Saturday, May 09, 2020


Nicholas Kristof compares the pandemic responses of Denmark and America:
Denmark lowered new infections so successfully that last month it reopened elementary schools and day care centers as well as barber shops and physical therapy centers. Malls and shops will be allowed to reopen on Monday, and restaurants and cafes a week later.

Moreover, Danes kept their jobs. The trauma of massive numbers of people losing jobs and health insurance, of long lines at food banks — that is the American experience, but it’s not what’s happening in Denmark. America’s unemployment rate last month was 14.7 percent, but Denmark’s is hovering in the range of 4 percent to 5 percent.

... Denmark’s approach is simple: Along with some other European countries, it paid companies to keep employees on the payroll, reimbursing up to 90 percent of wages of workers who otherwise would have been laid off.

Denmark also helped hard-hit companies pay fixed costs like rent — on the condition that they suspend dividends, don’t buy back stock and don’t use foreign havens to evade taxes....

As a share of G.D.P., Denmark’s coronavirus relief spending is a bit less than America’s, but it seems more effective at protecting the population.

The upshot is that Denmark staggered through the pandemic with employees still on the payroll and still paying rent. As the economy sputters back to life, Danish companies are in a position to bounce back quickly without the cost of having to rehire workers....

Some Americans cite Sweden as a model for coronavirus response because it has not imposed a major lockdown. But, in fact, Denmark, separated from Sweden by a bridge, has been far more successful: Denmark’s death rate from Covid-19 per million people is less than one-third of Sweden’s, and forecasters predict that Denmark’s economy will do better than Sweden’s this year.
Our response to the pandemic has been worse than Sweden's or Denmark's, and one consequence is that our economy will be in the toilet for years to come.

I understand that we're reopening much of America prematurely because our corporate overlords have contempt for their employees and their customers and just want revenue to start flowing again as quickly as possible. But why are they unable to grasp the obvious point that their customers are afraid to come back, and that they'll be even more afraid when, inevitably, the premature reopenings cause a spike in COVID-19 cases and deaths? In other words, why aren't the CEOs who have Donald Trump's ear telling him that, for his benefit and theirs (they really don't care about ours), he should be working harder to bend the curve and increase testing and tracing, because that's what it will take to give Americans the confidence to go out and consume?

And I know that corporate chieftains don't like government spending on anyone except themselves, but we're spending massive amounts of money anyway, so why don't they want it spent in a more Nordic way, a way that would help sustain consumer purchasing power?

In other words, if they support Donald Trump's approach to the pandemic, aren't they supporting the approach that will put less money in their pockets?

I've come to the conclusion that many American capitalists aren't seekers of pure profit. They often prefer control.

In this case, they don't like being ordered to shut down by the government. They want to forcibly reverse the shutdown -- even though it's likely to mean more death and less business, and even though letting the lockdown run its course would make them more money in the long run. They just don't want to be told that they can't have their wishes immediately gratified.

In the pre-coronavirus world, I saw something similar taking place in New York commercial real estate. The economic recovery was in full bloom, yet my neighborhood, where there's quite a concentration of wealth, was full of empty storefronts. This was true in many of the wealthy neighborhoods of New York -- beloved stores were regularly shutting down and not being replaced, in many cases for years, even though many neighborhood residents were quite well-to-do and eager to spend.

Why was this happening? Presumably because commercial landlords were demanding prices that tenants couldn't afford, particularly as e-commerce was cutting into retail sales at brick-and-mortar shops. The solution, obviously, was to lower the rents being asked, but landlords just wouldn't do that. They weren't going to be bossed around by ... market forces!

I once asked a real estate agent (who works outside the city) why this was happening. She gave me a one-word answer: "Greed!" But if it was greed, it was inept greed. Greedy landlords would try to make the most money they possibly could. These landlords were passing up 60% or 70% or 80% or 90% of what they wanted and choosing 0% instead. And even if a tax break was softening the blow (as I'm sure was the case), it can't possibly be more lucrative than having rent-paying tenants.

Now many of those storefronts are closed, and some tenants won't be able to hang on. I don't know if the landlords will demand huge rents during the coronavirus depression, but they probably will. The invisible hand of the marketplace isn't the boss of them! And the other businesses whose revenue prospects worsen every day the curve isn't flattened seem to feel the same way about the government, and the virus.

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