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¿Qué haría Roosevelt?

Mar 20, 2020 Pavlina R. Tcherneva

NUEVA YORK – Las consecuencias de la pandemia de coronavirus no se parecerán en nada a las de la crisis financiera de 2008; y no se obtendrá una recuperación en forma de V con medidas de estímulo convencional, por más grandes que sean los paquetes de estímulo. Estamos en guerra contra la COVID‑19, y en tiempos de guerra, la producción civil se detiene y el único trabajo que se necesita es el destinado al esfuerzo bélico mismo.

Además, lamentablemente es necesaria una recesión para detener el avance del virus. En Estados Unidos, más del 50% de los puestos de trabajo están en riesgo de despido, suspensión, recorte salarial y pérdida de horas. Casi todos los sectores de la economía perderán buena parte de su actividad, los hogares sufrirán una enorme merma de ingresos y el gasto de consumidores y empresas disminuirá rápidamente. En el sector industrial, el colapso ya comenzó; a continuación viene la economía de servicios, que emplea al 80% del total de trabajadores.

De modo que una pandemia provocará otra, de desempleo. La avalancha de despidos traerá una ola de deudas impagas, quiebras y reducción de ganancias. El efecto dominó continuará en muchos ámbitos: enorme caída de la recaudación impositiva en los niveles estatal y municipal, quiebras de empresas, empobrecimiento de comunidades, empeoramiento de indicadores sanitarios, gente sin techo y «muertes por desesperación».

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j. von Hettlingen Mar 21, 2020

Pavlina R. Tcherneva says, as the world is at war with COVID-19, it must act accordingly, because the current pandemic will create mass unemployment, due to an “avalanche of layoffs,” that will bring “a wave of defaults, bankruptcies, and depressed profits.” As a result of “collapsing state and municipal tax revenues and business failures to impoverished communities, declining health outcomes, homelessness” and so on, governments must address popular despair and grievances.
The author reminds of how President Franklin D. Roosevelt (FDR) responded, when America was in the grip of the Great Depression. He faced a “stricken” nation of closed banks, shut down factories, shattered confidence and millions without work or hope. But he insisted that "the only thing we have to fear is fear itself – nameless, unreasoning, unjustified terror which paralyses needed efforts to convert retreat into advance".
FDR had to discard one of the clearest pledges of his March 4, 1933 inaugural speech – that the cost of government would be "drastically reduced" – when he saw that the only way forward was for the government to stimulate the economy, invest in great public works, feed the hungry and for a time employ millions who had nowhere else to turn. This was denounced as "make work", but to Roosevelt, it was better than no work.
What followed was the start of an onrushing period – a sweep of legislation that transformed America; then and in the years that followed, FDR reformed the free market and rebalanced it with the welfare state. He saved America's union during a civil war. He also saved the economic system and perhaps even the democratic institutions. Then, for the US and the world, he played an indispensable part, side by side with Winston Churchill, in saving freedom from the nightmare of fascism.
The Great Depression was worse than COVID-19. Yet FDR found a way to warn and reassure all Americans, all at once. What the author proposes are more immediately measures – like overseeing the logistics management – “building temporary field hospitals… and emergency health centers…….cranking up production of essential equipment and medication, staffing health facilities adequately, and establishing support services for the hungry, homeless, and most vulnerable.”
To curb the spread of the virus, it is imperative that people stay home, while receiving financial help, like deferring utility bills and tax payment etc. They must be given “income support in the form of extended unemployment insurance, food stamps, and housing benefits.”
Apparently the coronavirus-response package recently adopted by the US “does not go nearly far enough. As it stands, the legislation still would leave 80% of private-sector workers without medical and paid-leave coverage. The provision for free testing offers no solace to those who are already critically ill, or who will have lost their health insurance as a result of unemployment. The US should “use this occasion” to make universal paid leave and Medicare for all permanent policies.” Households need cash desperately and an emergency cash support like a $1,000 disbursement “has gotten Americans excited”
However Trump is no FDR, and there is no way that he handles the crisis competently. While some crises require the mobilisation of fiscal and monetary resources, war requires a robust movement against an enemy, and world leaders are resorting to martial metaphors to describe the massive response required to stem the coronavirus epidemic, which is primarily a public health crisis. But it’s also an economic crisis, and a crisis of public morale. Fear is widespread and mounting.
FDR did not grapple with a pandemic, but the economic crisis was incomparably worse.
Coronavirus is not the Great Depression, but it is becoming a national trauma. Roosevelt knew that in the midst of trauma, a leader has three responsibilities. The first is to tell the truth. The second is to take concrete steps to address both causes and symptoms. The third is to give people confidence that their nation “will endure as it has endured, will revive and will prosper.”
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Robert Mullen Mar 20, 2020

Used to be the "Service Sector" consisted of folks who lived on the premises of their employers. Sheltering-in-place did not lead to a loss of productivity. It was the opposite of the gig-economy other respects, for example if you were the coachman, you would
have something to do even when the coach was not rolling.
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Michael Public Mar 20, 2020

Sanders is Roosevelt. And the voters just told him to f off. So maybe if they drop interest rates to -1% it will 'stimulate the economy'...ha ha. When Rome is burning you need fire engines, not fiddlers.
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stephan Edwards Mar 20, 2020

Wow!! Talk about fantasyland. How exactly does the author propose to get these policies through Congress? Maybe the 82nd airborne could hold them at gunpoint because that's the only way they could get it passed. Even the Democrats couldn't get support from a majority of THEIR OWN party much less in general.
Has for the authors proposal to effectively weld the plates to the presses at treasury and run it until the plates melt? I personally not sure that hyperinflation and a dollar that is worth less as a means of exchange (nationally and internationally) as piece of used toilet paper of the same size is a good idea. You put that many in circulation? Nobody with enough sense to come in out of the rain will take them. Our trading partners can usually tell when to come in out of the rain. So I rather expect they would refuse WORTHLESS dollars.
- Jeff Epstein Mar 21, 2020
  
  Nothing gets through this corrupt Congress, of course, but that doesn’t change anything about what’s truly necessary, nor does it change the fact that Congress is indeed capable of doing all of these things. They just don’t care about anything but their big donor checks.
  
  As far as all the scaremongering such as hyperinflation and worthless dollars, that’s incorrect. As long as we have the resources (labor, productive capacity) available to do it, Congress can safely vote the dollars into existence in order to activate them. With massive (and necessary) unemployment, OF COURSE we have the resources to do it.
  
  For those interested in learning how federal finance actually works, here is a good place to start: https://theconversation.com/explainer-what-is-modern-monetary-theory-72095
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- Michael Public Mar 20, 2020
  
  No. Other economists in this forum indicate it would amount to about 25% of gdp. As everyone else must follow suite, the dollar exchange rates will remain roughly the same.
  
  But don't worry, Adam Smith's invisible hand will solve it for you, as long you are a billionaire who bought a old nuclear bunker and stocked it with 60 years of supplies.
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