4 ms·

I find this situation very different from the bail outs of 2008. In 2008, the economy was too focused on housing and lending, and so real substantive changes

by ttcbj 7y ago

I find this situation very different from the bail outs of 2008. In 2008, the economy was too focused on housing and lending, and so real substantive changes needed to occur to refocus. People need to change jobs, etc. I was annoyed by the bailout then, though in the long term I came to see parts of it as wise. In this situation, many many business which are fundamentally viable (great restaurants, cruise lines) are going to be threatened by a temporary dislocation (everyone social distancing). It's not clear to me that we need a fundamental reallocation of resources in the long term (we don't have too many restaurants, or vacation destinations). In addition, I don't think its economically sensible to ask every business (say restaurant) to plan for a 2 year pandemic. It would just be inefficient. I think its right to handle that risk at the gov't level. It's all of our problem. So, in this case, I am hoping for effective gov't action to preserve much of the economy. I don't think I benefit if in 2 years, all my favorite restaurants are gone, and all the big vacation operators are bankrupt.

AnthonyMouse 7y ago
> In this situation, many many business which are fundamentally viable (great restaurants, cruise lines) are going to be threatened by a temporary dislocation (everyone social distancing). The issue is that it isn't just restaurants and cruise lines. How many of the shops in the local mall are in trouble if people stay home and order from Amazon? What happens to gas stations and convenience stores and truck stops if people are temporarily driving less? What happens to charter bus companies? Local community organizations? Conference organizers? Pretending that we can predict what all the effects are going to be on everyone and centrally plan optimal resource allocation is dangerous hubris. > In addition, I don't think its economically sensible to ask every business (say restaurant) to plan for a 2 year pandemic. It would just be inefficient. I think its right to handle that risk at the gov't level. It's all of our problem. That's kind of the point. When times are tough, that's the time for the government to borrow money and use it to help people out. But they're notoriously bad at deciding whether a cruise ship captain deserves it more than a small business owner with a sandwich cart.
- ttcbj 7y ago
  To be clear, I am not arguing for central planning. If I were in charge, I would try to combine (1) a temporary but much broader federally run unemployment system, with (2) measures to prevent short-sighted reallocation of capital resources based on contracts (say leases) that did not adequately anticipate this kind of disruption. My strong emphasis would be on (1). Part of my perspective is that I remember being very, very annoyed by the bailout of the automakers in 2008. Now, though, I think "where were all those workers going to go?" Would I have really been better off if we had hundreds of thousands more unemployed ex-autoworkers, and no GM? Ultimately, I think Obama made the right call on that. I am just arguing that in this case, gov't support for struggling individuals and businesses seems quite justified to me, and I think actions meant to support a return to something like the status quo in 2 years are probably wise.
  - AnthonyMouse 7y ago
    This is what I mean. Suppose you've got a small shop owner. Right now their sales are temporarily down by 60% -- but they're still open, or it would be down by 100%, so they're not unemployed. Unemployment doesn't help them. They also own the building, so reallocating a lease isn't their problem. Their problem is that after making their mortgage payment and utility bills, they can only pay themselves a third of their normal salary, and in two months of spending down savings they won't have money to buy food. Which is also a problem for all the places they usually buy everything else from, because all the non-necessities get cut out of their budget. Unless they get an injection of cash.

by ttcbj 7y ago

AnthonyMouse 7y ago

> In this situation, many many business which are fundamentally viable (great restaurants, cruise lines) are going to be threatened by a temporary dislocation (everyone social distancing). The issue is that it isn't just restaurants and cruise lines. How many of the shops in the local mall are in trouble if people stay home and order from Amazon? What happens to gas stations and convenience stores and truck stops if people are temporarily driving less? What happens to charter bus companies? Local community organizations? Conference organizers? Pretending that we can predict what all the effects are going to be on everyone and centrally plan optimal resource allocation is dangerous hubris. > In addition, I don't think its economically sensible to ask every business (say restaurant) to plan for a 2 year pandemic. It would just be inefficient. I think its right to handle that risk at the gov't level. It's all of our problem. That's kind of the point. When times are tough, that's the time for the government to borrow money and use it to help people out. But they're notoriously bad at deciding whether a cruise ship captain deserves it more than a small business owner with a sandwich cart.

ttcbj 7y ago
To be clear, I am not arguing for central planning. If I were in charge, I would try to combine (1) a temporary but much broader federally run unemployment system, with (2) measures to prevent short-sighted reallocation of capital resources based on contracts (say leases) that did not adequately anticipate this kind of disruption. My strong emphasis would be on (1). Part of my perspective is that I remember being very, very annoyed by the bailout of the automakers in 2008. Now, though, I think "where were all those workers going to go?" Would I have really been better off if we had hundreds of thousands more unemployed ex-autoworkers, and no GM? Ultimately, I think Obama made the right call on that. I am just arguing that in this case, gov't support for struggling individuals and businesses seems quite justified to me, and I think actions meant to support a return to something like the status quo in 2 years are probably wise.
- AnthonyMouse 7y ago
  This is what I mean. Suppose you've got a small shop owner. Right now their sales are temporarily down by 60% -- but they're still open, or it would be down by 100%, so they're not unemployed. Unemployment doesn't help them. They also own the building, so reallocating a lease isn't their problem. Their problem is that after making their mortgage payment and utility bills, they can only pay themselves a third of their normal salary, and in two months of spending down savings they won't have money to buy food. Which is also a problem for all the places they usually buy everything else from, because all the non-necessities get cut out of their budget. Unless they get an injection of cash.