A quarantine graduation? Or did you recently get promoted? Purchasing a product trickles down through a supply chain, with effects on everyone who had a hand in producing, transporting, and selling that product. Take the food industry. In addition to buying that book from a community bookstore, consider other ways to get the supplies you need from alternate sources and likely alternate supply chains. Is there a farm share you could join?
Find local businesses around your town that could benefit from your purchases. But for everyone who is thriving, there is someone else and likely, many others who are barely surviving. If you have extra work that could be outsourced, consider hiring a remote freelancer to assist. No, you may not be able to charge for an Instagram post or have a brand send you a product to unbox on YouTube. Hey, you may not even fully understand the purpose of TikTok.
But, as Sullivan points out, everyone is an influencer in their own circle of people. Word of mouth is still the most powerful marketing tool of all, and the more you share about the products, experts, and must-haves you love, the more you encourage people to shop smartly. From sales and income taxes to payroll taxes and wealth taxes, there is plenty of fine print to weed through on paystubs and receipts.
Please support our work by becoming a Social Europe member for less than 5 Euro per month. Thank you very much for your support! Given the high savings rates of private households, one might of course ask whether there is any need for a government stimulus to consumption. But low-income earners are generally hardly in any position to save.
They are also likely to be harder hit by income losses due to unemployment or short-time work. Those companies and self-employed most affected have suffered serious losses as a result of the lockdown.
What is needed is a strong surge in consumption, which should help not least to reduce high accumulated inventories. A targeted and administratively simple support measure is the loss carry back. This would allow the company to recover the tax paid for In Europe, the instrument exists so far in only five countries—France, Germany, Ireland, the Netherlands and the United Kingdom—and it is limited to one year.
With the pandemic entering its second year in Europe, it would make sense to extend the loss-carry-back period to two years. The risk of supporting zombie companies, chronically lacking a successful business model, however speaks against an overly long period. With a two-year carry back, companies could at least offset the losses of the two coronavirus years against the profits of and With a generous loss carry back such as this, coronavirus-weakened companies would see their liquidity and solvency strengthened, enabling them to bounce back strongly once the pandemic subsides.
European countries which do not have this facility should seriously consider it as a well-targeted instrument. The pandemic will have more than temporary effects on the economy, however. The pressure of digitalisation will make some business models obsolete or at least require major realignments. In most cases this will require investments which many businesses are unable to finance today. Their balance sheets damaged by the crisis, they will have a hard time getting loans from banks.
In this context, immediate write-offs could play an important role. According to the tax rate, companies thus receive interest-free liquidity assistance. A different stimulus is needed The U. This is not enough growth to reduce unemployment or stimulate investment. While President Bush has acknowledged the need for some form of economic stimulus, his proposals primarily would benefit wealthy taxpayers with tax cuts that will have their biggest effect five to 10 years from now, long after the current downturn has ended.
Indeed, he proposes a classic supply-side economic plan designed to increase economic capacity in an economy drowning in excess buildings, plants, and equipment, and to give benefits many years from now to an already well-off few. Supply-side economics failed in the s and it will fail again today. What the economy needs is a quick burst of new spending to minimize the chances of a double-dip recession like the one the U.
Among other things, this jump-start could be accomplished with state revenue sharing, with increases in unemployment insurance, with funding for school repairs, and with prescription drug benefits for the elderly.
In fact, the federal programs are already in place that can direct these resources to the most needy schools and districts for items such as rodent control, emergency plumbing repairs, leaking roofs and walls, and repair of damaged and dangerous electrical systems.
There is also a tremendous need for prescription drug insurance for the elderly, a new program that could be administered through the existing Medicare system although this would not be a short-run program.
There is no better time than a downturn to put a costly new program like prescription drug insurance in place, when new spending is desperately needed to stimulate the economy and reduce state fiscal shortages as well. Endnotes 1. The National Bureau of Economic Research, which is responsible for dating recessions, determined that a recession began in March www. The rate of growth was 5.
Department of Commerce An increase in the trade deficit reduces the demand for domestic goods and services. Some of the domestic demand for goods is leaking to goods and services produced abroad when the deficit is growing. Tax cuts, even if they are targeted toward lower-income households, are less effective than spending increases since there will always be some leakage in the form of increased savings, instead of more consumption. An alternative demand-side tax cut is a tax rebate, such as the one that was enacted in Low and moderate-income households, who are more likely to spend than to save the money, benefited substantially from this tax cut.
Also, it was a temporary measure that was enacted quickly and thus helped to boost the economy. References Bernstein, J. Mishel, and T. Washington, D. National Governors Association. Pearlstein, S. Popper, Margaret. Department of Commerce, Bureau of Economic Analysis. Weismann, Jonathan. See more work by Laura Singleton and Christian E. How not to stimulate the economy Bush proposal fails tests any successful stimulus package should pass by Christian Weller and Laura Singleton Eighteen months after the National Bureau of Economic Research officially declared recession, economists and policy makers continue to debate how the federal government should kick-start an economy still stuck in neutral.
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