JULY-2020 INCRY CALCULATION FOR EVERY TEACHERS
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The coronavirus hits the economy in two ways. The direct hit is an unavoidable consequence of the disease itself. Many goods and services are now either harder to get or impossible to purchase without risking exposure to a highly contagious disease. At the same time, many workers are being prevented from doing their jobs as productively and as safely as they had before the crisis. Together, this means that we can’t satisfy our material desires as well as we could six months ago. Economically, we are all worse off—and nothing will change that besides eliminating the threat of infection.
This direct hit has a corresponding secondary hit: financial losses. Less consumption and less production necessarily mean less real income, so someone has to end up poorer. What matters is who that will be. Different entities can absorb the financial hit better than others based on the strength of their balance sheets and their ability to service their obligations. Dumping the losses on the wrong people amplifies the initial impact of the virus by forcing additional—and unnecessary—cuts in consumption and investment.
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