Source: http://www.columbia.edu/~wk2110/Corona/Statement.pdf
The global pandemic of the new crown virus is first of all a health crisis, but it also severely damaged our economy. In response to public health challenges, businesses and households are required to drastically reduce economic activities, and the livelihoods of tens of millions of Americans remain unresolved. The policy choices made in the next few days will have a serious impact on the extent of economic difficulties that people will feel during the entire crisis, and who will feel the negative effects first. These choices will also determine what options we have available after the crisis is over.
Due to the unusual recession brought about by the dramatic actions taken to contain COVID-19, there is currently no ready-to-use action manual. Although the primary concern needs to be on public health, there are also two urgent concerns in economic policy: ①Ensure the safety and material welfare of our fellow Americans, and ②Prevent the collapse of the structure of American economic life. This will not only enable the United States to fight COVID-19 with all its strength, but also enable all of us to resume our lives in the most advantageous position while relaxing the necessary restrictions on economic activities.
First, we must act quickly to prevent the destructive bankruptcy of individuals and businesses. Policies to prevent these situations should be formulated immediately. The balance sheet is already in deficit. We will see the disappearance of jobs provided by companies that have closed down during this necessary downtime. In this case, most of the production capacity in the economy will be destroyed. Once this complex network of relationships is unraveled, the process of rebuilding the US economy will become slow and expensive. If you can’t act quickly to keep your job, it would be a serious mistake that will have an important impact on all aspects of American life.
In order to have a more rapid recovery in the future, Congress should adopt the following four proposals:
1. Invest funds to make downtime as short as possible , without saving resources, nor avoiding the development and production of trials, vaccines and new therapies. Venture capital. Saving months of normal economic life can make up for the money lost by pursuing things that will ultimately fail to function in the experiment. Even in the face of unprecedented short-term financial and economic costs, priority must be given to reducing infection rates.
2. Provide necessary support for small and medium-sized enterprises that cannot cope with this shock, So that it can normally pay credit, rent and maintenance costs, and perform other inherent obligations. This means supporting them to maintain wages, provide financial support for vacations, or provide support through other related policies. Once restrictions can be safely suspended, the continuity of employment can ensure that the company and employees immediately begin to contribute to the reconstruction of our economy. If we allow the liquidation of the company and the dissolution of employees, the economic recession will be more severe and the recovery will be slower.
3. Provide necessary support to individuals whose income is affected by the stop-work order so that they can make mortgage, credit and rent payments normally, and perform other inflexible obligations. This means paying them regular wages to make them loyal to their jobs, providing direct transfer payments to affected workers, supporting the unemployment insurance system, taking action to delay mortgage, credit, tax and rent payments, and strengthening state and local government support for others A safety net of capabilities in the form of.
4. Assist the financial market to maintain the production capacity of large enterprises.
All of us, whether conservative or liberal, believe that we must now spend money to support the economy. This is an extraordinary time when the US government is still able to spend. The government is the only party large enough to ensure that our economy can survive this crisis without serious collateral damage.
Legislation should provide sufficiently large transfers, loans and other forms of support, mainly for those directly affected enterprises and workers. It would be even better if these supports were more generous-after all, for companies and individuals at risk of bankruptcy, too little help or too much restriction will not be able to prevent them from going bankrupt. A policy that misses too many companies and individuals in need of help will cause unnecessary damage to the economy, while causing too much damage to the economy will make it difficult to sustain public health measures. The disappearance of viable companies will further damage the economic recovery.
We call on the Congress to pass and the President signs "extensive economic support for affected individuals and businesses" as soon as possible. The most important thing is to provide help quickly-if we spend a lot of time to formulate the perfect bill, we are doomed to fail in the future.
Up to now, 621 American economists have signed up to support the proposal, including top big cows such as Olivier Blanchard, Daron Acemoglu, Dani Rodrik and so on.