Stimulus

Why You Can't Solve a Public Health Problem With Economic Stimulus

Is a new stimulus package the right response to a pandemic?  

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Coronavirus isn't just a threat to your health, it's also a threat to the economy. As infection numbers ticked up, the stock market had its worst day in 12 years. 

So it's probably not surprising that President Donald Trump has touted "very dramatic" plans to help keep the economy up and running, with ideas ranging from tax breaks for individuals to writing everyone checks to industry-specific bailouts. 

But that just raises new questions: Can you solve a public health problem with economic policy? Is a new stimulus package the right response to a pandemic?  

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University and a frequent contributor to Reason magazine. She spoke with Reason Features Editor Peter Suderman about the coronavirus economy, and what government officials should do to fend off its economic effects.

Interview by Peter Suderman, edited by Ian Keyser, cameras by Austin and Meredith Bragg

Music: "Somnolence" by Kai Engel is licensed under CC BY 4.0

Photo credits: Traders on the floor of the New York Stock Exchange, MONIKA GRAFF/UPI/Newscom; President Trump tours the Viral Pathogenesis Laboratory, SplashNews/Newscom; President Trump, SplashNews/Newscom; Three large U.S. flags hang on the New York Stock Exchange, Jürgen Schwenkenbecher/picture alliance/Newscom; Pile of Cash, Digitalstormcinema | Dreamstime.com; Coronavirus Visualization, CDC

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  1. I’d probably say no. Just because people have more money doesn’t mean they’re gonna risk sickness to go spend it.

    The idea we can counter every economic bump by throwing money at it is quite dumb and shortsighted.

      1. Just Lysol the package on your doorstep before touching it. If you have Lysol. If not, order some from Amazon if they have it in stock. When that package arrives, um, not sure…

    1. I’d totally saying no, because government’s only job is to secure basic human rights, like don’t hurt people and don’t take their stuff.

      But it is a little disingenuous to say people are not strapped for cash and so a stimulus will do no good. When we put off going to movies or car dealers, we postpone spending that cash and the normal sellers are strapped for cash, and not just temporarily. We can always buy a car later, but when we cooked a meal ourselves instead of going out, or rented from Netflix instead of going out, that money was diverted, and some people are worse off, permanently.

      That does not justify a stimulus, of course. We also don’t go to theaters when Hollywood makes mistakes, and bad weather can deter us from a night on the town.

    2. Fantastic work-from-home opportunity for everryone… Work for three to eight hrs a day and start getting paid in the range of 7,000-14,000 dollars a month…Weekly payments……https://xurl.es/gz4go

  2. You know how we should solve public health problems? By allowing unlimited, unrestricted immigration.

    #OpenBordersWillFixEverything

    1. It’s working for Italy, so you’re on to something.

    2. TRUMP TO BUILD WALL TO KEEP CORONA-VIRUS OUT!

      MAKE MEXICO PAY FOR IT.

      MAGA!

      1. No, China will pay for it.

  3. Fuck it, everything Trump does is wrong.

    People complained about a lack of economic safety nets because everyone freaked the fuck out and shuttered their business. Trump wasn’t doing anything to help the workers of the world! Then, Trump offers a solution, and …. drum roll …. it won’t stop people from dying! INCOMPETENT!

    Everything Trump does is wrong. We get it.

    1. I think the title of that book was “Everything Trump Touches Turns To Shit”.

      I’m waiting for the movie to come out.

      Starring the fat Jonah Hill of course.

      1. I am told Hill and Megan McCardle will do a tasteful but explicit sex scene.

      2. If everything Trump touches turns to shit, how are you going to keep crediting Obama for everything good that happens?

    2. And no one claims it is a health policy. It is only to try and mitigate some of the economic damage done by the virus. As you point out, if Trump wasn’t doing this, Suderman would be on here talking about how uncaring and ineffective Trump is for not supporting a stimulus.

      It is absurd. But hey, it is not like anyone pays any attention to Suderman or read what he has to say other than to kick him around in the comments. So there is that.

  4. Ya, so?
    Why waste a good opportunity for a tax cut and give aways to favored industries?

    1. Because a tax cut without a spending cut doesn’t save anything, it just switches the load from taxpayers to lenders, and both reduce private spending.

  5. NBA and MLB teams say they will play without allowing fans into the games.

    MAGA BITCHES!

    1. Will they let you take your kiddie porn in, turd?

  6. I heard a very interesting podcast with Jacob Reese Mogg last night in which he made a very sound, logical argument that made me think that whatever economic damage is being done by a response (or over-response) will be very short lived.

    He compared the current conditions to the 2008 crisis in which demand collapsed. Real demand takes a long time to rebuild. But in this case, the demand hasn’t collapsed, only the supply has been restricted. The idea being that you can simply bring factories back online and fill the already existing demand in fairly short order.

    1. He is right. I would compare this to war rationing. For four years during World War II people couldn’t buy most durable consumer goods. That didn’t destroy the durable goods industry. People still had the money they didn’t spend. They just saved it and when they could buy good again there was a boom because of the pent up demand.

      This is the same thing only on a smaller scale. Yeah, people are going to travel and eat out less and go to fewer sporting and entertainment events. But the money they would have spent on those things isn’t going to disappear. They will in most cases still have it in a few months when this is over and the pent up demand will then give the industries harmed by this a huge shot in the arm and return them to normal.

    2. I think this will be bad. I live in a university town that shut down for a month. That is a lot of people missing a month of pay. Rent, utilities, and other bills are still due. Local business may not being back all their employees for quite a while. This could lead to a lot of unemployment, evictions, and bankrupt people. Multiply this across the country and we got a problem. Remember that a large percentage of people have less then $400 in savings.

      1. “I think this will be bad.”
        The economy has been damaged to the point now such that it will in no way recover in 2020. In fact, if this shut-down continues a bit more, we may well end up in a formal depression.
        What was a temporary market downturn has been transformed into a major disaster; the market is going to suffer long -term as a result of the lost profits caused by the shut-down.
        Trump should have told the chicken littles to stuff it.

    3. Eh…

      For folks who have an emergency fund, jobs with benefits, and the luxury of sick days, the damage will be short-lived.

      For folks who live paycheck to paycheck, no benefits, and are expected to work through sickness, it can be very disastrous.

      Which is my main issue with Trump’s proposed “fixes”. Folks like me don’t need economic help. We’ll be fine. But there are lots of folks who will need help… and his plan does nothing for them.

      1. What about the folks that had an emergency fund and a job with benefits and were laid off because their employer has no revenue? Like about 50% of the businesses. How the fuck do you figure anything you wrote? As if 2 weeks of sick leave will cover 2 months of schools closed and childcare being unavailable at any price. Most major cities have now ordered “nonessential businesses” closed. What is it you do that will be fine for two more months of this shit?

  7. If there’s a problem that can’t be solved with tax dollars, I’ve yet to see it.

  8. Seattle just closed all the schools for the next 14 days.

    1. Just a bug. No big deal.

    2. We need a propaganda stimulus package, stat!

    3. Maybe it will thin out the homeless problem there

  9. Looking past the 24/7 virus coverage, there was a little economic news out of Saudi Arabia recently.

  10. At this point, it is very clear that if public health is gonna work, it’s gonna be at the state/local level. And yes its gonna be those govts. There will be no private market for anything when no one is going anywhere. So stop dicking around with the panem et circenses and bailouts for the fucking whiny entitled 1%.

    Give a ton of money to the states and provide a short-term reinsurance backstop for their bonds. Provide mandates for what public health stuff it can be spent on – and create accountability/transparency stuff so that is what it gets spent on – and force them to bank that money in something like a Bank of North Dakota (afaik, the only state-owned bank in the US) not send it to Wall St. And figure out the repayments later as part of some post-crisis tax reform (and very probably – an overhaul of Medicare/Medicaid too since our entire healthcare system is about to go tits-up here). Some states will completely fuck up. Some will do well. But presumably that will provide us with valuable info about what sort of safety net works. And what doesn’t.

    This is about the DISTRIBUTION system for ‘US dollar’. It is completely constitutional and in fact long-term can provide competition to the current distribution monopoly of the primary-dealer system. So it can even potentially break the stranglehold of the Fed/banks over our money system – which is the main reason the 1% has their beaks out for the bailouts here. BREAK their beaks.

    1. “This is about the DISTRIBUTION system for ‘US dollar’. It is completely constitutional and in fact long-term can provide competition to the current distribution monopoly of the primary-dealer system. So it can even potentially break the stranglehold of the Fed/banks over our money system – which is the main reason the 1% has their beaks out for the bailouts here. BREAK their beaks.”

      You.
      Are.
      Full.
      Of.
      Shit.

  11. That’s an idiotic column. The stimulus isn’t meant to address the pandemic. Its meant to address the economic consequences of the pandemic. The conflation of the two is so idiotic as to beggar belief. Far more likely is that the author is just looking for another reason to bash the president and thinks we won’t notice. Separately we might debate whether a stimulus of the type proposed can actually work. I don’t think it will but that’s an economic argument as opposed to poor journalism.

    1. Yeah, I had to read the following a few times…

      But that just raises new questions: Can you solve a public health problem with economic policy?

      …to make sure I wasn’t missing something. It turns out I wasn’t, and it was just a stupid statement.

  12. But unfunded tax cuts cure everything. Isn’t that why all the mainstream repubs all have a laffer curve on the ceiling above their bed?

    1. “Unfunded” lack of theft.

  13. What’s wrong with exploiting an excuse if you need to get swing voters to allow people to keep more of their own money? If it helped end slavery in the USA to get some sector of voters to believe doing so would help get blacks out of the country, was that a bad thing?

  14. People will need economic help coping with the damage to business. Nobody thinks simply having more money will cure or prevent medical troubles.

  15. But that just raises new questions: Can you solve a public health problem with economic policy?

    I put new tires on my truck last week. It’s not going to make the COVID-19 situation any better, but it certainly improved my traction on the road.

  16. “…But that just raises new questions: Can you solve a public health problem with economic policy? Is a new stimulus package the right response to a pandemic?…”

    No, but regardless of my opinions on ‘stimulus packages’, they are not intended to solve public health problems.
    Is that strawman heavy?

  17. Sometimes, I like to pretend that Reason is an experiment. All the writers know better, but they test us with their moronic conclusions and sophistry. Once you finish reading the article and you’re thinking to yourself, “Just how fucking retarded can the author be?”, you find the comment section, which gives you the clarity of knowing you’re not being gaslighted by journalists. Everyone else sees their tricks too and like an answer section at the end of a practice test, the comments provide the missing facts and context needed to have a balanced understanding of the issue.

    Of course we all know Reason isn’t an experiment and some of the writers actually do lack the comprehension to apply logic properly, but it’s a nice gesture to pretend otherwise.

    1. Another theory is that they’re trolling for clicks, and they’re not better than anyone else in that regard despite pretending to be.

  18. Subsidizing sick leave for hourly workers that do not have it is the only suggestion I haven’t yet heard from the administration and it’s the only one that sounded the least bit sensible.

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