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Schuck: Time to sit tight and trust economy will still be there


There’s a string of photos on my phone showing my youngest son standing in front of the Peter Iredale shipwreck at Fort Stevens, taken basically every spring break for the last decade. In each shot, he grows taller while the wreck recedes ever farther into the sand.

Guest Writer

Eric Schuck holds a Ph.D. in economics and a professorship in agricultural economics at Linfield College. In addition to twice serving Fulbright fellowships abroad, he’s also been called to active military duty overseas on two occasions. Given his Scandinavian descent, he and his wife enjoy taking their two children to Oregon’s North Coast, where Scandinavian roots run deep. The venerable Peter Iredale shipwreck is one of their favorite attractions there.

As a gauge of time, these pictures mean a lot to me. We won’t be adding to the series this year, at least not anytime soon, and that saddens me more than I care to admit.

Here’s the deal, though: It’s OK to feel this way. It’s OK to lament what we are enduring, and to rage against what likely lies ahead. It’s OK to be emotional and angry and upset.

None of us asked for this. None of us deserved this.

We’re allowed to mourn and to grieve as we watch our community unravel around us. That’s all normal, and we wouldn’t feel this way if we didn’t love this place.

So be upset. It’s OK.

But let’s try to frame our pain the right way, especially when it comes to the economy.

To start with, economies are not facts of nature. They’re social systems created by people to manage the production and distribution of goods and services, ideally for the benefit of the people who live there.

We decided — collectively — that right now, we want to turn off our system and do our best to stay home and shelter in place.

This situation is coming at significant, sometimes even grievous, financial cost to many of us. There’s no softening that.

Yet think of what this truly means: Given a choice between people and money, we chose people. As a society, we would rather sacrifice our economy than our neighbors.

It’s hard not to feel humbled. The full scale and scope of that sacrifice is, however, staggering.

We just endured a week in which 3 million people lost their jobs. Current estimates from the Federal Reserve Bank of St. Louis show unemployment reaching 20 to 30% by summer, a level not seen since the Great Depression.

Yet while the level of unemployment may mirror the 1930s, the circumstances are profoundly different.

Back then, the priority was to get people back to work, and quickly. Today, such an action would be, quite literally, murderous.  Instead, we need to hold people and firms over until such time when the COVID-19 risk subsides. 

What we need is an economy-wide pause, a break that keeps firms and their employees united and ready for the day when they can all go back to work together. 

Unfortunately, our unemployment system is not built for that. More reflective of the Great Depression than the Great Pandemic, our system is meant to be a bridge between jobs, offering levels of support that barely tide someone over, thus provide a strong incentive to seek new work.

What is needed today is a completely different system — a system that can preserve business capacity and keep workers connected to their place of employment. If we can achieve that, the economy should have a warm start following the pandemic rather than a cold beginning. 

Such a system represents a radical departure, but it’s the right course of action.

Fortunately, this is what the recently passed CARE Act ensures. By dramatically raising the level of unemployment payments and expanding eligibility for benefits, the goal is to keep people safely out of the labor force until the danger passes.

Alongside this are “grants in loans” that have the same effect for businesses. By providing operating capital to firms that maintain employees on the payroll, thus connected to their businesses, firms should have the money to endure the pandemic with their productive capacity intact.

The higher the percentage of its employees a firm keeps, the lower the percentage of the loan it must repay to the government and the more capacity is preserved. If successful, that will keep firms alive until they can operate safely again.

As bleak as our situation may seem, there are policies being enacted to get us through this. For now, we all need to sit tight at home, trusting the economy will still be there for us — just like the Peter Iredale.   


Sally G

Thanks, Professor Schuck! (And I remember being in awe of the Peter Iredale 60 years ago as a young child.)

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