Before the Flood

July 17, 2020

By Matt Hughes

To avoid market collapse, we must address climate risk.

The Roosevelt Rundown is an email series featuring the Roosevelt Institute’s top stories of the week.

Preventing a Climate-Induced Housing Crash

This week brought two major climate developments in the presidential race: a Trump administration rule absolving federal agencies from having to internalize climate risk in infrastructure projects and presumptive Democratic nominee Joe Biden’s $2 trillion plan for a clean energy economy. A report released this week by the Great Democracy Initiative tackles another climate problem: risk in the housing market. In “Soaked: A Policy Agenda to Prepare for a Climate-Triggered Housing Crash,” GDI Fellow Lindsay Owens proposes how government can act now to rewrite the rules of the housing market, redistribute equity, and manage coastal retreat: “The challenge that lies ahead for policymakers is to use the regulatory apparatus (and legislation, where required) to incorporate climate risk into residential real estate markets to encourage adaptation and transition, without forcing existing homeowners, particularly those in frontline communities, to bear all of the risk.” Read more.

An untenable risk: As Roosevelt Chief Economist Joseph Stiglitz writes for the New York Times Book Review, “the whole multibillion-dollar insurance industry is predicated on risk aversion. If there were another planet we could all move to, that would be one thing. But there isn’t. So that means we have to be cautious. And caution is especially warranted once we realize how bad things could get.” Read on.

COVID-19 Relief That Works for All

While Kanye West, Jeff Koons, and other high-profile Paycheck Protection Program (PPP) recipients have garnered headlines, the real scandal is who didn’t receive help, as Roosevelt Vice President of Research Julie Margetta Morgan and Managing Director of Corporate Power Bharat Ramamurti argue in a CNN Business op-ed. “We can improve upon the PPP and stop thousands of small businesses from failing and millions more workers from being left behind,” they write. “To do this, the government should step in and directly take over payroll obligations for companies that have been hard hit by our current economic crisis . . . Second, we should provide specific, targeted grants to Black- and Latinx-owned small businesses, which have done particularly poorly with PPP. Finally, we should provide grants (or, at worst, low-interest loans) to small businesses to help cover non-payroll costs, like rent, that might be driving them out of business.” Read more.

Extend unemployment insurance: With the expanded unemployment benefits of the CARES Act set to expire this month, experts argue that economic recovery—and the financial security of millions—could be imperiled. “You will get into a downward spiral as people lose their income to pay their bills, which will affect the people who collect income on those bills as well,” Roosevelt Fellow Darrick Hamilton tells the Washington Post. “The way to prevent depression and recession is to keep aggregate demand up . . . We also need to stop people’s suffering and pain.” Next week, Bharat Ramamurti and Lindsay Owens will detail their fair wage guarantee proposal in a new Roosevelt issue brief.
Americans want a job guarantee: Per a Hill-HarrisX poll, 79 percent of voters support—and almost half strongly support—a federal jobs guarantee. As Roosevelt President & CEO Felicia Wong tells Hill.TV, “This actually says a lot about what the presidential candidates should be doing and should be thinking about with respect to their overall economic program.”

What the Nation Owes Black People

This week, the city council of Asheville, North Carolina, unanimously approved a measure apologizing for the city’s participation in slavery and calling for reparations for its Black residents. As the council defines it, that would include funding directed at increasing home ownership, mobility, and wealth—but not direct payments, as Roosevelt Senior Fellow Sandy Darity has proposed. In an email to the New York Times, Darity wrote that he was “deeply skeptical about local or piecemeal actions to address various forms of racial inequality being labeled ‘reparations,’” and that “piecemeal reparations taken singly or collectively at those levels of government cannot meet the debt for American racial injustice.”

Other angles: On the latest episode of Pitchfork Economics, Omidyar Network principal and Roosevelt board member Joelle Gamble explains how econ 101 upholds racist systems. For PBS NewsHour, Michigan State University economist and Roosevelt board member Lisa Cook discusses the economics behind COVID-19’s racially disparate effects. And on Amanpour & Co., Roosevelt Fellow Mehrsa Baradaran joins Michel Martin for a conversation about her book The Color of Money: Black Banks and the Racial Wealth Gap and the systemic exclusion of Black people from banking. For more from Baradaran, read her latest Roosevelt report, “Rethinking Financial Inclusion: Designing an Equitable Financial System with Public Policy.”