In this 2-page briefing note for U.S. policymakers, Eric Beinhocker makes the case for the U.S. to immediately follow the UK, France, and other European countries who have announced government nation-wide guarantees for the payrolls for all firms (large, small, profit, non-profit). This is an essential and urgent step towards limiting a catastrophic collapse in employment and incomes that has already begun in many countries. If workers can be kept in employment and incomes flowing during the lockdowns, there is a chance for a relatively rapid recovery once the public health crisis ends. But if businesses rapidly shed workers, even with significantly increased unemployment compensation or a temporary UBI, the large and rapid drop in incomes will lead to a downward spiral of collapsing demand and production, and huge frictional costs in re-starting the economy—an extended and deep depression will become likely. Other policies such as central bank interventions, business loans, or tax cuts are too slow and indirect to prevent such a collapse, only an immediate and blanket guarantee of payrolls will be fast enough.


Beinhocker, E. (2020). 'Guarantee All U.S. Payrolls Now to Prevent a Depression'. INET Oxford COVID-19 Blog, 23 March 2020.
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