In the right corner: Lloyd Blankfein, Goldman’s former CEO and outspoken critic of continued stay-at-home orders.
In the left corner: Neel Kashkari, a former Goldmanite turned Minneapolis Fed President.
This is the problem that’s vexing our brightest economic minds: How can you reopen when it will make people sick? How can you stay closed when people are suffering?
There’s no easy answer
Here’s the pickle in a nutshell (ew)
If you opened the entire economy tomorrow, that wouldn’t solve the crisis we’re in: As Kashkari notes, who’s going into restaurants, when indoor, tightly packed, air-conditioned spaces are the most dangerous places to be? Or movie theaters, nail salons or basketball games?
If you kept the entire economy closed for many more months, that wouldn’t solve the problem either: Coronavirus cases continue to rise across the country despite stay-at-home orders. And as Blankfein notes, business owners and workers are in dire straits. An extended shutdown could further destroy the livelihoods of millions of Americans.
So which is the least-worst option?
Well, maybe there’s a third path. It’s isn’t pretty, and it ain’t perfect. But it just might be the best solution we’ve got.
Congress and the Fed have already allocated trillions of dollars to stimulus checks, business loans, troubled asset purchases, municipal bond buying, and gobs of other programs aimed at keeping the economy from collapse. Some businesses and workers have inevitably fallen through the cracks, but millions of people have received emergency unemployment insurance and thousands of businesses have been granted forgivable loans.
It’s a Band-Aid, not a cure, for sure. It’s an expensive Band-Aid that we’ll be paying off for quite some time.
The former Goldman nerds are all correct. The only path out of this might be the same thing we’re doing right now: Staying at home and spending a ton of money to bail ourselves out of this mess.