A large part of our working population has been earning its living providing personal services to the rest of us. Restaurant workers have prepared and served millions of meals a day. Airline and hotel workers moved us around the country and provided places for us to stay, while rental car clerks and cleaners made local transportation available. The staffs of gyms gave us places to exercise, and massage therapists and acupuncturists helped us feel better. Hair and nail salons improved our appearance. Growing numbers of Uber and Lyft drivers moved us around urban areas. And even health care--one of our very largest industries--provided a steady stream of services that, under the pressure of the pandemic, have turned out to be quite optional. The same could even be said of much of the staffs of residential colleges and universities. Their employers, it turns out, can at least make a show of performing their truly critical functions without them. Because of COVID-19, which encourages us to avoid close contact with strangers--and particularly with strangers who have a lot of close contact with other strangers--millions of these jobs have at least temporarily ceased to exist. With or without formal restrictions, many of them, I suspect, will be very slow to come back. People simply will not indulge themselves in luxuries at the risk of a serious or even fatal illness--especially the elderly, who in our society are such a big part of the market for such luxuries. Stories are already appearing in the press blaming the well-off for the failure of the economy to bounce back, but their failure to spend is not really their fault. My own bank account has grown in the last few months because I can't spend much money on restaurants, movies, or, most important of all, travel. Many friends report the same.
All this shows, I think, that we have, in a very real sense, a trickle-down economy. We need a well-off class of people (and corporations) to finance the restaurants, travel, and so on that keep so many people employed. When the better-off cut back, others suffer. This would not have been the case in a largely agricultural society, clearly, and even in an industrial one, a cutback in production hurt the ownership and managerial class as well as the workers.
What is to be done? In the long run, one might conclude, we need better health care for all, and a much better public health system, to reduce vulnerability to disease and make it possible to respond more quickly and effectively to new epidemics. This is quite achievable. The US now has suffered 387 COVID-19 deaths per million people; Germany, which is more urban and therefore more intrinsically vulnerable, has suffered 108. Our economy depends on our ability to interact without fear to an extent that we had not realized. In the short run, we may need drastic measures to allow our suddenly huge unemployed population to live. It would make sense to me for a substantial portion of my surplus income to go into an emergency tax, thence to be distributed as long-term unemployment benefits while the economy recovers. Universal Basic Income sounded like a fringe idea just a few months ago; it looks more like a necessity now.
The stock market, meanwhile, has recovered in large part from its initial disastrous fall, despite one of the most spectacular increases in unemployment in US history. That confirms something I've been thinking for some years now: our financial establishment, the guardians of the largest part of our economy, regards the financial crisis of 2008 and its aftermath as a triumph. They have learned how to ope with any grave shock to asset prices, whether caused by trillions of dollars in bad investments (as in the 2000s) or by a sudden, drastic fall in output (now.) In either case the Fed can simply pump enough trillions of dollars in the markets to keep them up. Only time will tell whether this is a workable long term strategy, or a new kind of macroeconomic Ponzi scheme that carries new and even greater dangers with it. I don't know.