Rabee Tourky's not so economics blog

Extending HECS-style loans during the COVID-19 crisis is a bad idea By Rohan Pitchford and Rabee Tourky The spread COVID-19 inevitably means that people will isolate themselves at home, perhaps over several waves of infection, as the spread is managed. This may happen for a few, or many, months. The change in people’s behaviour means that the economy is faced with a large fall in demand in certain sectors. Public health experts have concluded that people being isolated is the best way to slow this very serious disease — to our minds this is more important at the moment than any immediate economic priority. But it comes with a large human cost: affected businesses will find themselves without the flow of revenue necessary to cover the wages they pay to employees, the rents they pay for buildings and equipment, and the repayments they make for bank loans. Without any relief, business with excellent future prospects will close and unemployment will spike. The key question