American crises

By Troy Stangarone

The United States is in the midst of three crises that are undermining confidence at home and abroad.

In recent years, the U.S. has suffered a slow decay of institutions. Key positions in government have been left unfilled and there has been a turn away from expertise to political ideology. The result has been an increasing unwillingness to listen to the experts that remain. That has left the U.S. more vulnerable to COVID-19.

It has also amplified the inadequate response to coronavirus. Where Korea has had a systemic response to test, trace, and contain the virus, the United States has had a more ad-hoc response.

The federal government abdicated its responsibility to coordinate a response and has given up the advantages that come from coordinating nationally. The result has been states bidding against each other for critical medical supplies, a patchwork of standards, and more than 122,000 deaths and counting.

Economically, COVID-19 has brought to an end the longest economic expansion in U.S. history. In the first quarter GDP declined by 4.8 percent and second quarter numbers are expected to be worse.

While a recession was unavoidable as states tried to flatten the COVID-19 curve, the lack of a coherent approach will likely result in a deeper economic decline than would have otherwise been the case.

Federal Reserve Chairman Jerome Powell recently testified before Congress that "significant uncertainty remains about the timing and strength of the recovery." He noted that a full recovery is unlikely "until the public is confident that the disease is contained," something the decline in U.S. expertise is hindering.

In the middle of these two crises, the United States is also facing a crisis over its values and social justice that is playing out in protests across the country. While triggered by the killing of George Floyd at the hands of the Minneapolis police, it is a tension that has long been below the surface of American society.

The United States has always been an experiment in the ability of individuals to overcome the bonds of ethnicity, race, and nationality to build a more inclusive society.

This spirit was written into the Declaration of Independence when Thomas Jefferson wrote: "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."

The U.S. has often struggled to live up to these words. Jefferson himself was a slaveholder, along with many of the Founding Fathers. The Trail of Tears saw the removal of tens of thousands of Native Americans from their homes to reservations further to the west.

The Civil War ended slavery, but it did not bring equality for African-Americans who continued to face segregation. During World War II, Americans of Japanese descent were placed in internment camps.

Despite even the progress of the civil rights movement of the 1960s and other efforts to address injustice, many Americans still struggle for the equality called for in the Declaration of Independence.

The unjustified deaths of African Americans at the hands of the police in Minneapolis, Atlanta, and other cities have understandably placed a focus on the use of force by police in the U.S., but ending racial inequality in America requires deeper changes than police reform.

African Americans have faced discrimination across society, including in the job market, for housing and business loans, and access to healthcare.

According to the Brookings Institution, decades of unequal access to opportunities have hindered the ability of African Americans to build wealth across generations. The average white American family is 6.7 times wealthier than the average African American family.

In the current economic crisis, University of California, Santa Cruz economist Robert Fairlie has shown that African American businesses have been hit hardest. The future prospects aren't good.

A separate report by the Brookings Institution found that while 60 percent of Caucasian-owned businesses survived the Great Recession, only 49 percent of African-American-owned businesses did.

Despite Congress creating programs to provide loans to small businesses to keep them afloat during the COVID-19 crisis, many of those loans have gone to larger businesses and not small, minority-owned businesses. It has taken individuals such as Magic Johnson to step up and pledge support for minority businesses to help give them access to the capital they need.

Inequality also impacts the health of African Americans. As the Kaiser Family Foundation has noted, African Americans fare worse than Caucasians across a range of health statistics and have also faced higher rates of death from COVID-19.

Change will not happen overnight. If the protests and struggles with COVID-19 help to make Americans more aware and more willing to act in response to the inequalities faced by minorities and those without access to healthcare, the U.S. can become a better, more equal country in the future.

Troy Stangarone (ts@keia.org) is the senior director of congressional affairs and trade at the Korea Economic Institute.