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Reopening the Economy Will Require Lawsuit Protection – National Review

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A deli closed due to the coronavirus outbreak in Brooklyn, N.Y., March 26, 2020. (Stephen Yang/Reuters)

There are plenty of ways to give litigation-wary businesses and institutions the reassurance they need to reopen, though none of them is perfect.

What will it take to reopen the U.S. economy and civil society? One obstacle that may stand in the way is the fear of lawsuits. State legislatures and Congress should act now to limit the threat of lawsuits so as to encourage economically and socially necessary activities that are bound to carry some risks. Doing so is a legitimate exercise of the power to make laws that allocate liability and decide what kinds of commerce, schooling, and public gatherings can proceed without government interference.

Defensive Lawyering

The chief reason to act in advance to head off civil lawsuits is to avoid the danger that businesses, schools, and other institutions will be excessively cautious and risk-averse in reopening when it is in society’s interests for them to do so. Right now, many institutions are shut down by direct order of the government; others closed voluntarily before government orders were issued, or have closed without being required to do so. Eventually, government restrictions will relax, and that will leave business leaders, school administrators, church leaders, sports-team owners, and others with decisions about when it is safe to open up again. Most of them, however, will be told by the government what they can do, not what they should do.

In making that decision, they are almost certainly going to talk to their lawyers and worry about legal risk. They will be told that they have some defenses, particularly if they can claim they were relying on the guidance of government leaders and public-health experts. Public schools may have additional defenses based on their status as government entities. Cruise ships are protected by federal laws limiting certain liabilities for deaths on the high seas. Still, uncertainty will linger. Small businesses such as barber shops and nail salons are less likely to have lawyers handy for consultation.

Consider the colleges. Cal State Fullerton has announced that it plans to go to online-only classes for the Fall 2020 semester. Harvard is still publicly mulling the same step. When Harvard sneezes, the university system catches a cold; it was Harvard’s closure that triggered the domino effect that closed most of Massachusetts’s colleges and universities within days. If you’re a lawyer for a California or Massachusetts college, do you want to be defending a lawsuit over reopening the college’s campus when there are other schools in your area saying they don’t think it is safe to reopen? Decisions should be based on the circumstances: A small, isolated, rural campus such as Williams College, in western Massachusetts, presents a very different calculus than an urban campus such as Boston-based Northeastern, which is heavily integrated into the surrounding business community. But in a lawsuit, plaintiffs’ lawyers would argue that the standard of care is set by peer institutions.

What about factories? The outbreaks at Smithfield meat-packing plants led to charges that the company had not provided adequately for employee safety from the virus, and the plants have lately been shutting down despite being classified as essential food-producing businesses under state laws. For factories, plants, or shipping hubs, it is not unreasonable for the state to require some enhanced safety procedures during a pandemic. But social distancing will be impossible for a lot of factories without huge, expensive renovations or massive reductions in the workforce on duty.

The Lawsuits Have Already Started

The plaintiffs’ bar is already circling workplaces and schools; two class-action firms have announced that they are forming a 30-lawyer “Coronavirus Litigation Task Force.” Some suits have focused narrowly on businesses and schools that closed without providing refunds to customers. Drexel and the University of Miami have been sued for providing allegedly inadequate remote instruction. Uber and Lfyt have been sued in California by workers claiming entitlement to sick pay. Producers of protective gear have faced lawsuits for alleged product defects. Target has been sued by people claiming that hand sanitizer does not kill the virus. Some of these types of suits may be justified, while others are frivolous. None of them deters the reopening of the economy.

Others, however, do. Cruise ships have faced suits for failing to adequately disclose whether previous passengers got sick, or for claims that they contributed to outbreaks by sailing. Nurses have sued hospitals for not providing adequate gear. A wrongful-death suit brought against Walmart by the family of an overnight stock and warehouse employee alleges that the company “failed to clean and sterilize the store [where the employee worked] properly, failed to promote and enforce social distancing guidelines, failed to provide personal protective equipment (PPE), and failed to address the health concerns of employees with COVID-19 symptoms and warn other workers.”

Safe Harbors

There is precedent for a legislative response to this problem. The National Childhood Vaccine Injury Act protects vaccine manufacturers from liability in order to encourage vaccine research, while providing a compensation system for people injured by vaccines. Gun manufacturers are protected from liability for shootings, on the basis of a legislative judgment that the blame for misuse of guns lies with the shooter. A variety of other laws offer safe harbors to protect businesses that comply with certain requirements or receive federal regulatory approvals. Some would object that this is government interference, but any lawsuit is government action; the only question is whether the rule of law being applied is made by a legislature or by a court. A more serious structural concern is federalism. A congressional response would be best limited to interstate operations or businesses of national scale. Most lawsuits would be filed under state laws in state courts, so the first line of defense for most of the economy should be state legislatures.

Lawsuit protection need not completely abolish lawsuits or legal safeguards. There are five ways to provide protection and guidance for decisions to reopen. The strongest protection would be an absolute bar of the sort given to vaccine makers, possibly coupled (as in that case) with a public fund for compensating those who get sick as a result. The second approach would be a rule-based safe harbor protecting any institution that follows a specific, measurable list of safety precautions from being sued. The third approach would create a permission-based safe harbor that protects any workplace that gets a green light to reopen from government authorities, perhaps after an inspection. The fourth, narrowest approach would be the creation of rules limiting the evidence that could be used against defendants (e.g. preventing the use of evidence that a neighboring school made a different choice). The fifth approach would be to eliminate certain categories of damages (e.g. barring people from suing over fear of infection or infections that did not lead to serious illness). Whatever path is taken, the key will be making the protection afforded clear enough that it can be planned around, and ensuring that it does not require extensive litigation before it kicks in.

There is no one, perfect answer; any approach to limiting lawsuits will involve a balance of interests. More lawsuit protection means more and faster reopenings, but also reduces incentives for workplaces to protect workers and customers from infection. Given the enormous economic and social importance of getting America back to work, however, the rules for filing such lawsuits should not be left to the courts to work out after the fact, with businesses stuck guessing what will happen and possibly overcompensating by staying closed. Lawmakers should lead the way.

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Coronavirus 'a devastating blow for world economy' – BBC News

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The coronavirus pandemic is a “devastating blow” for the world economy, according to World Bank President David Malpass.

Mr Malpass warned that billions of people would have their livelihoods affected by the pandemic.

He said that the economic fallout could last for a decade.

In May, Mr Malpass warned that 60 million people could be pushed into “extreme poverty” by the effects of coronavirus.

The World Bank defines “extreme poverty” as living on less than $1.90 (£1.55) per person per day.

However, in an interview on Friday Mr Malpass said that more than 60 million people could find themselves with less than £1 per day to live on.

Mr Malpass told BBC Radio 4’s The World This Weekend: “It [coronavirus] has been a devastating blow for the economy.

“The combination of the pandemic itself, and the shutdowns, has meant billions of people whose livelihoods have been disrupted. That’s concerning.

“Both the direct consequences, meaning lost income, but also then the health consequences, the social consequences, are really harsh.”

Mr Malpass warned it’s been those who can least afford it who’ve suffered the most.

“We can see that with the stock market in the US being relatively high, and yet people in the poor countries being not only unemployed, but unable to get any work even in the informal sector. And that’s going to have consequences for a decade.”

The World Bank, along with its counterparts, has been providing support to the worst affected countries, but says much more is needed.

It is calling on commercial lenders such as banks and pension funds to offer debt relief to poor countries.

He would also like them to make the terms of their loans clearer, so other investors are more confident about putting money into those economies.

Targeted government support and measures to shore up the private sector are also vital to rebuild economies, the World Bank argues.

Investment and support would create jobs in areas like manufacturing, to replace those in the worst affected sectors, such as tourism, which may have been permanently lost.

‘Tensions and inequality’

Mr Malpass admits the damage to global trade, and inclinations to bring supply chains closer to home or erect trade barriers, are a challenge.

“When trade is reduced, that creates its own set of tensions and inequality… I’m sure [the global economy] will be interconnected in the future, maybe less than it was pre-COVID.”

But ultimately, Mr Malpass said the “catastrophe” could be overcome, and that people were “flexible, they’re resilient” .

“I think it’s possible to find paths, it’s hard work for countries and governments to do that.

“But we can encourage that effort… I’m an optimist, over the long run, that human nature is strong, and innovation is real. The world is moving fast and connectivity… has never been higher. And so that gives hope for the future.”

However, he admits the challenge is getting the right plans in place at the right time – and in the meantime, the pain could be considerable.

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Guardians of the World Economy Stagger From Rescue to Recovery – Yahoo Canada Finance

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Guardians of the World Economy Stagger From Rescue to Recovery

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(Bloomberg) — The world’s governments and central banks are shifting from rescue to recovery mode as the deepest slump since the Great Depression shows signs of bottoming out.

After rolling out trillions of dollars worth of measures to prevent their economies and markets from collapsing, they are now doubling down with even more spending to backstop a recovery as coronavirus lockdowns ease. In what counts for good news these days, Bloomberg Economics’ global GDP growth tracker showed economies contracted at an annualized rate of 2.3% in May, less than the 4.8% slump in April.

“Policy makers are moving from triage to recovery,” said Deutsche Bank Securities Chief Economist Torsten Slok. “They are realizing that more fiscal support will be needed to households and small businesses to prevent this liquidity crisis from turning into a solvency crisis.”

The new wave of stimulus has both governments and central banks moving in sync to continue flooding lenders, markets and companies with cheap credit at an unprecedented pace.

The European Central Bank last week expanded its asset purchases by 600 billion euros ($677 billion) to 1.35 trillion euros, and extended them until at least the end of June 2021. And Germany’s government agreed another 130 billion-euro fiscal stimulus push and said it will back a proposed new 750 billion-euro European Union recovery fund.

“Action had to be taken,” ECB President Christine Lagarde said in a press conference.

It’s a similar story in Asia.

Japan is planning another $1.1 trillion worth of spending in its biggest splurge yet and the central bank in May called an emergency meeting to roll out 30 trillion yen ($274 billion) of loan support for small businesses.

China last week unveiled another 3.6 trillion yuan ($508 billion) in spending and South Korea’s 76 trillion won ($63 billion) ‘New Deal’ fiscal package is its largest to date.

In the U.S., lawmakers continue to debate extra fiscal stimulus and the Federal Reserve, which meets on June 10, has just launched a new Main Street Lending Program, the latest in trillions of support it has already poured into the economy and markets.

While the Fed is unlikely to signal any moves when its officials gather this week, many economists expect it to harden its commitment to easy monetary policy later in the year and perhaps even start pursing a Japan-style campaign to control long-term borrowing rates.

The latest U.S. jobs numbers give some hope that the stimulus unleashed so far is beginning to kick in. A record 2.5 million workers were added by employers during May while unemployment declined to 13.3%, wrong footing economists who had forecast widespread job losses.

Read more: Economists Have Biggest Miss Ever in U.S. Jobs-Report Shocker

To be sure, there’s far from consensus that the latest wave of support will be enough to get growth back to where it was at the start of the year. Some of the steps being taken are merely to replace existing policies as they start to expire.

“It seems clear already approved packages are perceived to be not enough,” said Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis SA.

There are other concerns that monetary policy can only do so much to revive growth before it loses its potency.

“How does the Fed actually get money to millions and millions of households and small businesses, that is difficult to do operationally,” former New York Federal Reserve Bank President William Dudley told Bloomberg Television.

“It’s much easier to intervene in the capital markets where the Fed can rely on counterparties, primary dealers and others,” Dudley said. “It is much more difficult to lend one by one to millions of different entities.”

Another risk is a return to austerity, even if it seems unlikely now. JPMorgan recently predicted a fiscal thrust of 3.3% of GDP this year and 1.5% drag next year.

U.S. senators have put the brakes on a $3 trillion fiscal package that was approved by lower house lawmakers. China’s government has ruled out a return to the kind of large scale stimulus it rolled out after the global financial crisis, preferring to keep a lid on rising debt.

Still, because the crisis meant economies were forced into shutdown, much of the emergency response so far has been less about driving growth and more about avoiding total collapse. It’s that dynamic which is leaving governments with little option but to borrow harder.

“We shouldn’t look at the positive immediate growth impact of the opening up process as being the rate of growth that may last,” said David Mann, chief economist for Standard Chartered Plc.

Creating jobs will be mission critical to cementing any upswing. That will need support for firms to retrain employees, incentives to hire older workers and for governments to continue with wage subsidies. More than one in six people have stopped working since the onset of the crisis, according to the International Labour Organization, which in April estimated more than 1 billion workers were at high risk of a pay cut or losing their job.

“A faster job market recovery will speed up the economic healing and reduce the risk from widening income inequality and social stress,” said Chua Hak Bin, senior economist at Maybank Kim Eng Research Pte.

Ultimately, the rescue of economies will go well beyond quantitative solutions and into the realm of story telling too, as policy makers will need to inject confidence back into wary consumers and executives, said Stephen Jen, who runs hedge fund and advisory firm Eurizon SLJ Capital in London.

“Human psychology is the same and is now as important as the mechanics of delivering the fiscal stimuli themselves,” he said.

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Guardians of the world economy stagger from rescue to recovery – BNNBloomberg.ca

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The world’s governments and central banks are shifting from rescue to recovery mode as the deepest slump since the Great Depression shows signs of bottoming out.

After rolling out trillions of dollars worth of measures to prevent their economies and markets from collapsing, they are now doubling down with even more spending to backstop a recovery as coronavirus lockdowns ease. In what counts for good news these days, Bloomberg Economics’ global GDP growth tracker showed economies contracted at an annualized rate of 2.3 per cent in May, less than the 4.8-per-cent slump in April.

“Policy-makers are moving from triage to recovery,” said Deutsche Bank Securities Chief Economist Torsten Slok. “They are realizing that more fiscal support will be needed to households and small businesses to prevent this liquidity crisis from turning into a solvency crisis.”

The new wave of stimulus has both governments and central banks moving in sync to continue flooding lenders, markets and companies with cheap credit at an unprecedented pace.

The European Central Bank last week expanded its asset purchases by 600 billion euros (US$677 billion) to 1.35 trillion euros, and extended them until at least the end of June 2021. And Germany’s government agreed another 130 billion-euro fiscal stimulus push and said it will back a proposed new 750 billion-euro European Union recovery fund.

“Action had to be taken,” ECB President Christine Lagarde said in a press conference.

It’s a similar story in Asia.

Japan is planning another US$1.1 trillion worth of spending in its biggest splurge yet and the central bank in May called an emergency meeting to roll out 30 trillion yen (US$274 billion) of loan support for small businesses.

China last week unveiled another 3.6 trillion yuan (US$508 billion) in spending and South Korea’s 76 trillion won (US$63 billion) ‘New Deal’ fiscal package is its largest to date.

In the U.S., lawmakers continue to debate extra fiscal stimulus and the Federal Reserve, which meets on June 10, has just launched a new Main Street Lending Program, the latest in trillions of support it has already poured into the economy and markets.

While the Fed is unlikely to signal any moves when its officials gather this week, many economists expect it to harden its commitment to easy monetary policy later in the year and perhaps even start pursing a Japan-style campaign to control long-term borrowing rates.

The latest U.S. jobs numbers give some hope that the stimulus unleashed so far is beginning to kick in. A record 2.5 million workers were added by employers during May while unemployment declined to 13.3 per cent, wrong footing economists who had forecast widespread job losses.

To be sure, there’s far from consensus that the latest wave of support will be enough to get growth back to where it was at the start of the year. Some of the steps being taken are merely to replace existing policies as they start to expire.

“It seems clear already approved packages are perceived to be not enough,” said Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis SA.

There are other concerns that monetary policy can only do so much to revive growth before it loses its potency.

“How does the Fed actually get money to millions and millions of households and small businesses, that is difficult to do operationally,” former New York Federal Reserve Bank President William Dudley told Bloomberg Television.

“It’s much easier to intervene in the capital markets where the Fed can rely on counterparties, primary dealers and others,” Dudley said. “It is much more difficult to lend one by one to millions of different entities.”

Another risk is a return to austerity, even if it seems unlikely now. JPMorgan recently predicted a fiscal thrust of 3.3 per cent of GDP this year and 1.5 per cent drag next year.

U.S. senators have put the brakes on a US$3-trillion fiscal package that was approved by lower house lawmakers. China’s government has ruled out a return to the kind of large scale stimulus it rolled out after the global financial crisis, preferring to keep a lid on rising debt.

Still, because the crisis meant economies were forced into shutdown, much of the emergency response so far has been less about driving growth and more about avoiding total collapse. It’s that dynamic which is leaving governments with little option but to borrow harder.

“We shouldn’t look at the positive immediate growth impact of the opening up process as being the rate of growth that may last,” said David Mann, chief economist for Standard Chartered Plc.

Creating jobs will be mission critical to cementing any upswing. That will need support for firms to retrain employees, incentives to hire older workers and for governments to continue with wage subsidies. More than one in six people have stopped working since the onset of the crisis, according to the International Labour Organization, which in April estimated more than 1 billion workers were at high risk of a pay cut or losing their job.

“A faster job market recovery will speed up the economic healing and reduce the risk from widening income inequality and social stress,” said Chua Hak Bin, senior economist at Maybank Kim Eng Research Pte.

Ultimately, the rescue of economies will go well beyond quantitative solutions and into the realm of story telling too, as policy makers will need to inject confidence back into wary consumers and executives, said Stephen Jen, who runs hedge fund and advisory firm Eurizon SLJ Capital in London.

“Human psychology is the same and is now as important as the mechanics of delivering the fiscal stimuli themselves,” he said.

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