On being OBE

 Here’s where procrastination leads, the netherworld of obe.  A month ago I bleeted about the need for action on economic relief for people being driven to the brink by the pandemic and the Draconian health policies it has called forth.

According to the Bureau of Labor Statistics, 1.6 million business establishments that had employed 26 million people at the beginning of 2020 suffered a government-mandated shutdown—about as Draconian a policy as most business operators can imagine.  While these 26 million people are not in any way in one-to-one correspondence with the 20-plus million workers on continuing unemployment insurance claims by late April and early May, they were a big part of the surge in that indicator from the more typical nearly 2 million in January. (About 4 out of 5 establishments that experienced a government-mandated closure either reduced employees’ hours or told them not to come to work.)

I was finally going to address the needed policy response to this catastrophe when this morning I hear that Congressional [language abuse trigger warning] leadership has developed a characteristically complex exit ramp from a loggerhead formed by one side wanting to include billions for state and local governments and one side to want protection of businesses from legal liability for damages inflicted by the coronavirus.   I’m not sure either of these panderings should be passed at all. But now that these events have overtaken me, here are some observations.

The latter is part of the much wider and more demanding look we are going to have to take at many aspects of unemployment insurance funding administration, bankruptcy law, bank regulation, credit scoring practices, financial institution stress testing, landlord-tenant law, credit card laws, gaap, wider liability (tort) reform, and things I cannot even imagine (much to my credit).  I see no reason it should be addressed now as a stand-alone.

The state and local government subsidies are going to have to be addressed sooner or later.  Right now, however, the humanitarian fraction of a percent of me says that the more urgent need is for an economic stimulus payment of about $900 to go to individuals and families starting at the very bottom of the income distribution and going until the amount proposed for subsidies to the governments responsible for actually executing the mandated closures mentioned above runs out ($160 billion by one report).  That sum would support a $900 boost for about half of the population.  Over time, I believe this would turn out to be a more frugal use of $160 billion.

As I note below, everything here is moving very quickly with a lot of poorly lubricated parts.  Even so, we should all expect to be obe more than once over the next 10 days.

 

Notes

UI data tool: Report r539cy, Employment & Training Administration (ETA) - U.S. Department of Labor (doleta.gov)  Make up your own mind about seasonally adjusted and no seasonally adjusted data.  Pandemics and government-ordered shutdowns know no season.

BLS Business Response Survey to the Corona Virus Pandemic: 2020 Results of the Business Response Survey : U.S. Bureau of Labor Statistics (bls.gov) and related pages on www.bls.gov.

Stimulus bill numbers Coronavirus stimulus updates: Bipartisan relief bill released (cnbc.com).  But be aware this is a rapidly moving target.