PART 2A

Before I attempt part three of my speculations, there are a few more observations I want to make about what is happening right now.  I have no inside dope.  This is all reactions to what I see on the tube or read.

First of all, the unemployment figures are much worse than the topline numbers made public.  This is not at all suspicious, it is just a function of how the numbers are collected.  The Bureau of Labor Statistics gathers monthly unemployment estimates [this is how it used to be, back when I was studying these things; it may have changed] by surveying each month a carefully constructed sample consisting of 50,000 households.  Adult members of each household are asked whether they are working fulltime, part time, or are not working.  If not working, they are asked whether they have looked for work in the last month.  If the answer is yes, they are listed as unemployed.  If the answer is no, they are asked whether they have looked in the past two months [or maybe more, I do not recall.]  If the answer is no, they are listed as not in the labor force;  if yes, they are listed as discouraged workers.  [This last category was added by the BLS to capture the manifest fact that many people who would, in better times, be out looking for work, and are thus in some obvious sense unemployed, have just given up.  This is why the unemployed figure may actually go up as things pick up and discouraged workers go out looking for jobs, thereby joining the ranks of the unemployed.]

Obviously, it takes a little while for the Bureau to conduct each survey and assemble the results, so each month’s unemployed number is about two weeks out of date when it is released.  Everybody who deals with these numbers understands this, and some cable news commentators say as much, but the great big number on the screen is what everyone talks about.  Furthermore, also commented on, people who are out of work because of the pandemic are not going to go out and look for jobs when they have been told to stay home.  So things are way worse than they appear.

A second point, of possibly considerable importance when we try to get our hands around the somewhat longer term consequences of the virus-caused economic crash.  Traditionally, in an economic turndown, the men are laid off at the factories and mines and sit around drinking cheap beer until a call goes out to come back to work.  There will be some of that, but not nearly as much as in the old days.  Many still functioning businesses are discovering that they can function with fewer employees, many of whom can work from home.  Even after things pick up, the bosses may decide to continue with what was originally an ad hoc adjustment to reality, thereby saving considerable sums on business travel, office space, and so forth.  We may see another shakeout in the airline industry, for example.  I am reminded of the time – is it now forty years ago? – when a large number of companies with bloated middle management ranks slenderized, throwing a lot of previously well-paid types into the ranks of the unemployed.  Not only did they find that the firing of these semi-important people did not diminish their profits; it did not even diminish their gross receipts, which, if the senior executives believed the nonsense they learned in their college Econ courses, meant that those laid off employees had zero marginal productivity and so did all of the retained employees in the same niche in the company’s organizational chart, so that ALL the middle level managers should be paid zero.  Oh well, as they say, don’t get me started.

It is blindingly obvious that there is a rational response to this crisis, but it is not available in any systematic way in a capitalist economy.  [“Anonymous” is right that we must continue to use the term “capitalist” and not default to “the economy” as though our response to the virus is, like the virus itself, a matter of ideologically neutral science.]  To put it as simply as possible, keep essential services going with all the testing, contract tracing, and mitigation needed, pay those who provide those services decent wages, keep everyone else home as long as necessary, and have the government print and distribute the money necessary to enable everyone at home to buy the services being provided by the essential workers.  Sheer desperation has compelled the Congress to take half steps in this direction, but they will not follow through adequately, as we can already see.