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The Four Rules of Pandemic Economics

Science

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.

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The Four Rules of Pandemic Economics

The Four Rules of Pandemic Economics

https://www.theatlantic.com/ideas/archive/2020/04/new-laws-pandemic-economics/609265/

theatlantic.com

5

Key Ideas

A new playbook

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.

The false choice

“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:

  • Early and aggressive interventions saved lives and triggered a faster rebound, such as job growth and banking assets.
  • Without a healthy population, there can be no healthy economy.

The hope is for a deep, short recession, to show that people have shut the economy down to limit the spread of disease.

A living wage

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.

A time machine

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.

Science

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.

SIMILAR ARTICLES & IDEAS:

Existing divisions

Epidemics and other natural disasters tend to both illuminate and reinforce existing divisions.

  • The division in our society is between those who can keep their jobs and work from...

Hope for low-income workers

History offers a precedent. Collective anger at low wages and poor working protections can produce lasting social change.

  • One study that looked at 15 significant pandemics revealed an increase in wages for three decades afterward.
  • After the Plague of Justinian, worker incomes doubled.
  • After the Black Death in the 1300s, textile workers in northern France received three raises a year.

Workers' rights

The pandemic may be bad for workers’ rights.

  • The pandemic might be blamed on outsiders - the Black Death led to massacres of Jews across Europe.
  • In the past decades, many low-income whites have become allied with other whites, not with poor people.
  • Organized labor is still far off. Busy employees at large retailers are spread across the country and don't have a centralized way to communicate.

2 more ideas

Restarting the economy

Restarting the economy

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.

Implementation is complicated

The proposed three-phase plan will allow many businesses to open in the first phase.

Schools and daycare centers can open in the next phase. But that means millions of working parents could be asked to return to their jobs before they have someone to take care of their children.

Partial reopening

In the early phases of reopening, businesses could be required to operate at a reduced capacity.

Offices might operate in rotating shifts, but other businesses could have a harder time. Restaurants may have tight profit margins even in better times. Operating at half capacity may mean working at a loss.

one more idea

Getting the economy back on track

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 getti...

Immunity vs. privacy

Getting the worldwide economy back on track requires workforce. Providing this workforce requires healthy individuals able to work hard enough to help things get better. Governments are now trying out ways to officially have people's health checked: by providing different types of certificates, for instance. The major concern, however, is in regards to everybody's privacy: while these certificates do prove our immunity, research institutions are working on developing tools that can also protect our data.

Certifying immunity and its advantages

It might be that only by certifying workers' immunity, states can help their economy know growth again. However, in order to make the people who get certified take up positions that require direct contact with customers, there will be a need for encouragement from employers' side, such as pay raises. As this is maybe the only real option, countries worldwide are going to have to apply the method.