Why the US is in serious trouble

Clashes at a protest in Los Angeles to demand the end to California’s shutdown. Picture: AFP

America’s official unemployment rate hit 14.7 per cent on Friday, or 20.5 million people.

Actually it’s more like 20 per cent, closing on 30 million people, and is already as bad as, or worse than, the Great Depression.

The broadest measure of US unemployment – U6 – is 22.8 per cent, according to the Bureau of Labor Statistics, and separate to that the BLS says a lot of people answered the survey incorrectly and if they had been counted as unemployed, “the overall unemployment rate would have been almost 5 percentage points higher than reported” (said the BLS in its April report).

So… what, 27.8 per cent actual unemployment? Probably heading higher in May. Another measure is the employment to population ratio, which fell from 61 in March to 51.3 per cent in April.

Any way you look at it, the United States – the world’s most important economy - is in grave danger.

A number of things flow directly from the collapse in employment in the US. Inequality is set to widen dramatically because the worst affected are the poorest, most marginalised; there is now a health time bomb ticking because most Americans’ health insurance comes from their employer – no job, no cover; and the evaporation of so many jobs so quickly has meant that much of the country is giving up on stopping the coronavirus way too early.

Holding the country’s nerve in the face of such a devastatingly fast rise in unemployment would be a huge challenge for the highest quality political leadership, but America has the misfortune to be led by a hopelessly incompetent narcissist incapable of providing even a semblance of consistently responsible leadership.

Labourers wait for day jobs in Arlington, Virginia. Picture: AFP

At least in Australia there has been a solid effort at national unity and of putting health first – although that’s starting to crack now - and a “whatever it takes” effort at protecting the economy, and peoples’ incomes.

In the US, Donald Trump is attacking the states whose governors aren’t nice to him, he and the Republicans in congress are now blocking further stimulus funds and Trump is openly defying social distancing rules and egging on the right-wing protesters against lockdowns, even as COVID-19 apparently sweeps through the White House itself, and the case and death charts across the country show no signs of flattening.

The whole approach to the virus in the US, to the extent that there is a “whole approach”, is based on the idea that it will be over quickly and there will be a V-shaped recovery in both health and the economy.

That is clearly not going to happen. Many states and individuals have not locked down hard enough or long enough to get on top of the virus, so the disease is likely to drag on.

And a lot of people are staying indoors and locking down voluntarily because they’re afraid of the virus, and they aren’t going to see the sort of decline in cases and deaths that Australia and New Zealand, for example, have experienced, so they are going to stay inside.

According to an article in Bloomberg, most of the decline in restaurant attendance happened before stay-at-home orders were issued, and polls show that most Americans are very wary of returning to their normal activities, even if the government says there’s no need to worry.

It’s exacerbated and complicated by the fact that COVID-19 has become a matter of bitter left-right culture wars, with the far right taking to the streets, with guns, to protest the lockdowns and declare they won’t do it. That’s happening to some extent in Australia and elsewhere, but nothing like it is in the US.

A Trump supporter at a protest in Sacramento against stay-at-home orders. Picture: AFP

In fact, Bill Gates is even coming in for vicious attacks because of his funding of the hunt for a vaccine. There are claims that he is going to spread nanobot mind control systems through it, with 5G used to talk to the nanobots, and Gates will apparently make billions from this.

Meanwhile the Trump Administration is rushing towards a cold war with China, far more aggressively and dangerously than it did with tariffs over the past couple of years.

It’s one thing to call for an independent inquiry into the source of the virus as the Australian Government is doing – which is making the Chinese Government mad enough – but Trump has gone straight to the verdict and declared China guilty, not just of being the source of the virus but doing it deliberately and using it to attack the US.

He said last week: “This is worse than Pearl Harbor. This is worse than the World Trade Center. There’s never been an attack like this. It could have been stopped in China. It should have been stopped right at the source, and it wasn’t.”

The week before Trump said he had evidence that the virus came from the Wuhan Institute of Virology, even though virologists are unanimous that the virus was not man-made and came from animals, not a lab.

So relations between America and China are the worst since president Richard Nixon went there in 1972 and diplomatic relations were established in 1979. These two countries are the poles of the global economy: if they can’t or won’t work together it’s not just a serious problem for them, but for the rest of us as well.

In general America appears to be on the precipice of a major economic depression and social collapse, and this has now gone to the top of the list of dangers from the pandemic, daylight second.

Most other countries are more or less dealing with it because they have some semblance of normal political leadership. The United States does not, at the wrong time.

Alan Kohler is Editor in Chief of Eureka Report