First, do no harm: if austerity were tested like a medication in a clinical trial, it would have been stopped long ago, given its deadly side effects. Each nation should establish a nonpartisan, independent Office of Health Responsibility, staffed by epidemiologists and economists, to evaluate the health effects of fiscal and monetary policies.
Second, treat joblessness like the pandemic it is. Unemployment is a leading cause of depression, anxiety, alcoholism and suicidal thinking. Politicians in Finland and Sweden helped prevent depression and suicides during recessions by investing in “active labor-market programs” that targeted the newly unemployed and helped them find jobs quickly, with net economic benefits.
Finally, expand investments in public health when times are bad. The cliché that an ounce of prevention is worth a pound of cure happens to be true. It is far more expensive to control an epidemic than to prevent one. New York City spent $1 billion in the mid-1990s to control an outbreak of drug-resistant tuberculosis. The drug-resistant strain resulted from the city’s failure to ensure that low-income tuberculosis patients completed their regimen of inexpensive generic medications.
What I have found incredibly ridicules about the current situation is the lack of emphasis on unemployment and its long-term effects. I have said the following numerous times, but it bears repeating again:
With interest rates at multi-decade lows, the US could borrow at incredibly low rates, hire the out of work blue collar people (primarily manufacturing and construction workers) and fix our crumbling infrastructure. Problem solved. The long-term growth projections from such a move would more then pay for the original cash outlay.
Yet, here we are with a fairly high unemployment rate and the commensurate problems associated with it -- lack of upward wage growth, lack of meaningful savings etc...
I especially like the idea of classifying unemployment as a pandemic. That makes perfect sense.
Anyway, read the whole piece. It's well worth your time.