We’re seeing soaring unemployment in much of the world, highly unstable financial markets, governments amassing debt at unprecedented rates. But what is this economic crisis we find ourselves in? A recession? A depression? Something new and entirely different? We asked a range of economists to think about that question and also to propose a single policy or action government officials could embrace that would make a difference. Here are ideas from Joseph E. Stiglitz, Christina Romer, Alicia H. Munnell, Jason Furman, Anat R. Admati, James Doti, Simon Johnson, Ayse Imrohoroglu, Alex Tabarrok and Shanthi Nataraj.
A deep recession, absent better policies or luck
The U.S.’ public health failures have firmly established this nation as first in confirmed disease cases, first in deaths, first in the rise of unemployment.
Bankruptcies, the pandemic’s devastating effect on business and household balance sheets, and precautionary consumer behavior may well cause an inevitable COVID-19 downturn to morph into a deep, prolonged recession.
This is not inevitable: There are policy responses that would help immensely, or we could just get lucky, with the pandemic coming under control or the economy bouncing back faster than now appears to be the case.
As the shutdown began, we used a fire hose to try to ensure liquidity and employment: lots of money, not well-targeted and, even worse, very badly administered. Politics as usual meant that while Congress recognized problems that needed to be solved, it couldn’t fully deliver. For example, we know sick workers shouldn’t go to work, but after lobbying from big business, the legislation that passed still exempts almost half the workforce from paid sick leave.
Simply put, the government must do more to support the economy, including assistance to state and local governments, assurances that the jobless will continue to get help while the unemployment rate remains elevated, passage of paycheck relief programs that will succeed at keeping workers attached to their jobs (see the bill introduced in late May by Rep. Pramila Jayapal [D-Wash.]) and successfully getting aid to the most vulnerable, not those with the best connections to banks.
It is even possible that we could emerge post-pandemic and post-recession with a greener, more knowledge-based and more equal economy.
Joseph E. Stiglitz, co-recipient of the 2001 Nobel Prize in economics, teaches at Columbia University and is the author of “People, Power, and Profits: Progressive Capitalism for an Age of Discontent.”
Aid to states will provide the best return
When the numbers come out in July, we are likely to learn that real GDP has declined at an annual rate of close to 40% in the second quarter. Whether one calls this a recession, a depression, or a public-health-driven economic collapse really doesn’t matter; it is a tragedy.
Recent policy actions have helped to contain some of the damage and eased the struggles of unemployed workers. The…
Go to the news source: Coronavirus brought economic catastrophe. Here are 10 experts on how to recover