If you’ve been following the coronavirus pandemic — and who hasn’t? — you know that there are two problems: the public health problems and the economic problems.
The public health problem is obviously how to contain the outbreak itself. The economic problem is how to deal with the fallout of social distancing. Restaurants, the travel industry, the entertainment industry, the tourism industry, all of those are getting savaged right now.
Here’s what not to do: send a bonus check to all Americans. That is a poorly thought out way to try to buy an election.
The clear economic problem here is that this pandemic is going to impact different sectors of the economy in completely different ways. If you’re a coder and you mostly spend your day behind a computer writing code, there will be very little impact on your life.
On the other hand, if you’re a waiter in a restaurant, you could be shit out of luck. Or a driver for Lyft. Or, as some of my friends are, musicians who make their living on the English Country Dance circuit.
As we formulate a response to the economic devastation the pandemic is going to cause, here is a minimum of things that we should be thinking about:
Bailout of Certain Industries
It’s clear that certain industries are going to need a bailout. Like the airline industry, for example, which operates on very thin margins. However, this time around this kind of bailout should not come without conditions.
Senator (and recently departed Presidential candidate) Elizabeth Warren has proposed eight conditions relative to bailouts, and these conditions might be a good starting point in terms of what to demand as compensation for a bailout:
- Companies must maintain payrolls and use federal funds to keep people working.
- Businesses must provide $15 an hour minimum wage quickly but no later than a year from the end
- Companies would be permanently banned from engaging in stock buybacks.
- Companies would be barred from paying out dividends or executive bonuses while they receive federal funds and the ban would be in place for three years.
- Businesses would have to provide at least one seat to workers on their board of directors, though it could be more depending on size of the rescue package.
- Collective bargaining agreements must remain in place.
- Corporate boards must get shareholder approval for all political spending.
- CEOs must certify their companies are complying with the rules and face criminal penalties for violating them.
At the same time, one cannot let industries like the airline industry just go under. Some airlines are really going to need assistance, and it’s not going to help anyone to just let them go under.
Changes to Unemployment System
There have been some estimates that by the time this pandemic is finished, we could be looking at 20% unemployment. Again, it’s industries like the restaurant industry, the travel industry, the entertainment industry, and the tourism industry that are going to be hardest hit. Restaurants operate on notoriously thin margins, and a bunch of them are going to go out of business. Oh, they may eventually get replaced, but how long will that take?
First, all these out-of-work waiters and cooks there are going to need to receive generous unemployment benefits, and these should be extended as necessary. And the waiting period should be waived.
In addition, there is a second problem, and that is what to do with all the “gig” workers who are not entitled to unemployment compensation? (This is one of many problems that are being created by the growing prevalence of the gig economy. It’s a further shredding of the safety net.)
Rollback of Tax Reductions
At some point the question is going to be, who is going to pay for all of the government benefits and bailouts that will be required? By now it’s clear to anyone who has been watching that the Tax Cuts and Jobs Act of 2017 was not a “jobs” act but just a tax give-away to corporations and rich people. Raising taxes in the middle of a recession is not what traditional economics would recommend, but at some point these completely unwarranted and ineffective giveaways will have to be reversed.