The economic fallout from the coronavirus pandemic will be unprecedented. Even if the American and global economy manages to achieve some stabilization post-COVID-19 through central bank stimulus packages and countermeasures, many small and medium-sized businesses will not survive. In addition to the millions of lost jobs in the United States alone, thousands of family-owned and medium-sized corporations and businesses are going under.
What Comes Next?
What comes next is exactly what everyone thinks: consolidation and big companies getting bigger. Larger businesses like Amazon, Microsoft, Wal-Mart, airlines, government contractors, massive grocery chains and all manner of other giant corporations will continue to scoop up any smaller fish in the pond as they grow to grotesque proportions. The end result post-COVID-19 will be a world in which large, tax-loophole-exploiting corporate behemoths who thrive under corporate socialism and government bailouts will be the only place to get a job.
Starting a business will be an impossibility for those struggling out from mountains of COVID-19 economic damage, not to mention even getting the financial liquidity to go up against market-dominating players who have actually been boosted as a result of the pandemic.
Profits Over People
The harsh and obvious truth is that governments care much more about their donors and economic partners than they do about their citizens. The US government got warmed up in 2008 and 2009 with its bank bailouts, and this time it’s the same approach on a larger scale and not focused on financial institutions — although large banks have made tens of billions in processing fees paying out emergency government loans to small businesses who are trying to stay afloat. Even when the government offers some help the middlemen manage to turn it to their advantage. It’s a win-win for the giant banks and corporations and a lose-lose for working people.
As Nassim Taleb put it of the last big bailout: “That was a blatant case of corporate socialism and a reward to an industry whose managers are stopped out by the taxpayer. The asymmetry (moral hazard) and what we call optionality for the bankers can be expressed as follows: heads and the bankers win, tails and the taxpayer loses. Furthermore, this does not count the policy of quantitative easing that went to inflate asset values and increased inequality by benefiting the super rich. Remember that bailouts come with printed money, which effectively deflate the wages of the middle class in relation to asset values such as ultra-luxury apartments in New York City.”
COVID-19 Has Been Great for Billionaires
While ordinary people including the upper-middle class and many who might be termed conventionally “rich” are suffering immensely during the pandemic, the ultra-rich and managerial “superclass” (as David Rothkopf coined them) are doing swimmingly. These are the folks who call the shots at a fairly senior level and work to shift entire economies and industries and they number around 6,000 worldwide. The pandemic hasn’t hurt billionaires like this for the most part. In fact, billionaire wealth has boomed significantly during this crisis. The panic and isolation of those in lockdown is only an opportunity for individuals like Jeff Bezos of Amazon, who has made over $25 billion just since March, to increase their profits.
Unsurprisingly, the head of Zoom Eric Yuan also saw a big jump in his earnings and is now worth around $3 billion and Bill Gates spent a recent interview with Fareed Zakaria chuckling as they talked about how unprepared the United States had been for COVID-19 and smirking and admitting Microsoft could do pretty well in the coming digital work gold rush while Zakaria talked about the economic suffering people will experience. Supposed free market global capitalism has slowly morphed into a worrying fusion of big government and big business that is starting to look vaguely similar to authoritarian movements of the past century and modern-day China which fused the military, government and corporate power into fascistic and communistic juggernauts of centralized surveillance and control.
The reality of many “free market” economies is that they function as a sort of feeding trough for large, connected corporations to monopolize, risk capital within and then collect lifesaving funds if they fail. This essentially means bailouts, tax breaks and special rules for the largest corporations and industry leaders and an up-by-the-bootstraps rhetoric of tough luck and homeless shelters for working families employed by many of those large corporations and small or medium companies who go under during tough times or find the bottom-of-the-barrel wages they are offered insufficient. It is not as if workers haven’t noticed that their mega corporations are profiting off their backs while offering them peanuts, with a mass strike of Amazon, Wal-Mart, Whole Foods and Instacart workers planned for May 1.
While the occasional $1,200 stimulus check may indeed help out struggling individuals during these hard times, it is nothing compared to the yearly subsidies and tax breaks of giant corporations or for the scope of their market dominance. Regular businesses work to innovate products, services and reputation as they expand and branch out: mega-corporations seek to become the actual market itself and force merchants to do business on their terms and under their supply chains. Are you a small business that sells household items online? Well you can pump money into advertising and get a trickle of customers or you can join Big Daddy Bezos’ Fun Farm and give him the commissions he demands in return for a steady stream of purchases and product exposure.
Survival of the Biggest
Many wars, revolutions, crises and social shifts in history have been accompanied by, and even partly caused by, enormous economic change and changing economic needs of industry leaders and the ruling class. The Protestant Reformation, the American Revolution, World War One and Two, the end of apartheid in South Africa, the list goes on. Think of a social, military or political upheaval and you will find a significant economic aspect. However, it would be naive to imagine that money or profit is the primary factor driving economic concerns at the upper level, even if it drives them on the lower level. For the very wealthiest and most connected, particularly those linked to the actual creation of money by central banks, money is merely a means to an end. That end is, generally speaking, stability, control and a specific social and political vision. If one thinks back to even several decades ago, there seemed to be numerous different brands of soft drinks, for example, headquartered in different areas if you read the fine print and with different prices and styles. Now almost every can or bottle you pick up despite its surface brand is owned by Coca-Cola or Pepsi. Consolidation and control is the name of the game: in governance and sociopolitical engineering just as in the food industry.
Join or Die
The post-COVID-19 world will be different and it will have even less illusion of choice than the Google-run techtropolis that preceded it. There is no time for “future shock” because the future is already here. Whether it is the government or its affiliated mega-corporations the reality will be simple, especially for those who have fallen on particularly hard times as a result of the pandemic with their health, insurance costs and lost work. The message of the emerging technocracy will be simple: work at our companies, eat our food, take our vaccines, believe our news, live in our plural cities where the jobs are all located, or else face the consequences of being banned. Make sure you don’t fall prey to the siren song of that ultimate evil of populism: you wouldn’t want to lose your government check or be forced to stay out in no man’s land where the new, worse viruses and looters are, right? Like a twisted shadow version of Benjamin Franklin’s Revolutionary War cartoon, the writing of the consolidated corona-nomics economic future will be on the wall for all to see. Join or die.