Bankruptcies cost more than maintaining state aid

The new normal

At the moment, it is very difficult to distinguish between healthy and unsound businesses. Companies that were already struggling before the pandemic outbreak, as well as those affected by the restrictions imposed, are kept afloat with state aid. According to Jacobs, the benefits of keeping alive all the companies that would be viable apart from the corona crisis are far greater than the price you pay to keep the economy going. He, therefore, calls it bizarre that the whole economy is being rebuilt to corona standards, that companies are going bust under the assumption that we are going to a new normal when everyone ultimately wants to go back to the old normal. In his view, Minister Wiebes's introduction of the concept ''new normal'' has been a very dangerous fallacy, because it is not where we as a society should be turning. At this stage, in which we cannot yet return to the old normal, it is important to continue to provide liquidity support, says Jacobs.

Long-term damage on the supply side

The corona crisis is also bringing innovation. Think, for example, of the development of working from home. Bas Jacobs argues that the crisis is indeed generating profits in certain segments, but at a macro level, the restrictions and limitations are only causing losses. Think of reductions in income, employment, and productivity. According to him, this damage is much greater than the profits made. These temporary economic downturns are causing great long-term damage to the supply side of the economy. Less is invested, consummation decreases, incomes fall, this all causes that less is being produced and we end up on a lower growth path. By continuing to give state aid, we can seek to prevent this, concludes Bas Jacobs.