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Capitalism no longer works: the pandemic changed it

2020-09-22T21:05:29.297Z


Capitalism is in crisis. The pandemic could change it forever, in favor of workers and those most in need.


New York (CNN Business) -

Capitalism is in crisis.

The pandemic could change it forever, in favor of workers and those most in need.

Covid-19 has put a magnifying glass on the many inequalities in the American economy and society.

Millions of Americans are still out of work.

Women and minority workers have been particularly affected.

Many people cannot afford the child care or technology their children need for distance learning in school.

The playing field was not level before, and the virus has shed new light on the shortcomings of current economic and social systems, said Paul Collier, a professor of economics and public policy at Oxford.

The World Economic Forum has already called for a "great reboot" of capitalism.

It is emblematic of today's capitalist society that groups of people are left behind, and it is the job of legislators to try to fix that.

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Other crises of capitalism

This is not the first time that capitalism has been in crisis.

In the 1950s, America's so-called golden age, there were concerns that automation would eliminate jobs and that people would fall through the cracks in the government's safety net (sound familiar?).

And in 2008, corporate greed came under the microscope after the financial crisis.

In modern history, only the Great Depression was more economically devastating than Covid-19.

The aftermath of the Great Depression - relief, recovery, and most of all reform - may once again be necessary to create a better economy for the future, said Larry Glickman, a professor of American studies at Cornell.

It will be difficult to sweep all of America's economic woes under the rug again when the pandemic is over.

"We are pregnant with change," said MIT economics professor Daron Acemoglu.

Here are three ways the pandemic could change capitalism forever.

A new social safety net

The pandemic exposed the cracks in America's social safety net.

Entering welfare state 2.0 could be more in tune with workers' needs, experts said.

"We are at a time where the pendulum is [swinging] toward a more favorable view of what the government can do," Glickman said.

Better-designed unemployment benefits, programs to help people return to the workforce, and more affordable housing could help ease the burden of this crisis for the weakest members of the economy.

Millions of people have lost their jobs in the pandemic, but regular unemployment benefits are often not enough to make ends meet, while rents eat up a large chunk of income across the country.

As the pandemic drags on, hunger is also a growing problem.

On top of that, workers in jobs that mostly have lower wages have been found to be at risk of contracting the virus in their workplace, including casinos, meat processing plants and shipping warehouses.

Paying to replace the wages of these workers won't be cheap and will likely mean taxes will have to go up while staying low enough not to stifle business, economists agree.

It is a tightrope.

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Globalization and automation challenge the manufacturing sector

Globalization goes hand in hand with capitalism.

The way money and people move around the world has changed.

A big challenge for policy makers is dealing with how that has affected workers.

In today's capitalism, money is considered, for the most part, more important than workers: if moving jobs elsewhere or using robots saves dollars, it is done.

For workers on the wrong side of these trends, things haven't gotten better and this has exacerbated inequality, Federal Reserve Chairman Jerome Powell said earlier this year.

The pandemic has provided a real-life example that robots don't get sick, but human workers do.

Wellness is not just about benefits.

It also extends to education and health.

In a world where machines are increasingly being made of people's work, it's important to educate the next generation so that their skills match what is needed.

More debt than ever

Capitalism is not just about how a country treats its people and workers, it is also about how it treats its money.

Covid-19 has generated public spending like never before and deficits are increasing around the world.

The Congressional Budget Office predicts that the U.S. federal budget deficit will be $ 3.3 trillion by the end of the year, more than triple what it was in 2019.

Debt could be one of the salient features of capitalism today, said Christine Desan, a Harvard law professor.

In the post-pandemic world, policymakers will have to accept living with a huge burden of debt or tackle a complete reform of the existing system.

Capitalism pandemic

Source: cnnespanol

All news articles on 2020-09-22

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