1. mandating social distancing requires socializing the economic costs of doing so. We as a society can’t reasonably require social distancing, with the massive economic consequences it entails, and believe that most of those costs should be privately borne. (2/n)
Therefore we need to either abandon social distancing (thereby overwhelming health systems and sparking untold deaths) or enact much larger stimulus measures. (3/n)
2. the potential disruption is so vast – the economy in many sectors and areas has effectively come to a standstill – that government failure to act will result in an avalanche of bankruptcies and extended unemployment that will, in turn, inflict lasting damage (3/n)
Economists call this phenomenon hysteresis; others call it not being able to put Humpty Dumpty back together again. (4/n)
given governments’ adoption of social distancing, the dilemmas we face will continue until an effective anti-viral or therapeutic can be found that allows us to contract the disease without suffering significant harm. (5/n)
even if current efforts successful at attenuating spread of disease over next several weeks, social distancing will need to be re-imposed in cycles. given plausible timetable for vaccine, and unless virus mutates in less harmful direction, cycles could continue for > year. (6/n)
4. proper response to crisis will test proposition that deficits don’t matter. This is fiscal risk worth taking. Those who argue cost is too high or increase in deficit too risky need to return to first point: budget reflects economic consequences of social distancing.(7/n)
5. economic harm comes mostly from sudden stop in business activity due to social distancing, not lost productivity of those suffering or dying from Covid-19. demographics of those suffering from coronavirus and those suffering from the economic virus quite different. (8/n)
One thing is clear about stimulus: Bigger is better. To my mind, least-worst option is large and comprehensive program of loans to businesses, as @andrewrsorkin has proposed. (9/n)
For more, see (10/n):
bloomberg.com/opinion/articl…
bloomberg.com/opinion/articl…
