Always useful to hear Matt Taibbi‘s perspective and insights as his latest feature for Rolling Stone magazine tacks to task that “while ordinary Americans face record unemployment and loss, the COVID-19 bailout has saved the very rich”.
He adds in his conclusion: “Although we’re seeing a graphic demonstration of how ‘unskilled’ workers like home health aides and delivery people and grocery clerks are actually the vitally important people in our society, they’re not getting the radical rescue. There’s no sudden universal health care, no guaranteed sick leave, no massive jobs plan, just Band-Aids. They will die in massive numbers and emerge from this crisis, if and when it ends, poorer and more vulnerable than before.”
The situation could get even worse if the shift from globalisation to local production increases costs, ie inflation, and taxes rise to pay for the increased debt just when incomes are falling real terms with people being furloughed or having pay slashed for those who can keep their jobs. In this scenario, consumer demand continues to fall creating a negative feedback loop on producers.
This is a less-than-pleasant way to deleverage an economy.
The only solution is for money to prop up innovation and productivity. Germany, for example, was already moving towards its self-imposed target of spending 3.5% of gross domestic product (GDP) on research and development (R&D), expected to be hit in 2025, and its bailout programme is focused as far as possible on retaining demand and supporting innovation.
As a result it will be interesting to hear from Brigitte Mohn, a member of the executive board of Germany-based publisher Bertelsmann’s foundation, at the GCV Digital Forum on 3-4 June on how competition and civic engagement are the basis of social progress.
Source: BMBF, Bundesbericht Forschung und Innovation 2020
