See that chart above? It’s every bit as shocking as it looks. Let me explain.

Not so long ago, watching the way America’s government and leadership class failed to respond to Coronavirus, I wrote a little essay called America is Committing Economic Suicide. It’s just a few days later, and already, my friends, you can see vivid proof of what I was talking about.

Another week — and by now, 17 million people or so in total have filed unemployment claims. How big is that number? The US labour force is about 165 million people. So about 10% of the labour force has filed for unemployment. Ten percent.

Worse, all that has happened In just three weeks. That’s a rate of about 3.3 percent per week. At that rate, a quarter of the economy is unemployed in another three and a half weeks or so. What happens when a society reaches about 25% unemployment? Usually, it tips into chaos and upheaval. 40%? It implodes into autocracy.

That’s stark proof of a simple, grim fact. Coronavirus is a shock the likes of which modern economies have never seen. Never is a big word — but in this case, it’s true. Even wars and earthquakes don’t crater a whole labour force in weeks. We have no experience of such an event, really, in modern history.

And so — crucially — the old rulebook isn’t and wasn’t going to work, either. We are way outside the boundaries of yesterday’s placid normal now — and so playing by yesterday’s rules is a recipe for adding disaster to catastrophe. And yet…that’s exactly what the American government did.

The stimulus that was passed supported businesses and households for just one week. Furthermore, it was badly designed: so opaque, nobody really knew how to get their hands on what meagre funds were offered, full of conditions, which made getting funds hard. It should have been easy to be supported, instead it was hard, it should have been simple, instead it was complicated, it should have been straightforward for everyone — instead, everybody was left in a haze of confusion. The result of all that?

A massive loss of confidence — yet confidence is the key to staving off a depression, as Keynes discovered nearly a century ago. Hence, uncertain, unsure, afraid, businesses are laying off employees en masse. A tidal wave of people therefore filed for unemployment. And we are barely seeing the tip of this tidal wave. Why?

Because Coronavirus hasn’t even peaked yet. And already 10% of the labour force has filed for unemployment. What’s the final tally likely to be? 20%? 30% Those numbers are now well within the realm of possibility.

What do they really mean? As people lose their incomes, so they have to dip into their savings to survive. But the vast majority of Americans have no effective savings. So then people are forced to sell assets. The net result of a tidal wave of unemployment is that people are going to lose their incomes, then savings, then homes. Americans — many of them — will be left not just temporarily broke, but genuinely destitute over the long-term. What assets they’ve worked hard to build up will vanish seemingly overnight. (Knowing American capitalism, predatory lenders will probably swoop in, and offer them a lifeline in disguise — more of a noose, which is endless unpayable, debt at a crippling price.)

As people become permanently poorer, of course, they have less to spend, and a vicious cycle of contraction kicks off — bang! Depression. Until, perhaps, a new equilibrium is reached — one where there’s less work, fewer jobs, lower incomes, less opportunities, and massive reduction in human potential.

And that is what an economy is really about: not stocks, bonds, or corporate profits — but human potential. If you really want to think well about Coronavirus — or any other shock — that is how to do it. So let’s discuss it for a second.

Bang! Coronavirus will finish a job that began in earnest about two decades ago: the death of the American middle class. It began shrinking as a result of bad economic choices — and around the 2010s, for the first time in history, the American middle class became a minority. The likely long-term effect of Coronavirus is going to be to wipe out America’s middle class. Why?

Not just because people will lose their incomes, then, savings, then assets. But because a lot of the jobs that are being destroyed right now are probably not going to come back. There’s a fantasy that American economists have, which is that once this is over, business will suddenly bounce back. Having no real-world experience of how mega-capitalism’s boardrooms operate, they’re sorely mistaken.

Many of the small and medium sized businesses that are shuttering their doors right about now are probably gone for good. Their owners are going to have declare bankruptcy. Do you think they’re suddenly going to be able to start new businesses, the moment all this chaos ends? Of course not. Not only will they be trapped, liquidating assets, for months or years, struggling to make ends meet — a lot of them will simply throw in the towel, and decide that the risk of entrepreneurship is too great to take.

At the same time, megacorporations will have a field day once all this is over. They’ve got plenty of cash stockpiled — so much they don’t know what to do with. Here’s a golden opportunity for them to buy assets on the cheap. Whether they’re shops or plants or machinery and so on. Take, for example, the grim and weird trend of America’s housing market being controlled more and more every year by gigantic real-estate companies, who buy up homes during bad times, and lease them right back to the people who used to own them. How much better off are they going to be at the end of all this?

You can already see Coronavirus boosting megacapitalism’s fortunes, in fact. Amazon and Google don’t need bailouts — they’re going to rake it in. Healthcare stocks are booming — and so are financial ones. Why is that? All these corporations have effectively privatized public goods — and so in times of crisis, they make huge amounts of money, charging Americans through the nose for things that should be public. Amazon, for example, is effectively subsidized by the postal service — which, meanwhile, is “going broke.”

The trend of mega capitalists building huge, economy-controlling monopolies is likely to be sped along greatly by Coronavirus — as a huge wave of small and medium sized businesses go extinct. Think about it simply. Today, you’re probably spending the bulk of your household income at Amazon — a trend that was increasing, but then went thermonuclear. Meanwhile, because of Coronavirus, your local butcher, baker, and brewer are going bankrupt. See those two lines converging?

In the end, what will be left in the wreckage of such an economy is just a handful of mega corporations controlling most of the economy. That’s already true in America, yes. But it will be even truer tomorrow.

Such an economy isn’t really a functional one — it’s a Soviet one. Why? Just as in the Soviet Union, huge monopolies have no real incentive to provide goods or services of any real quality — or even at all. As a result, Americans, like Soviets before them, face persistent, chronic shortages: of medicine, of healthcare, of decent food, of money itself, even of drinkable water now in many places. That trend will accelerate too, as a result of Coronavirus — the economy will go from broken, to completely dysfunctional.

What kinds of jobs do today’s mega corporations offer? Yesterday, they offered the ones the American middle class was famous for (at least for a certain kind of white person with the right pedigree, I suppose.) Ones of lifelong stability, with generous benefits, and expansive guarantees. Today, that’s a cruel joke. Americans work like neoserfs — and that trend, too, is accelerating. Jobs — if you’re luck enough to even have one — come with no real benefits, healthcare that barely works, incomes that never really grow much, a retirement package on which you can never retire. But even those McJobs have been becoming, over the last decade or so, something even more dystopian: gigs.

So now legions of Americans who used to be something approaching middle class are effectively glorified servants to the rich: they deliver their food and care for their pets and clean their homes and drive them from the sleek office to the glamorous club. And they earn a pittance for doing so. This is the face of a downwardly mobile society — a once prosperous middle class, a once healthy working class, now reduced to being serfs to their technocapitalist overlords, doing their menial and household labour, their everyday chores.

Think of how Coronavirus is likely to accelerate that trend. There’s the guy who was brave enough to try and do something interesting and worthy with his life — maybe he went into steep debt, to open a little microbrewery. He was beginning to do OK, just — then the virus hit. The economy went into freefall. His order books dried up, as his customers — restaurants, bars, pubs — all closed. The government offered him barely any support, as a business owner, or as father and husband. In desperation, he began to deliver packages for Amazon and Instacart during the day, and Uber at night. Someone had to pay off all that debt, after all. He’d put a lot of it on his own credit cards — foolish, but such is the price of being an entrepreneur, sometimes.

It’s three months later. The virus has finally passed. But he’s still working gigs, to pay off that debt. His microbrewery went bankrupt — because a lot of his customers simply didn’t exist anymore. He tried to keep it going — but the debt became insurmountable. It felt like it was driving him to despair. He couldn’t sleep, eat, think. He panicked all the time. So he decided enough was enough. There he is now — once a proud entrepreneur, a creative person, a life fulfilling it’s potential. Today…he’s delivering stuff for Amazon and Instacart and chauffeuring for Uber. He doesn’t have a “job” — or a business — anymore, and probably never will.

See all that human potential going to waste? Now multiply it by all the lives which will be affected. Think of how much we will all lose. Whether it’s art or literature or science or just the simple creativity of my example above. Think of how many lives will be reduced to penury, unable to fulfill themselves and reach for their dreams now — forced by the coming depression into doing what they must to survive now, which, in this dystopian economy of rich and poor, of predator and prey, means something very muck like algorithmic neoserfdom — being essentially a servant to the super rich. Think of what that makes of a once healthy middle class and working class. What do we call whole social classes…of glorified servants? What do we all lose when they’re busy cleaning and driving and delivering — instead of perhaps discovering cures for the very diseases which afflict us?

Human possibility. Poof. Up in smoke. That is what has really happened now, as a result of the American government’s stunning failure to support it’s people or economy well enough — at all, really — during a global pandemic.

It’s a sad tale I’ve told. And yet it will be played out by the millions in the coming weeks. As average Americans who worked hard all their lives to just have the tiniest glimmer at their dreams find their lives suddenly wrecked and shattered. But it’s not their fault. It’s the fault of their government and leadership class. Who did far too little to help them — offering them just one week of support, during a crisis which lasted months.

What happens, by the way, when people finds their hopes dashed, and their dreams shattered? When they live lives of fresh — but seemingly now permanent — poverty? They turn to demagogues and strongmen, in rage, frustration, despair, anger, pain. The demagogues point their fingers at the powerless — and blame all the problems of an economy and a society on them. “They are the reason you’re poor!”, shout the strongmen. In America, “they” are Mexicans and Latinos and Jews, in Britain, Europeans, in India, Muslims, and so on across the world.

When societies go through shocks which are allowed, through negligence and folly and failure, to leave entire classes of people suddenly, permanently poorer — then democracy tends to die, too. Think of the Weimar Republic. Think of Soviet Russia becoming Putinist Russia. Think of…modern day America. Trumpism was a direct, predictable consequence of the implosion of the American middle class. Coronavirus is likely to accelerate America’s implosion into autocracy.

This is how an economy dies, my friends. And when an economy dies, a healthy, sane, civilized society tends to go with it. Is that America’s future? Is that already America’s present? I’ll leave that part to you to judge.

Umair

April 2020