Around 16.8 million Americans applied for unemployment insurance over a three week period. Will the shock of the Covid-19 pandemic be a one time bump the world will get over and continue as it was, or will this be a permanent change, and if so, to what?
Of course these millions of Americans are only those who had jobs with unemployment insurance. Many others are designated “independent contractors,” for example real estate agents and other salespeople. They will not be unemployed, but they won’t have jobs or money coming in, because unable to work or make deals because of the pandemic. Then there are the small business owners. I think it is fair to say that these events were a wake up call to everyone who needs to work to pay the bills. Your income may not be there tomorrow.
The American economy has run on debt for a long time now. Debt is money you get now and promise to pay back later. You are giving a vote of confidence to “later” whenever you incur debt. You don’t have that money now but you will have it later, you think. You are sure. Since it is in your own “later” you are giving a vote of confidence to, pretending such confidence is extreme folly, even if often done. The pandemic has torn the veil that hid the reality from the eyes of anyone who did so. Later may be unemployment. To have confidence that later will be better than now is delusional.
People who lose jobs will lose cars and houses. The effect of this large number of unemployed people will ripple through the economy. Its contraction is reflected in very low oil prices. It is not the numbers but the uncertainty that will have the greatest effect. It is my opinion that the pandemic will change people’s comfort with credit. Showing off a brand new car that put you in hock up to the eyeballs might not be as much fun as it used to be. And do we really need to trade up to that new house with four bathrooms in the suburbs where you have to drive to get anywhere? Will people go to sports events, concerts, blockbuster movies?
What would happen if Americans recognized the frivolity upon which they expended the wealth of a raped world? I am certain they would feel neither sorrow nor regret. They will look for someone else to blame. But they will also, I contend, become more frugal. The all too apparent uncertainty of the future surely must affect our confidence in it.
In any case, I think that a lot of the frivolous expenses of the previous economy, tourism for example, will not return because no one will be in the mood. It just won’t be fun to be stupid any more. That’s going to put a real dent in the economy, added to what we already have. Debt will collapse. The criminal absurd expenditure of the wars will be apparent. Could this possibly lead to food shortages?
It certainly could. The pandemic is certain to affect food storage, processing, and transportation. In addition, in the midst of starvation there will, paradoxically, be a demand shortage because people will not have money.
Excerpted from: 'Food Security in the Time of COVID-19'.
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