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The Wall Street giants whose reckless and even criminal behavior ushered in the 2008 crisis ended up, after the dust settled, even bigger and more powerful than before the crisis began.

The Wall Street giants whose reckless and even criminal behavior ushered in the 2008 crisis ended up, after the dust settled, even bigger and more powerful than before the crisis began. (Image: Book cover detail)

Does the Coronavirus Crisis Have to End with a Wealthier Wealthy?

This time around, let’s use the power of the public purse to reduce inequality.

Sarah AndersonSam Pizzigati

We all have to come together. We need to help each other. We don’t have time for politics as usual.

In times of crisis — the current coronavirus pandemic, for instance — these sorts of calls for cooperation become the drumbeat of our daily lives. And most all of us march to that drumbeat because we understand that we do need to cooperate and help each other when crises crash down upon us.

Unfortunately, no drumbeat ever gets everybody marching in sync. In every society, some self-absorbed people will think first and always only of themselves. But these self-absorbed few, in relatively equal societies, pose no great problem. They just don’t have the means to mess things up.

In more unequal societies, we have a different story. In deeply unequal societies, nations where wealth and power have concentrated intensely, a few people do have the means to undercut the common good. These wealthy few can exploit the vulnerabilities of societies in crisis to make themselves even wealthier.

Back in 2007, Naomi Klein explored this phenomenon brilliantly in her landmark book The Shock Doctrine. Klein showed how corporate elites worldwide have repeatedly and brutally used “the public’s disorientation following a collective shock — wars, coups, terrorist attacks, market crashes or natural disasters — to push through radical pro-corporate measures.”

The 2008 financial collapse would vividly illustrate the dynamics Klein so powerfully described. The Wall Street giants whose reckless and even criminal behavior ushered in that crisis ended up, after the dust settled, even bigger and more powerful than before the crisis began.

Klein sees those same “shock doctrine” dynamics now resurfacing in the coronavirus crisis.

“We are seeing,” she noted earlier this week, “this very predictable process that we see in the midst of every economic crisis, which is extreme corporate opportunism,” a “dusting off” of the corporate and Wall Street wish list on everything from cutting and privatizing Social Security — by undermining its current payroll tax revenue stream — to enriching the fossil fuel industry.

What can we do, this crisis time around, to prevent a “shock doctrine” repeat? We need, for starters, to provide immediate support for those the coronavirus is hitting the hardest: the sick and those who care for them, the workers who lose jobs and income.

But we can’t afford to stop there. We need, in effect, a “shock doctrine” in reverse. We need to seize the openings for change the coronavirus creates and challenge the capacity of our rich and powerful to become ever richer and more powerful at the expense of our greater social well-being.

One example: Within our increasingly coronavirus-ravaged economy, more and more families will be facing evictions as they fall behind on rents and mortgage payments. Progressive activists and like-minded elected leaders are now quite rightfully calling for a coronavirus moratorium on evictions.

But we have a chance here to go much further. Low-income families, a compelling new analysis of shelter in Southern California has just detailed, face a rental market that corporate landlords have thoroughly rigged against them. These corporate interests have created an “empire of fees and evictions” to gouge low-income families. Why not fight, in this coronavirus crisis moment, to rewrite the eviction-enabling statutes that let corporate landlords enrich themselves at the expense of families already reeling?

The coronavirus crisis also gives us an opportunity to use the power of the public purse to shift our economy towards greater equity and sustainability.

Various industries are already clamoring for federal loan guarantees and other bailouts to get them past the coronavirus crisis. We have an obligation to help workers in these industries. We have an opportunity to help these workers not just through the coronavirus crisis, but beyond.

The core of a reverse shock doctrine ought to be a massive public investment program designed to create good jobs, with a premium on projects that better position our economy to address climate change.

For immediate bailout funds, policymakers should consider attaching pro-worker strings. We could deny, for instance, tax-dollar support to private companies that pay their top execs over 50 or 100 times what they pay their most typical workers.

Moves in that direction would give top execs an incentive to pay workers more — and exploit them less.

Back in mid-20th century America, a time of much greater equality than we have now, corporate top execs only averaged 30 times more pay than their workers. That more equal America proved resilient enough to overcome a fearsome polio epidemic and prosper.

That more equal America, let’s remember, emerged out of the back-to-back crises of the Great Depression and world war against fascism. Progressives seized the opportunity those crises created and changed the face of American society. Why can’t we?

Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
Sam Pizzigati

Sam Pizzigati

Sam Pizzigati, veteran labor journalist and Institute for Policy Studies associate fellow, edits His recent books include: "The Case for a Maximum Wage" (2018) and "The Rich Don't Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970"(2012).

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