OPINION | Venice has a 400-year-old COVID monetary lesson [By Matthew Brooker] READ:
and Singapore have disbursed funds to their populations during the pandemic, as lockdowns stalled economic activity and strained the finances of households and businesses. While these have sometimes been reported as examples of “helicopter money,” none of them met the strict definition of that approach, which remains controversial because it draws central banks into the realm of fiscal policy, makes them more susceptible to political pressure and erodes their tradition of independence.
Faced with the devastation of the plague, the city used what academics Charles Goodhart, Donato Masciandaro, and Stefano Ugolini refer to as “hard helicopter money,” resorting to fiscal monetization through its Giro bank. The state lender’s balance sheet rose to 2.67 million ducats by June 1630 from less than 1 million ducats in the previous decade, as the government paid its creditors by merely crediting their current accounts, they write inThe consequences were severe.
The political backdrop is instructive. Wealth was extremely polarized in Venice at the time, the authors write. Though ruled by an oligarchy, public institutions reflected the expectations of the population when calamities occurred. People were watchful of government activity and ready to cause major disturbances if they became convinced authorities weren’t doing all they could and should to ensure the availability of food.
At the same time, the city was employing stringent containment measures. While these saved lives, they paralyzed the economy . Shops were closed, and auctions and weekly markets prohibited. The majority of Venetians became unable to work during pandemics, leaving them dependent on public handouts or illicit activity.
An “incomparable greater number of people has died purely as a result of unemployment than of typhus or any other contagious disease,” the study cites one textile merchant as saying in pleading for the quarantine to be lifted. That’s an unmistakable echo of the debate over lockdown tradeoffs that has caused frustration and protests from
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