Unsanitized: Republicans, Predators and the PandemicThe worst kind of capitalists have persuaded the worst kind of Republicans to end the shutdowns. This is The COVID-19 Daily Report for May 24, 2020.
BY GAUTAM MUKUNDA MAY 24, 2020
DAVID ZALUBOWSKI/AP PHOTO
Predatory capitalists like Charles Koch are behind the rush to reopen the country.
The following is a guest version of Unsanitized from Gautam Mukunda, a Research Fellow at Harvard Kennedy School’s Center for Public Leadership and author of Indispensable: When Leaders Really Matter. Follow him on Twitter @gmukunda.
Spurred on by President Trump, Republican governors are reopening their states. In other states, protests against the lockdown roll on even as the country hits new highs in daily deaths. Despite the economic devastation, however, 80% of Americans still support shelter-in-place measures. Even among Republicans, 61% support shelter-in-place and 47% oppose the protests while only 36% support them.
The experts are on the same page. Economists, virologists and epidemiologists all say that easing the lockdowns before the virus is under control would have disastrous consequences.
But while the experts and the public – Republicans included -- are overwhelmingly on one side of the issue, many Republican officeholders, including President Trump, are on the other. It is rare, to put it mildly, for politicians to take positions opposed by most Americans, particularly those of their own party, on a subject of immense public interest. To understand why, we need to know where the support for ending the lockdown comes from and its roots in a profound flaw in the American economy.
Much of the pressure to immediately end the lockdowns stems from a relatively small group of Republican financial elites. The President’s initial proclamation to reopen the economy by Easter was spurred in part by a widely-reported call with prominent investors. As well, the protests against governors’ shelter-in-place and social distancing orders have been quietly supported by major conservative donors like Charles Koch.
But not all billionaires are minimizing the danger of the virus. Bill Gates, for example, was a prophetic voice warning against the danger of a pandemic, and has continued to make the case for a forceful national response. He’s far from alone. So who are the open-it-up mega-rich, and why are they so powerful?
There are two ways to make a great fortune. The first is creation – generating value and capturing a disproportionate share of it. We might criticize their tactics or business practices, but most Americans feel that Microsoft, Apple, and Google have greatly benefited America, and that we should have many more companies like them.
There’s another, and sadly easier, way to become stratospherically wealthy, however – predation. Instead of creating wealth, you capture it from others, leaving them, and society as a whole, worse off. If you inherit an oil company and build it into a giant it might be an impressive business achievement – but when you use a tiny fraction of that wealth to weaken environmental regulations, then take advantage of them to drive up your profits, you’re not creating wealth, you’re just imposing costs on everyone else. If you buy companies, load them up with debt to pay yourself huge fees, strip their assets, and then leave their workers unemployed with worthless pensions, the only thing you’re creating is suffering – but you will get rich. And if, like Trump, you inherit a real estate company, illegally dodge taxes, scam your customers, and refuse to pay your contractors, then you’ve won predation bingo.
In 1954, the great business thinker Peter Drucker said that the only purpose of business is “to create a customer.” A few years later, however, Milton Friedman argued that the “only one social responsibility of business [is] to increase its profits.” You create customers by filling their needs so both you and they are better off. Profits, however, can just as easily – all too often, more easily – be increased through predation. Unfortunately, it was Friedman’s ideas, not Drucker’s, that came to dominate the way businesses were run, creating enormous fortunes for executives while making it easy for them to think of most Americans as prey.
What’s more, predators have realized that their best return on investment comes from spending on politics, particularly on Mitch McConnell’s money-driven Republican Party. We see this in the titanic power of conservative billionaires like the Kochs, Sheldon Adelson, and Robert Mercer. When your fortune is in the billions, spending tens or even hundreds of millions of dollars to lower your taxes is a bargain. What Republican donors want is often very different from what Republican voters do, as the polling on sheltering in place makes clear. Indeed, as the Republican Party became dependent on predatory capitalists, it followed their preferences to such an extent that with two years of unified control of the government from 2017-2019, the only significant bill it passed was a giant tax cut on the wealthy – even though a Fox News poll found that 54% of Republican voters support raising taxes on people with incomes over $1 million.
In this Administration, predators aren’t just behind the scenes – they’re center stage. There’s Trump, but there’s also Steve Mnuchin, who made hundreds of millions expediting foreclosures even though his company took $1.2 billion from the government to help homeowners avoid them, and Jared Kushner, who made millions as a slumlord who refused to maintain apartments and gouged residents on fees.
So why are some Republicans pushing to re-open immediately, even though the CDC predicts that this would result in deaths from the virus rising to more than 3,000 per day by June 1st? Why is Trump using the Defense Production Act to force meatpacking workers to labor in unsafe plants while refusing to use the power it grants him to increase the supply of Personal Protective Equipment? Why is McConnell trying to give companies immunity from lawsuits if they violate workplace safety rules and get their employees sick? Why did Republican Senators slip a $170 billion tax break into the CARES act that will provide more than 80% of its benefits (more than $1.6 million each) to wealthy real estate investors?
Because they need the predators. When you’re a predator, the calculation of when to reopen the economy looks very different than it does to most of us. In the absence of a vaccine or treatment, Covid-19, unchecked by social distancing, will likely kill hundreds of thousands of Americans. But for a predator, sacrificing other people to maximize your wealth is the way you got rich in the first place.
When predators go unchecked, however, the system – beginning with its legitimacy -- can buckle. In 2009 President Obama told the CEOs of major banks, “My administration is the only thing between you and the pitchforks” when he was trying to persuade them to limit what they were paying their top executives (including themselves) after being bailed out by American taxpayers. The Obama Administration kept the pitchforks at bay, but his fundamental message – that the American people would not much longer accept a mutant strain of capitalism in which a few gained stratospheric wealth by immiserating many – remained unheard.
Today’s tradeoff is even starker. The details of the global financial system are hard for almost anyone to understand. But it takes no special skill to see that a relative handful of billionaires are using their influence over the Republican Party to end the lockdown with scant regard for the ensuing cost in human life. Beating the virus and creating a nation where we are citizens, not prey, requires us to reject their influence and remove from power the politicians who do their bidding. Votes, not pitchforks, are the weapons we must wield.
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