“Build Back Better”
Stop the spread and eradicate Covid-19. Restore the health of the U.S. economy. That much is agreed upon, the “what.” Now for the “when and how.” Then there is “WHO.”
WHO, as in World Health Organization, and health professionals at local, regional and national levels, concur on most details: Flood labs with the resources needed to find therapies and vaccines that will treat the afflicted and prevent the spread of the virus; testing and tracing cases to reveal the extent and inform steps toward prevailing over the disease, while guarding against the spread using face masks, hand sanitizer, social distancing, crowd avoidance.
Less consensus surrounds the “when and how” of the second goal – restoring the economy. Memories of a “Great Recession” just a decade ago provide the economics profession fresh evidence for guidance. Economist Heather Boushey is Executive Director and Chief Economist at the Washington Center for Equitable Growth. She wrote a book in 2018 titled Unbound: How Inequality Constricts Our Economy and What We Can Do About It. Her book features recent research on income, wealth and demographic attributes surrounding inequality.
Post Great Recession policy targeted getting money to lower-income families with higher propensity to consume “in order to provide the biggest boost to demand, so as to get the economy back to full employment sooner.” Benefits for unemployed workers passed Congress in 2008, and this Emergency Unemployment Compensation program was amended eleven times through 2013. Extending support of demand was largely partisan. “Many now argue that it was the failure of the US economy to recover quickly that sparked the rise in populism and ongoing political polarization.”
Boushey, writing before there was a Covid-19, echoed positions taken in a previous blog post, After Covid-19: Opportunities and Threats. “The low cost of borrowing,” she wrote, “combined with the pressing social and environmental needs and an imperative to make sure savings is well spent, point in the direction of prioritizing new public investments.” Boushey’s collection of economic research results goes beyond recovering from recession, grasping an opportunity to address the moral imperative to make access to the American Dream available to all. Getting money in the hands of people who will consume is simply a logical tactic for recovery; it is good for business. Boushey’s focus on families with higher propensity to consume recognizes research that finds the top 1% of households save 51% of their income, while the bottom 20% of households save 1%. There is ample evidence that unemployment benefits not only help families but also are effective in moving the economy toward full employment.”
Boushey cites research revealing “inequality drags down national productivity by making our workforce less capable than it could be, and our economy less innovative…. Income and wealth inequality obstructs children from having access to resources.” Prenatal care, healthy food, skilled parenting, books, after school programs and high quality teachers are too often unavailable to children of low-income families, but they all are necessary to support development of children into more productive and innovative participants in the economy. Economic research recognizes a confluence of market benefit and moral imperative.