Friday, March 27, 2020

The Coronavirus Does Not Discriminate; Unfortunately Our Economic System Does — Thomas Masterson

Without stronger and more direct action, the fallout for the most vulnerable will be even worse and the gaps between rich and poor, whites and non-whites in the US will grow even larger. Rather than subsidies for corporations with no oversight why not help state governments fill their budget shortfalls? During the Great Recession, too little was done to help states and they responded by cutting the things that could make a difference: education and healthcare. Cutting back on these things is not just pro-cyclical, which is bad enough, it reduces the future capacity of the states to deal with the next viral pandemic (in the case of healthcare cuts), as well as reducing the growth potential of the economy. As far as transfers, rather than a one-time payment, why not monthly transfers for the duration of the crisis? There is no doubt that sending US households a cash infusion will go some way towards offsetting the reduction in the demand for goods and services. However, a one-time cash infusion will have a much lower dollar-for-dollar impact than knowing there’s money coming in regularly. In the former situation households that can are more likely to set that infusion aside in case things get even worse....
Multiplier Effect
The Coronavirus Does Not Discriminate; Unfortunately Our Economic System Does
Thomas Masterson

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