Opinion: Coronavirus Highlights Inhumanity and Inefficiency of For-Profit Economy

The economic culture in the United States still largely holds to the belief that private industry, guided by the pursuit of private interests and the profit motive, leads to the most efficient and effective economy. Conservatives, of course, cling to this belief on steroids, as is evident in their hallmark platform calling for small government, even no government, railing against bloated government operations and programs such as Social Security, Medicare, national parks, and more. As I’ve written much about lately (here and here, for example), Trump is operationalizing this ideology in hyper-drive, rampantly destroying the public sphere and railing against the public school system as “failing government-run schools,” as he eyes the dismantling of that system as well.

It is now practically a truism in our culture, even outside of conservative circles, that the private sector somehow knows how to get things done expeditiously and efficiently, while our government agencies are dilatory, ineffective, and wasteful of taxpayer dollars.

The non-partisan coronavirus argues strongly against this truism, in fact absolutely debunking it, highlighting its wrongheadedness and lunacy.

Our current economy, encouraging behaviors designed above all else to maximize profits, valorizes, for example, the elimination of excess capacity because of its inefficiency from a business standpoint. The emphasis on “lean production” similarly valorizes practices such as “just-in-time” inventory management, which discourages the stockpiling of “excess” production materials, again of because of its inefficiency from the business standpoint.

Both of these business practices are substantially hampering the national response to the coronavirus, collectively costing us much more than dollars. The cost is measured in human lives.

The lesson?

We need to measure the effectiveness of our economy in terms of how efficiently it serves human life, human need, not how efficiently it serves business by maximizing profit.

Any student will learn in Economics 101 that the purpose of an economy is to produce and distribute goods and services most efficiently to meet the needs of those living within it.

So, we need economists who think about our systems from human perspective, not a business perspective.

To be fair, the famous moral philosopher Adam Smith, in his landmark 1776 work The Wealth of Nations, notoriously argued that the way for people to promote the public good most vigorously was to seek to make us much money as possible, to pursue their private interests most vigorously without even thinking about the public good. This would, he thought, maximize the general revenue for the benefit of all.  He observed of man, “By pursuing his own interests he frequently promotes that of society more effectually than when he really intends to promote it.  I have never known much good done by those who affected to trade for the public good.”

The coronavirus offers a powerful argument.

And New York Governor Andrew Cuomo has been a powerful spokesman for the virus’s position against Adam Smith. Consider how he spelled out the problem of the lack of hospital capacity to address the pandemic:

“You only have 53,000 hospital beds. You only have 3,000 ICU beds. Why? Because our health care system is basically a private system. They don’t build capacity that they don’t need. They don’t build extra ICU beds just in case. An intensive care bed is very expensive. They don’t build a wing of ICU beds that sit vacant for 10 years on the off-chance that there’s going to be a public health emergency and you’ll need the beds… so we don’t have them. We have the capacity that people use day-in and day-out. And that’s not just New York. That’s every state in the United States. You now have this influx, you can’t handle it.

You will have people on gurneys in hallways,” Cuomo told reporters. “That is what is going to happen now if we do nothing. That is what is going to happen now if we do nothing. And that, my friends, will be a tragedy.”

In short, to paraphrase Cuomo, we need a “just-in-case” economy, not a “just-in-time” economy if we are going to be prepared to meet human need, not just maximize profit.

He diagnoses the problem as precisely one of the privatization of public health services, which means these services organize their operations from the economic standpoint of business, not the economic standpoint of meeting human need.

And what has he called for in a letter he wrote to President Trump? He called for Trump to send in the Army Corps of Engineers to build temporary medical facilities to meet the surge in patients needing treatment for the coronavirus.

He called for government intervention, for a public sector response, precisely because the private sector has failed abysmally; its so-called best business practices, in fact, forecast, inherently entail, the private sector’s failure to meet human need.

And even if these facilities get built, the supply chain processes dictated by “best” business practices for private companies also hobble an effective medical response to the pandemic.

Our just-in-time supply chains stretch across the globe. Because China has been shut down, and now Italy, with workers not going to work and factories shut down, this supply chain is disrupted. Because business efficiency militates against stockpiling so-called “excess” supplies, such as masks and other protective healthcare gear and equipment, hospitals simply don’t have the necessary resources to adequately respond to the public need the pandemic has engendered.

Adam Smith, we should recall, still foregrounded promoting the public good, the general welfare, as the moral purpose of economic behavior. When he wrote, he viewed people’s pursuit of private profit as the best means to serve the public good.

History, however, has provided a corrective to Smith’s thinking.

Hasn’t Gordon Gecko, preaching “greed is good” with horrible consequences in the 1987 film Wall Street, provided an iconic morality tale for the U.S. political economy?

One imagines Smith’s moral vision would now valorize economic behavior consciously supporting the public sphere, thinking more about the health of nations.

While Trump merits mistrust, Americans, trained in mistrusting government, may change their mindset and start prizing government intervention.