Tim asked for my "letter" as an alternative to the free cash proposal; not sure you all want to sign on, but here's a more detailed policy response (draft):

How to deal with the crisis

L. Randall Wray

Naomi Klein: Disaster capitalism creates crises and uses those to implement Shock Doctrine; most of the proposals coming out—writing checks to all, bail-outs for banks, hundreds of billions for corporations—are all examples of taking advantage of the shock of a crisis to further the doctrine of “free markets”. Klein argues that what usually happens in a crisis is that all the progressives get co-opted and abandon progressive policy because they see the crisis as so severe, and causing so much suffering, that they’ll settle for the Doctrine as better than nothing. Slowly but inevitably, we lose all social protection as progressives abandon their principles to deal with the immediacy of the serial crises created by disaster capitalism.

Of course you will see this agenda as “politically infeasible”—and it is infeasible if you accept the premise of the Doctrine that there is no alternative to Neoliberalism’s Disaster Capitalism.

  1. Don’t pay attention to the stock market. It was boosted largely by corporate buy-backs and is vastly overvalued. Reported corporate profits since the GFC have been high, and more than all of them were used to goose stock prices. The stock market should—and will—fall much more.
    1. Yes, people are worried about their retirement portfolio. But saving Wall Street is not the answer
    2. Wall Street must be replaced by decent government-funded pensions.

  2. GDP is likely to fall by about 20%;
    1. much of this will be in the service sector where personal services are required.
    2. Additionally it will hit entertainment and travel very hard. And education.
    3. A rough guess is that the impact is similar to that of the GFC (where home construction and related sectors were hit)—just over 16% of the economy
    4. But people are still spending.
    5. It does not make sense to add $1 trillion to demand through thousand dollar checks sent indiscriminately, largely to those who do not need them, at a time when supply is declining. This is not a usual economic downturn caused by falling demand.

  3. Corporate debt is likely at an all-time record high—far higher than reported. Corporations were likely insolvent even before the Covid crisis. No wonder they are already begging for bail-outs—a couple of weeks into a crisis that has barely even begun and they’ve already run out of cash.

  4. Nationalization of troubled corporations is a better alternative than bail-out.
    1. We should insist on quid pro quo: only those corporations that submit to public management will receive help.
    2. Fed govt will select a manager to organize support and help rescue firm
    3. If a corporation seeks help, all top management must submit letters of recognition; the appointed manager will hold these and use them when necessary in the case of recalcitrant CEOs
    4. No bonuses will be paid to top management during 2020; any bonuses that have already been paid will be clawed back. All top management pay would be reduced to appropriate GS levels for as long as the firm needs help; thereafter, the top pay (including salaries, benefits, and deferred pay)  of any firm that received government help will be limited to 30 times the pay of the median worker in the firm for a period of at least a decade.
    5. Govt should insist that worker representation will be added to every Board; labor contracts will be enforced; laws protecting unions will be enforced

  5. The biggest banks have trillions of bad bets. They want bail-outs. We should take them over instead; then “resolve” them as mandated by law, breaking them up and shutting them down.

  6. Do not support President Trump’s Re-election Gambit of offering checks for all in an attempt to buy the election.
    1. He caused this disaster and is trying to divert attention; he sees the disaster as a way to ensure re-election
    2. BIG or UBI is the Neoliberal free market wet dream of Silicon Valley. They want to reduce the role of people in society to nothing more than consumers.
    3. This is shock doctrine—you lose your job, you lose democracy, all you get is a check.
    4. Instead of playing a role in the workplace and the political sphere, you get to “vote” with dollars for ice cream flavors.
    5. Disaster capitalism will use this crisis to bust the remaining unions

  7. We need to prioritize the health crisis impacts on people:
    1. Mandated paid sick leave and parental leave for the duration of the crisis; Fed govt offers refundable tax credit to fully cover the cost
    2. Ramp up unemployment compensation to cover ALL workers who lose jobs or hours; paid by Fed govt
      1. Extend to Gig workers
      2. Increase compensation to cover lost wages (@ 100%) up to $50,000 annual for duration of economic downturn
    3. Medicare for all, universal, immediate, free coverage for all treatment related to the virus
    4. Free testing for all
    5. Guarantee of adequate food, clothing and shelter for all
      1. Extended food stamps (loosen requirements, increase allotments, reverse Trump cutbacks)
      2. Safe shelter for all who request it
      3. targeted cash payment for all who need it

  8. It is best to target cash payments to those who need them; the argument that this is too difficult is overblown.
    1. Indeed, those who need the least help are the ones who are easiest to find: homeowners, employed workers, those who file tax returns.
      1. People are scared to spend, so those who do not need it won’t spend it anyway
      2. The check is too small to help those who just lost their jobs; more generous unemployment compensation is a better answer
    2. Those who need the most help are hardest to find: poor, unemployed, renters, homeless, and those with income so low that they do not file.

  9. In any event, if we do send checks to all (which I do not support), they can be issued now as a tax refund against 2020 taxes, with a proviso that those with taxable income below $30,000 for fiscal year 2020 keep the full value, but those with taxable income above $30,000 bear an additional tax equal to the value of the refund checks cashed. For those with taxable income over $30,000 the checks function as interest-free loans to be repaid at tax time (April 15 2021).

  10. We need a moratorium on:
    1. Foreclosures for missed mortgage payments
    2. Evictions of renters
    3. Rent and interest rate hikes
    4. Late fees and penalties for missed payments on debts (including but not limited to mortgages, student loans, auto related debt, and credit card debts)
    5. Debt collection
    6. Student loan payments
    7. Tax payments

  11. Payroll tax holiday: we do not need the stimulus, but the demonstration effect is important. The payroll tax is a terrible tax: regressive, taxes employment, taxes work. Workers and employers should demand a permanent holiday from this tax.

  12. Job Guarantee: an antidote to BIG and UBI. JG would be a permanent program; we can begin by creating projects to deal with this crisis. Because of quarantines, etc, it will take time to scale up to a universal program
    1. Unemp compensation now, JG a permanent response

  13. Tone of Macron is correct: we need a massive increase of the social safety net; we are at war—but not just a war against a virus, but against Disaster Capitalism;
    1. We need to use military hospitals, hotels, taxis, the army, National Guard, Corp of Engineers
    2. Build mobile hospitals and testing centers
    3. Better funding of community health centers
    4. More support for state and local governments
      1. Zero interest loans and grants
      2. Fed govt takes over all costs of Medicaid for duration of crisis
    5. Use emergency power to go after price gouging
    6. Use emergency powers to push increased production of medical devices, medicine, and research and development of treatment and vaccination

L. Randall Wray
Senior Scholar, Levy Economics Institute

Professor of Economics, Bard College

Emeritus Professor, University of Missouri-Kansas City

Co-editor Journal of Post Keynesian Economics
ISSN 0160-3477 (Print), 1557-7821 (Online)

Recent Books:

A Great Leap Forward: Heterodox Economic Policy for the 21st Century; Randall Wray; Paperback ISBN: 9780128193808; Academic Press; Published Date: 22nd January 2020;


Macroeconomics; Author(s): William Mitchell, L. Randall Wray, Martin Watts; Red Globe Press, Macmillan International; February 2019;


Why Minsky Matters: An Introduction to the work of a maverick economist, Princeton University Press


Modern Money Theory: a primer on macroeconomics for sovereign monetary systems, Palgrave Macmillan 


Please make note of my new email address as I will be transitioning all email to:

From: AFEEMAIL Discussion List <[log in to unmask]> on behalf of Dell Champlin <[log in to unmask]>
Sent: Wednesday, March 18, 2020 12:38 PM
To: [log in to unmask]
Subject: Re: [AFEEMAIL] COVID-19 Pandemic

Thanks, Geoff, for posting this. 


The contrast with our “leader” is heartbreaking for those of us in the US.




Sent from Mail for Windows 10


From: Geoff Hodgson
Sent: Wednesday, March 18, 2020 10:21 AM
To: [log in to unmask]
Subject: COVID-19 Pandemic


Dear All


Thanks for the interesting discussion of what should be done to deal with the COVID

-19 pandemic. I paste below the text of President Macron’s speech of 16 March.


Compare and contrast with US and UK “leaders”.


Best wishes

Geoff Hodgson


President Emmanuele Macron      16 March 2020

“We are at war. This is a war of sanitation. We are struggling against an enemy we can’t see. We are at war. We need everyone to fight this enemy. Nobody can break this new rule.

We are at war. Everyone, every leader of all parts of French society, we call upon you to fight together. We must care for everyone. We cannot let anyone slip through the net.

Special medical services will be available for the elderly. Things will be available in your pharmacies on Wednesday.

Keep our children safe. We owe them a duty of care and safety. I assure everyone that money does not matter. We will open hotels, we will use taxis as ambulances, we will use the army and their ambulances. We will use military hospitals. We are at war.

We must take this decision to protect everyone. If you are French and overseas, come home now.

The consequences of this war will require everyone to make sacrifices.
We will support everyone economically. No company, whatever it is, will be put at the risk of bankruptcy. No individual will suffer .

We will defer all payments for taxes, rents, so nobody is left without resources.

We will massively widen social security payments.

We will work with our economic advisers to ensure security for all.

We cannot say how long this will go on. We are guided by experts. We continue to work to finding treatment.

I say to each of you I will tell you the truth at every stage of this war. If we work together as citizens, my dear people, we will accept and bear these constraints. We will all do this.

These are things which we know. A lot of things we thought to be impossible are happening. Remember this, on the day after we have finally won this war, we will never be the same. We will be stronger. We will be united. We can win this war together.”





Geoffrey M Hodgson

Professor in Management at Loughborough University London

Editor in Chief, Journal of Institutional Economics

Secretary of the World Interdisciplinary Network for Institutional Research (WINIR)

Secretary of Millennium Economics Ltd

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