What’s Next? You Probably Aren’t Going to Like It

Former GOP Delegate Chris Saxman penned an Op-Ed for Bearing Drift last week looking at what the post-COVID-19 United States might look like. His points were well-taken regarding how the emergency measures that we are using today, such as online learning or teleschooling as I like to call it, consumer shopping, and health care screening will become the new normal.  But I fear that his summation that all this change will eventually become accepted and lead to a new decade of “greatness” is just a tad bit optimistic.

The future is out there, but it is going to be far from great, especially if you are a free market fiscal conservative, something that is now as nearly extinct as a Rockefeller Republican and a Red Dog Democrat. The Federal government, after considerable bickering in Congress over corporate welfare versus workers’ rights, has passed an economic stimulus package that will cost an estimated $2 trillion. In one fell swoop our elected representatives have increased the national debt by almost 10 percent in less than ten days.

This is just the first of several stimulus packages to come. To put that GBN (great big number) into context, the last time the national debt increased 10 percent it took three years (2009-2011) and less than $1 trillion in Federal relief during the Great Recession. Put another way, economists like to express the national debt as a ratio of debt-to-GDP (Gross Domestic Product) which more accurately portrays the ability to not just service the debt but to amortize it.

When we increased the national debt by 10 percent during the Great Recession, we increased the debt ratio from 68 percent of GDP to 90 percent.  Today the debt ratio is 108 percent and the final calculation of the debt ratio next year will include the most dramatic drop in GDP, and subsequent loss of government revenue, since the Great Depression of the 1930s. With such a budget deficit for 2020, a debt ratio of 125 percent or higher by early next year is not just possible but very likely.

How will we pay for this? We can’t, and the changes that we are likely to see with the new normal is going to exacerbate the problem beyond anything that we could have foreseen just months ago.

The new normal, the unavoidable changes that this pandemic will generate, will dominate our public policy and political discourse for the next decade, and it will be anything but great. Consider some of the fallouts we have already seen in just three months (or 30 days in Trump Time).

  • The vulnerability of the lower middle class and the working poor. Far too many people in our United States are living from paycheck-to-paycheck with no savings or rainy-day reserves. Almost as many are living below the poverty line with an even more precarious financial situation. Few or none of these workers are receiving a living wage, much less earning sick leave, paid time off (PTO), or paid health care. That was why the only true bipartisan provision of the first (first of many, as I said) stimulus bills included a somewhat means-tested cash payout of $1,200 per taxpayer. These members of our society who suffered the greatest and most immediate impact of the pandemic are crucial to our economy, both as key workers in the service and hospitality industries and as consumers of everything from rental property to telecommunications and groceries. Over the next decade we will see enormous political pressure for not just a higher minimum wage but a living wage, one that includes sick leave and health insurance, PTO, and retirement benefits. The now-venerable 401k-type retirement plans, I predict, will not be part of the new normal. Large employers (say, 500 employees or more) will be compelled by the government to return to defined benefit pension plans. All of this will come at the expense of dramatically increased costs of consumer goods and services, higher taxes, and a much larger Federal bureaucracy to implement and regulate it all.  Say good-bye to smaller government, not that we were ever really headed in that direction anyway.
  • The compelling case for universal health care. Whether we surrender to single-payer, government operated health care (a.k.a. socialized medicine) or choose an enlargement of the current hybrid of private health insurance along with government Medicaid/Medicare, if we do suffer between 100,000 and 240,000 American deaths during this pandemic we will never withstand the demands and political pressure for universal health care. Resistance to it will result in social unrest that will make the draft riots during the Civil War look tame by comparison. It will give new meaning to the term “expensive.” If you thought that the proverbial $8 aspirin was bad, wait until you see what Medicare For All is going to cost. Of course, we could put the costs on all those big employers and Elizabeth Warren’s Wall Street billionaires who own those companies. But that would decrease their profits, lowing their contributions to Federal, state, and local revenues, and decrement their dividends which determines the value of your 401K retirement plan. And it would also exponentially increase the costs of consumer goods and services. TANSTAAFL.
  • Higher education can and will be more affordable to those who want it, but we will all pay for it. There are tenured university professors who have sworn for years, if not decades, that they would never accept a higher learning model whose foundation was based on distance learning, teleconferencing, or online tutorials. Today, these same neo-Luddites are eagerly embracing the virtual classroom model and it is easy to understand why. Instead of being furloughed when campuses shut down for social distancing, they are still enjoying full employment from the comforts of their home offices. That will be part of the new normal because it will cost individual students far less than the traditional campus model. As we used to say in the Defense business, electrons are a lot cheaper than atoms, and an Internet connection to a smart workstation costs a tiny fraction of building and maintaining a campus with classroom and office buildings, residence halls, and the entire brick and mortar infrastructure of a modern university. However, some costs are fixed and unavoidable, such as salaries for administrators, faculty and staff, curriculum and course development and production costs, and a myriad of other support services such as constantly updating online learning technologies necessary for sustainment of a higher learning environment.  On the other hand, incidental activities of a brick and mortar university are unquestionably a profit center that helps offset the actual expense of higher education, often in the tens of millions of dollars per year. These are activities such as hosting academic conferences, bringing in visiting students (esp. foreign students) for special summer courses and symposia, hosting the influx of summer interns to the area by providing for-profit housing and boarding, and numerous other things we don’t normally think about in conjunction with the bottom line of operating a college or university. College will be cheaper for students, but the new university business model would be unrecognizable today. Like public universities now, the new university model will require government subsidies or private, non-profit universities will either become the exclusive province of the privileged wealthy or cease to exist at all.

These are just a sample of how the post-pandemic new normal could affect us all. It almost sounds like the pandering, grandiose, pie-in-the-sky campaign promises of Bernie Sanders and Elizabeth Warren are going to come about. They might, but not because our public will in this democratic republic desires it, but because the new normal is going to make it inevitable. And this is just a sample. Will social distancing result in a more germophobic society? How would that affect daily staples such as air travel, carpooling, sports events, and the entertainment industry? Motion picture theaters, for example, have been slowly dying for years. Will this pandemic experience make them as obsolete as the telegraph?

In closing, I want to emphasize that I am not necessarily advocating a living wage with full benefits for all, free health care for all, free higher education, or anything else on the menu of the modern Utopians. I’m not advocating tornados or hurricanes, either.  But they are coming.

Now, don’t think that this is the pessimistic view that I am presenting. It is actually the median projected outcome and could be much, much, worse. For example, suppose that some infectious disease experts are right, and a single vaccine will not eliminate this plague like it did smallpox and polio? Suppose, like influenza, this coronavirus will constantly evolve its outer protein layer and emerge annually as a new infection impervious to last year’s vaccine? What if it not only constantly evolves but is not a seasonal affliction and mutates faster than new vaccines can be developed, produced, and distributed? In that case, as to everything I wrote above, never mind.

Сейчас уже никто не берёт классический кредит, приходя в отделение банка. Это уже в далёком прошлом. Одним из главных достижений прогресса является возможность получать кредиты онлайн, что очень удобно и практично, а также выгодно кредиторам, так как теперь они могут ссудить деньги даже тем, у кого рядом нет филиала их организации, но есть интернет. http://credit-n.ru/zaymyi.html - это один из сайтов, где заёмщики могут заполнить заявку на получение кредита или микрозайма онлайн. Посетите его и оцените удобство взаимодействия с банками и мфо через сеть.