Opinion | Jobs Aren’t Being Destroyed This Fast Elsewhere. Why Is That?

Covidcare for All would also cover the cost of Covid-19 treatments for people who are insured. Insurance companies would be barred in return from hiking premiums, which might otherwise spike as much as 40 percent next year.

The United States also needs to ramp up its support to businesses. Since containing the epidemic requires government-mandated economic shutdowns, it is legitimate to expect the government, in return, to shelter businesses from the economic disruptions. To keep businesses alive through this crisis, the government should act as a payer of last resort. In other words, the government should pay not only wages of idled workers, but also essential business maintenance costs, like rents, utilities, interest on debt, health insurance premiums, and other costs that are vital for the survival of businesses in locked down sectors. This allows businesses to hibernate without bleeding cash and risking bankruptcy. Denmark was the first nation to announce such a program; it is being emulated by a growing number of countries, including Italy.

In the United States, calls to support businesses have been met with excessive skepticism so far. To be sure, the congressional relief package includes $350 billion in help for small businesses, but the program is complex, limited in scope and only a fraction of eligible businesses are likely to use it.

A liquidationist ideology seems to have infected minds on both the left and the right. On the right, opposition to government grants to businesses is grounded in the view that markets should be left to sort out the consequences of the pandemic. Let airlines go bankrupt; shareholders and bondholders will lose but the airlines will restructure and re-emerge. The best way government can help is by slashing taxes, according to this view. The relief package includes more than $200 billion in tax cuts for business profits.

This view is misguided. There is nothing efficient in the destruction of businesses that were viable before the virus outbreak. The crisis cannot be blamed on poorly managed corporations. Government support, in the case of a pandemic, does not create perverse incentives. Bankruptcies redistribute income, but in a chaotic and opaque way. And while bankruptcy might be a way to deal with the economic fallout of the pandemic for large corporations, it is not well adapted to small businesses. Without strong enough government support, many small businesses will have to liquidate. The death of a business has long-term costs: The links between entrepreneurs, workers and customers are destroyed and often need to be rebuilt from scratch.

On the left, a popular view contends that the government should help people, not corporations. It holds that big corporations acted badly before the crisis — buying back their shares, paying C.E.O.s exorbitant salaries — and should not be bailed out. If they are, in this view, they should be subject to strict conditions, like swearing off share buybacks, reducing C.E.O. pay, and a $15 minimum wage for their employees.

The concerns underlying this view are understandable. Inequality has surged since the beginning of the 1980s. This crisis, however, is unlike the financial crisis of 2008-9. The firms seeking aid today bear no direct responsibility for the disaster that threatens their survival. If the government mandates a shutdown for public health reasons, why should it attach any conditions to temporary financial support for directly affected industries?

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Written by Angle News

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