Entrepreneur and Executive Sanjeev Mansotra Highlights 3 Policies that Could Mitigate the Economic Fallout of the Coronavirus Pandemic

Recent news reports would suggest that the coronavirus (COVID-19) pandemic is going to have a massively negative impact on the broad economy in general, and certain sectors especially such as airline travel, tourism, hospitality, and entertainment. Indeed, even in areas of the world where restaurants, bars, clubs and coffee shops haven’t been ordered to close down, owners are reporting a catastrophic drop-off in customers and revenues; forcing some of them to reduce their hours or temporarily shut down altogether.

However, the good news is that there are meaningful things that governments can do to mitigate the economic fallout, and ultimately help businesses from disappearing entirely — and putting hundreds of thousands, if not millions, of people out of work for an extended period of time.

According to entrepreneur and executive Sanjeev Mansotra, three policies in particular may help stem layoffs: increasing liquidity to banks, non-bank finance companies, and directly lending to affected businesses; providing expedited unemployment benefits or wage subsidies to affected workers; and implementing broad-based monetary stimulus programs. Each of these initiates is described below.

Increasing Liquidity and Lending

As noted above, the biggest threat to long-term economic health and wellness is mass layoffs, which not only affects capacity and demand, but also reduces the value tax base upon which governments rely on the pay for public goods like hospitals, roads, police and fire services, schools, and so on. Increasing liquidity to banks and non-bank financial institutions, while also providing direct loan guarantees to affected businesses (including small firms, which collectively employ the majority of workers in the U.S. and around the world), could make a material difference.

“Increasing liquidity and lending is not a long-term solution, and must be done in a very structured and strategic manner to avoid waste and misuse,” commented Sanjeev Mansotra. “For example, businesses that receive loan guarantees or credit guarantees should only be those that meet certain criteria, and they should also be obliged to commit to maintaining or increasing their workforce. They should not be allowed to get a low or no-interest loan, and then proceed to start firing people or reducing hours.”

Providing Expedited Benefits and Supports to Affected Workers

It is a foregone conclusion that job losses will continue to mount, especially (as mentioned earlier) in sectors that have thus far been hardest-hit by the pandemic such as the embattled airline and hospitality industries. Policies that enable affected workers to quickly access benefits and other supports, such as job re-training programs, could go a long way towards minimizing the impact and avoiding a crisis of consumer confidence — which could quickly turn a painful recession into an agonizing depression.

“We are already seeing these kinds of targeted programs roll out in countries like South Korea,” commented Sanjeev Mansotra. “And while the impact is obviously financial in nature, there is also a critical psychological component as well. Laid off or under-employed workers who face a dramatic reduction on their quality of living, or might even face financial ruin if they have significant debts, need to feel that there is some semblance of a safety net to keep them above water. Without this, we will almost certainly see a dramatic spike in mental health illnesses and financially-motivated crime.”

Implementing Broad-Based Monetary Stimulus Programs

Advocates of a “less is more” approach to government wince at the notion of implementing broad-based monetary stimulus programs like reducing central bank rates and quantitative easing, because invariably it leads to challenges and problems down the road such as high inflation and mounting debt. Yet sometimes — and this may very well be one such scenario — accepting the severe side effects of medication are worth it.

“Stimulus programs can be effective, but they need to be carefully managed and limited in scope,” commented Sanjeev Mansotra. “It’s also important not to view these policy decisions in a vacuum. They can be a piece of the puzzle, but not the whole thing. It’s not enough to just make money cheap. It’s even more important that the money is used in ways that drive economic activity and, ultimately, get more people working in quality long-term jobs.”


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