Unprecedented Times, Uncharted Territory

The Only Treatment for Coronavirus Is Solidarity
by Jedidiah Britton-Purdy
A pandemic makes the slogan of solidarity literal: an injury to one is an injury to all. That’s why a pandemic also heightens the frantic wish to withdraw oneself from the web of interdependence and ride it out alone.

The new coronavirus makes vivid the logic of a world that combines a material reality of intense interdependence with moral and political systems that leave people to look out for themselves. Because we are linked—at work, on the bus and subway, at school, at the grocery store, with the Fresh Direct delivery system—we are contagious, and vulnerable.

Read more in Jacobin Magazine (March issue)
We Need to Protect the ‘Touchless Economy’
By Tim Wu
The economy is currently on life support—yet as that metaphor suggests, it could actually be worse. Imagine if, next week, we find that coronavirus infection has spread so far through major supply lines as to sicken large numbers of the workers who deliver goods and also begins to threaten their recipients. Or imagine what the economy would look like if broadband internet service were to go down for significant parts of the population… For now at least, the touchless economy is holding firm. But now is the right time to be thinking about its weak spots. Because if it falters, we could end up thinking of our current chaos as the good old days.

Read more in The New York Times (March 25)

Congress Should Endorse the Federal Reserve’s Extraordinary Measures
By Kathryn Judge
Just a few short weeks ago, the United States was basking in the longest period of sustained economic growth on record. The country now faces what could be the steepest decline in economic activity in its history. The long-term health of the country and the economy remain fluid and will be determined in part by how policymakers respond. The Federal Reserve quickly recognized the unprecedented nature of the threat and has intervened aggressively to stem the pain this crisis will inflict on the long-term health of the real economy. Congress should now authorize the Fed’s most creative interventions and give the Fed explicit, albeit time limited, authority to go even further.

Read more in the CLS Blue Sky Blog (March 25)

Unsanitized: Seven Lessons from the Great Recession
By Lev Menand and Ganesh Sitaraman, Professor of Law at Vanderbilt Law School
With Congress debating a stimulus and bailout package to address the economic crisis sparked by the coronavirus, it is worth looking back at policy choices made during the last economic crisis to draw some lessons for navigating the current emergency...Looking back at what worked and what didn’t can help us reprise successful strategies while avoiding pitfalls.

[Note: Menand is an academic fellow and lecturer]
Read more in the American Prospect (March 21)
 Coronavirus Is Becoming a “Majeure” Headache for Pending Corporate Deals
By Matthew Jennejohn ’07, Julian Nyarko, and Eric Talley
A folk proverb from the American West teaches that the most important ingredient of a successful rain dance is timing. And the timing couldn’t be worse for signed corporate deals hanging in the balance at the onset of the novel coronavirus pandemic. As of this week, we estimate that there are just under 150 significant mergers and acquisitions (M&A) transactions signed and waiting to close, representing over half a trillion U.S. dollars in economic value. The fate of these deals has been thrown into considerable doubt by the COVID-19 crisis. 

[Note: Nyarko was most recently a CLS postdoctoral fellow.]
Read more at the CLS Blue Sky Blog (March 19)

Money in the Time of Coronavirus: The Case for Free Money (a real Libra)
By Katharina Pistor
Our money system revolves around debt. It combines state-issued legal tender with private debt instruments that in good times are money-like. Debt is a pledge on the future and debt-based money is based on the expectation that the future will produce positive returns.

The Coronavirus pandemic is a stark reminder that this is not always the case. Indeed, we are beginning to realize that the problem with our future now is not that it is uncertain, but that it will certainly be radically different from past expectations, even from our current imagination. 

Read more in Just Money (March 20)

INSIGHT: Delaying Environmental Compliance Because of the Coronavirus Emergency
By Brian D. Israel and Michael B. Gerrard
The global coronavirus pandemic will cause unprecedented response actions and significant disruptions throughout our economy. In times of true emergency, environmental obligations are flexible enough to excuse, where appropriate, certain delays in environmental compliance.

Read more in Bloomberg Law News (March 20)

Coronavirus, Systemic Risk, and Lessons from 2008
By Kathryn Judge
The greatest single-day decline in the stock market this century, widespread fear and uncertainty, shuttered schools, an end to large gatherings everywhere from NBA games to the South by Southwest festival – these are just a few of the signs that the United States and the rest of the world will face some very tough economic times in the months and years ahead… Banks cannot be blamed for starting the current crisis, nor can financial regulators be expected to contain it. It is, at bottom, a public health crisis, and the top priority must be to contain the spread of Covid-19.

Read more in the CLS Blue Sky Blog (March 16)

Washington Post—March 25
Coronavirus shutdowns have gone nationwide. Many police departments aren’t enforcing them.
Coronavirus-related restrictions that are enforced in some places and not others are bound to be scrutinized for evidence of bias, said Jeffrey Fagan, a professor of both law and epidemiology at Columbia. “The police have to tread carefully. If they’re seen as overstepping their boundaries and they do it in a way that’s harsh and intrusive, then they’re going to be treated with suspicion and maybe not the greatest cooperation,” he said.

CNN Business—March 25
More people are avoiding cash. That might not be a good thing
“Household debt is at an all-time high,” said Michael J. Graetz, a law professor at Columbia University and co-author of "The Wolf at the Door: The Menace of Economic Insecurity and How to Fight It. “People have no savings to fall back on. They were maxed out on credit cards with extraordinarily high interest rates even before the coronavirus. It is very worrisome.”

The American Banker—March 24
Fed moves telegraph fears of prolonged liquidity crisis
Although banks may be prepared for a downturn, it is hard to know at what point economic stress would reach financial institutions, said Kathryn Judge, a professor at Columbia Law School. “With things like the liquidity coverage ratio, [banks] have more liquidity on hand,” she said. “But things are moving so quickly and in such big ways that I think it's almost impossible to rule out the possibility of a lack of liquidity proving problematic for some set of institutions.”

Associated Press—March 24
States differ on exempting worship from coronavirus closures
Columbia University law professor Katherine Franke said that since “the overwhelming majority of at least Christian congregations are meeting online,” state officials may have issued the exemptions in the hopes the impact would be minimal, assuming “most people will do the right thing.”

Cheddar—March 23
Coronavirus Clears the Skies, but Threatens to Undercut Climate Efforts
"The environmental authorities have generally made it clear that they will take no enforcement action against actions that could impede the immediate response to a major disaster," Michael Gerrard, senior counsel at Arnold & Porter, and director of the Sabin Center for Climate Change Law at Columbia Law School wrote this week.

McClatchy DC—March 23
More money. Sen. Kamala Harris backs new plan for financial help in coronavirus pandemic
“This is a survival bill, not a stimulus bill,” added Michael Graetz, professor of law at Columbia University. He would rather see the nation’s patchwork unemployment system be improved so that it serves more people out of work. But that won’t be happening anytime soon. So while “I don’t believe cash payments are well targeted, they are the only alternative to get money to people who need it,’ said Graetz, co-author of “The Wolf at the Door: The Menace of Economic Insecurity and How to Fight It.”

MarketWatch—March 21
Two senators under scrutiny over selling stock before the coronavirus market crash — but do insider-trading laws apply?
The STOCK Act’s fiduciary duty applies to all members of Congress, staffers and government employees, according to Columbia Law School professor John Coffee, an expert in securities law. The law “duplicates” the legal standards already in place barring corporate executives from using material, nonpublic information for their financial gain, said Coffee.

Marketplace—March 20
Is it time yet for the government to bail out some large companies hurt by COVID-19?
Michael Graetz, professor of tax law at Columbia Law School, said government equity investment is a bad idea. “I don’t think most large businesses are cash-constrained,” he said, adding that government loans for companies most at risk would be the better way to go.

The Hill—March 19
Coronavirus offers reprieve from air pollution
“What counts is not the reduction in the number of people flying but the number of airplanes flying. There are a lot of airplanes running half empty,” said Michael Gerrard, a professor at the Columbia Law School and director of the Sabin Center for Climate Change Law.

The Washington Post—March 17
The case for just giving Americans money to help with coronavirus fallout
“The main problem now is, people are stuck in their homes, and they can’t afford child care, and they can’t buy groceries, and their checks are going to stop,” said Michael J. Graetz, a tax expert and law professor at Columbia University who was a top Treasury Department official in the George H.W. Bush administration. “Many businesses will continue to pay for people for a short period of time, but they are not going to pay people for a longer period of time. They will just let people go.”

Bloomberg News—March 14
Coronavirus Will Change How We Shop, Travel and Work for Years
Kathryn Judge, a financial markets and regulation expert at Columbia University, says the U.S. banking crash of 2008 has left deep scars by fueling divisive politics and declining levels of home ownership. The current crisis, as nations around the world take emergency steps to shield citizens from coronavirus infection, will have an impact too. “Long-brewing debates about how to revamp the U.S. health-care system might benefit from a renewed sense of urgency, enabling structural change,” Judge said.