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The disastrous crisis management has made the United States the new epicenter of the global coronavirus pandemic. The country is facing an unprecedented economic crash. Are we witnessing the implosion of a superpower?
Pictures like from the 1930s
Nowhere is the coronavirus crisis as visible in the U.S. as at the food distribution centers. One Chicago food bank distributed over three tons of food in a single day. In Manhattan, the line for a soup kitchen extends for several blocks. If the scene were in black and white, one would have trouble distinguishing it from pictures from the 1930s.
The coronavirus has plunged the UNITED STATES into the greatest crisis since the Great Depression. That period began with the crash of the New York Stock Exchange in the fall of 1929 and is still etched into the collective consciousness. The pandemic is affecting every nation on the planet, but nowhere in the Western world has it brought to light shortcomings as relentlessly as it has in the United States. At the end of February, the American president claimed that his government was in complete control of the situation. But now the number of infected is already exceeding the 700,000-mark. Hospitals in New York, Detroit and New Orleans are barely able to cope with the onslaught of sick people.
And unlike in previous global crises, the U.S. is failing as a global leader. The country is currently too concerned with itself.
Now the U.S. has become the problem child in the global battle against the virus. While China and South Korea have stopped the spread of the contagion for the time being and parts of Europe are trying to slowly return to normality, the U.S. is setting one negative record after the other. No other country has as many infections, and the White House itself is predicting up to 240,000 deaths by fall. A study by the Federal Reserve Bank in St. Louis estimates that 47 million Americans will have lost their jobs by June.
Europe’s social welfare states are proving to be better prepared for keeping economies afloat in the shutdown, with measures like Germany’s short-time work furlough program and government-backed loans for companies. In the U.S., it remains unclear how the rescue funds from the government’s massive $2.3 trillion package are going to reach recipients. Meanwhile, many small- and medium-sized businesses are already in existential peril. Many people have also lost their health insurance, which was linked to their employers.
Hundreds of thousands of Americans are going through similar experiences right now. They’re sitting at home in front of their computers trying to figure out what to do with their lives now that they are unemployed.
For small and medium-sized companies, the stimulus package included an initial provision of $350 billion, which the government wants to quickly increase by another $250 billion due to the huge demand. U.S. Treasury Secretary declared that the loans would be granted on a ‘first come, first serve’ basis, which may have contributed to the fact that banks were totally inundated with inquiries at the beginning of April. Many things are still going wrong because the system isn’t designed for this kind of state intervention.
For the U.S. economy, the corona crisis is a fall from a very high horse. Up until recently, the U.S. was considered the world’s unrivalled, leading economic power – with the most valuable companies, the biggest financial markets, the most important currency. By almost all comparative measures, the United States was leading during the past decade. Its economic growth figures were also usually greater than those of other developed countries, including in Europe.
This country, whose wealth was once dependent on oil imports from the Middle East, had also risen up as an energy exporter. And never before had a single national economy dominated the world’s future-oriented industries as much as the U.S. with its digital sector. Economic crises didn’t seem to affect the U.S., which quickly overcame the 2008 financial crash.
This makes it all the U.S.’s sudden, apparent vulnerability all the more surprising, a weakness spurred by Trump’s mismanagement, but also by the fundamental flaws in its health-care system. Overnight, the economic wellbeing of the country stopped being dependent on the adaptability of its companies and the financial power of its government, but rather on the number of intensive-care beds available.
The End of American Economic Dominance?
Some economic scientists expect the coronavirus recession to be deeper in the U.S. than in many other industrialized countries. Recent forecasts estimate that its economy will shrink between 4 and 7 percent when calculated over the entire year. A growing number of economists are also losing hope that the collapse will be followed by a swift recovery.
According to one analysis by Deutsche Bank, many companies and households will at first save money to pay off debts they have accumulated in the crisis. Analysts at the bank believe this would result in the economy taking not a V shape, but a U-shaped curve, meaning the collapse will be followed by a period of stagnation before growth starts again. New York University economics expert Nouriel Roubini believes even that is optimistic. He has recently begun speaking of an ‘I’ scenario, a vertical, nearly uninterrupted decline in the economy, without any recovery in sight.
Some economists fear that the corona crisis could spell the end of American economic dominance. Harvard University’s Kenneth Rogoff argues that, even though we shouldn’t underestimate the U.S.’s ability to creatively overcome adversity, it is unclear if it will succeed this time. He says that the pandemic could prove to be the greatest threat to U.S. leadership and primacy of the dollar since World War II.
So will the virus put an end to the country’s superpower status? Doshi, the Washington political scientist, believes that if the U.S. proves itself incapable of leadership, global power relations could shift in favor of Beijing.
Government Played The Pandemic Crisis Down
The president played down and tried to suppress the crisis for months.
But the pandemic is also exposing weaknesses that existed before this Govewrnment’s election: a health-care system that fails the very moment when it is most needed, and a capitalist system that is unrestrained during boom times, and unimpeded when it crashes. Above all, however, it has revealed a democracy that has forgotten how to compromise.
Is the world witnessing the collapse of a superpower?
The end of the American era has often been evoked, but the signs of crisis have never been as clear as they are now. Although the virus began its spread at a market selling exotic animals in Wuhan, China has become the first country to contain the pandemic. It is now airlifting simple, but nevertheless scarce products to the U.S.: fever thermometers, masks and protective gowns.
A Shift in the Balance of Power?
The airlift from Shanghai to New York is a gesture of solidarity, but also a smart PR move. The image of Beijing providing relief to the U.S. the way it would to a developing country is intended to demonstrate the shift in the global balance of power: The American patient is being cared for by the strict, but kind Chinese doctor.
The Americans’ urgent need for help is most visible in New York, the country’s largest city, where hospitals are in danger of collapsing under the weight of the pandemic.
Why is the disease hitting the city so hard?
It quickly becomes clear that what is most lacking is central coordination. According to a survey of its members by an association representing 42,000 New York nurses, around 85 percent have already come into contact with COVID patients, but almost three-quarters do not have access to sufficient protective clothing.
Doctors in hospitals had teams working around the clock for weeks now to source personal protective equipment. Some hospitals are currently spending several million dollars each month from their own funds to fight the pandemic. Doctors say it is still unclear whether the government will step in with aid.
The U.S. actually ought to be very well prepared for a pandemic. In 2018, almost 18 percent of the country’s gross domestic product flowed into the health sector, a total of $3.6 trillion (3.3 trillion euros). But the American health-care system is enormously expensive and highly inefficient. The wealthy and people with good jobs often receive excellent medical care. But a lot of that money goes into the coffers of pharmaceutical and insurance companies.
That is now being exacerbated by political ineptitude.
It’s Going to Be Just Fine
The first COVID-19 case in the U.S. was detected in Seattle on Jan. 20 – the same day South Korea had its first case. The South Koreans built up their own testing regime at break-neck speed and were soon able to test 10,000 suspected cases a day. The American President, on the other hand, claimed on Jan. 26 at the World Economic Forum in Davos, ‘We have it under control, it’s going to be just fine.’
Nothing could have been further from the truth. At the time, the CDC decided to develop its own test for the coronavirus rather than using a functioning one from the WHO. The test quickly turned out to be faulty, and as a result, weeks went by without anyone being able to determine how widely the disease had already spread in the U.S.
On Jan. 30, the WHO warned of a possible global coronavirus pandemic. In early February, some state governors began requesting help from Washington, mainly in the form of protective clothing and ventilators from the Strategic National Stockpile. The national reserve was set up in 1999, overseen by some 200 employees at several secret locations. But the reserve has never been properly replenished since the H1N1 pandemic, the swine flu of 2009.
On Feb. 5, Secretary of Health and Human Services Alex Azar requested $4 billion from the White House to order supplies needed in the battle against the pandemic. But Azar didn’t get that money because Trump’s advisers still considered warnings about the virus to be exaggerated – and the president obviously feared that bad news would send stock prices plummeting. Trump also refused to make recommendations for dealing with the epidemic.
On Feb. 25, Mardi Gras celebrations in New Orleans reached their climax, with tens of thousands of drinking and partying merrymakers winding their way through the city’s streets. Much like the après-ski bars in the Austrian town of Ischgl, which was one of the main infection corridors that brought the disease to Germany and other Western European countries, the carnival celebration was the ideal breeding ground for the pathogen.
Jefferson Parish County has more deaths per capita than New York City. And like almost everywhere else in the U.S., it is hitting people at the bottom of the socioeconomic ladder hardest. Even before the pandemic, Americans living under the poverty line were five times at greater risk of disease than wealthy people.
In the U.S., health insurance is often obtained through a person’s employer, meaning their health-care protection is directly tied to their job. People working in low-wage sectors like wait staff, cashiers or parcel carriers are often forced to get their own insurance. But that insurance is often too expensive, especially considering that the current minimum wage in many U.S. states is $7.25 an hour.
It’s no wonder, then, that the pandemic is affecting a disproportionately high number of African Americans, who on average have incomes 25 percent lower than those of white Americans. African Americans are also more likely than average to be employed in jobs where working from home isn’t possible and the risk of infection is high.
The Hour Of Need
Many presidents rise to the occasion in their nation’s hour of need: John F. Kennedy led his country through the Cuban missile crisis, George W. Bush listened to the advice of experts during the financial crisis of 2008. But Trump doesn’t see the virus as way of overcoming partisan rancour. On the contrary: He appears to view the virus as some kind of personal insult.
One of the reasons the pandemic is hitting the country so hard is that no one appears to be able to hold the president back from his whims. He has systematically removed independent thinkers and experts from the White House and the government. Trump has systematically bled the government dry and has failed to fill many important positions in the government or he has dissolved them altogether. In one particularly disastrous move, he abolished the pandemic task force in the National Security Council that was set up after the Ebola outbreak in West Africa.
Jaw-Dropping Unemployment In The U.S.
When the U.S. slid into the Great Depression in 1929, then-President Herbert Hoover tried to keep the nation happy with one-liners. He said the debate about the economic crisis was hysterical and added: ‘What the country needs right now is a good big laugh. If someone could get off a good joke every 10 days, I think our troubles would be over.’
But Americans soon lost interest in the president’s slogans and started looking at the hard economic facts. During the fall of 1932, the U.S. had an unemployment rate of almost 24 percent. Economic output fell that year by 12.9 percent. During the presidential election on Nov. 8, 1932, Democratic candidate Franklin D. Roosevelt won a crushing victory over Hoover, the Republican incumbent.
There is little to suggest at the moment that the American economy will recover quickly. The growing number of unemployed in America is often described in the U.S. media as ‘jaw-dropping.’ In the past three weeks alone, more than 15 million Americans have applied for unemployment benefits. Goldman Sachs is expecting a 34 percent decline in gross domestic product during the second quarter of this year. The bank is forecasting a 6.2 percent decline of the economy for 2020 as a whole. ‘Never in American history has a president with such poor economic data been re-elected,’ says Michael Green, a White House staffer under George W. Bush who now teaches at Georgetown University.
The virus has already ravaged every sector of the U.S. economy. First it hit bars, restaurants and movie theaters, and cinemas are probably among the last establishments that will be reopened once the lockdowns are loosened. It is already becoming clear now that the U.S. is far less well equipped for fighting the economic pandemic than other countries. There has never been anything like this before where the U.S. is in hibernation. And nobody knows when they will come out of it.
Predictions Are Premature
That said, the end of American dominance has often been predicted in the past. On Oct. 4, 1957, the Americans grew terrified when Moscow sent the first-ever satellite, Sputnik 1, into space. People saw it as a sign of the Soviets’ technological dominance over the U.S.
But then the nation once again stirred. The event led not only to the founding of NASA, the American space agency, but to the investment of billions of dollars by the federal government in the public school system, in an effort to interest young people in physics and mathematics. On July 21, 1969, Neil Armstrong of Wapakoneta, Ohio, became the first person to set foot on the moon.
There are now signs that the country is coming to its senses. Most Americans are, even without orders from the authorities, exercising social distancing from each other, thus ensuring that the virus spreads more slowly. A clear majority of Americans are now in favor of the U.S. government providing responsible health-care insurance for American citizens.