Opinion

The left refights the financial crisis

The economy is crashing from government intervention — and the left is blaming capitalism

The most sudden and sharpest economic collapse in American history was preceded by perhaps the greatest government failure. The coronavirus pandemic is no shockingly unexpected black swan, not after multiple high-profile viral outbreaks over the past two decades. Not after myriad studies and simulations, both from government and nonprofits. Not after specific warnings from past U.S. presidents. And yet here we all are, quarantined at home, either binging on golden-age television or studying YouTube videos on how to make masks from dish towels and underwear. Then there are the nearly 30,000 dead and counting.

So, capitalism, what do you have to say for yourself? Basically that's the message from left-wing critics who see the terrible economic and human carnage of the past three months as confirmation that they were right all along about the inadequacy of business and markets. They said that "capitalism kills" before the pandemic, and now they're saying it's killing ever harder. Socialist magazine Jacobin warns that "capitalism will be responsible for many" of the fatalities in one of "worst mass deaths in human history."

Politicians on the left aren't quite that extreme or explicit. But some are taking a victory lap of sorts. Rep. Alexandria Ocasio-Cortez (D-N.Y.), for example, tweeted a screen grab of a CNBC chyron, "More Than 16M Americans Have Lost Jobs In 3 Weeks," along with her own hot-take analysis: "When late-stage capitalism takes a selfie." She seems to be forgetting that even the Nordic social democracies of Scandinavia that she claims to greatly admire are also facing mini-depressions and spiking unemployment.

What really seems to bug some on the left, maybe even more than the job losses, are the government bailouts. All that taxpayer dough going to struggling corporations rather than, say, a massive debt jubilee for students or Medicare-for-all. "DealBook," the New York Times business newsletter, devoted much of a recent issue to a preachy essay on "stakeholder" capitalism by law professor Dorthy Lund and Leo Strine Jr., former chief justice of the Delaware Supreme Court and long-time critic of U.S. corporate governance and "short-termism." As they wrote, "It is more important than ever to understand the connection between the poor policy choices we have made and the reasons for yet another enormous corporate bailout." If only Washington hadn't allowed so much corporate cash to be spent on stock buybacks and dividends for investors.

Or maybe try this alternative storyline: The economy has suddenly stopped because it is under a quarantine — partially from consumer fear, partially from government edict. And Corporate America needs a government cash and credit lifeline because companies didn't do what no one ever recommended they do: Stockpile an Olympus Mons of cash just in case there was a global pandemic whose economic impact was exacerbated by bad government. Remember, all those buyback haters wanted companies to spend more money — on both workers and machines — not sock billions away in some ginormous rainy-day fund.

As much as anti-capitalists would love to frame this economic collapse as some sort of replay of the financial crisis from a decade ago, the current shock is clearly something totally different. Yet they seem intent on refighting the last war, one which they lost. The banks weren't nationalized back in 2009. Wall Street executives weren't all frog-marched into federal court. The worst economic downturn since the Great Depression didn't usher in a New New Deal or a leap into full-scale social democracy. And now they want a second bite at the apple.

But the story of the past few months is one of government incompetence, not corporate recklessness. After all, it was the FDA that enforced regulations making it tougher for hospitals, private clinics, and companies to deploy diagnostic tests. Where testing has been most successful, it's been where government has effectively mobilized its private sector. Indeed, The Wall Street Journal reports that dozens of companies are now finally "developing tests that indicate whether someone has had — and is likely immune to — the coronavirus." Business is also mobilizing to make ventilators and protective gear.

Also, just look how reducing the role of government has eliminated key health-care bottlenecks, such as multiple states having dramatically shortened or gotten rid of licensing processes for health workers. Washington, for instance, now is allowing medical professionals to work there if they're licensed in a different state. And a big reason that small businesses are having trouble accessing a new federal forgivable loan program is that it's being run through the Small Business Administration rather than directly through banks.

One would hope the left would be learning lessons in humility about what government is capable of. Instead, they dream of giving it more power and responsibility. "Nationalize everything," tweeted (and since deleted) Marissa Barrera, a health policy adviser to Bernie Sanders. "I don't even care what it is … y'all lost your capitalist privileges." But government already took away those "privileges" with a mandated economic shutdown. And it's nearly time to give them back.

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