Growth evangelists are right when they state that severe lockdowns produce a parallel human misery of unemployment, looming bankruptcies, and extreme financial anguish. Yet, opening the economy too soon may produce mass death.
We need a new playbook for pandemic economics to govern our short-term reaction to the health crises.
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A three-or four-month freeze is one thing, a full year of isolation and economic inactivity is disastrous.
Our lack of knowledge about the virus is our greatest weakness. More tests can reveal more information that should lead to defeating the disease as fast as possible. There is no such thing as a normal economy until we contain the virus.
“Save the economy or save lives” is a false choice.
A group of economists published a paper on the 1918 flu outbreak. Their findings revealed:
The hope is for a deep, short recession, to show that people have shut the economy down to limit the spread of disease.
Asking millions of able-bodied workers to stop working creates a crisis of unemployment.
During this time, the U.S. is expanding unemployment benefits and are also delaying tax filing. In northern-European countries, the government is directly paying businesses to maintain their payrolls to avoid mass layoffs and furloughs.
Many small-and-medium-sized companies face extinction during the pandemic shutdown. While their income is gone, they still owe wages and rent to landlords.
This could lead to cascading bankruptcies. A time machine is needed, where grants, cheap loans, and debt relief would allow companies to shift their expenses to the future.
The economy shut down almost overnight. But reopening it will not happen the same way. It may take months and possibly years to fully open, even under the most optimistic estimates.
Saying the economy should reopen gradually is more easily said than done. One business that could reopen may depend on other companies that are not allowed to reopen.
While fighting the new virus economy worldwide has seen a huge growth in unemployment. Therefore, measures are to be taken and this as soon as possible. Maybe the most significant factor into getting the economy worldwide back on track is getting people back to work. One efficient way to do this is by using vaccines and tests for antibodies to make sure that the people who are getting back to work have developed immunity.
The current pandemic has led to an economic free fall which is unparalleled in history. In the US alone, the unemployment rate plummeted at such a speed that more than 10 million have claimed unemployment insurance in a matter of three weeks.
With over 30 percent of the U.S. population expected to be unemployed by this summer, and the GDP shrinking at a faster rate that the Great Depression of the 1930s, the current situation is uncharted territory, even for the experts.
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