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Tim: I admire your passion, of course, and I think it demonstrates an important point. well, maybe several.
A shock crisis creates desperation so that progressives will settle for the doctrine. Naomi explains this very well. We had a crisis of medical care so we settled for a bailout of wall st (AKA obamacare). We know Bernie's got the policies, but we settle for Uncle Joe because we've got a crisis of Trump. Joe's going to continue all the failed policies of the past--everyone knows that--but he's better than Trump (impossible to argue with that). We know that handing out cash to the comfortable is dumb policy, but Silicon Valley, Trump, and Munchkin are all-in on it. (It is the "bail out Trump" initiative, after all.) You can be sure that Trump et al will buy your support and reduce the amount to a pittance--just enough to improve his popularity--while focusing their attention on Wall St.
Yes 7500 is a huge amount for a poor family. Hard to work with so many zeros, but it works out to near a Trillion for the population (if my math is right). Let's say production only falls by 20% and Trump piles on for a BIG so there's no other stimulus, we lose, say $5T of production, but demand doesn't fall by as much so the bottom half of the population can compete with the top half for the reduced supply. Landlords get their rents, debt collectors get their debts, the insurance companies deny the claims, patients get stuck with the bills. Middle incomes who can work at home get their Teslas. Life goes on, Trump gets reelected, or (very unlikely) Joe replaces him. Nothing changes. Wall Street is rescued again.
By our estimate, even if you ignore most savings of moving to full employment, a universal Job Guarantee at $15 per hour with good benefits comes to half of that. And we don't provide the downpayments for Teslas. Of course I do not care about the budgetary "cost"; I do care about subsidizing the purchases of Teslas, as well as helping the high income to compete with the lower income for the reduced supply of total output.
Actually I did already put my proposal out (with Yeva) and linked it. Much of what we proposed has already become fairly widely accepted (I'm not implying it was because of our piece--which I doubt has been read by many). I asked that you and others consider the points raised. We did in the end support a payroll tax holiday although we do not see much value in the stimulus--rather we would like to see a permanent elimination of the payroll tax, which is a terrible tax for several reasons. If we get a holiday in every crisis, maybe some might begin to fight for a permanent holiday. But most of our focus was on dealing with the crisis--eliminating the uncertainty over testing, treatment, and sick pay. We do not see much point in stimulating Agg D when the problem is collapse of Agg S.
We began arguing for the Job Guarantee about 25 years ago. Virtually everyone told us it is impossible, will never be accepted. (Some institutionalists have been supportive all along; virtually all Post Keynesians have attacked it from the beginning up to the present time.) And, heck, it was politically impossible until about a year ago when almost all presidential candidates were forced to adopt it.
You just never know. I never take "it will never happen in our current political situation" as a barrier to proposing what is the correct approach. And especially as a crisis is unfolding. Our current political situation is changing by the minute. And it has changed tremendously over the past 25 years. Outside the geezer class, the majority of Americans now prefer Socialism. Who wudduv thought?
You are suggesting that this early in the "game" we pile on to the "save Trump" strategy--send a check to every potential voter, plus their kids. I'm suggesting you are giving in to the doctrine much too early. There are many other strategies that can help the groups you are worried about. What about a moratorium on foreclosures, evictions of renters, bill collectors, utility payments, student loan and mortgage payments. Expanded food stamps, emergency provision of food and supplies everywhere the virus has struck, field hospitals, safe shelter and transport. Demanding quid pro quo for support of business (OK airlines, you get a check too, but we are nationalizing air transport to ensure better service.)
Targeted support (both cash and help) makes much more sense than mailing a check to every American. I don't see any reason to give up so early.
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; https://www.elsevier.com/books/a-great-leap-forward/wray/978-0-12-819380-8
Macroeconomics; Author(s): William Mitchell, L. Randall Wray, Martin Watts; Red Globe Press, Macmillan International; February 2019; https://www.macmillanihe.com/page/detail/Macroeconomics/?K=9781137610669.
Why Minsky Matters: An Introduction to the work of a maverick economist, Princeton University Presshttp://press.princeton.edu/titles/10575.html
Modern Money Theory: a primer on macroeconomics for sovereign monetary systems, Palgrave Macmillan http://www.palgrave.com/page/detail/modern-money-theory-l-randall-wray/?isb=9781137539908
Timothy A Wunder
Clinical Associate Professor of Economics
Department of Economics
Target cash.
Provide compassion and support without discretion.
Yes, many are suffering and we should relieve the suffering. No more foreclosures; no more fees and interest added to late payments; moratorium on debt collection; financial assistance for rent and utilities where needed. Ramp up foodstamps (Yes, I know Trump is cutting them), Jobs for all who want them and social assistance to those who cannot/should not/do not want to work.
Sending cash to a comfortably employed worker who can work from home just makes no sense. Might that person go make a down payment on the latest Tesla SUV? Probably.
Make no mistake. This is a trial run for the doctrine. Similar to what they did in New Orleans after Katrina. It worked wonders.
This time, it is the whole country and probably many others.
It is the Munchkin-Trump alternative to a real response.
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; https://www.elsevier.com/books/a-great-leap-forward/wray/978-0-12-819380-8
Macroeconomics; Author(s): William Mitchell, L. Randall Wray, Martin Watts; Red Globe Press, Macmillan International; February 2019; https://www.macmillanihe.com/page/detail/Macroeconomics/?K=9781137610669.
Why Minsky Matters: An Introduction to the work of a maverick economist, Princeton University Presshttp://press.princeton.edu/titles/10575.html
Modern Money Theory: a primer on macroeconomics for sovereign monetary systems, Palgrave Macmillan http://www.palgrave.com/page/detail/modern-money-theory-l-randall-wray/?isb=9781137539908
Timothy A Wunder
Clinical Associate Professor of Economics
Department of Economics
I'd like everyone to think a bit more about this proposal.
See this first: http://www.levyinstitute.org/publications/the-economic-response-to-the-coronavirus-pandemic
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www.levyinstitute.org
The Levy Economics Institute of Bard College is a non-profit, nonpartisan, public policy think tank
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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; https://www.elsevier.com/books/a-great-leap-forward/wray/978-0-12-819380-8
Macroeconomics; Author(s): William Mitchell, L. Randall Wray, Martin Watts; Red Globe Press, Macmillan International; February 2019; https://www.macmillanihe.com/page/detail/Macroeconomics/?K=9781137610669.
Why Minsky Matters: An Introduction to the work of a maverick economist, Princeton University Presshttp://press.princeton.edu/titles/10575.html
Modern Money Theory: a primer on macroeconomics for sovereign monetary systems, Palgrave Macmillan http://www.palgrave.com/page/detail/modern-money-theory-l-randall-wray/?isb=9781137539908
On Mar 17, 2020, at 10:16 AM, Wunder, Tim <[log in to unmask]> wrote:
Can we get an open letter started calling on the government to get money to families directly? There is a proposal for 850 billion in emergency funds. That's enough to give every man woman and child $2500. Can someone more influential than I am start an open letter calling for the government to send households money directly. So a household of 4 would get $10k. A household of 2 would get $5k.
This would be incredibly popular and it would actually help the people.
I know there are people on this list who could organize something like this. Retail workers are terrified, as are so many Americans. Perhaps this is something we could do to help.
Tim
Timothy A WunderClinical Associate Professor of EconomicsDepartment of Economics