The thing is they actually have not prioritised anything, they thought they were prioritising, but actually caused a deeper recession by failing to contain the virus.
It's like prioritising cooking dinner over dealing with the house fire - it doesn't work that way.
Not that they should have done nothing, but clearly they could have addressed the acute crisis, and then normalized when that passed.
Instead they addressed the acute crisis, and continued the same policy for 2 years with no change.
What they should have done was 6 months or so after peak covid panic, start to normalize interest rates and QE. They also didn't consider at all the velocity of the economy and just looked at point in time employment numbers to drive their policy thinking.
It was clear the job market was already overheated at 5% unemployment, for example, due to the historical number of job openings and increasing pace of those job openings, plus record high quits rate. Plus retail sales/inflation.
Similarly lowering interest rates into the ground when consumers still had plenty of money but supply was constrained probably wasn't a wise move either.
More targeted assistance of just affected industries during the pandemic could have prevented almost all of this.
The idea of prioritising the economy is a falsehood. You can't have a strong economy with a virus like covid ripping its way through the population. Some people might go on as normal, but a huge portion of the population will be afraid of going outside.
The only feasible path to economic recovery is:
1. Keep the borders closed. Mandatory & monitored quarantine for anyone entering.
2. Lock down, test & contact-trace until the virus is basically eradicated. Mandating mask use outside of abodes or any other measure will help speed this along, too.
3. Open up, but keep borders closed except to places applying a similar approach.
This is the part that annoys me. Most people would agree that this particular virus presents a threat that should be addressed in a way that bypassed day to day considerations.
But that is not the case. In US, the president openly says if it hurts economy too bad, we might as well roll the dice and see what happens. Very annoying given that the advice is likely coming from people who can cloister themselves if needed.
Why does everything has to be calculated in terms of the dollar? Hell, a month ago poster here was advocating killong off bat a species to save 2T in imaginary assets.
It feels like I am going on a rant here, so I apologize. The past few days have been bananas.
I'm much more worried about the virus than a recession. The latter... is going to suck, for a lot of people, but with the right policies in place, we can get through it. The virus is simply going to kill a lot of people if it's not checked.
COVID demonstrates lack of being prepared and future orientated, we did not have PPE stockpiles and did not takw actions that would contain the virus to save the economy now. The more future oriented you are, the safer you are.
The goal is to make the economy to recover quickly. Fail fast, learn the lesson, make things cheap and keep unemployment low. Or do something against centuries of experience and see what happens.
Avoiding short-term pain by trading it for a much worse problem later is what made us so vulnerable to a not-so-deadly virus. Zombie too big to fail banks and corporations and a real estate market out of control. Same happened everywhere, not just US.
Would you believe it if I told you that not fighting the virus has an even bigger toll on the economy? Imagine if we'd aggressively addressed this problem back in March, how much less economic impact would have resulted. But then, as now, we wanted to "protect the economy" and avoid restrictions as long as possible. But this time the strategy will work? I have trouble believing that.
There is a big problem with the argument that the virus would have destroyed the economy no matter what — look at how people are behaving in the places that have reopened. They were behaving that way before the lockdowns too. Restaurants are packed.
People just don’t want to hide in their homes from this. If they had been doing that, the lockdown orders would have been unnecessary and superfluous.
It’s fair to say that the virus would have damaged the economy, but it’s just not reasonable to believe that damage would have been as bad as, or worse than, the damage caused by the virus plus the lockdowns.
There are multiple points of failure. Pretending everything was A-OK is the largest one, failing to identify the virus's presence in the country for months was another, denying and downplaying the usefulness of masks was another, underfunding hospitals was another, failing to secure PPE was another, making it painfully difficult to get tested was another. There's a lot of blame to go around on this one. But reopening the economy was the biggest mistake.
It’s not possible to predict the future, so I disagree with your stance that it was obvious a virus could cause an economic downturn like this. It comes across as victim blaming to me.
Since the government response is a LAGGING indicator (I.e. people are already the steps to contain the virus before the government), we probably saw pick virus.
Also, the stock market becoming cheaper actually reduces inequality since it allows new savers to get in at a lower price. And the same thing for housing.
It feels like Europe and the US only have a few options:
* Let the virus run its course and accept a huge death count.
* Continue the lockdowns for months, strangling the economy.
* Do what's in this article and allow life and the economy to return to normal.
* Hope for a miracle.
It's a straw and camel argument. Realistically we were due for a correction. But the current 20%+ fall wasn't on anyone's menu.
FWIW: I think the much bigger long-term risk to this wikipedia article's framing is that the crash almost certainly isn't over. We have months of VERY bad economic news in the future still. Realistically the recovery won't even start for real until either the virus runs its course over the population or a vaccine is widely available. Both of those are going to take a year or more.
(Well, it's possible to get the virus to go faster of course. We don't want that.)
I don't really expect companies to plan for the government ordering the majority of economic activity to halt for an undefined length of time.
This isn't just some "rainy day" to save for. This is unprecedented, and it's only necessary because the government did not take steps to contain the outbreak sooner.
Money given to companies after this is not a bailout in the 2008 sense. It should be viewed as compensation for damages caused by the government's bungled response to the virus.
It's like prioritising cooking dinner over dealing with the house fire - it doesn't work that way.
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