Covid-19 has produced the largest increase in government spending outside of wartimes. Governments around the world are providing income support to workers kept from their jobs by quarantines and to mitigate the collapse of demand as ordinary citizens fearful of Coronavirus remain at home and stop travelling, shopping, and going to restaurants, bars and theaters. Governments are investing in the search for vaccines, spending billions for scientists at state and university labs, and in contracts to private pharmaceutical firms, in the hopes that one or more of those will develop an effective drug. At the same time, governments are paying for the construction of multiple factories that will be ready to mass produce vaccines.
The ways in which states respond to Covid-19 reflect their capacities, their ideological orientations, and the ability of capitalists and other private interests to influence governmental decisions. The United States stands at one pole. While the US government has the enormous advantage of being able to spend unlimited amounts of money thanks to the dollar’s status as the global currency, the trillions it has spent have been in good part wasted. Supplemental unemployment insurance payments sustained the economy but ended on 31 July. Even more was given to corporations in tax breaks, zero interest loans, and subsidies for retaining workers. However, much of the largess to capitalists ended up fueling speculation in the stock and bond markets, doing nothing to help ordinary workers. Meanwhile, universities, schools, and state and local governments have gotten little. Americans are now facing the coming bankruptcies of many universities, transit systems, museums and theaters, while state and local governments will be forced to dismiss millions of their employees.
Countries with already existing systems of income support and more robust public sectors have had much smaller increases in unemployment and poverty than the US. The US is unique in financing its universities by charging students tuitions that equal the median worker’s income, costs that students finance by taking on massive amounts of debt that they then have to pay off over decades. If students are unable to attend university in person, the institutions lose income they receive from dormitories and cafeterias. That already has forced some universities to dismiss faculty and other employees. Of course, if there is a prolonged recession, students will be reluctant to take on large debts to pay tuition. These circumstances could bankrupt many universities and already have led those schools to suspend hiring, which will leave the next generation of scholars without jobs and force them from academia. This will have drastic long-term effects in retarding American research in the sciences and humanities.
While the world waits for the development of a vaccine which could come anywhere from the end of 2020, to a year or two later, to never (remember, there still isn’t a vaccine for AIDS forty years after the discovery of that disease), the US, despite spending more on health care than any country on Earth, has failed to employ contact tracing, enforce quarantines, and then use antibody testing to identify those who have recovered from the disease and can safely interact with others, while providing protective equipment for everyone else. These are the measures that are being used in Germany, South Korea, Taiwan, China, Vietnam, and other places that have been able to keep deaths low and now are able to allow normal life and work to resume.
The US has not been able to achieve any of these goals because the American healthcare system is organized to allow private entities to maximize their profits. As a result, there is no central coordination and the most effective but least profitable public health measures do not receive enough funds. Contact tracing requires training and paying a large staff of public health workers. That is not profitable and the few skilled people doing that task are employed by state and local public health departments or the Centers of Disease Control, all of which have smaller budgets today than they had ten years ago.