The Pandemic Recession Is Showing America’s Economic Problems
The “pandemic recession” has shown us that the U.S. has two economies.
The first one is made up of college educated, knowledge-based employers and employees. They work with ideas, facts, figures and spread sheets. These businesses and their employees need only an internet connection to continue unabated. Their incomes, for the most part, have not diminished.
Our second economy is based on having to be physically present in a business. These are the people that are restaurant servers and cooks, retail clerks in stores, airline personnel, and hotel workers whose businesses have been closed. Many of the tradespeople that service these types of establishments have been affected. They are the ones with diminished earning capacity.
An Outmoded Model
Yet what has been the government’s response? A totally inadequate one based on an economic model that no longer is relevant. If the country continues down this wrong path, even much of the first U.S. economy will fall like that of the second.
Our government’s programs are mired in an old economic model that has not been true since the 1960s. Even President-Elect Biden’s supposed expanded social programs are based on those antiquated employer-based models. From unemployment insurance to health care to family and sick leave, the government is foisting current and expanded benefits onto the private sector through mandates.
More than half the population will not be covered by employer-based programs since they work for themselves or in small businesses. There is also a fundamental inequality built into that system with haves and have nots. It also saddles business with higher labor costs as compared with their competitors in the rest of the world.
Countries that blur the lines between public and private ownership (such as China) internally operate their economies as extensions of government. China, no matter its claim to a market-based structure, only does so when in the world economy. Most other nations are much more attuned to a capitalistic market economy both domestically and internationally.
On the other hand, the United States is proceeding down the path of crony capitalism. It rewards…