Failure is the Key to Success

The radicalism of the nation’s policy response to COVID, at least in the American context, remains underappreciated on much of the US left. But it’s crucial to grasp in order to understand how that response has exposed the American adaptation to dysfunction.

The simple fact is that the economic policy response to COVID — primarily through the CARES Act under Trump and the American Rescue Plan under Biden — gave Americans a brief glimpse of what successful economic policy actually looks like. In 2020, a year of unprecedented economic dislocation and unemployment levels, poverty in the United States actually fell. The combination of relief payments, paycheck protection loans, and supercharged unemployment insurance created a situation where the lives of the poorest Americans actually improved during a recession. In fact, the US response to the crisis stands out internationally for its aggressively egalitarian fiscal response.

Yet these policies, alongside others like eviction moratoria and prisoner release programs, actually created new problems in a society built around the pervasive failure to provide for its citizens.

In California, this dynamic became apparent relatively early in the crisis, when the state released thousands of prisoners to reduce prison overcrowding during the pandemic. Mass incarceration is, of course, one of the most glaringly pathological features of American society. While California is in the middle of the pack when it comes to incarceration rates among US states, if it were its own country, the state would be in the top ten most-jailed societies in the world.

So when the state scaled back its carceral ambitions even slightly during the pandemic, it threw sand in the gears of some of its institutions that have grown to depend on a large prison population. Chief among these was its firefighting capacity, particularly crucial in a rapidly drying state. California relies on prison inmate firefighters, paid only dollars a day, to contain the wildfires that ravage its backcountry every summer.

In August of 2020, the state was hit with weeks of major wildfires, including the largest such fire ever seen in the state. The state’s prisoner release policy actually created a shortage of firefighters just when they were needed most. Because the state has adapted to its pathological over-incarceration, any remedy for that pathology is bound to create problems in other institutions.

A similar dynamic surfaced in the used-car market. While it’s common knowledge that used-car prices shot up during the pandemic, it’s less widely appreciated that a key reason was the decline in auto repossessions.

Since even used cars are well beyond the means of many Americans, about two-thirds of all auto purchases in the United States are financed with some kind of loan. Over the last decade, auto lending has expanded into the subprime market, as financiers embrace the kind of risky lending that led to the mortgage crisis in 2008. As a result, about two million cars are repossessed by lenders annually. These cars are then resold by dealers, forming a crucial part of the used-auto supply chain.

Auto repossessions actually fell during the pandemic, for a few reasons. First, the eviction moratorium meant that people could divert more money to their car loans, since there weren’t similar protections against automobile repossession in most states. Second, the huge amounts of relief money going out meant that people had more resources with which to make their car payments. Finally, lenders themselves, wary of popping the auto-loan bubble that’s been building, eased off repossessions.

As a consequence, the supply of used cars contracted and prices shot up, just as more people began buying cars to avoid public transit during the pandemic. In the United States, many people’s ability to afford a car depends on other people failing to make their payments, and therefore losing theirs.

The economic recovery that followed the pandemic recession has exposed how the labor market, a foundational institution in any capitalist society, is also built around dysfunction. Thanks to the United States’ vigorous economic policy response, the recovery has been unusually rapid, gaining ground in months that previous recoveries took years to attain. As a consequence, the labor market is now tighter than it has been at any point since the “miracle economy” of the late 1990s.

Because workers now have options, employers whose entire business model is based on underpaying a desperate workforce are running into trouble. Domino’s Pizza just reported its first earnings drop in over a decade because it can’t find delivery workers willing to work for its usual wages. Similarly, slaughterhouses are having trouble finding workers willing to brave their notoriously dangerous and abusive conditions for a paycheck. Even a $3,000 signing bonus isn’t scaring up the needed labor. As a result, meat prices are going up as supply stagnates.

The labor market always depends on what Marx called the “dull compulsion of the market” to function. But in the United States, this compulsion is particularly brutal. In Denmark, for example, the average wage for meatpacking workers is over €30 an hour. In the US, the median hourly wage in slaughterhouses is $14.

There is nothing inherent to meatpacking that makes it low-wage work. But in the United States, there has always been a steady supply of absolutely desperate workers, and so the entire meatpacking industry — like many other industries — is built around exploiting their desperation. When the workers become even a little less desperate, the industry begins to malfunction, demonstrating once again how failure is key to the system’s success.

Jailbreak From the Prison of the Market

These examples highlight an often unrecognized source of difficulties for the Left as we seek to build a more humane and functional society. We know that it’s our responsibility to fight for better compensation, options, and power for workers. What’s less obvious is how our victories might engender problems of their own. When markets as central to most Americans’ lives as the market for meat products begin to malfunction because workers are a little less desperate, we should expect discontent to reach far beyond the employer class.

Indeed, this is already happening. Opinion polls indicate that fear of inflation is widespread in American society, despite the fact that economic conditions for most people are much better than they have been in decades. (Of course, the fact that most media outlets breathlessly run any piece they can find fanning inflation fears, no matter how ridiculous, certainly doesn’t help.) If this modest retreat from barbarism brought on by a tight labor market has provoked this response, one can only imagine the discontent truly civilizing reforms would bring in their wake. It is this dynamic, in which markets protect themselves by punishing those who interfere with them, that led the political scientist Charles Lindblom to describe the market as a prison.

But as the example of countries like Denmark suggests, prison breaks are possible. States can pass reforms that disrupt the institutions that function on dysfunction, and can maintain those reforms in the face of inevitable backlash.

The key to withstanding that backlash is class consciousness. In the United States, class consciousness is abysmally low. People are far more likely to think of themselves as a consumer of meat or a buyer of used cars than as a worker. But it is only when people identify as workers, and see their fate as linked to that of all workers, that they can be persuaded that a spike in meat prices or long waits for pizza delivery aren’t problems to be concerned about but rather signs that the class as a whole is gaining ground.

There is no way around class consciousness for those hoping to civilize American society. Institutions large and small have adapted to the pervasive dysfunction and misery in this country, and attempts to remedy that will undoubtedly be disruptive of those institutions. That disruption threatens the viability of remedies. Only a political coalition that convinces large numbers of Americans to see their interests as workers rather than consumers can provide the stability needed to weather the storm.