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[Noah Smith] Virus crisis may keep Sanders revolution rolling

Now that Bernie Sanders has dropped out of the presidential race and endorsed presumptive candidate Joe Biden, it‘s worth considering just how profoundly Sanders seems to have shifted the policy landscape. Despite the rise of inequality and other long-term economic problems, a majority of Democrats probably felt too comfortable with the current system to embrace revolutionary change. Although the Sanders insurgency is over, many of the progressive ideas he urged on the electorate may yet come to pass in some form -- thanks to the crisis unleashed by the coronavirus.

History offers a number of potential parallels. The original US socialist movement, headed by Eugene V. Debs, failed to win significant power. But when the nation was forced to respond to the Great Depression and World War II, the administration of Franklin D. Roosevelt expanded government enormously -- increasing taxes on the wealthy, creating a social insurance system, providing jobs directly to citizens and executing industrial policies. Though he always vehemently rejected the socialist label, in some ways FDR took the country in the direction Debs and his followers wished.

The British socialist movement similarly worked in vain to win over the country for a century. But in the aftermath of World War II, the UK elected a socialist Labor government under Clement Attlee, who proceeded to create the famed National Health Service, nationalize industries such as transportation, energy and steel, and greatly expand the welfare state.

Here again, a catastrophic event made the difference. The feeling of national solidarity engendered by the struggle against Nazi Germany, the need to rebuild the country from both war and economic collapse, and the experience of the wartime intrusion of government into all areas of the economy may have prepared the UK for socialism in a way that a century of idealistic exhortations could not.

The US is now facing its own deep crisis -- not a war, but a pandemic. And though the leftist bloc that Sanders built may not end up taking the reins, COVID-19 could shift policy and public opinion decisively in favor of many of their preferred policies.

Inequality, for example, is more visible and painful during the epidemic than before. Although many of the well-off can work remotely from home or even second homes far from the centers of infection, the working poor are either stuck on the front lines -- in grocery stores, in warehouses, at delivery services -- or sitting at home unemployed, waiting desperately on a government check. Before the crisis, poor people tended to live precarious lives, but the widespread devastation of the labor market coupled with the risk of a horrible death bring a whole new dimension to their insecurity.

The pandemic has also illustrated the inefficiency and unfairness of the US health-care system. Even insured people have received steep bills for coronavirus testing and treatment -- a typical outcome in the byzantine world of insurance networks. This has prompted President Donald Trump to push for a prohibition on surprise billing for these services. But the very need for such ad-hoc measures shows that the fractured, fragmented US medical insurance system is terrible at handling emergencies. A system of national health insurance -- which most other advanced nations already have -- wouldn’t prevent epidemics, but it would make the medical fallout less of a nightmare for those involved.

Americans also must be wondering: If enormous surprise bills are unbearable for this disease, why are they ever acceptable? A system that reduces out-of-pocket costs and takes the uncertainty out of billing is looking more and more sensible.

Finally, the lockdowns forced by coronavirus have required government to rapidly expand its role in the economy. Much of American industry is now being kept afloat by government loans. By paying companies to keep workers on payroll, the government is also intervening in decisions usually left to management. And Trump has used the Defense Production Act to pressure companies to make more of the equipment needed to detect and treat the disease. Many think he should have used it even more broadly.

This doesn’t equate to a nationalization of industry, but it could make Americans more comfortable with the idea of strong industrial policy to fight crises. Climate change is a slower but even greater threat than the coronavirus, but Americans might also now realize the usefulness of direct government action to build out renewable energy, make buildings more energy efficient and so on -- just the kind of things that Sanders called for in his Green New Deal.

So although Sanders’s personal revolution is over, a bigger revolution may just have begun. A major national disaster can spur a country to embrace government in ways that seemed unthinkable just a few short months earlier.

Noah Smith
Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion. -- Ed.