Hi Dave

Thanks for taking the time to comment.

I struggle to recognize your remark of “contempt for the poor”. Is it advocating for more targeted monetary transfers to those who really need it? Or is it the pros and cons discussion about the ability of the UI admin to ensure the funds reach those who are in financial trouble?

All economists (I have come across) including myself agree that it is important the people and businesses affected by the pandemic and lockdown (which is a thing completely out of their hands) get help. It is needed to ensure they can survive (preferable more than just that) during this period AND to ensure they are able to be employed when the situation betters.

Questioning whether printing a one-time check is the best way to do it, or whether we can design policy better within constraints of time etc., is completely warranted in my opinion. And to be honest, all the arguing about 600 vs. 2000 appear misplaced in my view. Even $2000 is not enough to help those really struggling through the next 3–6 months. Mind you, with the CARES act they received an extra $600 per week on top of the normal unemployment insurance.

I understand your argument about the stimulating effect of checks through what we normally label fiscal multipliers (when you spend something at a store, the store owner gets money to spend etc. etc.). But the data shows many of the recipients of stimulus checks doesn’t do that. Their personal economy isn’t really affected by the checks. Due to this — and the fact that its harder to spend money at the moment with a lot of expenditure options non-available (think vacations, eating out, goign to bars and theaters)— a large part of it is saved. A lot of assets inflates as a result, meaning wealth inequality also is likely to increase.

Stimulus checks will be more effective (as a stimulus tool) if timed with the reopening. That is when businesses really need demand to be there.

In the meanwhile, attention should be shifted toward those who need it the most (judging by your comment, I think you actually agree on that). There should be better ways to do it than with stimulus checks, but if it’s hard or costly to administer more targeted measures, it may be an ok option after all.

Anyway, it is important to think about how we best design policy, and my writings were a discussion exploring some of the ideas top economists have put forward.

Regards, Asger

I’m an economist doing policy design and analysis. I write about the economy, taxation, innovation and growth, policy design, and financial markets.

I’m an economist doing policy design and analysis. I write about the economy, taxation, innovation and growth, policy design, and financial markets.