Coronavirus highlights how much America takes our economy for granted. Americans have gone from thinking themselves immune to the pandemic, to believing our economy is. Required to support a growing government burden in the best of times, now, in the worst of times, it must withstand coronavirus’ impact and the government’s massive response.
When coronavirus first entered America’s awareness early this year, we believed it to be a foreign phenomenon. Even as it spread, there was a feeling of impunity, if not immunity. Should it reach us, we naively imagined it would not be serious. We would stop coronavirus in its tracks; instead, it has stopped us in ours.
Over 68,000 deaths and 1.1 million cases later, we see coronavirus very differently. We recognize America’s safety is not insulated from a global pandemic. However, we continue to treat our economy as though it were.
Just as we formerly imagined that our lives could go on as normal and still shoulder the coronavirus without change, we still believe our economy can. Americans see our economic supremacy has having always existed (untrue) and as always existing (even more untrue) — despite all we place on it. Coronavirus is merely its latest load.
In many ways, America’s economy is a victim of its own unparalleled success. It is a $22 trillion behemoth, the likes of which the world has never seen. Despite the left’s twaddle and prattle, it produces more wealth and resources than any in human history.
Under normal conditions, the American economy withstands over a fifth of its output being used to support federal spending — 21 %. State and local spending increases that by another half, taking government’s total to 32.2%.
That means almost one-third of GDP is diverted from more productive private sector uses to less productive public sector use. However, the government’s demands on the economy exceed this, because that only measures actual spending. Additionally, there is enormous regulatory burden circumscribing the private economy’s operation.
On top of this large government burden falls the coronavirus crisis. The health shock alone would have been staggering. Then has come the aftershock, the indirect effect of the government’s response: A nationwide lockdown of a large portion of America’s economy.
Combined, the nation has gone from historically low unemployment, to over 26 million people being out of work. That is just the most focal measurement. The cost in dollars still awaits tabulating; its recoupment could take years.
This is not to say that the government response should not have occurred; it is to say that we should understand what has transpired. Overlooked is the fact that America’s economy has allowed for this unprecedented response. When the last century’s great flu epidemic occurred, America could not have done this. Even a generation ago, America could not have shut itself down.
In the past, the private sector possessed insufficient savings to allow a large part to idle itself. The public sector would not have had access to the vast sums it is now borrowing — just in Washington, almost $3 trillion in a matter of weeks.
America’s economy, on top of the routinely large demands placed on it by the public sector, is simultaneously financing the massive direct and indirect effects of the coronavirus crisis at the private and public level. Yet this basic fact is never mentioned, it is simply assumed.
The reason America’s economy can shoulder this unprecedented burden is because of its past —and expected future — strength. Currently, America is living off its vast accumulated reserves — real and reputational.
Once immediate public needs to address coronavirus have passed, expect attention turning to “stimulating” the economy. Thus far, the focus has been on amelioration, not stimulation. Sending payments to pay bills is compassionate, but it is not stimulation.
Really focusing on stimulation means reducing the public sector’s growing burden on the private sector. Taking a page from government’s response to coronavirus, attention has been on reducing government regulations to allow a greater, faster, and better private sector response. The reason is because during a time of crisis, America could afford nothing less. The truth is, America can afford nothing less going forward either.
America’s response to coronavirus changed at the personal level — and will again in its aftermath. The same changed perspective also should apply to our economy. As coronavirus has reinforced: There is a danger in taking our economy for granted; it goes well beyond dollars and cents, to life and death.
J.T. Young served under President George W. Bush as the director of communications in the Office of Management and Budget and as deputy assistant secretary in legislative affairs for tax and budget at the Treasury Department. He served as a congressional staffer from 1987 through 2000.