Five years on, how has the COVID-19 pandemic shaped the economy?
Five years on, how has the COVID-19 pandemic shaped the economy?
This week marks five years since the World Health Organization declared COVID-19 a global pandemic. Economic reality changed almost overnight as the virus spread, and despite a very strong recovery, we are still dealing with some of the consequences. Inflation is still on its way back down from pandemic highs.
To take a look back at some of the enduring economic marks left by the pandemic, “Marketplace Morning Report” Sabri Ben-Achour was joined by Pavlina Tcherneva, president of the Levy Economics Institute at Bard College where she’s also an economics professor. The following is an edited transcript of their conversation.
Sabri Ben-Achour: We did get new and expanded forms of government relief and service during the pandemic. Did any of that stick? Or really did that change at all what Americans expect from their government?
Pavlina Tcherneva: We were able to really mobilize the public resources. And I’m talking about financial resources, and research capabilities, administrative structures. We were able to mobilize them to, you know, develop obviously vaccines. We offered telehealth, we offered various other subsidies. And so I think people understood, for a brief moment, that this was possible. And those protections then disappeared, and they were left to struggle with high health care bills and the kind of difficulty to access health care, as one example.
Ben-Achour: There were and are differences of opinions on the effectiveness of some of the things the government did. For example, relief payments. On the one hand, they provided much needed relief to people. On the other, people say that they contributed to inflation. I’m wondering what mistakes did we or could we learn from from an economic perspective?
Tcherneva: I mean, I think the first lesson is that income support relief payments clearly can be dispersed on short order, but I think what it also demonstrated is that just income support doesn’t really address the fundamental structural issues that we’re discussing here. Income support doesn’t increase the minimum wage. You have to have minimum wage legislation to do that. You have to have legislation to provide benefits for working people. And I think this is where we missed an opportunity to think very deeply about transforming the labor market. There was, I think, a missed opportunity on extending the expanded child tax credits. We could have tried different types of student debt relief when student debt cancellation didn’t work. We’ve seen homelessness increase — you know, thinking about housing issues. And so I think that income was the expedient thing to do, but it was not a transformative thing to do.
Ben-Achour: Well, if there is, you know, political disagreement about whether to keep some of the measures we took to help people along through the pandemic, are we better or worse prepared for knowing what to do the next time something crazy like this happens?
Tcherneva: I hope we’re better prepared. I mean, one important lesson is that if we’re faced with a major crisis, we need to be looking to the fiscal side. We need to be looking to Congress for swift action, and it is the public sector that can mobilize the resources. Clearly, we’re working in a political environment that is quite antithetical to increasing public investments, an environment in which public administrative structures that acted very effectively during the COVID pandemic are being under attack. So we have a lot of work ahead of us. But in terms of economic policy, I would say a lesson would be the fiscal arm is the one that can act, and it needs to act perhaps in a more surgical way to improve in a long-term manner the problems in the labor market, increasing minimum wage, providing essential benefits, dealing substantively with the accelerating health care costs, child poverty. These are the sorts of things that we saw even during the last election. I think these are the lessons that we can be learning going forward.
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