The trouble with mixing ethics and economics is not that they are incompatible. Quite the contrary, they are inextricably linked. The problem is that if you talk about them simultaneously, you never get anywhere.
Both subjects are important. Neither is dispositive or scientific. But economics has the advantage of a vocabulary of facts and a language of numbers. Thus, if you want to have the conversation about both, it’s better to start with the facts and numbers.
So let’s do that.
After crushing demand, the federal government’s $350 billion small-business relief fund ran out in less than two weeks. This week, the Small Business Administration began accepting new loan applications for an additional $310 billion in forgivable loans, with new rules in order to expand the initiative’s reach. (Though the agency’s electronic filing system crashed within minutes of the program reopening.)
The total “relief package” already enacted will cost about $2 trillion. There is good reason to believe that we will have a second and perhaps a third one at that same level.
We learned that 3.8 million more Americans lost their jobs last week – which means that the virus put around 30 million out of work within six weeks.
There are about 127 million households in America earning, on average, about $150,000. (That’s the mean, which counts the rich people. The median income is $60,000.) Ten million unemployed, multiplied by, say, $100,000, is $1 trillion. At an average tax rate of 20%, that’s $200 billion in lost federal tax revenues.
Tens of thousands of small businesses, representing hundreds of billions of dollars in tax revenues, have been shut down. Many of them will not reopen.
For some years now, the federal government has been running at a deficit of about $1 trillion a year.
Total U.S. debt is nearing $24 trillion and rising fast.
The stock market is near its all-time high?
Is this sustainable?
Jeff, Guest Blog
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