3 thoughts on “To manage the crisis, we need to think like central planners

  1. One thing we can note is that the insecurity of many minimum wage, part-time and casual workers means that they have no reserves when a crisis occurs. This insecurity means no savings and no ownership of a place of residence. Just one week or one fortnight without income means no food and no place to live IF the standard laws and rules of the economy remain in place. An economy which strips all surplus value from workers up front (meaning they cannot save and cannot buy a house or flat even with a mortgage) means that the state must immediately come to the rescue in a crisis and provide welfare, suspension of normal economic rules and other assistance throughout the economy. In a very real sense, the bill for this rescue should be delivered to the rich. They got rich stripping the rest of society of the distributed capacity to meet a crisis.

  2. It is interesting to compare the Fiscal stimulus sums for 2020 compared to 2008. In 2008 the GFC had damaged the money economy. So Fiscal stimulus was focussed on credit and bad loans. But in 2020 the COVID/19 virus has damaged the real economy. With one million jobs lost in one month the Fiscal stimulus is already three to four times larger. Central planners can only use broad strokes to save jobs and businesses. The real economy is made up of real people who must be reassured and supported. John Maynard Keynes pointed out that central planners must save workers FIRST and let big business cope as best they can. So the provision of public sector jobs is paramount. Trying to save failing businesses is non optimal. Big Businesses are artificial not real. They can be easily replaced. Real people with job skills cannot be easily replaced. Keynes said that certainty is all that is needed to restore businesses. But real people need protection, reassurance and financial support.

  3. JQ – “The idea, in dealing with an economic problem like unemployment, is to ask how a perfectly informed, and purely benevolent social planner might deal with it … No such omniscient and benevolent planner exists or is likely to, but…”

    Smirko – ““It is a moment like when Moses looked out at the sea and held up his staff …”

    https://www.theguardian.com/australia-news/2020/apr/01/scott-morrison-prays-for-australia-and-commits-nation-to-god-amid-coronavirus-crisis

    Yes, it is April Fools’ Day, but no joke.

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