Those are hard words for a libertarian to say. But then this is a harder crisis than we’ve faced in anyone’s living memory. To put this in perspective: By some of the higher estimates, this virus could kill more than 1.5 million Americans. That’s more than all the Americans who have died in all wars since the country announced its independence from Britain.
To avoid this disastrous outcome, we need to “cancel everything” for some, hopefully short, period of time. But that won’t work unless we ensure that the people who will be most hurt — people and businesses who make things or provide services in a physical location — come through this relatively unscathed.
We’re going to have a recession, and in a certain sense we want a recession; if the economy is growing, it means too many people are still moving around. So there’s little use for traditional policies like payroll tax cuts, which aim to get people back to working and shopping as fast as possible. Instead, we have to think first about mitigating the suffering of those who have lost their jobs and, second, about keeping businesses on life support so they can go back to normal production as quickly as possible whenever we get the virus under control.
In this unprecedented situation, the government will need novel, creative policymaking to minimize the damage — and not just the same old predigested ideological programs. The first priority should be laid-off workers, who need secure access to what financial guru Dave Ramsey has dubbed the “four walls”: food, transportation, rent or mortgage, and utilities. That will mean, in part, putting cash into the hands of individuals who have been laid off or quarantined, first through checks, then through unusually generous unemployment insurance and some sort of federal sick-leave program. It will also mean declaring a moratorium on evictions and utility shutoffs, like the one Maryland Gov. Larry Hogan (R) has already put into place. Vehicle repossessions and residential mortgage foreclosures should be added to the list.
But that won’t be enough. Halting evictions, repossessions and the like will just shift the problem and the cost back to utilities, landlords and other providers of vital services, who have their own loan payments to make. So the government must keep those businesses solvent, with zero-interest loans if necessary, to help them survive the coming months.
Finally, the government must target employers, to ensure that as many people have a job to go back to when all of this is over. There are a lot of ways we could do that, but one of my favorites is Tim Bartik’s proposal to encourage “labor hoarding.”
Labor hoarding sounds nasty, but actually it’s good: It’s how economists describe employers who hold on to more employees than they really need during recessions. Finding and training good workers are expensive, so it is often cheaper in the long run to keep people on when demand falls. But employers also do this because, despite the stereotypes, most bosses hate to fire people and will go to almost any length — including letting unproductive employees skate — to avoid having to say, “We’re letting you go.”
This is a tendency the government should encourage right now. So Bartik suggests we offer employers a tax credit to maintain their payrolls above 90 percent of their 2019 average. It’s much cheaper than offering a payroll tax cut to people such as me who can easily transition to working from home, and provides employers a much more direct incentive to do what we want.
At this point, conservative readers may be shuffling uneasily. Isn’t this going to be expensive? Won’t unscrupulous people try to game the system? Won’t this distort the economy?
The answer to those questions is yes, yes and yes. In a normal time, or even a normal recession, I’d never suggest any of these measures.
But this is a most abnormal time. Our collective health relies on every other citizen doing the right thing and keeping their distance from everyone else. We need to make it as easy as possible for everyone to do the right thing. That’s going to cost money, some of which will go to people who don’t deserve it. The only justification is that it will cost all of us a lot more if we don’t take these steps. They are as necessary as they will be expensive.