Dealing with the second wave
Subsidise rather than order closures
Subsidise rather than order closures
In the autumn of 2020, many European governments are imposing ‘lockdowns light’, which usually contain limitations on the activities of those restaurants, bars and shops considered as non-essential.
The assumption behind these often partial closures is that the risk of infection is high wherever people mingle in confined spaces.
A recent paper provides further evidence of the importance of restaurants, bars and gyms in the spread of the virus.
Mandated closures have led to strong popular protests (especially in France and Italy) because they threaten the livelihoods of many small individual shop or restaurant owners.
Mandated closures have led to strong popular protests (especially in France and Italy) because they threaten the livelihoods of many small individual shop or restaurant owners.
These two sectors are already under pressure from e-commerce.
There are thus many marginal operators who feel they cannot survive this second lockdown, even if only a light one.
Governments have of course been trying to provide help and compensation for lost income.
But in many cases, this compensation has been late, partial and unable to target the most (economically) vulnerable.
Governments have instinctively reacted with mandated closures, but this step might not be needed if one considers the alternative of taxes or subsidies.
Governments have instinctively reacted with mandated closures, but this step might not be needed if one considers the alternative of taxes or subsidies.
Taxes or subsidies have so far played no role in the so-called Non Pharmacological Interventions (NPIs), although they could achieve the same objective in terms of social distancing.
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