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May 28, 2021

Covid-19 crisis demands institutional reforms – leading macroeconomic influencers

Covid-19 failures require the CDC and FDA to make more independent decisions.

Economists believe that US public health agencies have strong incentives to adhere to the president and Congress, as the latter decides the budget for these agencies every year.

Garett Jones

Garett Jones, associate professor of economics at the Centre for Study of Public Choice at George Mason University, shared an article on Covid-19 failures reflecting why the Centers for Disease Control and Prevention (CDC) and the US Food and Drug Administration (FDA) should be more independent. He further added that agencies like these are working on the behest of the president and the US Congress for funding and support. Therefore, it is more likely that their decisions are politicised.

Jones emphasises that big government failed during the early days of the pandemic. In addition, one of the biggest disasters in the US was the distribution of substandard Covid-19 testing kits by the CDC in early February. It is believed that the test kits did not work effectively, while the FDA did not allow outside labs to create their own test kits until the end of February. As a result, fewer tests were being conducted during the crucial and early days of the crisis.

However, he also added that the Fed’s independence to act boldly, buy corporate and municipal bonds and create direct lending programmes for businesses, have been some of the most successful pandemic responses.

https://twitter.com/GarettJones/status/1397980630764376064

Daniele Paserman

Daniele Paserman, professor of economics at the Boston University, retweeted on the hours worked for pay from home by women but not men, during the Great Recession. Economists believe that the Covid-19 pandemic has highlighted that women are disproportionately losing paid work.

Economists look at the American Time Use Survey to understand the impact of the unemployment benefit extensions triggered by the Great Recession on hours worked from home. The survey revealed increased gender inequality in the job market, with women having to work put in more hours and effort during the recession than men, and the resulting changes in the duration of unemployment benefits.

Experts believe the coronavirus pandemic has dramatically affected the labour market, with the prevalence of remote working trends and women losing more jobs than men. In addition, they add that the literature to date on work performed at home also suggests it may well affect workers’ wellbeing and productivity.

Martin Sandbu

Martin Sandbu, economics leader writer and senior research fellow at the Zicklin Centre for Business Ethics Research at the Wharton School, University of Pennsylvania, retweeted a discussion on his book, ‘The Economics of Belonging‘, which was written before the Covid-19 crisis hit, but is more relevant today as it calls for action and urgency.

Although based on experience of 2016, Sandbu states that it is about belonging and the end of belonging, where the economy has not worked or left behind. He believes new technologies should be embraced for further productivity growth, and low or bad productivity jobs should be wiped out in high income countries. He also stresses on a good competition policy in place and to enhance competition in both product and labour markets to smoothen the transition of the economy post crises such as the current pandemic.

 

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