Sometimes, the humane thing to do is also economically efficient, and this government is doing neither. This is the message of today's employment numbers.

We must not be fooled by the fact that unemployment, at 1.34 million, fell slightly in the second quarter and is unchanged from a year ago. This disguises huge job losses. PAYE data show that the number of employees fell by 740,000 between February and July. And as the furlough scheme is withdrawn, further job losses are likely. On top of this, the numbers of self-employed slumped by 238,000 in Q2,

So, why didn't unemployment rise? One reason is that there have been lots of jobs lost among the over-65s: 161,000 in Q2. Many of these will have returned to retirement. The number of people who are economically inactive but would like a job rose by 218,000 in the quarter.

A second reason is that it is foreigners who have lost jobs: the number of non-UK people in work fell by 327,000 in Q2. Some of these will have gone home.

All of which poses a danger - that the economy has lost potential supply. Some of those migrant workers (and perhaps some of the over-65s) might not return to the UK if or when labour demand picks up. The formerly self-employed might decide that self-employment is too precarious for them and so seek staff jobs instead. That will cause shortages for those industries (such as much of the entertainment business) dependent upon the flexibility that freelancers offer. And to the extent that small businesses close, their surviving rivals will enjoy greater monopoly and pricing power.

If we get a decent recovery in demand, therefore, it might stoke up inflation. Not very much inflation, granted. But enough to limit the expansion somewhat. What should have been a temporary shock might therefore have longer-lasting adverse effects upon potential growth.

This is a policy failure. In theory, the government could have preserved the economy in aspic when we went into lockdown thus protecting all jobs and businesses, taking it out only when the threat of Covid-19 passed. It did not do so. Instead, as James Smith at the Resolution Foundation says, the support was inadequate and - as Paul Evans notes - insufficiently targeted at freelancers.

Which poses the question. Why has policy failed?

I don't think the main reason was concern about horizontal equity - paying people to do nothing is unfair on those still working.

I suspect a stronger reason was insufficient intellectual flexibility. The Tories aversion to massive intervention in markets is reasonable in normal times but inappropriate in a crisis when the pandemic prevents normal market functioning*. They failed to make a big enough shift.

Also, there has been a lack of policy infrastructure. What we most needed back in March was immediate and massive support for everybody. But as Eric has pointed out, the systems were not in place for this. And whilst there were possible ways of working around this - as Eric has shown - both the Bank and the Treasury weren't sufficiently intellectually agile to adopt such methods. One lesson of this crisis is that the government should put the infrastructure in place to ameliorate the next downturn - so that a basic income, job guarantee or helicopter money can be swiftly introduced.

Perhaps the greatest reason for the failure, however, is that the government (and media) make a fetish of the public finances. Even Faisal Islam - who should know better - has said that the furlough scheme is "being paid by the taxpayer." You don't need to believe MMT to see this is not quite right. The cost of supporting jobs need not and should not be borne by current taxpayers. The government can borrow over decades and so spread the cost not only to our grandchildren but to their grandchildren too: It's only a few years ago that the government paid off the fiscal cost of the Napoleonic war. Better still, this cost falls over time. 25-year gilts now yield minus three per cent in real terms, which means that for every £100 the government borrows today it need repay less than £50 in today's money over the next quarter-century.

If I'm even ball-park right that today's losses of jobs and businesses will reduce future capacity, and that they are due in part to the fiscal fetish, we have a nice irony - that an attachment to "sound money" might prove to be inflationary. In policy-making, intentions and outcomes are sometimes different things.

* I say pandemic rather than lockdown because, as Sweden's fall in GDP shows, Covid-19 would have reduced economic activity even without a lockdown simply by scaring people out of shops and offices.