政府在市场经济中的正确角色 2021

政府在市场经济中的正确角色：以疫情后复苏为例

约瑟夫·E·斯蒂格利茨 2021

https://doi.org/10.1016/j.jge.2021.100004

摘要

长期、广泛的COVID-19大流行给公共卫生和经济复苏带来了巨大挑战。政府必须在设计和执行经济政策方面发挥积极作用，以解决纯粹市场力量无法解决的各种问题，例如外部性和风险市场的缺失。 Covid-19 暴露了当前安排的缺陷以及建立更好机构的必要性。我们还需要更好地理解政府、市场和社会其他机构之间的关系。

一、简介

COVID-19 大流行造成了不同程度的损害，世界各地的恢复路径也多种多样。遏制疾病传播和减轻其对公共卫生和经济不利影响的努力既有成功也有失败。一些经济体已经能够迅速、成功地遏制病毒的传播，实现了显着的复苏，而另一些经济体仍在与激增的感染作斗争。为了恢复强劲增长，仅靠市场力量不足以解决当前的各种问题。各国政府必须加紧填补这一空白，并在复苏中发挥关键作用。本文旨在探讨政府在恢复经济增长方面的重要性。

本文分为四个部分。在第一部分中，我阐述了公共卫生部门面临的挑战、遏制病毒所需的措施以及恢复增长的困难。在第二部分中，我讨论市场力量为何失效，并探讨政府干预至关重要的领域。在第三部分中，我评估了有关政府在市场经济中的作用的假设，揭示了经济学家常常对市场自行解决问题抱有过分的信心。最后，我回顾了在政府和经济学领域进行新研究的必要性。

二、后疫情时代经济复苏的漫长道路上任务艰巨

2.1. 病情难以控制阻碍康复速度

首先要解决的问题是如何控制疫情本身，这对于经济的强劲复苏至关重要。这需要采取更多预防措施和措施。一方面，要规范佩戴口罩，加强检测和追踪，保持社交距离，避免聚集，遏制疾病传播。我们还应该注重提高高风险环境（例如疗养院）的安全性。

另一方面，在有效治疗该疾病方面，我们也面临着挑战。由于对针对这种新疾病的疗法的有效性仍知之甚少，因此不确定性仍然存在。尽管目前有一些已获批准的疫苗，但它们在广泛接种过程中的整体长期有效性仍有待探索，特别是最近在几个国家发现的高传播性新变种。

在美国，虽然由于大规模生产短缺以及分配和注射疫苗方面的困难，疫苗的推广最初进展缓慢，但现在已迅速回升，每天注射数百万剂。1 明显基于种族疫苗接种率的差异还导致黑人和西班牙裔社区的疫苗接种率低于白人，鉴于黑人和西班牙裔社区的感染率较高，这一点令人震惊。此外，一些人不信任医疗保健系统，即使有疫苗也不愿接受疫苗。然而，与一年前相比，美国至少发现自己处于更好的位置，当时人们对这种疾病知之甚少。更重要的是，拜登总统领导的新政府推出了计划，呼吁各州和联邦政府在上任的头100天内在口罩强制执行、检测、疫苗接种、治疗、医疗等方面更加协调一致。此外，通过重新加入世界卫生组织，美国再次与国际社会团结起来，共同抗击这一流行病及其影响。

由于其持续变异，且传染性极高，除非世界上每个国家都取得成功，否则新型冠状病毒肺炎 (COVID-19) 无法得到完全控制。

2.3. 整个社会保护体系没有为穷人和弱势群体提供足够的帮助

美国医疗保健系统内提供护理和治疗方面的巨大不平等和低效率阻碍了疾病传播的控制，从而阻碍了国家的复苏。首先，约9.2%的美国人口（约3000万人）缺乏医疗保险。如图 1 所示，这一比例高于大多数经合组织经济体的未参保率。与样本中的大多数国家不同，美国的初级私人保险相对于公共保险所占比例较高。其次，低收入个人和有色人种更有可能缺乏医疗保险。2越来越多的美国人依赖私人雇主提供的保险，这意味着失业也可能导致保险范围的丧失——在疫情期间。

Fig. 1 Source: OECD Health Statistics. Fig 1

面对危机时，失业保险的缺乏为经济提供了薄弱的缓冲。例如，美国失业三个月后维持收入的比例为57%，低于OECD许多发达经济体，如图2所示。美国失业六个月后维持收入的比例降至8%，相比之下，美国失业三个月后维持收入的比例为57%。 25 个月后，经合组织的总量逐渐下降至 30% 左右。

Fig 2

图2.失业保险的替代率，来源：OECD统计（注：替代率是失业一定月数后维持收入的比例。比率是指没有子女的单身人士收入占总收入的67%）平均工资，包括社会救助福利，不包括住房福利。）。

Fig 3

Fig. 3. Public Expenditure as a Share of GDP

此外，由于带薪病假规定不足，许多员工生病时无法呆在家里，这增加了遏制 COVID-19 传播的难度。在大流行之前，与其他发达国家相比，美国带薪休假的覆盖率相对较低（Heymann 等人，2009 年；经合组织，2020 年）。为了应对这一流行病，通过了《家庭优先冠状病毒应对法案》，为受到病毒影响的工人提供两周带薪病假，但仅限于某些公共雇主和雇员人数少于 500 人但超过 50 人的私人雇主雇员，不包括一半以上的工人。因此，许多受感染的美国人，特别是在无症状的情况下，仍然继续工作，部分原因是他们没有带薪病假。这种情况在储蓄不足、靠工资过活的人中最为普遍。此外，许多低薪员工是一线工人，他们在封锁期间必须继续外出工作。接触病毒的高风险使这些工人更加脆弱，特别是那些在运输、物流、仓储和食品行业工作的工人。

2.4. 延迟且设计不当的刺激方案延长了复苏之路

立法进程缓慢且充满争议，加上总统领导力不足，抑制了对该疾病及其经济后果的强烈反应。 2020 年春季通过的 COVID-19 一揽子计划的设计和实施都很糟糕，大部分旨在提供救济的资金并没有被最需要的人收到。此外，救助计划并不是针对持续一年多的如此广泛的危机而设计的。州和地方政府面临严重的预算限制，迫切需要额外的资金。尽管如此，这些计划的庞大规模弥补了设计上的缺陷，部分解释了美国与其他一些发达国家之间经济衰退程度的差异。拜登政府的到来代表着一个重大的变化。这种疾病受到了认真对待；听取了专家的意见；科学得到了应有的回报；政府能力开始恢复；开始制定严肃的经济计划，以提供救济并解决美国经济长期存在的缺陷。 1.9万亿美元复苏计划的通过导致对美国经济的预期大幅上调，国际货币基金组织预计2021年经济增长6.4%，使美国能够在年底超过疫情前的预测。

2.5. 巨大的滞后效应

恢复增长最重要的问题之一是解决 COVID-19 造成的经济损害，其中一些损害可能是长期的，从而产生滞后效应。第一个是破产，它往往与人力资本、组织资本和信息资本的损失有关。例如，当小企业被迫解散并根据《破产法》第 74 章申请破产时，就会发生这些经济后果。当疫情结束后，这些破产的公司将无法恢复——它们不仅仅是“未破产”。

滞后效应的第二个例子与对企业资产负债表的影响有关；资产负债表的恶化削弱了企业投资甚至生产的能力和意愿。违约增加也对银行资产负债表产生了影响。

第三，由于收入和财富的减少，家庭资产负债表的疲软导致耐用品支出减少。家庭和企业资产负债表的恶化以及不完善的风险市场不确定性的增加往往会促使更多的预防性储蓄，从而削弱总需求。

上述所有因素都阻碍了恢复速度。如果我们能够在短时间内（例如六周）控制住疫情，那么造成的损失就会有限。然而，一年多来，COVID-19 已经严重影响美国的生活，预计这种情况还会持续更长时间。这意味着更大的损失和更多的恢复障碍。

取决于美国以及世界各地采取的卫生和经济政策的类型，复苏之路仍然存在很大的不确定性。 COVID-19 仍有可能持续很长一段时间，而不是作为一种暂时现象消退。虽然有效疫苗的迅速部署和拜登政府采取的强有力措施为这场痛苦的结束带来了希望，但疾病的持续变异和大量似乎对获得疫苗有抵抗力的人是来源值得关注。

2.4. 延迟且设计不当的刺激方案延长了复苏之路

2.5. 巨大的滞后效应

恢复强劲的经济增长面临着许多任务。经济政策应旨在减轻或最大程度地减少损害，并使我们处于更好的复苏地位。例如，如果工人能够在短期和长期内与公司保持联系，那么复苏就会更容易。这意味着当企业重新启动时，雇主不会失去公司特定的人力资本。一些国家在保持低失业率方面比其他国家更成功，例如新西兰、德国和大多数欧洲国家。相比之下，美国的政策设计糟糕、管理不善、成本高昂且相对无效。同样，当小企业得不到援助时，它们就会破产，社会将面临疫情后创建新企业的任务，这比维持老企业生存要困难得多。因此，这些早期故障可能会带来高昂的成本。

3. 为什么纯粹的市场力量不足以恢复经济增长

几十年来政府干预薄弱，导致美国的卫生和经济系统在长期大流行面前变得脆弱。阿罗和德布鲁（Arrow and Debreu，1954）建立了一系列市场有效“解决”经济问题的条件。然而，这些条件通常不会得到满足，而且市场总体上运行不佳，因为通常政府干预可以提高经济（帕累托）效率。5 在本节中，我们将讨论市场失灵的不同方面。下一节我们将概述政府应发挥的积极作用，以及一些国家过去公共干预的经验。

3.1. 外部性

传染病的本质造成了无法通过价格体系来应对的外部性。这意味着，一个人决定去上班或从事任何可能暴露他人的活动，就会给他人带来成本，而他并没有为此付出代价。最好的应对措施是征收针对特定行动的税，即针对特定互动的税，但这种税很难征收。这就是为什么我们的公共干预手段非常不完善，例如封锁、隔离等来阻止疾病的传播。还有一些措施，例如带薪病假，可以通过减少不利外部性的方式影响行为。不幸的是，正如前面提到的，大公司的反对导致很大一部分劳动力没有带薪病假。第二种外部性与宏观经济有关。一家企业的破产会影响其他企业，而一家企业的救助也会带来社会效益。还有许多其他方面的行为会引起宏观经济外部性，例如过多的外债。

3.2. 缺乏风险市场

与整个大流行期间的行为尤其相关的是风险市场的缺失。6如果有良好的保险市场，个人和企业就能够购买保险来抵御疾病的破坏及其经济后果。在美国和其他国家，引人注目的事情之一是许多企业认为他们已经购买了保险来应对业务中断。企业每年要支付数千美元的保费来防范此类事件。但这最终是徒劳的，因为保险公司声称保单中的细则意味着因 Covid-19 封锁而造成的业务中断并未得到承保。

缺乏良好的保险市场也会产生重大的宏观经济影响，因为它会导致家庭和企业采取强烈的预防行为，从而减少总需求。

因此，Covid-19暴露了这一关键“市场失灵”、不完善的风险市场以及相关市场失灵的重要性——执行合同的困难，包括因语言模糊而产生的困难。

3.3. 对准备灾难的企业进行补偿

与风险相关的最后一个重要的市场失灵是需要对企业进行只有在异常事件中才有价值的活动进行补偿。此类活动包括建立口罩、防护装备、呼吸机等库存。然而，对于每 10 至 20 年一次的事情进行补偿是不存在的。这就是为什么解决这些突发事件是公共责任。

4. 政府在疫情后恢复中的适当作用

政府的角色是什么？ Covid-19 说明了政府可以而且应该发挥的重要作用。正如我们在第二节中讨论的，政府越有效地控制疫情及其经济后果，持久损害就越小，恢复也就越快。除了复苏的公共卫生方面之外，政府还可以发挥多种作用，特别是在解决市场无法自行解决的问题时。以下小节更普遍地强调了政府需要更广泛地发挥的众多作用中的一些作用。

4.1. 规定

政府首先要发挥的作用是监管。私营公司有赚钱的动机，但他们常常通过利用他人来实现这一目的。例如，我们在之前提到的疫情期间保险公司的剥削中就看到了这一点。政府必须实施监管以防止此类剥削并追求其他社会目标。7 不完善和不对称的信息、不完全的风险市场以及其他市场失灵意味着，与伴随监管和其他政府行为的价格干预相比，价格干预本身的效果并不好。

4.2. 风险社会化

政府的第二个作用是提供社会保险。个人面临许多私人市场无法承保（或不可承保）的重大风险，例如失业、退休和社会保障。当存在影响每个人的相关风险时，私人市场尤其会失败，在这种情况下，政府应充当最后的再保险公司。同样，对于系统性风险超出任何保险公司承受能力的宏观经济事件，也必须提供社会保险。8而且我们必须考虑交易对手风险对宏观经济的影响。

这对政府来说并不是一个新角色，但公共政策似乎对以前吸取的教训记忆犹新。例如，1997年亚洲金融危机期间，承保保险的公司破产，导致那些自以为购买了保险的人没有得到保障。

4.3. 缓解道德风险问题

每当个人获得保险时，就有可能出现“道德风险”，即他们不会采取必要的行动来减轻道德风险。这些不利的激励效应有多大，通常并不清楚。必须判断道德风险效应相对于风险缓解价值的重要性。

让我们看一下美国正在就一项非常具体的计划进行辩论的例子——失业，这是与该疾病相关的风险之一。私人市场从不提供失业保险，因此每个社会都依赖公共提供的失业保险。随着失业保险的加强，可能会有一些不寻找新工作的动机。问题是这种道德风险有多重要。失业保险只是他们正常收入的一小部分，大多数人都知道这只是暂时的。他们知道找到一份好工作有多难，因此不会利用失业保险。他们可能因为害怕病毒而不会去上班，但失业救济金不会推动他们的决定。此外，当工作机会很少（如果有的话）时，个人就不会去寻找：缺乏寻找并不是因为失业保险，而是因为缺乏就业机会。

美国国内一直存在争议，因为最初的失业方案提高了福利，以补偿少数只提供失业救济金中工资一小部分的州。为了防止人们挨饿或以其他方式受苦，政府除了正常的失业救济金外，每周还发放600美元，导致失业金高于工资。然而，一项跨州实证研究发现，没有证据支持上述失业保险阻碍了人们工作的论点。 9 尽管自认为所向无敌的年轻人不断冒险，但他们这样做的程度并不受他们的生活水平影响。保险。相反，谨慎的老年人无论保险是什么样的，都不会冒险。总体而言，保险具有二阶效应。

4.4. 美国经济史和东亚经济增长对政府作用的启示

第一个教训是政府必须介入解决市场失灵的问题，例如：与较大的外部性有关。新机构的创建带来了社会变革，从而产生了巨大的社会外部性。阿罗（Arrow，1962a，b）和斯蒂格利茨（Stiglitz，1987）也表明，市场在创新资源配置方面的效率低下，无论是在指导创新的方式和程度方面。10在过去半个世纪中经济快速增长的国家，包括东亚国家在内的国家通常比那些增长失败的国家更好地应对市场失灵。

第二个教训是，政府对市场发展的整体支持极其重要。很难找出哪个经济体在没有政府强有力干预的情况下取得了成功的发展。 19世纪和20世纪初期的美国经济增长都是如此，二战结束后东亚和中国经济的快速增长也是如此。

19世纪的美国是农业经济体。政府支持农业推广服务，以提高农业生产力，并将技术带给全国农民。大萧条之后，又是政府推动了从农业经济向制造业经济的结构转型。二战的巨额开支也促进了美国经济的转型。二战及艾森豪威尔执政期间的巨额研究支出，特别是美国研究型大学的支持，为美国在许多领域的技术领先地位发挥了重要作用。美国生活水平的提高是基于公共资助的基础研究；私营部门本身根本无法提供足够的支持。

政府也在东亚奇迹中发挥了重要作用。11 对于成功的东亚经济体来说，关键不是移动技术前沿，而是从其他地方引进知识并迎头赶上。仅靠市场无法实现这一目标。当我担任世界银行首席经济学家时，我们认为发展中国家与发达国家的区别在于知识差距，而不仅仅是资源差距。市场努力维持这种知识差距，而政府则需要克服这些差距。 12

这一观点已得到越来越多的认可。在玛丽安娜·马祖卡托（Mariana Mazzucato）的《创业国家》一书中，她强调了政府在促进创新方面的作用。这是我们应该从成功经济体中汲取的教训之一——只有通过国家行动才能（部分）克服市场失灵，从而实现持续增长。就东亚奇迹而言，这就催生了“发展型国家”的概念。非洲的一些国家已经援引了这一想法，并为它们的发展成功做出了贡献。Mazzucato，2013

5. 政府与经济学系统研究的案例

忽视政府的作用就等于忽视经济的很大一部分——在某些地方，公共部门占经济的 30%，而在另一些地方，这一比例高达 60%。标记政府和经济学领域的更通用方法是“政府和集体行动经济学”，因为集体行动可以在许多不同层面（国家、地区、省、地方）并通过各种媒介（政府、工会）进行。、民间社会、非政府组织）。

5.1. 经济学家对政府在市场经济中的作用做出具体假设常常是错误的

许多参与政策制定的经济学家对市场解决问题的能力过于自信。他们认识到外部性和不完善的保险市场，并且能够认识到巨大的风险必须社会化，因为没有保险公司有能力承担这些风险。然而，当谈到政府政策时，许多经济学家很容易忘记这些事实，并开始拥护市场的优点。一些人认为，即使市场不能解决所有问题，依靠市场也比求助于政府更好。当然，很明显政府并不总是有效。任何在美国生活过或观察过特朗普政府统治下的国家的人都了解政府失败的概念。然而，如果我们放眼世界，最成功的国家都有成功的政府。例如，基于人们对政府的信心、对科学的信任以及社会团结，新西兰在遏制疫情方面取得了出色的成绩。

教训很简单：我们需要努力在公共和私营部门建立更好的机构。一般来说，经济学家倾向于对亚当·斯密感到神秘，并将他误解为不受约束的市场的倡导者。但在斯密的《国富本质和原因探究》一书中，他用了一页又一页的篇幅讨论政府确保市场运转的必要性。他看不见的手只是这本书中很小的一部分。他不仅对市场效率失灵极其敏感，而且对市场在防范剥削方面的不足也极其敏感。史密斯认为，政府需要防止对工人和消费者的剥削。政府在提供教育方面也发挥着重要作用。Smith，1976

5.2. 社会科学、政治学和公共选择

经济学不能与政治学和其他社会科学分开。政治学是对政府和我们集体决策方式的研究。政府制定支撑经济的规则和法规。它设定了调节宏观经济的利率以及税收和支出水平。它提供经济所依赖的基础设施、教育和基础研究。受詹姆斯·布坎南影响的公共选择是经济学的一个分支，试图解决公共决策者的激励问题。然而，这个领域并没有想象中那么成功，因为它建立在每个人都是自私和渴望权力的信念之上。

然而，大量研究表明，人们并非完全自私。我们在家庭中看到了这一点，我们希望以不完全自私的方式彼此互动。我们在我们的国家和世界上也看到了这一点，这里到处都是奉献一生来帮助他人的人。因此，公共选择理论体现了一种特别狭隘的人性观。近年来，我与卡拉·霍夫（Karla Hoff）（Hoff 和 Stiglitz，2016）等人一起进行的研究之一是发展一种内生偏好和行为的理论。我们提出的问题如下：决定人们利他行为与自私行为程度的因素是什么？

5.3. 研究政府和经济学需要新的方法

研究政府和经济学，应该运用理论研究、案例研究、历史研究等多种方法。

首先，我们必须为政府和经济学研究奠定坚实的理论基础。我们需要关于个人、社会及其相互作用的本质的理论基础。最近许多流行的经济学著作都采取了特别狭隘的观点。它还关注假设经济（几乎）始终处于均衡状态的情况。例如，标准宏观经济模型之一的动态随机一般均衡模型（DSGE）始终假设均衡，即使在不均衡期间出现各种有趣的情况，例如 2008 年和 2020 年的意外冲击和金融危机。

其次，必须谨慎做出正确的假设。我们总是必须简化。但做出错误的简化会导致错误的政策等。我们之前的讨论提供了多个例子。例如，在 Covid-19 中，企业和高收入个人之间的一阶效应是预防行为的增加，这不是标准 DSGE 模型的一部分。

花费全部精力解决复杂的跨期替代问题会分散人们对其他问题的注意力，例如对风险变化的反应。同样，今天，在考虑气候变化时，标准经济模型更多地关注跨期影响，而不是其带来的巨大风险。

第三，要合理运用其他学科。经济学家应该更多地借鉴社会学、政治学和心理学等其他学科的研究。一个例子是埃莉诺·奥斯特罗姆 (Elinor Ostrom) 作为一名政治学家对经济学的开创性贡献。 15 右翼经济学家在管理与共同池问题（例如与渔业相关）相关的当地外部性时，先前的假设始终是根据科斯分配财产权定理。然而，Ostrom（1990）确定了一种替代方案——监管框架——以防止过度捕捞，这在许多发展中国家行之有效。此外，她还指出，产权解决方案具有显着的缺点，包括交易成本高和容易导致不平等。

六，结论

除了提供财政刺激方案外，政府还需要采取一系列其他方式来填补市场空白，以促进强劲的经济复苏。仅举几例，除了确保充分就业之外，这些措施还包括调节外部性、促进强有力的竞争、防止剥削、限制市场力量和提供社会保护。在应对 COVID-19 最成功的国家中，政府有效地发挥了这些作用。

这场大流行病暴露了迫切需要进行改革，以建立良好的治理，解决政府和市场失灵问题，并改善机构。不幸的是，在包括美国在内的一些西方国家，人们普遍存在一种毫无根据的信念，即市场会自行解决一切问题。然而，富有和强大的市场参与者往往会反对对整个社会最有利的解决方案，因为这意味着他们必须放弃一些金钱和权力，因此需要政府干预。但这些力量将试图阻止政府发挥其应有的作用。此外，一些政府腐败。正如特朗普政府所见，行善的力量也赋予了做坏事的能力。因此，我们必须努力纠正市场失灵和政府失灵。创建良好的制度是一场永无休止的斗争。

这就是为什么对政府和经济学的研究很重要。只有通过研究这些机构并找出它们何时成功、何时失败，我们才能建立更好的机构。我们永远不会创建完美的机构，但我相信我们可以在公共和私营部门创建更好的机构，并为它们制定更好的框架，以便它们共同合作并与其他人（包括民间社会和非政府组织）合作。

The proper role of government in the market economy: The case of the post-COVID recovery

Joseph E. Stiglitz

https://doi.org/10.1016/j.jge.2021.100004 Get rights and content

Abstract

The long-lasting, widespread COVID-19 pandemic has imposed huge challenges on public health as well as economic recovery. Governments must take an active role in designing and enforcing economic policies to address various problems that pure market forces cannot, such as externalities and the absence of risk markets. Covid-19 has exposed deficiencies in current arrangements and the need to develop better institutions. We also need to develop better understandings of the relationship between government, the market, and other institutions within society.

1. Introduction

The COVID-19 pandemic has caused varying degrees of damage followed by diverse paths to recovery around the world. There have been both successes and failures in the effort to contain the spread of the disease and mitigate its adverse effects on public health and the economy. Some economies have been able to swiftly and successfully contain the spread of the virus, allowing for remarkable recoveries, while others are still struggling with surging infections. In order to restore robust growth, market forces alone are inadequate to resolve the various issues at hand. Governments must step up to fill this void and play a key role in recovery. This paper aims to examine the importance of government in restoring economic growth.

This paper is divided into four sections. In the first section, I lay out the challenges faced by the public health sector, the measures required to contain the virus, and the difficulties in restoring growth. In the second section, I discuss why market forces fail, and explore the areas where government intervention is crucial. In the third section, I evaluate assumptions about the role of government in the market economy, revealing that economists often place an undue amount of confidence in the market to resolve problems on its own. Finally, I review the necessity of a new research in the fields of government and economics.

2. Mounting tasks in the lengthy path to Post-COVID economic recovery

2.1. Difficulty controlling the disease impedes the speed of recovery

The first issue to address is how to control the pandemic itself, which is crucial for a robust recovery. This requires more precautions and measures to be enforced. On one hand, we must normalize mask-wearing, enhance testing and tracing, maintain social distancing, and avoid congregation to contain the spread of the disease. We should also focus on increasing safety in high-risk environments, such as nursing homes.

On the other hand, we also have challenges to address when it comes to the effective treatment of the disease. Uncertainty remains since there is still little knowledge about the effectiveness of the therapeutics being used against this new disease. Although there are currently a few approved vaccines, their overall long-term effectiveness are still to be explored during widespread inoculation, especially concerning recently identified highly transmissible new variants in several countries.

In the US, while the vaccine roll-out was initially sluggish due to a shortage of mass production and difficulties in distributing and administering the shots, it has now picked up quickly, with millions of shots being administered every day.1 Significant race-based disparities in vaccine take-up have also resulted in lower vaccination rates in Black and Hispanic communities compared to the white population, which is alarming given higher infection rates in the Black and Hispanic communities. Furthermore, some people distrust the healthcare system and are hesitant to receive the vaccine even when it is available. However, the US at least finds itself in a better position compared to a year ago, when there was little knowledge about the disease. More importantly, the new administration under President Biden has rolled out plans calling for more coordinated efforts across state and federal governments in mask-mandating, testing, vaccinations, treatments, medical care, etc. during its first 100 days. Moreover, in rejoining the World Health Organization, the US has once more united with the international community in efforts to combat the pandemic and its fallout.

Due to its continuing to mutate, and given the high level of contagiousness, COVID-19 cannot be fully controlled until every nation in the world succeeds.

2.2. Huge social costs associated with the pandemic

After a yearlong battle with the pandemic, the death toll of COVID-19 in the US surpassed 520,000 by early March—a staggering figure, comparable to the American lives lost in World War II, Korea, and Vietnam combined. With over twenty-eight million reported cases worldwide, COVID-19 amounts to the largest public health threat since the 1918 influenza pandemic. Although US cases have plummeted in recent weeks, the daily number of new infections is still above 50,000, partly due to the recently identified new variants. With a one-year decrease in life expectancy during the first half of 2020 reported by the Centers for Disease Control and Prevention, this pandemic may well have a long-term impact on public health.

Besides the damage caused to public health, the virus has had an equally significant economic impact on households and businesses across the nation. The US yearly GDP fell by 3.5% in 2020—the worst drop since World War II, though markedly less than that in Europe. After reaching a historical peak of 14.7% last April, the unemployment rate gradually declined to 6.2% in February 2021, which is still well above the 3.5% rate in February 2020, showing long-lasting stagnation in the labor market recovery. Moreover, these “headline” unemployment numbers mask the true depth of the weaknesses in the labor market, reflected more accurately in reductions in the level of employment.

2.3. The overall system of social protection does not provide sufficient help for the poor and vulnerable

The huge inequities and inefficiencies in the provision of care and treatment within the US healthcare system have impeded controlling the spread of the disease, and thereby the nation's recovery. First, about 9.2% of the American population (about 30 million people) lacks health insurance. This is a higher uninsured rate than most OECD economies, as shown in Fig. 1. Unlike most countries in the sample, primary private coverage consists of a higher proportion relative to public coverage in the United States. Second, low-income individuals and people of color are more likely to lack health insurance coverage.2 The dependence of more Americans on private employer-provided insurance means that the loss of jobs can also lead to a loss of insurance coverage—especially troublesome in the midst of pandemic.

Fig. 1 Source: OECD Health Statistics. Fig 1

The absence of unemployment insurance provides a weak buffer for the economy in the face of a crisis. For example, the proportion of income maintained after three months of unemployment in the US is 57%, lower than many developed economies in the OECD, as shown in Fig. 2. The US rate declines to 8% after six months of unemployment, compared to a gradual drop to around 30% after 25 months for the OECD aggregates.

Fig 2

Fig. 2. Replacement rate in unemployment insurance， Source: OECD Statistics (Note: The replacement rate is the proportion of income that is maintained after a certain number of months of unemployment. Rates refer to a single person without children earning 67% of the average wage, including social assistance benefits and excluding housing benefits.).

Fig 3

Fig. 3. Public Expenditure as a Share of GDP

Source: IMF (Note: Economies listed are G-20 countries excluding the European Union).

Furthermore, due to the insufficient provision of paid sick leave, many employees cannot afford to stay home when they are ill, increasing difficulties in containing the spread of COVID-19. Before the pandemic, the United States had relatively low coverage of paid leave compared to other developed nations (Heymann et al., 2009 and OECD, 2020). In response to the pandemic, the Families First Coronavirus Response Act was passed to offer two weeks of paid sick leave for workers on whom the virus had an impact, but only for certain public employers and private employers with fewer than 500 employees but more than 50 employees, excluding more than half of all workers. Thus, many infected Americans, especially when asymptomatic, have continued to work, partly because they do not have paid sick leave. This situation is most prevalent in people with a shortage of savings who are living paycheck to paycheck. Moreover, many low-wage employees are frontline workers who must continue to work outside of their homes during lockdowns. The high risk of exposure to the virus makes these workers more vulnerable, especially those who work in transportation, logistics, warehousing, and food industries.3

2.4. A delayed and ill-designed stimulus package has prolonged the path to recovery

A slow and contentious legislative process with inadequate presidential leadership inhibited strong responses both to the disease and its economic aftermath. The COVID-19 packages passed in Spring 2020 were poorly designed and implemented, and much of the money meant to bring relief was not received by those most in need. Furthermore, the relief package was not designed for such an extensive crisis lasting over one year. State and local governments face severe budgetary constraints and are in dire need of additional funding. Still, the massive size of the programs made up for the deficiencies in design, partly accounting for the difference in the magnitude of the downturn between the US and some other advanced countries. The arrival of the Biden administration represented a substantial change. The disease was taken seriously; experts were listened to; science was given its due; competency in government began to be restored; and serious economic packages both to provide relief and to address longstanding deficiencies in the American economy began to be formulated. The passage of the $1.9 trillion Recovery Package has led to substantial upward revisions in expectations for the US economy, with the IMF projecting 6.4% growth for 2021, enabling America to exceed pre-pandemic projections by the end of the year.

2.5. Enormous hysteresis effects

One of the most important issues for restoring growth is addressing the economic damage of COVID-19, some of which could be long term, giving rise to hysteresis effects. The first of these is bankruptcy, which tends to be associated with a loss of human capital, organizational capital, and informational capital. These economic consequences occur, for instance, when small businesses are forced to dissolve and file for Chapter 74 bankruptcy. Such bankrupt firms will not be able to recover when the pandemic is over—they don't just become “unbankrupt.”

The second example of hysteresis effects are related to the impacts on corporate balance sheets; the deterioration in their balance sheets undermines the ability and willingness of corporations to make investments or even produce. Increases in defaults have also had an impact on bank balance sheets.

Third, the weakening of household balance sheets has led to less spending on durables due to decreases in income and wealth. The worsening of household and firm balance sheets and the increase in uncertainty in imperfect risk markets tends to prompt more precautionary savings, thus weakening aggregate demand.

All of the factors listed above have impeded the speed of recovery. The damage would have been limited if we had been able to bring the pandemic under control in a short period—say, six weeks. Yet, COVID-19 has been severely affecting life in the United States for over a year now, and it is expected to go on for even longer. This means greater damages and more obstacles to recovery.

Depending on the kinds of health and economic policies deployed not only in the United States, but also around the world, there is still much uncertainty regarding the path to recovery. It is still a possibility that COVID-19 may last for a very long time to come rather than subsiding as a temporary phenomenon. While the rapid deployment of effective vaccines and the strong measures taken by the Biden administration have provided hope that the end of this travail is in sight, the continued mutation of the disease and the large numbers of individuals who seem resistant to obtaining the vaccine are sources of concern.

There are many tasks ahead to restore robust economic growth. Economic policies should be aimed at mitigating or minimizing damage and putting us in a better position for recovery. For example, recovery will be easier if workers have been able to keep connections with their firms, both in the short-term and long-term. That means when business restarts, employers will not have lost their firm-specific human capital. Some countries have been more successful than others at keeping unemployment low, such as New Zealand, Germany, and most European countries. In contrast, the United States’ policy has been badly designed, poorly administered, costly, and relatively ineffective. Similarly, when small businesses are denied assistance, they go bankrupt, and society will be faced with the task of creating new businesses after the pandemic, which is much more difficult than keeping old businesses alive. Hence, there may be high costs associated with those early failures.

3. Why pure market forces are inadequate to restore economic growth

Decades of weak government intervention have left the health and economic systems of the United States fragile in the face of a prolonged pandemic. Arrow and Debreu (1954) established a set of conditions under which markets efficiently “solve” economic problems. However, those conditions are not typically satisfied and markets do not work well in general, in the sense that there are typically government interventions that can enhance economic (Pareto) efficiency.5 In this section, we will discuss different aspects of the failure of market forces, and in the subsequent section we will outline the active roles that governments should take, and the past experiences of public intervention in several countries.

3.1. Externalities

The very nature of contagious disease creates an externality that is impossible to deal with through the price system. This means that one person's decision to go to work or do any activity that might expose someone else imposes a cost on others that he does not pay for. The best response would be to have action-specific taxes, i.e. interaction-specific taxes, which are difficult to impose. That is why we instead have very imperfect instruments of public intervention such as lockdowns, quarantines, and so forth to stop the spread of the disease. There are also measures, such as paid sick leave, which affect behavior in ways that reduce adverse externalities. Unfortunately, as previously mentioned opposition from big companies resulted in large fractions of the workforce not having paid sick leave. A second type of externality is related to the macroeconomy. The bankruptcy of one firm affects others, while the rescue of one firm has social benefits as well. There are many other aspects of behavior that give rise to macroeconomic externalities, such as excessive foreign denominated debt.

3.2. Absence of the market for risk

Particularly relevant to behavior throughout the pandemic is the absence of risk markets.6 If there were good insurance markets, individuals and businesses would have been able to purchase insurance against the ravages of the disease and its economic consequences. One of the striking things in the United States and other countries is that many businesses thought they had bought insurance to cover business interruption. Businesses paid thousands of dollars of premiums every year to guard against an event just like this. But this turned out to be in vain, as the insurance companies claimed that fine print in the policies meant that the business interruption resulting from the Covid-19 lockdown was not covered.

The absence of good insurance markets also has significant macroeconomic implications, as it leads to strong precautionary behavior by households and firms, which reduces aggregate demand.

Thus Covid-19 has exposed the importance of this key “market failure,” imperfect risk markets, as well as related market failures—the difficulties of enforcing contracts, including those that arise from the ambiguity of language.

3.3. Compensation for firms in preparation for disaster

The last important market failure associated with risk is the need to compensate firms for undertaking activities that will only be of value in unusual events. Such activities include building stockpiles of masks, protective gear, ventilators, etc. However, compensation for something that occurs once every 10 to 20 years does not exist. This is why it is a public responsibility to address these contingencies.

4. The proper role of government in post-COVID recovery

What are the roles of government? Covid-19 has illustrated the important roles that government can and should play. As we discussed in Section 2, the more effectively the government can control the pandemic and its economic aftermath, the smaller the lasting damages will be and the sooner recovery will take place. Beyond the public health aspects of recovery, there are multiple roles the government can fill, especially when it comes to fixing problems that the market cannot resolve on its own. The following subsections highlight more generally some of the many roles that government needs to play more generally.

4.1. Regulation

The first role the government must play is regulation. Private companies have an incentive to make money, but they often accomplish this by taking advantage of others. For example, we have seen this in the previously mentioned exploitation by insurance companies during the pandemic. Governments must impose regulations to prevent such exploitation and pursue other social goals.7 Imperfect and asymmetric information, incomplete risks markets, and other market failures imply that price interventions by themselves do not work well compared to price interventions accompanied by regulation and other government actions.

4.2. Socialization of risks

A second role of the government is to provide social insurance. Individuals face many significant risks that are not insured (or insurable) by private markets, such as unemployment, retirement, and social security. Private markets especially fail when there are correlated risks that affect everyone, and in such circumstances the government should act as a reinsurance company of last resort. So too for macroeconomic events where systemic risk is beyond the capacity of any insurance company, social insurance must be provided.8 And we must consider the macroeconomic implications of counterparty risk.

This is not a new role for the government, but public policy seems to have a short memory of previously learned lessons. For example, companies writing insurance went bankrupt during the 1997 Asian financial crisis, with the consequence that those who thought they had purchased insurance were not covered.

4.3. Mitigating the moral hazard problem

Whenever individuals obtain insurance, there is the possibility of “moral hazard,” that they will not take the action required to mitigate the moral hazard. How significant these adverse incentive effects is often not clear. A judgment must be made about how important the moral hazard effects are relative to the value of risk mitigation.

Let us look at one example that is being debated in the United States in terms of a very specific program—unemployment, one of the risks associated with the disease. Private markets never provide unemployment insurance, and therefore every society relies on publicly provided unemployment insurance. With stronger unemployment insurance, there may be some incentive not to search for a new job. The question is how important such a moral hazard is. Unemployment insurance is a fraction of their normal income and most individuals know that it is only temporary. Knowing how hard it is to get a good job, they are not going to take advantage of unemployment insurance. They may not go to work because they're afraid of the virus, but the unemployment benefits are not going to drive their decision. Moreover, when there are few if any jobs available, individuals will not search: the lack of searching is not because of unemployment insurance, but because of the absence of employment opportunities.

There has been controversy in the United States because the original unemployment package raised benefits to compensate for a few states that provided only a small fraction of wages in unemployment benefits. To prevent people from going hungry or suffering in other ways, the government granted $600 per week in addition to normal unemployment benefits, resulting in higher unemployment pay than wages. However, a cross-state empirical study found no evidence supporting the argument that the above unemployment insurance discouraged people from working.9 Although young people who believe they are invincible continue to take risks, the extent to which they do this is not affected by their insurance. Conversely, old people who are cautious do not take risks no matter what their insurance is like. Overall, insurance has a second-order effect.

4.4. Lessons on the role of government from US economic history and East Asian economic growth

The first lesson is that the government must step in to solve problems of market failures, e.g. associated with large externalities. The creation of new institutions brings societal change, which generate large societal externalities. Arrow (1962a, b) and Stiglitz (1987) show too that markets are inefficient in the allocation of resources to innovation in both how and how much they direct that innovation.10 The countries that have had rapid economic growth over the past half century, including those in East Asia, have typically dealt with market failures better than those countries that have failed to grow.

The second lesson is that integral support from the government for market development is extremely important. It is hard to identify any economy that has achieved successful development in the absence of strong government intervention. This was the case for US economic growth in the 19th and early 20th centuries as well as in the rapid economic growth in East Asia and China since the end of World War II.

In the 19th century, the United States was an agricultural economy. The government supported agricultural extension services to boost productivity in agriculture and bring technology to farmers across the country. It was again the government that facilitated the structural transformation from an agricultural economy to a manufacturing economy after the Great Depression. The massive expenditures for World War II also facilitated the transformation of the US economy. The huge research expenditures in World War II and afterward during the Eisenhower administration, especially the support of US research universities, were instrumental in providing the US with its technological leadership in many areas. The improvement of the standard of living in the US has been based upon publicly funded basic research; the private sector simply would not have provided adequate support on its own.

Government has also played an important role in the East Asian Miracle.11 For successful East Asian economies, the key has been not to move the technology frontier, but to bring in knowledge from elsewhere and catch up. Markets alone cannot achieve this goal. When I was chief economist at the World Bank, we argued that what separated developing from developed countries was the gap in knowledge, not just the gap in resources. Markets work to maintain such knowledge gaps, and government is needed to overcome them.12

This view has been increasingly recognized. In Mariana Mazzucato's book, The Entrepreneurial State, she emphasizes the role of the government in promoting innovation. This is among the lessons we should learn from successful economies—that it is only through state action that market failures can be (partially) overcome to achieve sustained growth. In the case of the East Asian Miracle, this gave birth to the concept of “the developmental state.” A few countries in Africa have invoked this idea, and it has contributed to their successes in development.Mazzucato, 2013

5. The case for systemic studies of government and economics

To ignore the role of government is to ignore a very large fraction of the economy—in some places the public sector makes up 30% of the economy, while in others it comprises up to 60%.13 A more general way to label the field of government and economics is “economics of government and collective action” since collective action can take place at many different levels (national, regional, provincial, local) and through a variety of mediums (government, unions, civil society, NGOs).

5.1. Economists are often wrong in making specific assumptions about the role of the government in the market economy

Many economists involved in policymaking are overly confident in the ability of the market to resolve problems. They recognize externalities and imperfect insurance markets, and they are able to realize that large risks must be socialized because no insurance company is capable of bearing them. However, when it comes to government policy many economists are prone to forget these truths and start championing the virtues of the market. Some believe that markets, even if they fail to solve all problems, it is better to rely on them than to turn to government. Of course, it is clear that governments don't always work. Anyone who has lived in the US or watched the country under the Trump administration understands the concept of government failure. And yet, if we look across the world, the most successful countries all have successful governments. New Zealand, for example, has done a fantastic job containing the pandemic, based on people's confidence in government, trust in science, and their social solidarity.

The lesson is simple: we need to work to create better institutions in both the public and private sector. In general, economists tend to mystify Adam Smith and misinterpret him as an advocate of unfettered markets. But in his book An Inquiry into the Nature and Causes of the Wealth of Nations, Smith spends page after page discussing the necessity of government to make sure the market works. His invisible hand is just a very small part of the book. He was extraordinarily sensitive not only to market failures in efficiency, but also to the inadequacy of markets in guarding against exploitation. Smith argued that government was needed to prevent the exploitation of workers and consumers. The government had an important role too in providing for education.Smith, 1976

5.2. Social sciences, political science, and public choice

Economics cannot be separated from political science and other social sciences. Political science is the study of government and the way we make decisions collectively. The government sets the rules and regulations that underpin the economy. It sets the interest rates and levels of taxes and expenditures that regulate the macroeconomy. It provides the infrastructure, the education, the basic research on which the economy relies. Public choice, influenced by James Buchanan, is a branch of economics that tries to address the incentives of public decision-makers. However, this field has been less successful than hoped because it is founded on the belief that everyone is selfish and power-hungry.

However, there is a great deal of research to show that people are not utterly selfish. We see this within our families, where we hope to interact with one another in ways that are not utterly selfish. We also see this within our country and the world, which is full of people who have devoted their lives to helping others. Thus, public choice theory embodies a particularly narrow view of human nature. One of my own strands of research in recent years that I have done with Karla Hoff (Hoff and Stiglitz, 2016) and others is to develop a theory of endogenous preferences and behavior. Among the questions we have asked is the following: what are the factors that determine the extent to which people act in an altruistic way versus the extent to which they act selfishly?

5.3. The need for new methodologies to study government and economics

To study government and economics, we should deploy a wide variety of techniques including theoretical research, case studies, and historical studies.

First, we must form a strong theoretical foundation to inform studies in government and economics. We need theoretical foundations regarding the nature of the individual, society, and their interaction. Much of the fashionable recent work in economics has taken a particularly narrow view. It has also focused on situations where the economy is assumed to be (almost) always in equilibrium. For example, dynamic stochastic general equilibrium models (DSGE), one of the standard macroeconomic models, always assume equilibrium even though every interesting situation occurs during disequilibrium, such as the unanticipated shocks and financial crises of 2008 and 2020.14

Second, care has to be taken in making the right assumptions. We always have to simplify. But making the wrong simplifications will, for instance, lead to the wrong policies. Our earlier discussion has provided multiple examples. For instance, in Covid-19, the first-order effect among firms and upper income individuals was an increase in precautionary behavior, which is not part of the standard DSGE model.

Spending all one's energy solving complex problems of intertemporal substitution takes away attention from other problems, such as the responses to changes in risk. Similarly, today, in thinking about climate change, the standard economic models focus more on the intertemporal effects than on the overwhelming risks that it poses.

Third, we must properly utilize other disciplines. Economists should draw more upon research from other disciplines such as sociology, political science, and psychology. One example is Elinor Ostrom's seminal contribution to economics as a political scientist.15 The prior presumption among right-wing economists for managing local externalities associated with the common pool problem (such as associated with fisheries) was always to assign property rights according to the Coase Theorem. However, Ostrom (1990) identifies an alternative– regulatory frameworks– to prevent overfishing which have worked well in many developing countries. Furthermore, she showed that the property rights solution had significant disadvantages including high transaction costs and the tendency to lead to inequality.

6. Conclusion

In addition to the provision of a fiscal stimulus package, there is a long list of other ways in which the government is needed to fill the gaps of the market in facilitating a robust economic recovery. To name a few, beyond ensuring full employment, these include, regulating externalities, promoting robust competition, guarding against exploitation, limiting market power, and providing social protection. In the countries with the most successful COVID-19 responses, government has played these roles effectively.

The pandemic has laid bare the dire need for reforms to create good governance, addressing both government and market failures, and improve institutions. Unfortunately, in some Western countries, including the United States, there is a pervasive and unfounded belief that the market will solve everything on its own. However, wealthy and powerful market players tend to work against solutions that are best for society as a whole when it means they must relinquish some of their money and authority, hence the need for government intervention. But those same forces will try to impede the government undertaking the roles which it should play. Moreover, some governments are corrupt. The power to do good also enables the capability to do bad, as seen in the Trump administration. Thus, we must work to correct market failures and government failures. It is a never-ending struggle to create good institutions.

That is why research on government and economics is important. It is only by studying these institutions and finding out when they succeed and when they fail that we can move toward building better institutions. We are never going to create perfect institutions, but I believe we can create better institutions both in the public and private sector, and develop better frameworks for them to work together and with others, including civil society and NGO's.

1: According to the Centers for Disease Control and Prevention (CDC), the share of total population having received 1 or more doses of vaccine, and both doses, are 17.7% and 9.2% respectively by March 7, 2021.

2: According to the 2019 National Health Interview Survey for adults aged 18-64, 25.8% of those categorized as poor (with income less than 100% of the Federal Poverty Level) are without health insurance, compared to 9% for those not categorized as poor (with income of 200% FPL or greater). Additionally, 29.7% of the Hispanic population and 14.7% of the non-Hispanic Black population are uninsured, compared to 10.5% for non-Hispanic white individuals. Artiga et al. (2020) find that under the Affordable Care Act between 2010 and 2018, Black Americans were 1.5 times more likely to lack insurance than white Americans, and the uninsured rate of Hispanic people was 2.5 times higher than that of whites.

3: See for example, Berube and Bateman (2020) and Tomaskovic-Devey et al. (2020).

4: Chapter 7 is an option for corporations and limited liability companies going out of business for help facilitate an orderly liquidation.

5: As discussed in Stiglitz (1993), these conditions are “extremely special and empirically irrelevant”. A large amount of literature shows that these conditions are essentially the only conditions under which markets are efficient. Greenwald and Stiglitz (1986) illustrate that when markets are incomplete or there is imperfect information, markets are not constrained Pareto efficient.

6: Rothschild and Stiglitz (1976) characterize insurance market equilibrium under adverse selection and show that competitive equilibrium may not exist. Stiglitz and Yun (2013) study how the presence of moral hazard and adverse selection affect the optimal and equilibrium insurance contracts and discuss the role of the market and the government in implementing optimal allocation.

7: See Stiglitz (2009) for further discussions on the rational for government intervention as well as the types and instruments of regulation.

8: Stiglitz and Yun (2014) offer an explorative design of a social insurance program, income contingent loans, which effectively provide interstate and intertemporal smoothing with minimal adverse effects on incentives.

9: See Bartik et al. (2020), Finamor and Scott (2021), and Marinescu et al. (2020).

10: Innovation is inherently risky, marked by imperfect information and incomplete insurance markets. As a public good, knowledge cannot be supplied efficiently by private markets.

11: Stiglitz (2016) provides a detailed review of the growth processes in these economies, where the state played a catalytic and a regulatory role, at the same time acknowledging the importance of markets. These economies depart from the Washington Consensus policies, which called for a small state, limited government activism, and paid no attention to inequality or social cohesion.

12: There is a potential role for the government since markets are not efficient in general when technology is endogenous. Policies aimed at improving the static allocation of resources often fail when promoting learning, advancing knowledge, and closing the knowledge gap within a country, as well as the gap between developing and developed economies.

13: There are different measures of the size of the public sector. Fig. 3 shows public expenditure as a share of GDP for G-20 countries, which vary from 16% for Indonesia to 56% for France in 2019.

14: Stiglitz (2018) provides a detailed assessment of the problematic micro foundations of DSGE models in incorporating aspects of economic behavior.

15: Ostrom is one of the few political scientists and the first woman to win the Nobel Prize in economics.