Businesses and individuals around the world have been hit hard by the ongoing COVID-19 pandemic, with many countries instituting unprecedented policies that include enforcing lockdowns and the shuttering of nonessential businesses in an effort to limit the spread of the Coronavirus.
Many governments are working on or have already implemented various stimulus measures in response, aimed to help those suffering financially from the crisis, which has wiped out close to $10 trillion in global wealth and left millions of people without work.
What we have learned from the past
However, if history is anything to go by, these programs are unlikely to do much to mitigate the devastation done to the average working person says Scott Patrick Carson, the founder and CEO of medical device distribution company Powered by MRP.
The 2009 financial crisis is a good example according to Carson. In the midst of millions of Americans losing their jobs and homes, it was the banks that caused the crisis in the first place by issuing predatory mortgages and grossly overleveraging themselves that received the bulk of the government assistance. Within short order, the banks were back to earning record profits.
Meanwhile, the average citizen was heavily punished by government austerity measures that slashed public spending, further weakening the economy and contributing to millions of lost jobs in 2009 that pushed U.S unemployment to nearly 10%.
Things are even more dire in 2020, with the unemployment rate being the highest it’s been since the Great Depression and getting worse by the day. Economists are forecasting that more than 30% of Americans could be out of work by June, a far higher rate than even the Great Depression at its peak.
Scott Patrick Carson points out that these figures are somewhat misleading, as they largely represent temporary government-mandated business closures rather than a hopeless economy. Nonetheless, Americans and many others around the world are in dire straits and in desperate need of assistance.
In the U.S, Congress unanimously passed a $2.2 trillion stimulus package that will put $1,200 a month in the hands of lower-income Americans. While that may be enough to maintain public order for now, it’s a relative pittance compared to what the majority of those Americans were earning.
On the other hand, the stimulus bill includes what Rep. Alexandria Ocasio-Cortez describes as the largest corporate bailout in American history with few strings attached. Those same corporations that used the historically low interest rates of the past decade to build mammoth debts while using their free cash flow to buy back shares that enriched their executives and insiders with large bonuses and stock price appreciation.
If Boeing, which is fighting for a $60 billion bailout for the aerospace industry, is so vital to national security that it has to be protected according to President Trump, one wonders why the company is allowed to spend any of its free cash flow on stock buybacks rather than using it to strengthen its operations or financial resilience, let alone the 74% of free cash flow totaling over $43 billion that it’s put into its stock over the past decade.
All the while, wages have remained stagnant for the working class, nearly half of whom had previously reported having less than $400 in savings to cover any kind of emergency, let alone a society-altering, months-long pandemic.
A broken system
Unfortunately, the system is broken, laments Scott Patrick Carson, and even a crisis of this magnitude can’t change that. Overleveraged corporations will continue to be bailed out by the politicians they make large donations to, all under the guise of protecting jobs or important infrastructure and using taxpayer money that the corporations themselves use every accounting trick in the book to avoid paying.
In a great crisis, there is great opportunity. When we are faced with an overwhelming situation and gasping for air, we need to pivot and find the opportunity inside the crisis. It is there. In addition, during these times of crises, we cannot give up. We need to continue to fight.
