We Need Class, Race, and Gender Sensitive Policies to Fight the COVID-19 Crisis

Luiza Nassif Pires | April 2, 2020

Luiza Nassif-Pires, Laura de Lima Xavier, Thomas Masterson, Michalis Nikiforos, and Fernando Rios-Avila

 

Disproving the belief that the pandemic affects us all equally, data collected by New York City Department of Health and Mental Hygiene and a piece published today in the New York Times shows that the novel coronavirus is “hitting low-income neighborhoods the hardest.”[1] In a forthcoming policy brief, we share evidence that this pattern would be the case and provide a solid explanation as to why (Nassif-Pires et al., forthcoming). Moreover, as we argue, the death tolls are also likely to be higher among poor neighborhoods and majority-minority communities. This inequality in health costs is in addition to an unequal distribution of economic costs. In short, poor and minority individuals are disproportionately feeling the impacts of this crisis. A concise version of our evidence is presented here.

The toll of social inequality in healthcare is well known. A clear relationship has been repeatedly demonstrated between social determinants — such as income, education, occupation, social class, sex, and race/ethnicity — and the incidence and severity of many diseases. This association holds true for infectious respiratory illnesses such as influenza, SARS and also for COVID-19, as figure 1 shows. The consequences of this imbalance are particularly catastrophic when there is a massive disease outbreak. The precise mechanisms by which social determinants drive unequal disease burden during these outbreaks is harder to assess. On the one hand, there is a strong association of social determinants with clinical risk factors for respiratory illnesses such as chronic diseases, on the other, social aspects of poverty increase the risks of individuals contracting infectious diseases.

To establish the relationship between poverty and the clinical risk of a severe case of COVID-19, we estimate a health risk index as a function of poverty and percentage of minority population in neighborhoods of 500 cities. We use data from the 500 Cities project and from the American Community Survey. The risk index accounts for the incidence of chronic obstructive pulmonary disease, diabetes, coronary disease, cancer,  asthma,  kidney disease, high blood pressure, percentage of smokers, proportion of individuals with poor physical health and the proportion of the population that is above 65 years old. All data is available at the census tract level and results are presented in figure 1 and figure 2[2]. continue reading…

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What If We Nationalized Payroll?

Pavlina Tcherneva | March 30, 2020

As the coronavirus pandemic rages on, the US Congress appropriated a whopping $2 trillion budget to tackle it (about 10% of GDP). The focus was on expanded unemployment benefits and cash assistance to families, as well as grants and loans to small firms and large corporations in hopes that they will halt the torrent of layoffs.

Across the ocean, Denmark took a different approach. The Danish government announced that it would cover 75–90% of certain worker salaries for the next 3 months. However remote the possibility here in the US, it still inspires the question: Could we have followed suit? How shall we think about such a policy?

The Danish approach only covers workers in virus-hit jobs. However, suppose the US government decided to pay the entire wage bill for the economy during the months of radical social distancing. This would amount to an effective nationalization of the payroll, making the government an employer of first resort. continue reading…

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Home Quarantine: Confinement With the Abuser?

Luiza Nassif Pires | March 29, 2020

by Ana Luíza Matos de Oliveira, Lygia Sabbag Fares, Gustavo Vieira da Silva, and Luiza Nassif Pires

Even though Covid-19 has already killed thousands worldwide and is paralyzing global economic activity, President Jair Bolsonaro insists on referring to it as a “little flu.” Despite the president’s efforts to avoid a halt to the economic activity in Brazil, the rhythm in the country has slowed down and people who can afford to stay confined at home are doing so. This week, several cities and states implemented mandatory shut downs on non-essential commerce and services. Given this new scenario, with still very uncertain impacts, we would like to raise a concern with a problem that has been reported in other countries: the increase in domestic violence. continue reading…

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The Coronavirus Does Not Discriminate; Unfortunately Our Economic System Does

Thomas Masterson | March 27, 2020

In the last 24 hours, two big news stories regarding the economic impact of the Covid-19 pandemic have broken. The first is news that the Senate has passed a $2 trillion stimulus package that legislators claim is intended to alleviate the economic damage caused by the responses to the unfolding pandemic: closures of schools and businesses as well as the social isolation of much of the population. The second–a reported 3 million new unemployment claims in the last week alone–is a direct result of the aforementioned responses, as businesses close, events and travel plans are canceled and those who can remain isolated in their homes wondering which will run its course first: the supply of binge-able content on Netflix or the pandemic.

continue reading…

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Tcherneva on the Green New Deal and Job Guarantee in France

Michael Stephens | February 5, 2020

Pavlina Tcherneva recently participated in a hearing before a parliamentary group (La France insoumise) of France’s National Assembly on the subject of the Green New Deal and the job guarantee (the intro is in French; Tcherneva’s testimony is in English):

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Minsky Explains Financial Instability

Michael Stephens | December 10, 2019

In this rare video from 1987 (there is very little surviving footage of Minsky discussing his work), Hyman Minsky summarizes his theory of the financial fragility at the heart of modern capitalist economies:

This was part of an event in Bogotá, Colombia (which is discussed in this working paper by Iván D. Velasquez).

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Join Us for the 11th Minsky Summer Seminar

Michael Stephens | October 23, 2019

The Hyman P. Minsky Summer Seminar
Levy Economics Institute of Bard College
Blithewood
Annandale-on-Hudson, N.Y.

June 7–13, 2020

The Levy Economics Institute of Bard College is pleased to announce the 11th Minsky Summer Seminar will be held from June 7–13, 2020. The Seminar will provide a rigorous discussion of both the theoretical and applied aspects of Minsky’s economics, with an examination of meaningful prescriptive policies relevant to the current economic and financial outlook. It will also provide special sessions introducing the theory and applications of Wynne Godley’s stock-flow consistent modeling methods, supported by hands-on workshops.

The Summer Seminar will be of particular interest to graduate students, recent graduates, and those at the beginning of their academic or professional careers. The teaching staff will include international economists working in the theory and policy tradition of Hyman Minsky and Wynne Godley.

Applications may be made to Kathleen Mullaly at the Levy Institute (mullaly@levy.org), and should include a letter of application and current curriculum vitae. Admission to the Summer Seminar will include provision of room and board on the Bard College campus. The registration fee for the Seminar will be $375.

Due to limited space availability, the Seminar will be limited to 30 participants; applications will be reviewed on a rolling basis starting in January 2019.

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Bloomberg Interview: Wray on Modern Monetary Theory

Michael Stephens | July 31, 2019

Bloomberg Businessweek‘s Cristina Lindblad and Peter Coy sat down with L. Randall Wray for an in-depth interview on Modern Monetary Theory:

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Remembering Nina Shapiro

Jan Kregel | March 15, 2019

We are grieved to announce that Nina Shapiro, Professor of Economics Emeritus at St. Peter’s College, passed away on March 6. Nina was one of the first Levy Institute Visiting Scholars and a major contributor to the field of post-Keynesian economics. She passed away last week at the age of 71 from complications due to cancer.

Nina was best known for her work on the post-Keynesian theory of the firm and innovation, as well as the history of economic thought and macroeconomic theory. Her work was rooted in the tradition of Marx, Keynes, Kalecki, and Steindl. She was a deeply creative thinker who connected Marxian and Marshallian ideas on competition with the macroeconomics of Keynes and Steindl. An essay published at the start of her career—“The Revolutionary Character of Post Keynesian Economics” (Journal of Economic Issues, 1977)—made an enduring case for the rejection of scarcity as the basis for economic analysis. She was a founding member of the Editorial Board of The Journal of Post-Keynesian Economics and at the time of her death was at work on a book on the theory of the firm.

Trained in the nascent political economy doctoral program of The New School for Social Research with Edward Nell, Robert Heilbroner, David Gordon, and Anwar Shaikh, she was a part of the Rutgers University Livingston College program in post-Keynesian Economics along with Paul Davidson, Alfred Eichner, Bruce Steinberg, Lourdes Beneria, Robert Guttmann, Michele Naples, and myself. One of very few women in the field of post-Keynesian economics, she was a brilliant teacher of the history of economic thought and heterodox microeconomics and mentored two generations of Rutgers graduate students in economists, including Fernando Cardim de Carvalho, William Millberg, Andrea Terzi, and Radhika Balakrishnan.

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Big Guns Shooting Holes in the Sky

Jörg Bibow | March 12, 2019

The New Keynesian monetary mainstream has brought out the big guns. Paul Krugman, Kenneth Rogoff, and Larry Summers have come out to shoot down the rising star known as “MMT,” which stands for Modern Monetary Theory. For a while, it was academically convenient to withhold paying any public attention that could foster competition in the field. Like other non-mainstream ideas in economics, MMT was simply ignored by our star mainstream economists, who are always ready and keen to lend their wisdom and advice for public action. Now that MMT has reached the public debate through arousing interest among powerful public voices, fostering political debate about available policy options, protecting the mainstream monopoly of opinion has prompted them to take aim at MMT.

The key issues in the battle of ideas between Paul Krugman (New Keynesian monetary mainstream of the IS/LM variety) and Stephanie Kelton (MMT) are out there for everyone to see (see Krugman, Feb. 12th; Kelton, Feb. 21st; Krugman, Feb. 25th; and Kelton, Mar. 4th). It is noteworthy that the two do not seem to be all too far apart regarding their preferred policy agenda. At its core, the controversy really concerns monetary theory – including the question of what kind of money and monetary economy any relevant monetary theory should theorize about. Regarding this particular battle, I will only add that Keynes, in his response to John Hicks’ (1937) IS/LM model interpretation of The General Theory, addressed the very point that Krugman and Kelton strongly disagree on.

In terms of the IS/LM model that Paul Krugman is so very fond of, increased government spending means increased government borrowing pushing against an upward-sloping LM curve that generates a rising interest rate, and hence “crowding out” of private borrowing and spending.

Remember here that the LM curve’s upward slope stems from the assumption of a given money supply apparently controlled by the central bank (Keynes preferred the notion “pool of liquidity” as provided by the banking system). When Hicks highlighted this outcome in his seminal 1937 article, Keynes responded: continue reading…

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