Economic policy is not about GDP growth. It’s about welfare.
Externalities are key. Infection externalities don’t go away by calling for responsible behavior. Infection externalities can turn positive.
Keeping worthy companies or networks alive does not require government intervention, unless capital markets don’t work.
To judge the right amount of burden sharing is beyond economics. But economics gives some clues: In an ideal world, idiosyncratic risk exposure would be insured while in second best, taxes and subsidies achieve only part of that. The data show that trade-offs between public health and economic activity are less severe than sometimes argued.
In the Boston Review, Dani Rodrik discusses neoliberalism and argues that
mainstream economics shades too easily into ideology, constraining the choices that we appear to have and providing cookie-cutter solutions.
Rodrik emphasizes that sound economics implies context specific policy recommendations.
And therein lies the central conceit, and the fatal flaw, of neoliberalism: the belief that first-order economic principles map onto a unique set of policies, approximated by a Thatcher–Reagan-style agenda.
But he also stresses that the
principles [of economics] are not entirely content free. China, and indeed all countries that managed to develop rapidly, demonstrate their utility once they are properly adapted to local context. Conversely, too many economies have been driven to ruin courtesy of political leaders who chose to violate them.
In Rodrik’s view
[e]conomists tend to be very good at making maps, but not good enough at choosing the one most suited to the task at hand.
I have argued elsewhere that the main job of economists is to create maps, not to choose among them. See also the earlier post on Ariel Rubinstein’s excellent discussion of Rodrik’s recent book.