Chapter News

American "Exceptionalism" and Covid-19

Bill Smaldone
June 1, 2020

Many Americans view the United States as the “exceptional” nation, a model, chosen by God, the freest, richest, most democratic nation. These claims are, to say the least, mythical, but as one of the developed world’s most unequal societies, the U.S. is truly exceptional.

The U.S. is extraordinarily rich, but its wealth is crassly maldistributed. While the value of American workers’ wages peaked in the early 1970s, since then real income for most families has fallen or stagnated, while the rich have grown incomparably richer. Labor productivity has steadily risen, but most of the new wealth has gone to the top. Indeed, the top 1% of families now control 40% of the national wealth, while the bottom 90% controls only 25%. In addition, even in times of “full employment,” tens of millions of families, especially in communities of color, lack health care, housing, and educational opportunity. Some 40% of American’s cannot find $400 in cash in an emergency.

The Covid-19 pandemic exacerbates this division. As the rich retreat from the cities to the countryside, and the better-off employees work from home, millions of workers have become unemployed with few resources to fall back on. While many are eligible for unemployment benefits, the rush of millions to apply has caused long waits leaving families with no income for months. Typically, a family earning $50,000-70,000 needs two years to save a month’s expenses, while one earning $200,000 needs only two months. Thus, for families living from paycheck to paycheck, the loss of a job means scrambling to find money for rent, heat, and food.

As states implemented stay-at-home policies to combat the pandemic, the federal government allocated trillions of dollars to  businesses and state unemployment insurance systems, but this money has propped up corporations and the wealthy more than small business and workers. In contrast, other developed capitalist states, especially in northern Europe, have managed the pandemic more equitably and effectively. Workers there have much more social security and a stronger health-care infrastructure with which to weather the storm. 

As Nicholas Kristof recently noted, Denmark provides an excellent example of a state in which strong labor unions and an effective Social Democratic Party have won living wages and a broad array of social benefits for workers. Fast food workers, for example, start at $22 per hour, get six weeks annual vacation, life insurance, a year’s paid maternity leave, and a pension, while also participating in the country’s universal medical insurance and paid sick leave system. Child-care is affordable, higher education is free, and Danes typically work 22% fewer hours than Americans.

In response to the pandemic, the Danish government issued stay-at-home orders, implemented twice as much per capita testing as the U.S., and effectively limited the spread of the virus. Meanwhile,  it kept workers employed by paying firms to ensure that they earned 90% of their regular pay. As a result, there was no resort to credit to pay bills, no turn to food banks, no fear of eviction, and the labor force was ready to work as the government reopened the economy in mid-May. 

Capitalism is alive and well in Denmark, but the Danish welfare state shows what an exceptional society can achieve.