The coronavirus has now gone global, and economies are in freefall. The pandemic is clearly the precipitating cause of today’s crisis, but there’s an underlying disease that has been with us for a long time: neoliberal economics. Globalized travel and trade, multinational supply lines, offshoring and overly financialized economies that have prioritized banking interests, cartels and oligarchy above all else have made a large portion of our population highly vulnerable to the effects unleashed by this pandemic.
Policymakers have a tricky task ahead of them. The virus has created a supply shock, as businesses have shut down and workers have been told to stay at home. In response, demand is plunging as a result of the lost income and the corresponding collapse in sales. That’s highly deflationary (as the bond markets are now signaling). What is required is a robust fiscal response so that workers’ incomes are protected and have adequate financial resources to get health care.