Robert E. Wright starts with a classic pop culture reference:
The phrase “to jump the shark” at first referenced the point at which a television program started to lose its moorings, and its audience. Specifically, it referred to the episode of Happy Days (1974-84, ABC) when “the Fonz” (played by Henry Winkler, now better known for his role as an acting teacher on HBO’s Barry) jumped over a shark tank on water skis. Ratings for the show did stay up after the episode because there were only 3 or 4 channels available back then. Many fans, including this then eight-year-old, however, became mere viewers after that episode.
Today, though, the phrase has expanded to include any turning point eventually ending in disaster.
Lots of folks, from politicians to used car salesmen, are trying to calm fears associated with the COVID-19 pandemic by harkening back to America’s glorious past. “We” can get through this, they say, because “we” successfully traversed worse travails. The problem with that analysis is the “we” has changed. Yes, America suffered invasion and the destruction of the national capital in 1814, a long, bloody Civil War, and so forth. But the Americans who preserved or prevailed then are all long gone, as are many of the nation’s most important institutions.
Yes, some people who lived through the Great Depression and World War II are still alive but they are hardly the same people they once were. And right now they should all be indoors wearing gloves and N95s, or those gas masks that we all bought after 9-11, a terrorist attack that most of those alive today survived. But did we really do a good job responding to 9-11? We lost a lot of civil liberties and treasure fighting unnecessary wars and still suffer through ridiculous rituals at airports that protect no one.
America’s currency and debt are in a similar position to post-shark Happy Days. Nobody really likes it anymore but decent alternatives hardly abound. Solid currencies like the Swiss franc are too small, leaving only the currencies of a deeply divided Europe or authoritarian China as serious competitors.
The level of the national debt in absolute, per capita, and percentage of GDP terms, which can be tracked here, frightens many. In round figures, the national debt is $24 trillion, or $72,000 per person (man, woman, child) or $192,000 per taxpayer. That is 110 percent of GDP, the highest since the World War II era. And that is just the money borrowed to fund operations. Other liabilities, like Social Security and Medicare, are estimated at $77 trillion.
But the real problem is the loss of what Bill White called America’s Fiscal Constitution, a set of borrowing and budget rules first developed by Alexander Hamilton, America’s first Treasury Secretary. The idea was that the federal government should keep a lot of “dry powder” so that it could borrow to fight wars, purchase territory, and respond to shocks. To do that, it had to run budget surpluses when peace, easy taxes, and a tolerable administration of justice, and hence prosperity, prevailed. But basically since World War II, America has remained at war, some shooting, some cold, some necessary, but many, like the “wars” on drugs and poverty, concocted and counterproductive. Chronic deficits resulted.
Instead of imbibing the lessons of Richard Salsman’s The Political Economy of Public Debt, America’s policymakers and pundits ignore the national debt, or dismiss it with facile, and long since exploded, myths like “we owe it to ourselves” or “we can’t default on it because we can always print money to pay it.”
Before the COVID-19 pandemic, many held that America might muddle along for decades more, unloved but the only serious TV show left on air. But the only thing more disappointing than the irrational response of many American governments to the pandemic has been the way that Americans have acquiesced to the suspension of their civil and economic liberties on very flimsy grounds.
At 40:30 of this video, leading epidemiologist Knut Wittkowski puts it clearly: “I think, people in the United States … are more docile than they should be. People should talk with their politicians and ask them to explain” the rationale for business shutdowns, shelter-in-place orders, and other medieval responses to what he, and many other epidemiologists not on the government payroll, believe is just another annual “pandemic” that kills those with weak immune systems. The government’s response is actually making matters worse by slowing herd immunity.
As I recently argued elsewhere, America’s educational system has not prepared us for the government power grab because it does not create enough Emersonian independent thinkers or, frankly, even adult thinkers. Due to the extreme Left bias of higher education, many of America’s college graduates remain intellectually infantilized to the point that they can do little more than Tweet ignorant hate at any idea that does not accord with Progressive mantras.
While some older Democrats, like the aforementioned Bill White, and Peter Schuck, author of Why Government Fails So Often, are rational beings worthy of the attention and respect of all thinking beings, many young progressives appear completely rigid between the ears. They want less economic activity to “save the planet” but cannot cheer death or the pain that lockdowns inflict upon the poor. While fewer miles traveled by automobile must warm their hearts by presumably cooling the planet, the thought of all the extra hot water needed to wash hands a dozen times a day must sting a bit, along with the fact that plastic straws and grocery bags are far safer during pandemics than purportedly “green” alternatives.
Strangest of all have been progressive calls for their archenemy, President Trump, to behave in a more authoritarian manner! The statist assumption that “only government can save us” is so deeply ingrained on the Left and Right that rational calls to vitiate the economic crisis with voluntarism have not gained traction.
And don’t even get me started on the Right’s economic nationalism. Pure lunacy, like calls for AUTARKY (no international flows, like pre-Perry Japan!), now attracts serious attention. And why not? Didn’t we all “learn” in college that some French and German philosophers were right about there being no truth, just power and rhetoric? Strangely, though, the descendants of the apostles of postmodernism have no trouble seeing the truth in destroying the economic lives of most Americans because some unrealistic models claimed between 10,000 and 100 million people would otherwise die.
Is America about to jump the shark? Maybe it already has. Or maybe, unlike the Fonz, it won’t even clear the tank, the victim of the weight of its own inane policies. All that is clear is that somebody is going to have to pay for this fiasco, and that somebody is “us.”
Inequality is the price we pay for civilization. Property rights, inheritance customs and unequal gains from technological innovation have long divided us into haves and have-nots. Because stability favors such disparities, it usually took powerful shocks to flatten them. The collapse of states wiped out elites. The World Wars slashed returns on capital and imposed heavy-handed regulation and confiscatory taxation. Communist regimes equalized by force and fiat.
The greatest plagues also turned into levelers, by killing so many that labor became dear and land cheap. For a while, the rich became less rich and the poor less poor: Europe after the Black Death is the best-known example. Catastrophic pandemics joined systemic collapse, total war and transformative revolution — the four great horsemen of apocalyptic leveling.
Will the coronavirus crisis be such a leveler? It won’t act as a Malthusian check: mortality will mercifully be far too low to drive up wages. But progressives will seize on this crisis to push for redistributive reform, perhaps all the way to a Green New Deal. Failing that, misery and discontent might foment enough unrest to upend the status quo.
But not quite yet. Four great stabilizers stand in the way of democratic socialism or social collapse.
The most basic one is affluence: no society with a per capita GDP of more than a few thousand dollars has ever descended into breakdown or civil war. At some point, it seems, even the dispossessed have too much to lose, and well-endowed authorities are hard to dislodge.
The social safety net comes a close second. A century ago, shaken by the mobilizations and mutinies of World War One and the sudden threat of Bolshevism, European states ramped up investment in welfare schemes. America soon followed suit in order to survive the Great Depression. Revolution dropped off the menu. It turns out that welfare schemes don’t need to be Scandinavian-sized to keep the radicals at bay.
The torrent of seemingly free money created by central banks adds a third great stabilizer. By promising to bail out businesses and keep the unemployed afloat without reviving inflation, aggressive quantitative easing takes the shine off calls for punitive wealth taxes to foot the bill. This particular genie would seem hard to put back into the bottle: the Great Recession taught policymakers what was possible and at what low cost, just as the Great Depression had taught them what to avoid. We are now able to choose which bits of history to repeat.
Finally, science will act as a conservative force. This might seem odd, given our inclination to view it as a relentless driver of open-ended change. Yet technology is already widening existing inequalities, by separating the work-from-home crowd from exposed essential workers, and remotely taught students with reliable internet access from those without.
What is more, science has the potential to bail out the plutocracy even more reliably than any government or central bank could hope to do. The sooner labs and Big Pharma deliver effective treatments and vaccines, the sooner we can revert to some version of business as usual — with all the entrenched inequalities it entails. The odds are good. The SARS-CoV-2 genome was sequenced and made available just a month after the first reported cases in Wuhan. More than 1,000 drug trials are already underway. Nothing like this would have been possible even a decade ago.
This is not a coincidence. The great stabilizers have been creeping up on the great levelers. When pre-modern states fell, their elites were doomed. The United States is infinitely more resilient, and even if it wasn’t its richest would have other places to go. In the West, plausible revolutionary movements have gone the way of the dodo; and even if they hadn’t they would be blunted by mass affluence.
Nor are we in any meaningful way united against a shared threat. Notwithstanding the current surge in martial rhetoric — with Donald Trump posing as a ‘wartime president’ — our lived experiences are exactly the opposite of those fostered by total war. We are asked to stay home, not to venture out; we work less, not more; we are distancing, not thrown together in fox holes or armaments factories. The solidarity that shaped the Greatest Generation will remain a distant memory. And unlike in the aftermath of much more lethal pandemics, labor will be cheap: 30 million unemployment benefit claims will make sure of that. The four horsemen of leveling are set to continue their deep slumber.
In the past, the rich weathered a series of storms. The War of Independence was hard on wealthy loyalists. Slaveowners’ fortunes evaporated during the Civil War. The Great Depression delivered a double blow, first by wiping out investments and then through the ascent of unions and high taxes during the New Deal. When the Japanese bombed Pearl Harbor, capitalists were trapped, compelled to submit to unprecedented levels of regulation and taxation. Decades of relative equality followed.
Much has changed since. Deregulation, tax reform, financialization, globalization and automation have created potent means of both creating and concentrating wealth. As a result, the Great Recession failed to leave a lasting mark on the One Percent, and inequality stubbornly clung to the heights it had scaled. By acting in concert, the four great stabilizers promise more of the same.
The current crisis would have to spiral out of control to sap their strength — if, say the virus somehow foiled the efforts of the scientific community, or the economy slid into a drawn-out depression. If history is any guide, it would take a worst-case scenario for COVID-19 to bring about genuine leveling.