Not Simply a ‘Natural Disaster’

Part 1 of a joint series in Labor Notes and Dollars & Sense on the economics of the coronavirus crisis. Part 2, "How the Coronavirus Crisis Became an Economic Crisis," is here.

The coronavirus pandemic is not simply a “natural disaster.” How many people and which particular people will fall ill or die depends not just of the characteristics of the infection but also on the policies and institutions of the society.

To understand how a large-scale disaster can be social and political, rather than natural, it is useful to look at the example of famines. The economist and philosopher Amartya Sen, a preeminent scholar on hunger in the modern world, argued that the mainstream understanding of famines—as the result of natural disasters that caused overall food availability to collapse—is fundamentally wrong.

Droughts or floods might be natural phenomena, and famines might follow them, but Sen pointed out that most famines in modern times did not involve large declines in average food availability. Instead, famines were caused by particular social groups losing access to food, usually because their incomes collapsed.

It was well within the power of governments, Sen argued, to give these affected groups enough income so they could buy food, or provide them with food in other ways. If the government failed to do this and a famine resulted, then that famine was caused not by nature but by policies and institutions.

As a child, Sen lived through the Bengal Famine of 1943 (in what was then British-controlled colonial India). Writing about it many years later, he observed that the famine did not affect all social groups equally but primarily people in rural areas, and among them mainly farm laborers who did not have direct entitlement to the food they grew (unlike self-employed small farmers or sharecroppers). The war-driven boom in urban incomes fueled rising food prices, the farm workers could no longer afford enough food, and the British colonial government refused to provide them with adequate incomes or food. Millions starved to death, Sen observed, even as “Bengal was producing the largest rice crop in [its] history.”

Sen observed similar patterns in famines generally. Often famines happened when there was no decline in average food availability. During famines, food was often exported from afflicted areas to feed higher-income and politically favored groups elsewhere. Famines happened under dictatorial or colonial rule where governments faced little political pressure to act to avert famines, rarely if ever in democracies with independent media and opposition political parties.

The coronavirus pandemic originated with a highly infectious and deadly virus jumping the species barrier to human beings. Its human impacts depend, however, on the political and economic structures in the society. In the United States, its impacts lay bare some grave failings of economic policy and institutions—indeed, of the capitalist system itself—that are not at all new.

UNEQUAL ACCESS TO HEALTH CARE

If access to medical care is determined by one’s ability to pay or access to insurance—and such access is not universal—some people who need care urgently will go without, even as people in less urgent need do receive attention. As soon as the coronavirus epidemic erupted, for example, reports emerged of the wealthy and influential getting tested while others could not.

In the U.S., before the recent layoffs nearly 28 million people (more than 10 percent of the non-elderly population) did not have health insurance. About a third of those who do have insurance still have problems paying out-of-pocket costs, sometimes forgoing needed care.

Such barriers to treatment can magnify the spread of an infectious disease. “A young person with no health insurance and an itchy throat,” notes the German epidemiologist Hendrick Streeck (quoted by the New York Times), “is unlikely to go to the doctor and therefore risks infecting more people.” Those who finally go late to the ER may also suffer worse health effects from lack of timely attention.

In the United States, those who do get treatment could face dire economic consequences. The nonprofit FAIR Health estimates that the average bill for an uninsured coronavirus patient requiring a six-day hospital stay would top $70,000.

EMPLOYERS’ POWER OVER WORKERS

As the crisis unfolded, some employers kept requiring workers to come in. The video game retailer GameStop, for example, came under fire for keeping stores open even after shutdown orders for nonessential businesses. Management claimed it was “essential retail” because it sold items needed for work from home. Employees and others saw instead the company profiting from surging demand for gaming products, at the risk of workers’ health. (GameStop relented in late March.)

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Employers cannot, of course, literally force anyone to come to work. But many people may go in if their employer insists, simply because they cannot afford to lose their jobs. In the U.S., people in the bottom half of the income distribution get, on average, 90 to 95 percent of their income from work; those in the next two-fifths above them, 80 to 85 percent. (By contrast, people in the top 10 percent of the income ranking get over 40 percent of their income from property, in the form of profits, rents, dividends, interest, etc.; those in the top 1 percent, nearly 60 percent.) Most of us simply do not have other sources of income to fall back on if we lose our jobs, apart from public benefits.

In other high-income countries workers also rely on their jobs for money incomes, but they get access to health care through public health insurance or a public health service. In the U.S., in contrast, about 60 percent of those with health insurance have an employment-based plan; excluding those covered by Medicare, about 75 percent. When losing your job means losing both your income and your health coverage, employers have enormous power over workers.

WORKERS’ VULNERABILITY TO UNEMPLOYMENT

Unemployment insurance claims are breaking records. Since the week ending March 21, new claims have topped 3 million every week, with the highest weekly figures in late March and April topping 6 million. To put those figures in context, 3 million is more than four times the highest level previously recorded in the half-century these data have been collected. Total claims over this period are more than 33 million.

The “headline” (or U-3) unemployment rate calculated by the Bureau of Labor Statistics is now nearly 15 percent. That number, however, does not include those who have given up looking (“discouraged workers”) or those who want to work full-time but can only find part-time work (“involuntary part-time workers”). Adding in those and some others, BLS calculates a broader (U-6) figure of nearly 23 percent.

Losing your job hurts not just your income but your health. Researchers at Drexel University and the University of Michigan found that the increase in mortality risk from being unemployed is about 70 percent. By comparison, the increase from one additional year of age is about 7 percent. So being unemployed has about the same effect on mortality as aging a person 10 years.

In other words, many people could die prematurely during this pandemic not because they have contracted a deadly infection but because they have lost their jobs.

THE UPSHOT

While this strain of coronavirus is new, the underlying social conditions that shape its impacts are not at all new. The crisis is transmitted like a shock wave through the political and economic structures of society: The lack of a universal guarantee to the most basic goods (like health care). The enormous power differential between employers and workers. The vulnerability to unemployment. These are everyday scourges of life in capitalist America. The current crisis has just illuminated these realities in an especially stark way.

In Part 2 we’ll cover why this public health crisis is spiraling into a massive recession, and the limits of the standard policy playbook to deal with it.

Alejandro Reuss is an economist and historian, lecturer in Labor Studies at the University of Massachusetts, and former co-editor of Dollars & Sense. A longer version of this article (with full list of sources) is available here.