Jamelle Bouie writes:

The outbreak threatens entire industries with destruction. Most restaurants, for example, can probably survive a week or two of social distancing. Some can survive a month. But if self-quarantine lasts for months, then hundreds of thousands of businesses, including suppliers and distributors, will fail. Millions of Americans will be out of work. It’s even worse for travel and tourism. The so-called accommodations sector of the economy, which includes hotels and other forms of lodging, accounts for more than two million jobs — all of them are endangered by extended periods of social distancing. The shock from losing these industries would be more than enough to push the economy into depression.

Nearly one-fifth of American workers already say they’ve lost hours or work because of the outbreak. If lawmakers are going to save the economy from destruction, they need to think along the lines of the economists Emmanuel Saez and Gabriel Zucman of the University of California, Berkeley, who, in a brief paper, call for the government to act as a “payer of last result” to “stanch the flow of mass layoffs and business destruction.”

In the program they envision, workers would remain formally employed but receive unemployment benefits. Businesses would report their costs to the government and receive payment in return. If businesses report too much, or get too much in return, then the payments could be “transformed into an interest-free loan that the government could recoup over several years.”

This would not stop a recession; it would help keep the downturn from spiraling out of control. It’s an unprecedented program, but we’re facing an unprecedented situation. [Continue reading…]