Grandstand. Whole cities in a state of containment. Panic in the financial markets. Empty shelves in stores. Hospitals running out of beds. The United States has in turn entered a reality that was unknown to us in peacetime.
By demanding that people stay confined to their homes, policymakers hope to slow down and then reverse the speed of propagation of the Covid-19. But neither containment nor a major creation of money will be enough to stop the pandemic or save our economies.
The US $ 2,000 billion (€ 1.8 trillion) economic rescue package just adopted by the United States is one example. The country certainly needs public spending on this gigantic scale, but also State intervention to cope with a worsening public health crisis. As a result, many of the provisions in the “stimulus” bill appear ill-advised, and even lamentable in some cases. Others are going in the right direction, but are too fragmentary.
But what is alarming is that many American policymakers – including President Donald Trump – assume that it will be possible to ease the containment as early as Easter, ignoring the threat posed by Covid-19 not only to the elderly, but also for the young. According to New york times, about 40% of people hospitalized for this disease in the United States are between 20 and 54 years of age, which suggests that the work overload on health systems will increase considerably before a return to normal .
The very possibility of the death of millions of people while the economy is in disarray justifies a substantial increase in the scale and scope of state action. So the state’s response must be viewed as an unprecedented form of short-term systemic assurance over our lives and livelihoods. Given the absolute value we place on our lives and livelihoods, citizens and governments must be prepared to pay what can make them feel like an extraordinarily high insurance premium.
Systemic insurance
This systemic assurance is necessary in four areas:
- reallocate the economy's current production capacity to overcome the increasing shortages of materials and services needed to respond effectively to the pandemic;
- assist businesses that are not directly involved in crisis response efforts so that they can continue to provide essential goods and services;
- ensure that the population has sufficient means to purchase these goods and services;
- create a financial facility to help people unable to pay their loans and receivables, thereby mitigating the risk of a cataclysm for the financial sector.
