Tags: Coronavirus | Trump Administration | economy | pandemic | casey mulligan

Former WH Economist: Offer Back-to-Work Incentives to Promote Growth

a sign indicating a laundromat is closed because of the coronavirus pandemic

By    |   Thursday, 20 August 2020 02:39 PM

The economic crisis that has spread across the world, especially in the United States, by the coronavirus is particularly felt by the small business community throughout America.

Dr. Casey Mulligan is a professor at the Kenneth C. Griffin Department of Economics at the University of Chicago, a former member of the White House Council of Economic Advisors, and the author of the new book entitled, "You're Hired!: Untold Successes and Failures of a Populist President."

Mulligan notes that Congress had been advised that the world was due for a pandemic back in September 2019.

"When I was there [at the White House Council of Economic Advisors], we were working on a report on pandemics that was released sometime last September," he said. "We didn't know that a specific pandemic was going to happen, but we expect one every 20 to 25 years. We projected that it would be very costly — within the range of $1 to $4 trillion for the United States."

Mulligan has been "on the money," as it were, regarding the dollar amount that it has cost the U.S. economy and taxpayers. Yet, one has to wonder: what are his policy prescriptions now that he is outside of 1600 Pennsylvania Ave. and with the country in the eye of the storm of this pandemic?

Regarding unemployment, Mulligan's commentary would lead us to believe that worst of the economic downturn is behind us.

"Unemployment numbers are not something that I have looked at in my career because it is a combination of not having a job and being in a state of mind," he said. "The government is always changing how it rewards that state of mind, and there are two versions of being unemployed: not working and out of the labor force. So, we need incentives that encourage people to go back to work rather than stay at home and do nothing."

To further justify his stance, Mulligan points to "a survey that reports every two weeks was started earlier on during the pandemic, and that report has shown that the labor market hit its lowest in May. Right now, the labor market has bounced back by 50 percent from that low."

Given the media-driven hysteria that has the country fraught with a gloomy outlook, Mulligan remains confident that the "pandemic will likely be over for all intents and purposes by the time of the inauguration, whether it is [Joe] Biden or [President Donald] Trump who wins."

One could not help but ask the former Trump administration official about the Biden campaign's plan for infrastructure, that in Biden's words will "build our economy back better."

Mulligan was quick to analyze that the plan "on its face could create more jobs. However, one has to wonder if the 'clean energy projects' part of that plan is worth it. While it would technically create a larger gross domestic product, it could also be totally worthless and entirely wasteful, as we saw under the Obama administration."

The unions have a lot of trouble with adapting to change. The American economy is in a situation where unions have to change, but they won't allow for it by definition. It is so backwards to think that more union involvement in a changing economy that requires adaptation would be a good idea. The economy needs more adaptation, not less.

It is a refreshing bit of news to see that Mulligan is not one of Trump's naysayers after serving from September 2018 to August 2019 in his official capacity at the White House. Moreover, his diagnosis and prognostications should serve as a welcome sign to investors and all Americans that our economic woes will soon be in the past.

However, our fight is far from over.

"People aren't recognizing right now that work is even more important in these next few months than it normally is because we need to know how to do it," Mulligan said. "You have to figure out how to run your restaurant when its doors are still shut, and some people will fail. Right now, work is more important from an aggregate perspective."

Mulligan believes that the coronavirus' lasting effect will be more subtle than one expects.

In his words, "the number one effect of the virus is not that it forced our government to do bad things, which is true. It is that it has caused people to act differently than they normally do, and when people decide to stay home, they are protecting themselves. When they go out and make a mistake or have success, people learn from those lessons and we can't learn anything [from an economic perspective] right now sitting at home and doing nothing."

It appears that both Mulligan's and Trump's views on the economy are pretty much in sync. They both project an "onward and upward" mentality for getting America back to work and back to normal as soon as reasonably possible.

Michael Cozzi is a Ph.D. candidate at Catholic University in Washington, D.C.

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The economic crisis that has spread across the world, especially in the United States, by the coronavirus is particularly felt by the small business community throughout America.
economy, pandemic, casey mulligan
Thursday, 20 August 2020 02:39 PM
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