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conservative economics in the time of covid
A great deal of conservative economics (the respectable kind, as practiced by conservative professional economists, as opposed to what Krugman calls "professional conservative economists") is based on the valid principle of "incentives": if you reward people for doing X and punish them for doing Y, then people (in aggregate) will do more of X and less of Y. (Liberal economists may retort that some individuals, through no fault of their own, can't do X, so a reward for doing so doesn't help them and merely puts them farther behind the curve than they already were.)
From this perspective it makes sense to decide what's in the public interest, and institute systems that reward people for doing that and punish people for doing the opposite. And if "the public interest" is defined largely in terms of GDP, then one activity in the public interest is to produce valuable goods and services, i.e. to work.
Now add the axiom that the value of your work is equal to what you get paid for it, and we conclude that to get people to do what's in the public interest, you merely have to let the market reward them with pay, and have the government interfere as little as possible -- in particular, tax their pay as little as possible, not progressively but flatly or even regressively, so they get as much reward as possible for producing more value.
Of course, that axiom is questionable (see here). In brief, if you're an ordinary employee of a large employer, the value of your work is an upper bound on what you get paid, but the less bargaining power you have, the farther below that value you'll actually get, and the more of that value will go to your employer instead. And if you're an upper-echelon employee of a large employer, you may actually get paid more than the value of your work, because you set your own salary (or you and a small cadre of similar people jointly set their own salaries -- it has to be a small cadre or they would bankrupt the company). But this phenomenon acts like a regressive tax and gives people even more incentive to work harder and move up in the company, so some might see this axiom failure as actually a good thing.
That axiom also largely ignores work not paid for in money, such as homemaking and caring for (sick, old, young) relatives. One can sweep this under the rug by assuming that every economic unit (let's call it a "family") has one person working for pay and one person doing the homemaking and personal-care tasks; if so, then this only applies a constant multiplier to everything and doesn't change the choices made by those families. This doesn't work so well when some families fit that mold and some don't, but let's leave that aside for now.
Anyway, the originally-utilitarian principle that, for the public interest, people should be rewarded for working-for-pay and punished for not-working-for-pay has taken on a moral quality: "he who will not work, he shall not eat." (Similarly, a lot of social practices that were originally considered in the individual or public interest, such as monogamy, not eating pork, or not eating other people, have become moral rules because it's easier to teach masses of people a moral rule than to have them all follow a utilitarian argument.) Those who believe deeply in this moral principle see anybody who doesn't work-for-pay, for whatever reason, as a "moocher", and any politician who wants to help unemployed people eat as simply "buying votes" with pan et circenses.
For some reason, conservative economists believe there is no such thing as involuntary unemployment: if you can't find work, it's because you're demanding too much pay, because there is always work available for anybody willing to work for sufficiently low wages. And if the value of your labor (= your wages, see above) isn't enough to cover the expenses (uniform, commuting, child care, etc.) of you going to work, you should probably go to work anyway because it's the Morally Right Thing To Do. It is of course true that if everybody doesn't work, no value will be produced and everybody will starve, not to mention having no clothes or videogames... but it's less obvious that if a few people don't work, perhaps for reasons beyond their control, those few people should starve.
In many economic circumstances, it's also in the public interest for investment capital to be available, which requires that people save money, i.e. spend less than they earn in the same period of time. This too has become a moral principle: everybody knows that it's right and moral and responsible to save money for the future, while those who do the opposite are irresponsible spendthrifts.
So government policy should reward people who save money with high real (after-inflation) interest rates. (The liberal economist will point out that for a substantial number of people living paycheck to paycheck, "saving money" is essentially impossible; even buying in bulk and buying higher-quality goods because they're more cost-effective in the long run are impossible because there's never enough cash available at one time.)
For some reason, conservative economists seem to think there's always a shortage of investment capital, and all economic problems can be solved by throwing more capital at them, so it's always in the public interest for people to save money and to be incentivized to do so with high real interest rates. The obvious counterexample is the recession of 2008, when lots of investment capital sat around with nowhere to invest because nobody was buying anything; what we needed then in the public interest was for people to spend money, even more than they earned, in order to kick-start the economy.
Which brings us to COVID. In a mass-contagion event, it's in the public interest for large numbers of people to stay home and not interact much with other people, and that means (for many of them) not working-for-pay. So it would seem to make sense for government policy, for the duration of the pestilence, to reward people for staying home and punish those who interact face-to-face with lots of other people. That's what several Asian countries (especially those that remember SARS) and most European countries have done: if you normally work an in-person job, we'll pay you to temporarily stop doing it in the public interest, and we'll fine people who congregate in large numbers. And that's what the US's "Paycheck Protection Act" was supposed to do: reward employers who keep their employees on the payroll even while they can't do their normal jobs. But the PPA didn't apply to small employers, and it didn't apply to large employers, and the amount of money authorized in it was an order of magnitude too small for the number of people who suddenly can't work, and it was implemented in a tremendous hurry with unclear rules for who could qualify and what they needed to do to qualify and with minimal oversight of how the money was actually used, and most of the money went to relatively-large employers who already had the clerical infrastructure to meet the qualifications, and and and.
Unfortunately, what's currently in the public interest collides with the moral principle of "who will not work, he shall not eat", based originally on the public interest in more-normal times. Naturally, the people who believe most strongly in this moral principle are vehemently opposed to helping anybody who's not working-for-pay, for whatever reason: if you're in a high-risk group, or your job involves a lot of physical contact with other people, or your employer has shut down because the mean old government has told it to, or you or somebody in your household are already sick, the fact remains that you're not working and therefore it would be immoral for you to be able to eat. Some Republican members of Congress are outraged that, with the temporary increase in unemployment benefits, some people might be better off unemployed than working -- which was exactly the point: we want them to stop going to work so they don't spread disease.
There ought to be a clever, penetrating conclusion to all these ramblings, but I don't have one and I need to go to work now :-)
From this perspective it makes sense to decide what's in the public interest, and institute systems that reward people for doing that and punish people for doing the opposite. And if "the public interest" is defined largely in terms of GDP, then one activity in the public interest is to produce valuable goods and services, i.e. to work.
Now add the axiom that the value of your work is equal to what you get paid for it, and we conclude that to get people to do what's in the public interest, you merely have to let the market reward them with pay, and have the government interfere as little as possible -- in particular, tax their pay as little as possible, not progressively but flatly or even regressively, so they get as much reward as possible for producing more value.
Of course, that axiom is questionable (see here). In brief, if you're an ordinary employee of a large employer, the value of your work is an upper bound on what you get paid, but the less bargaining power you have, the farther below that value you'll actually get, and the more of that value will go to your employer instead. And if you're an upper-echelon employee of a large employer, you may actually get paid more than the value of your work, because you set your own salary (or you and a small cadre of similar people jointly set their own salaries -- it has to be a small cadre or they would bankrupt the company). But this phenomenon acts like a regressive tax and gives people even more incentive to work harder and move up in the company, so some might see this axiom failure as actually a good thing.
That axiom also largely ignores work not paid for in money, such as homemaking and caring for (sick, old, young) relatives. One can sweep this under the rug by assuming that every economic unit (let's call it a "family") has one person working for pay and one person doing the homemaking and personal-care tasks; if so, then this only applies a constant multiplier to everything and doesn't change the choices made by those families. This doesn't work so well when some families fit that mold and some don't, but let's leave that aside for now.
Anyway, the originally-utilitarian principle that, for the public interest, people should be rewarded for working-for-pay and punished for not-working-for-pay has taken on a moral quality: "he who will not work, he shall not eat." (Similarly, a lot of social practices that were originally considered in the individual or public interest, such as monogamy, not eating pork, or not eating other people, have become moral rules because it's easier to teach masses of people a moral rule than to have them all follow a utilitarian argument.) Those who believe deeply in this moral principle see anybody who doesn't work-for-pay, for whatever reason, as a "moocher", and any politician who wants to help unemployed people eat as simply "buying votes" with pan et circenses.
For some reason, conservative economists believe there is no such thing as involuntary unemployment: if you can't find work, it's because you're demanding too much pay, because there is always work available for anybody willing to work for sufficiently low wages. And if the value of your labor (= your wages, see above) isn't enough to cover the expenses (uniform, commuting, child care, etc.) of you going to work, you should probably go to work anyway because it's the Morally Right Thing To Do. It is of course true that if everybody doesn't work, no value will be produced and everybody will starve, not to mention having no clothes or videogames... but it's less obvious that if a few people don't work, perhaps for reasons beyond their control, those few people should starve.
In many economic circumstances, it's also in the public interest for investment capital to be available, which requires that people save money, i.e. spend less than they earn in the same period of time. This too has become a moral principle: everybody knows that it's right and moral and responsible to save money for the future, while those who do the opposite are irresponsible spendthrifts.
So government policy should reward people who save money with high real (after-inflation) interest rates. (The liberal economist will point out that for a substantial number of people living paycheck to paycheck, "saving money" is essentially impossible; even buying in bulk and buying higher-quality goods because they're more cost-effective in the long run are impossible because there's never enough cash available at one time.)
For some reason, conservative economists seem to think there's always a shortage of investment capital, and all economic problems can be solved by throwing more capital at them, so it's always in the public interest for people to save money and to be incentivized to do so with high real interest rates. The obvious counterexample is the recession of 2008, when lots of investment capital sat around with nowhere to invest because nobody was buying anything; what we needed then in the public interest was for people to spend money, even more than they earned, in order to kick-start the economy.
Which brings us to COVID. In a mass-contagion event, it's in the public interest for large numbers of people to stay home and not interact much with other people, and that means (for many of them) not working-for-pay. So it would seem to make sense for government policy, for the duration of the pestilence, to reward people for staying home and punish those who interact face-to-face with lots of other people. That's what several Asian countries (especially those that remember SARS) and most European countries have done: if you normally work an in-person job, we'll pay you to temporarily stop doing it in the public interest, and we'll fine people who congregate in large numbers. And that's what the US's "Paycheck Protection Act" was supposed to do: reward employers who keep their employees on the payroll even while they can't do their normal jobs. But the PPA didn't apply to small employers, and it didn't apply to large employers, and the amount of money authorized in it was an order of magnitude too small for the number of people who suddenly can't work, and it was implemented in a tremendous hurry with unclear rules for who could qualify and what they needed to do to qualify and with minimal oversight of how the money was actually used, and most of the money went to relatively-large employers who already had the clerical infrastructure to meet the qualifications, and and and.
Unfortunately, what's currently in the public interest collides with the moral principle of "who will not work, he shall not eat", based originally on the public interest in more-normal times. Naturally, the people who believe most strongly in this moral principle are vehemently opposed to helping anybody who's not working-for-pay, for whatever reason: if you're in a high-risk group, or your job involves a lot of physical contact with other people, or your employer has shut down because the mean old government has told it to, or you or somebody in your household are already sick, the fact remains that you're not working and therefore it would be immoral for you to be able to eat. Some Republican members of Congress are outraged that, with the temporary increase in unemployment benefits, some people might be better off unemployed than working -- which was exactly the point: we want them to stop going to work so they don't spread disease.
There ought to be a clever, penetrating conclusion to all these ramblings, but I don't have one and I need to go to work now :-)