Lessons for the Age of Consequences: COVID-19 and the Macroeconomy

Lessons for the Age of Consequences: COVID-19 and the Macroeconomy

Storm, S.T.H. (TU Delft Economics of Technology and Innovation)

2021

Comparative empirical evidence for 22 OECD countries shows that country differences in cumulative mortality impacts of SARS-CoV-2 are caused by weaknesses in public health competences, pre-existing variances in structural socio-economic and public health vulnerabilities, and the presence of fiscal constraints. Remarkably, the (fiscally non-constrained) U.S. and the U.K. stand out, as they experience mortality outcomes similar to those of fiscally-constrained countries. High COVID19 mortality in the U.S. and the U.K. is due to pre-existing socio-economic and public health vulnerabilities, created by the following macroeconomic policy errors: (a) a deadly emphasis on fiscal austerity (which diminished public health capacities, damaged public health and deepened inequalities); (b) an obsessive belief in a trade-off between ‘efficiency’ and ‘equity’, which is mostly used to justify extreme inequality; (c) a complicit endorsement by mainstream macro of the unchecked power over monetary and fiscal policy-making of global finance and the rentier class; and (d) an unhealthy aversion to raising taxes, which deceives the public about the necessity to raise taxes to counter the excessive liquidity preference of the rentiers and to realign the interests of finance and of the real economy. The paper concludes by outlining a few lessons for a saner macroeconomics.

COVID-19
economic inequality
excess liquidity
fiscal austerity
public health emergency
recession
relief spending
social determinants of health
‘disconnect’ between the financial and the real worlds

http://resolver.tudelft.nl/uuid:8fc198aa-c497-4722-a7cd-35aefcfad7ff

https://doi.org/10.1080/09538259.2021.1985779

1465-3982

Review of Political Economy, 35 (3), 823-862

Institutional Repository

journal article

© 2021 S.T.H. Storm