In a normal free market economy, when people get laid off, their labor is reallocated to a different sector in the economy. Now there’s no reason to look for another job, if your rent is guaranteed and the government checks come in every month for four months on top of unemployment.
What exactly leads you to believe that we’re currently in a situation for the free market to prevail while millions of Americans can’t leave their houses and the infection rate of COVID continues to double every three days?
The last time we saw labor contraction like this was during the Great Depression, when millions starved and the economy took years to recover. What are people supposed to do when there are no jobs for them and they can’t leave the house? If there’s no work to be done for the next three months and no income coming in, what do these millions of workers do, starve?
What do you think they did in the Great Depression? WW2? They didn’t sit there and wait for the government to bail them out. They saved for a rainy day. The US govt borrowed money from the citizens to fight WW2. But thanks to QE infinity, the government has disincentivized and fucked over savers as well. Big surprise, anytime the government gets involved they fuck it up.
Rich people were getting free money by doing nothing and taking no risk. Now they're getting less free money by doing nothing and taking no risk.
It's crazy that you want to enact policies which would very literally kill thousands of people just because you want rich people (who don't need more money) to get more free unearned money.
In a truly free market wealthy people would have to pay vault, security, and insurance fees to maintain a riskless balance.
The government in the 30s took on trillions (in modern dollars) in debt to do just that; the only difference being they put people to work by pouring money into infrastructure projects because people could actually work without isolation.
The difference here is that the money isn't going into infrastructure, it's going into basic necessities and healthcare; people are still being put to work as you can tell from the ramp-up in hiring for delivery, cargo, logistics, etc. The velocity of money hasn't stopped - if anything, it's actually increased in certain areas of spending. The problem here is unique for almost everyone alive today: entire quadrants of the economy have ground to a halt because of an external stressor.
TL;DR: your understanding of the new deal needs work.
On some level, isn't that almost the goal? If the coronavirus hits us at full speed, the estimates I've seen suggest that the loss of life would remove tens of trillions of dollars of future economic capacity. (And also, you know, kill people.)
Until we figure out how to keep this under control (like Singapore) or slow it enough to provide adequate medical care for the infected, the goal is to get people to stay home.
So it almost makes sense to incentivise people not to work. The last thing we want right now is everybody out and mingling.
But we have to use this time well. We need to increase medical capacity, research treatments, build ventilators, run serological tests for antibodies, build contact tracing infrastructure, care for patients, make masks and PPE, and a hundred other things.
After all, people with inherited wealth or unearned income will have no incentive to work otherwise. A such, we MUST strip them of their assets so that they may become productive parts of society.
Free market economies are an analytical fiction, not a normal thing at all.
> Now there’s no reason to look for another job, if your rent is guaranteed and the government checks come in every month for four months on top of unemployment.
Both the base and supplemental unemployment still require you to be actively seeking work and to not reject offered work to continue to receive the checks, so there is, in fact, a very good reason to look for work.
Perhaps this will be a lesson to us as a people, a nation, and all companies who operate to not take such a narrow view.
Genuinely curious what you would want to do instead? Are you thinking UBI, so that even if they get a job they still receive the other benefits. I could get behind that. Is that what you're thinking though?
(If you need a hint here, look at all the medical workers working crazy shifts now. You think they're getting overtime and danger pay commensurate with the risk?)
That's one way to look at it.
An arguably more accurate interpretation is that few workers laid off due to Covid-19 are likely to find remote work. And that means testing wouldn't be worth the expense.
There is increased demand for delivery drivers and truckers, I admit. So I agree that these policies may increase wage rates for such categories. But that's not so horrible.
That is actually an ideal outcome, because that would slow down the disease transmission significantly.
Which does not obtain during a demand shock. I really wish people would pay more attention to the fine print.