On Thursday, faculty representing multiple schools at the University of Virginia participated in a live webinar on the coronavirus pandemic and its economic implications. Professors David Leblang, Robert Bruner, and David Smith, who previously teamed up to teach a class on the 2008 Great Recession, joined Miller Center Director and CEO Bill Antholis for a virtual discussion on the current health and financial crisis.
Bruner, who is Dean Emeritus of UVA’s Darden School of Business as well as a Distinguished Professor of Business Administration, began his remarks by describing his outlook on the future.
“In the long run, I’m an optimist, and in the short run, I think we have some serious, bad news yet to come, and the dominant question for everyone should be, ‘What’s the dividing line between the short run and the long run?'” Bruner said. “I should emphasize that I don’t have a crystal ball, and no one I know has one either.”
Smith, a professor of finance and associate dean at the McIntire School of Commerce, commented on the recent fiscal collapse in the United States. He explained that Americans have frozen the economy in place through self-isolation and related public safety measures.
“We’re essentially globally shutting down substantial parts of our economy,” Smith said. “It’s going to have big consequences. I am also heartened and optimistic that we will get through it, and that the efforts by the Federal Reserve thus far to provide as much liquidity into the market — not just to banks but to other lending institutions and even to the non-financial sector through both small businesses and to large businesses — all of that effort that I’ve never seen in my lifetime is really impressive.”
In addition to teaching, Leblang directs the Global Policy Center at the Batten School and conducts economic and political research at the Miller Center. He echoed Smith’s praise for the Federal Reserve, highlighting the leadership of Chairman Jerome Powell.
“What’s been astonishing to me is how effective — maybe I shouldn’t say astonish — pleasing to me in an astonishing way is how rapidly and how effectively the Fed has sprung into action after Powell has just been battered and beaten by the Trump administration for months, and how the Congress is not moving as quickly as one would like,” Leblang said. “But they’ve been able to hammer some things out.”
On the topic of Congressional response, panelists discussed extreme fiscal stimulus policies intended to help Americans through the pandemic, including controversial, no-strings-attached cash handouts nicknamed “helicopter money.” On Wednesday, the United States Senate unanimously passed a $2 trillion economic rescue plan that included unprecedented, direct payments of up to $1,200 each to millions of citizens. The bill, likely to be approved by the House of Representatives on Friday, includes expanded unemployment aid, loans and grants to American businesses, and money for states, hospitals, and education.
Bruner remarked on Congress’s historically-unparalleled attempt to prevent economic recession, raising broader moral questions.
“This is the first time in U.S. history — mark this day — this is the first time in U.S. history that we’ve seen such a policy implemented,” Bruner said. “It is often said that extreme circumstances warrant extreme remedies. We’ll see. This policy adoption today will be richly debated for years to come, I predict…It begs the question of, ‘How much are we willing to pay to save a life? Or to save many lives?’ For indeed we are paying, as a nation, in lost output and in the economic welfare of the entire nation by our policy of ‘shelter in place.’ The enlarged sense is that the specific answer is imponderable. I can’t answer it. It must arise from the will of the populace communicated through state and national legislatures in the policies that they adopt.”
Despite recent Congressional measures, Smith explained his reservations about allowing the government to drive all recovery efforts.
“I don’t think we need to wait for the federal government to step in and start directing industries to do certain things,” Smith said. “Other things being equal, you would love to have folks putting in equity that doesn’t have to be paid back right away, but the implication of that would be for the Federal Reserve — if they are injecting money as equity — they would end up owning a lot of these companies…These are the times where I think it’s useful to use debt, but the ultimate point is, how much of this [money] is actually going to get to small businesses? Larger companies, by their very nature, have more borrowing capacity, they have more cash on their books. I think this [crisis] is something that’s going to be more painful for the small-business owner than for the larger-business owners.”
Going forward, Leblang urged viewers not to forget marginalized populations across the world or their unique challenges.
“I’m looking at developing countries and I’m looking at displaced peoples,” he said. “When COVID-19 hits and takes hold in refugee camps, in and among displaced people in Europe, in and around Venezuela, in Africa, I think we’re going to see devastation that we can’t even imagine. I think that’s where we’re going to have to think about the production of medical supplies — respirators, masks, medicine — in a way that we’re not even contemplating to serve our local populations at this moment.”
To conclude the panel, Antholis highlighted the Miller Center’s efforts to move their regularly-scheduled events online, and encouraged interested viewers to keep an eye on the Center’s website for more information.
“We really appreciate everyone’s participation and the ongoing support of our viewers,” Antholis said. “Especially in this challenging time.”
To watch the full panel, titled “The pandemic and the developing economic crisis,” click here.