skies, universal access to affordable
healthcare and higher education and a guaranteed living wage for all workers.
For all of
this, we need a new administration and Congress and a new approach for our
nation. Until then, Trump's fantasy world is our nightmare. Hang tight. A
new dawn is coming.
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