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Corporate Socialism: The Government Is Bailing Out Investors and Not You
- frabbit 7y agohttps://www.jacobinmag.com/2020/03/coronavirus-recession-global-economy-stimulus-state https://www.jacobinmag.com/2020/03/coronavirus-recession-glo...
- 8bitsrule 7y agoHaven't seen many people complaining about all the homeless people on social media much in the past two weeks.
- gowld 7y agoThat's because people with computers are at hunkered at home and social distancing.
- blaser-waffle 7y agoNo morning commute, no stepping over human poo, no one trying to sell you drugs in the Tenderloin, etc. when you're at home.
- david_w 7y agoOr, alternatively, not in San Francisco,CA. USA, as many people aren't.
- goldenkey 7y agoI've made valiant efforts to help homeless folk. Thousands spent and even provided them my prescription valium so can they could off of chugging vodka and vomiting blood. What I found is that they: Don't want to shower. Have tons of contagions like fleas, lice, hepatitis A, B, C, D, E... Don't wash their hands, actively spreading via feco-oral route. Would rather drink than take benzodiazepenes despite the same effect. They are walking contagions, spreading hepatitis and who knows what else, to others via parasitic insects. They make $60 or more a day by panhandling and prefer to spend it all on drugs. If the coronavirus kills off these net negative to society, in both health and wealth, I see nothing but a boon. I, like not most others, got to know and help homeless populations. Except for the minority of them, they are felons or wanted in other states and generally _bad_ people. They make plenty of money and I no longer have any sympathy card after my wasted efforts. They don't want to be helped. They are at fault for the health hazard they pose to society.
- extralego 7y agoWhy do some societies have the problem and others do not?
- stuaxo 7y agoPeople at rock bottom are not all ready to be helped and yes, plenty of drugs turn addicts into arseholes. Still, America has a lot more of this kind of problem after pushing many mentally ill people into the community. It's great people are helping at the base, but these are systemic issues.
- rat9988 7y ago>If the coronavirus kills off these net negative to society, in both health and wealth, I see nothing but a boon.
- BubRoss 7y agoI wonder if people in the US realize that when they hear the number "two trillion" they should think "$10,000 per tax payer".
- tobltobs 7y agoMost people in the US won't even know how many zeros a trillion has.
- ianai 7y agoThat’s how it should be discussed. That it’s not underscores the lapdog position of the media. All media.
- m0zg 7y agoThat'd be misleading though. Much of that $2T is comprised of loans.
- BubRoss 7y agoTo who and at what interest rate?
- wool_gather 7y agoThat figure only goes up when large numbers of people drop off the tax rolls, whether because they succumb to COVID or knock-on effects.
- nodesocket 7y agoWithout businesses there are no jobs. I don't understand why people are so outraged about small business and corporate stimulas during this crisis. What exactly is their counter plan?
- DVassallo 7y agoRather than bailout the corporations, bailout the workers who lost their jobs.
- marcusverus 7y agoThis isn't an argument. It's a bumper sticker.
- Barrin92 7y agoI don't even understand this rhetoric. You can't 'bailout' workers. You can send workers cash, which the government does, but you also should help businesses, because that's where people go to work in the first place. I'm not really sure what the purpose of this antagonism is, as if protecting employment isn't in the interest of workers, or as if helping businesses and workers is mutually exclusive.
- DarthGhandi 7y agoWhere do you think workers spend their money? We need to stop propping up companies incapable of weathering a rainy day. This moral hazard madness needs to end.
- burgerzzz 7y agoSo do we just keep sending them the same benefits when they can’t find work because the businesses failed?
- Red_Leaves_Flyy 7y agoCross that bridge if we get to it.
- LatteLazy 7y agoThe whole point of capitalism is that owners are rewarded and everyone else get's fucked. That's really fucking obvious. The key to living under capitalism is to become an owner (of capital) as soon as you can and stop being a worker. Anyone talking about any other strategy is talking nonsense. The proletariat will not rise up any time soon and capitalism is not going anywhere. So everyone's best bet is to stop moaning and get with the program. We can't beat them, join them.
- Build3Wai 7y agoFair characterization of industrial capitalism, perhaps. How about network capitalism of the type described by Yochai Benkler? https://www.benkler.org/ https://www.benkler.org/
- LatteLazy 7y agoI'm not aware of Benkler, I'll take a look. That said, unless it's a very different form of capitalism that we currently practise...
- blackflame7000 7y agoI think fundamentally humans want to compete instead of cooperate and that a tiger can't change its stripes.
- extralego 7y agoCapitalism !== markets. Markets are much older than capitalism and will be around long after capitalism has come and went. Capitalism is merely a mode of production based on exploitation by control of capital.
- cloverich 7y agoHonest question, given the tens of thousands of years of humans cooperating to form groups of increasingly large size and interdependence, what makes you think there is more competition than cooperation happening?
- morceauxdebois 7y agoThere is no such thing as corporate socialism, its called oligarchy. How long must the rest of the world suffer before the Americans open a dictionary?
- sullyj3 7y agoThat's not as rhetorically powerful.
- Build3Wai 7y agoMy rough estimate is 10% of $6T US bailout goes to people Vs corporations by end of May. Your estimates? Is it true that Banks encashed $1T at 0% the Sunday before? Why did Mortgage rates go up?
- Donald 7y agoMortgage rates went up because 10 and 30 yr bond yields have spiked. Also, during the yield collapse a few weeks ago, banks got flooded by refi requests and it exhausted banks’ supply of available dollars for mortgages.
- blaser-waffle 7y agoSo... a run on the banks?
- bubbleRefuge 7y agoBanks have an practically infinite supply of money. They just issue it when they create loans. What they lack is the capacity to process the loans, not the funding.
- charrondev 7y agoOn the Canadian side so I’m not sure how our recent legislation differs. Up here the government is forcing businesses to close their doors 3-4 weeks if they’re non-essential. We can can weather 3 weeks and continue paying leave to the few employees we have. After that we’re out of money to rent, wages, & utilities without any government assistance. Small business don’t exactly sit on warchests of cash, especially if they have business loans to pay off. I might be biased here, but I’d prefer to maintain existing employees then lay them off and try hiring when this is over, but no one can even see if we’ll actually be able to reopen in 3 weeks. How long will this take? No one really knows. If this lasts 3 months and the economy is still at a halt, we’re in even worse shape as now we’re bled of cash and on top of that have a bunch more debt.
- AzzieElbab 7y agoI do not see how most business get through this without accumulation of some serious debt in the form of unpaid bills.
- llcoolv 7y agoIt is really beautiful to see a thread consisting of 90% comments downvoted into gray. https://imgur.com/a/wQBKp4f https://imgur.com/a/wQBKp4f
- nickff 7y agoAlso at a small Canadian business, and I think the vagueness on timeline and 'stimulus/bailout' is intentional. It seems very likely (>50%) this will stretch out at least to June, and the government appears to be trying to avoid a huge rash of layoffs. My take is that the government is trying to get businesses to take on debt and essentially fund stimulus spending. My advice is not to count on being back in business in three weeks. Sorry for the dour view, but I hope you can make it through; this is going to be tough for a lot of us.
- grecy 7y ago> On the Canadian side so I’m not sure how our recent legislation differs The government is paying anyone who's income is impacted (even self-employed) $2k a month for four months... so individuals are getting monetary support. https://www.surreynowleader.com/news/trudeau-unveils-new-2000-per-month-benefit-to-streamline-covid-19-aid/ https://www.surreynowleader.com/news/trudeau-unveils-new-200...
- jdmoreira 7y agoWhy bailout? Why not nationalize it instead and hopefully privatize it back later down the road. Or if you don’t want the nationalization headache at least trade money for equity.
- dragonwriter 7y ago> Why bailout? Why not nationalize it instead and hopefully privatize it back later down the road. That's not an alternative to a bailout, its a common bailout method: the government purchases equity of an ailing institution, thereby nationalizing it in whole or in part, puts it's own management in place, turns it around, and then sells the equity on the open market.
- jdmoreira 7y agoThanks for explaining. I thought bailout meant just giving away money or some low interest credit to companies without getting equity in return.
- extralego 7y agoI used to think the same. Good article here with a bit more detail! https://www.peoplespolicyproject.org/2020/03/23/how-to-think-about-corporate-bailouts-correctly/ https://www.peoplespolicyproject.org/2020/03/23/how-to-think...
- unlinked_dll 7y agoAlso worth noting the equity they get dilutes existing equity meaning it tends to screw the shareholders (but not as bad as insolvency). This is a good thing when you bail out companies that messed up. If you have a stake in a company you shouldn't ever want a bailout. I really think that the government should be taking a majority stake in Boeing. They have institutional problems in addition to money problems.
- m0zg 7y agoIn fact Boeing seems to be balking at govt requiring equity in exchange for loans: https://www.fool.com/investing/2020/03/24/boeing-ceo-rejects-talk-of-government-equity-stake.aspx https://www.fool.com/investing/2020/03/24/boeing-ceo-rejects... Which, to me, sounds like Boeing doesn't need a bailout all that much.
- bubbleRefuge 7y agoWorkers are being helped here, they are getting 600 per week + whatever the state program gives them. In Florida, that would be around 1K per week which is unprecedented. I think where the legislation falls short is help to states. There should be around 1 or 2K per capita in direct aid to state governments experiencing revenue short falls and increased demand for services with no state 'FED' to issue money for them.
- Stranger43 7y agoThe real question is why/when restructuring through bankruptcy became seen as something society should avoid rather then embrace? There is a huge argument to be said for the government acting like an buyer of last resort for critical assets/activities belonging to organization under bankruptcy, rather then acting as an lender of last resort for companies trying to stay out of bankruptcy court. Lets keep in mind that bankruptcy under almost all western legal systems allow for the continuation of viable economic activity and resale of valuable assets, i.e. in a lot of cases most salaried employees keeps their jobs even after the parent company goes bankrupt. From an market theory and moral perspective we need an functional system of restructuring through bankruptcy for any free market based system to starve off the (according to Marx inevitable) decline back towards aristocratic mercantilism.
- downerending 7y agoThe general answer is that governments (i.e., bureaucrats) are not thought to be very good at stepping in and running corporations. In addition, presumably all of those bureaucrats already have things to do and don't need the headache.
- Stranger43 7y agoIs that empirical based knowledge or theological doctrine? The idea that an service cannot be efficiently provided by government is an idea that tend to be thrown around a lot in US politics despite evidence from Europe that on public utilities government/state/city owned/controlled utilities is cheaper/better then private companies when allowed to compete directly side by with private enterprise.
- downerending 7y agoIt's one thing to have the government provide a service as part of a carefully planned operation. It's another thing entirely to put a bunch of government workers suddenly in charge of a large corporation. Hey Joe and Jane in GSA, GM just went bankrupt. Could you please drop your other responsibilities and run it from now on?
- readme 7y agoIIRC the stimulus bill does not allow for stock buybacks. So, I am not sure how they're bailing out investors. Wait until the unemployment numbers are out in a couple weeks. When the government shuts businesses down, people lose jobs. Let's not forget everyone who has a 401k and was hoping to retire this year. To add to how wrong this headline is, the government is literally sending everyone a check. I am sure some guy on medium is more capable of sizing this up than our entire senate and house of representatives, though. You should trust him: it's corporate greed. CSPAN is the place to go if you want to know what's really happening.
- erentz 7y agoThose rules are largely for show as Section 3 gives a provision allowing the treasury secretary to simply waive the rules: https://mobile.twitter.com/davidsirota/status/1242873747096227840 https://mobile.twitter.com/davidsirota/status/12428737470962...
- readme 7y agoThat's interesting, I had no idea. Puts a lot of power in Mnuchin's hands I guess. I think he does have our best interests in mind, though. Given this emergency though, and the amount of time it takes congress to even pass a bill like this, I would have to say I am not opposed to that clause. Yeah, the road to hell was paved with good intentions and so on. At the end of the day, you have to trust someone.
- jdmoreira 7y agoThe author is Nassim Taleb. A highly respect figure on HN among many other circles. You might have also heard of one of his books "The Black Swan"
- readme 7y agowell I stand corrected on that, it looks like he does have some experience with what he's writing about However I don't agree with the comparison of the 2008 bailouts with the current stimulus bill at all. Those definitely were corporate socialism, but I think we have progressed as a country since then.
- abstractbarista 7y agoIf I'm an investor, which I am, they are indeed bailing me out too. 55% of Americans hold equity. So 55% of Americans are being bailed out. Let's get that number to 100%, so we can move on to other issues.
- david_w 7y agoI love Taleb; he's a certified creative genius, better-than-chance-would-allow prophet and a regular guy with Good Judgment, all three at once- a rarity. I think he is wrong on this one however. Wrongest observation in the article: "For the very fact that we are saving airlines indicates their role as utility" An industry can be essential to society and still not be a utility, and that's a feature, not a bug. Nationalizing an industry implies the State has the knowledge to run it. But an entire industry of experts is already dedicated to doing just that. Nationalizing it implies the State would pay those same people or their equivalent to do what it is they already do. Why would it do that ? This is true of critical and non-critical industries. The government does not possess the knowledge to run specialized industries. That's exactly why Socialism always fails, and yes, it does always fail. In America at least, even "utilities" are not State owned, at most they are regulated, and the constant object of regulatory capture because of it. His other main point, that this is not a Black Swan, it's a White Swan (a disaster they should have seen coming and planned for) is stronger. However the exact scope and duration of this event is itself something of a Black Swan, no? The entire world is in lockdown for an unknown duration. Did you want that priced into every airline ticket you buy? It's not a rhetorical question, you have to decide if this is something you yourself would have wanted, back in the beforetime. For that matter, how does a nationalized airline industry raising your taxes to pay for Black Swans sound to you? Think that's where the money would ultimately really go? How's your Social Security lockbox doing? The reason we stem the bleeding in our industries like airlines isn't because their lobbyists incite Congressfolk to sin or even because they're utilities in all but name. Life could go on if the major airlines all failed all at once. After some time, there would be new airlines and until then charter planes for critical things and telecommute, like now. The reason we bail them out is because the net downstream cost of not doing so is many times the net cost of doing so. People have to have jobs to go back to after this is over. There has to be an economy. There has to be industries with jobs to go to. The demand for air travel will certainly be there, air travel is not a new invention waiting to catch on, is it? So the question to be answered is: is it wiser to birth a new airline industry or treat the wounds of the one you have? Here I define wiser to mean: less costly to the government and less ruinous of people's lives. In the US at least, everyone is getting hard cash presently to see them through, #masshole not withstanding. Many industries and even banks(!) are stepping up in all sorts of creative and genuinely helpful ways. This will pass; we will survive thanks to people's willingness to endure #lockdown for the sake of others. Everything else beyond that is gravy from historical and biological perspectives.