The Nordic Way to Economic Rescue
Source: New York Times
Date: March 28, 2020
 
The Nordic Way to Economic Rescue
 $2 trillion package of spending people are losing their jobs by government fiatWhat is needed, say many economists, is not a spur to economic activity, but a comprehensive rescue for people harmed while normal life is frozen: The government should step in and issue paychecks directly to prevent a disastrous wave of joblessness.
“Essentially, the government becomes the employer of first resort,” she said. “If we were to do that today, we could stop some of the additional hemorrhage.”
In Denmark80 percent of wages, and on Thursday extended those protections to the self-employed“There was quickly an understanding that we were in an exceptional situation where it was necessary to very quickly produce exceptional initiatives,” said Carl-Johan Dalgaard, an economist at the University of Copenhagen and chair of the Danish Economic Council, which advises policymakers. “If you can tide firms over and thereby reduce the severity of bankruptcies and firings, you can expedite the return to normal.”
“You don’t have a comprehensive welfare state in the United States, because it implies a politically unacceptable level of redistribution,” said Jacob F. Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington. “As long as you’re not willing to tax wealthy people and give some of the money to people who are not wealthy, these sorts of options are not on the menu.”
Organization for Economic Cooperation and Developmentmost of the benefits flowing to the wealthiest householdsunemployment benefits last week — the worst week on record by far — and uglier numbers are likely ahead. With the United States now the epicenter of the pandemic, and with the economy in virtual lockdown, the downturn could exceed the pain of the Great Recession a dozen years ago.
“This is not about stimulus,” said Heidi Shierholz, senior economist and director of policy at the Economy Policy Institute, a labor-oriented research institution in Washington. “We don’t want to get people back to work right now. You’re making sure people are OK while you’re on lockdown.”
By any reckoning, an American version of Denmark’s plan would cost a hefty sum. Last year, 157 million Americans were officially employed. About 53 million low-wage workers have median annual earnings of only $18,000 a year, according to the BrookingsFederal Reserve Bank of St. Louisdollar is the global reserve currencyPart of the reason the Danes could quickly pledge extraordinary amounts of government money was that they were already financing some of the world’s most generous social safety net programs.
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Link: https://www.nytimes.com/2020/03/28/business/nordic-way-economic-rescue-virus.html?referringSource=articleShare