The controversial fiscal and monetary policies that were implemented as a result of the 2008 housing market crash may have prevented further damage to the economy, but they have not fixed the fundamental problems that caused the recession in the first place. Today, economies struggling as a result of the COVID-19 pandemic have been met with unprecedented fiscal and monetary policies that have largely followed the footsteps of 2008 by leaving businesses unaccountable and harming the middle class.
Much like in 2008, current policies do not address the real issues within the economy, such as corporate malfeasance, reckless financial deregulation, and most importantly, the tens of millions of Americans that are currently suffering from mass unemployment and wage cuts. Congress and the Fed have once again catered to the interests of banks and big business through generous bailouts, bond buybacks, and low-interest rates.
These policies may temporarily prevent further damage to the economy, but certainly do not induce true economic growth. In many cases, government policy has hurt working-class families, such as the Fed’s goal of keeping inflation below 2% and Congress’ corporate bailouts.
Many fervent anti-inflationists claim that inflation is an evil, unfair tax upon the population and therefore must be prevented, no matter the cost. The reality is that crippling levels of unemployment hurt the average American much more than an additional 1 to 2 percent increase in inflation would. When the Fed increases the interest rates of their loans to “slow down” the economy in order to prevent inflation, it brings down demand and delays or even reverses reemployment progress.
Despite the Fed’s many faulty, unaccountable monetary decisions, the greatest threat to America’s economy is it’s infamous corporate welfare program. The 2020 bailout gave over half a trillion dollars to companies with no strings attached, much like the 2008 bailout did. The Right constantly criticizes unemployment and welfare programs for encouraging laziness and destroying incentives to work (they don’t). Ironically, this same line of reasoning can best describe how government bailouts and deregulations have incentivized banks and financial firms to engage in deceptive accounting, reckless risk-taking, and predatory lending.
The reason these disastrous bailouts and regulations are implemented is because of corporate lobbying, which has become an increasingly greater threat to our economy and democracy in recent years. In 2008, banks and big businesses demonstrated how far they were willing to go in order to secure a bailout with minimum accountability and no significant regulations by spending an average of $17.4 million on lobbying every single day Congress was in session.
Much of what the country witnessed in 2008 (with great frustration) is happening again today, except the stakes are much higher. To-big-to-fail firms and banks have become even bigger since 2008, requiring greater bailouts. The Fed has already pumped more money into the economy than it did during the entirety of 2008. And most importantly, demand is at an all-time low, as tens of millions of Americans face evictions, unemployment, and substantial wage cuts.
Although our current economic crisis was not directly caused by the financial sector or banks as it was in 2008, issues that have gone unchecked for over a decade have intensified today’s current crisis. Only under the pressure of the people will Congress and the Fed break free from the shackles of corporate control and implement policies that will serve the interests of the American people, not just the 1%.
Title Image: Oli Scarff/Getty Images
