America has failed its people during COVID-19. With almost 5 million cases, more than 160,000 deaths, and inept leadership, the country’s response has been the worst on Earth. More grave consequences lie ahead, though, as the virus shows no signs of slowing down.
“It may be too late now,” says economist and author L. Randall Wray. “The infections may be too widespread to contain.”
Wray is one of the leading proponents of Modern Monetary Theory (MMT), a heterodox economic theory that, in its simplest form, says governments can print as much money as they like to cover deficits. Orthodox macroeconomic theory holds that governments operate like households or private firms, which, if holding too much debt, can go belly up. But since a government issues its own currency and doesn’t use currency like a household or firm, it can’t actually go into debt. The theory has gained steam over the past several months, especially as the global economic crisis deepens amidst COVID-19.
Outsized spending and currency creation might be necessary right about now. Wray has written extensively about MMT, including his 2020 book A Great Leap Forward: Heterodox Economic Policy for the 21st Century. In March, he and Yeva Nersisyan co-authored a piece for the Levy Economics Institute at Bard College entitled “The Economic Response to the Coronavirus Pandemic.” The authors identified four necessary steps—full coverage of COVID-19 treatment and testing costs, mandated paid sick leave and coverage, family debt relief, and “swift deployment of testing and treatment facilities in underserved communities.” Four months later, those necessary steps sound like a pipe dream from a more just universe.
“There was hope that we could get it all under control and we could sort of go back to what we were doing, open the schools and all that, which would’ve made it easier to get the economy going again,” Wray says. “That [now] looks unlikely, probably impossible.”
The dire economic consequences of being unable to contain COVID-19 still loom. That includes tens of millions of people who could be evicted from rentals or lose their homes, as well as fresh rounds of firings and furloughs. Wray thinks bold action is necessary and looks to the Green New Deal—legislation whose proponents have referenced Modern Monetary Theory as a way to pay for it and deal with the impending environmental crisis.
“The first thing we need to do is implement the job guarantee,” Wray says. “This has gotten publicity the last couple weeks, there are people talking about this outside the usual MMT crowd, so I have some hope that we might do that. This not only would give people jobs and income, it would also help us start to tackle the consequences of the pandemic.”
Putting millions of people to work is key, but so is taking care of families. As people return to jobs or continue working them, they’ll need help at home taking care of and teaching kids who aren’t likely to be in school.
“This is the time to start implementing the broad vision of the Green New Deal that includes a job guarantee, but also time to start tackling the environmental crisis, the inequality crisis,” Wray says. “Of course right now we’re also dealing with racial equality, as well as the severe consequences for Black and brown families due to the pandemic, both economically and health[-wise].”
If it all sounds radical and like it might cost a lot, that’s the point. Unprecedented times call for unprecedented thinking and methods—particularly economic theories that will help avert economic disaster. For many, COVID-19 has already proved dire. Without serious initiatives to tackle the variety of economic consequences it has caused and will continue to cause, the suffering will only continue into 2021.
“That’s what I’m hoping we start to do,” Wray says. “Realistically, we’ve got an election coming up and a lot of this is going to wait until we see what happens in January.”