Slump after the slump?

Submitted by AWL on 28 April, 2020 - 12:39 Author: Colin Foster

57% of US university chiefs say they will be cutting jobs in the coming months. Many US universities are expected to shut down altogether.

In Britain, councils say they will face an unpayable ÂŁ5 billion debt as they move out of the lockdown. Some are already planning cuts, and some are threatening to declare themselves bankrupt.

Workers in some elderly care homes have been told that their jobs may disappear as the lockdown eases, since the homes will have fewer old people to look after.

In Britain already, one and a half million people have claimed Universal Credit. Those who have lost jobs, or a lot of their pay, are disproportionately young and worse-off. 80% of the workers facing lay-offs or sizeable pay cuts are estimated to be without university degrees, although about 43% of the population aged 21 to 64 have degrees.

But the easing of the lockdown could bring more job cuts than the lockdown itself.

Small businesses will often be surviving despite lost income because they’re not paying their rent and bills, and in full lockdown those payments are not chased hard. As the lockdown eases, their creditors will come after them.

Burger King has said publicly that it is paying no rent on any of its shops, and many smaller operations must be doing the same. Burger King can do a deal with its landlords as the lockdown eases. Smaller operations, maybe not.

Even big businesses will be in trouble, despite the government’s lavish promises of credit for them. The worldwide total of corporate bonds (a sort of IOU) in 2019 was $13.5 trillion, twice the level of 2008. A much slighter tightening of credit than in 2008 will topple many firms who have built their plans on a spiral of debt.

Governments, too, will have built up huge debts. Governments and big businesses will try to restore their position at the expense of the working class.

Universal Basic Income has drawbacks as an all-purpose formula for a social “safety net”. But right now, in this particular emergency, an emergency Universal Basic Income, paid to everyone without application procedures or delays, of the type of the $2,000 per month for everyone demanded in the USA by Bernie Sanders, is the only formula foolproof and speedy enough to meet the case.

Coupled with a cancellation of rent, mortgage, and utility bills during the emergency, it could save millions from pauperisation and economic life from an implosion.

Together with that, the labour movement should demand the emergency public ownership, under democratic control, of high finance, to protect our lives against the danger of an implosion of credit and a snowballing slump even as the pandemic eases.

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