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Going directly to people does not maintain jobs for people to return to. You know that saying about teaching a man how to fish. Saving the businesses is the s

Going directly to people does not maintain jobs for people to return to. You know that saying about teaching a man how to fish. Saving the businesses is the same as grabbing the fishing rod so the fish don't pull it into the ocean and the man has no rod to return to. Giving it directly is giving the man a fish so he feeds himself for a day (something we are also doing with $1200 checks). If we don't grab the rod and save it, we're stuck feeding the man for many days, until there is another rod available to use. You may ask "Why not just buy the man a fishing rod?" Well because there is no rod and rods don't scale to support a population of 330 million people. We're past the point in our economy where everyone can sustain themselves solo. It's more like fishing nets (companies) that each require dozens to thousands of people to operate to pull in a catch. We're saving the fishing nets. We lose enough fishing nets and soon enough there won't be enough fish to collect as tax and redistribute to those we need to feed for a day. The ability to hand out anything at all is backed by the fishing nets and the people operating them. You need to save both.

throwlaplace 7y ago
>If we don't grab the rod and save it, we're stuck feeding the man for many days, until there is another rod available to use. the man doesn't have food now. not 6 months from now when your fishing line untangles. what do you do?
- malandrew 7y ago
  Give them the minimum number of fish for them to survive as a stopgap (two $1200 checks, some extra conditional $600 checks and unemployment).
  - throwlaplace 7y ago
    these kinds of solutions always assume there isn't enough slack in the system to give more than the minimum when it's clearly not the case because all of the fed models have slippage factored in. but no when it's welfare absolutely every penny has to be accounted for. >some extra conditional $600 checks conditional on what? literacy? drug tests? skin color? why conditional at all?
    - malandrew 7y ago
      > conditional on what? I don't remember. I think it might have been for dependents. Go read the text of the first bailout bill. It's all there.
phkahler 7y ago
>> Going directly to people does not maintain jobs for people to return to. Normally it's the best way to inject money into the economy. Right now the best thing to do would be to suspend rents and debt repayment obligations.
- malandrew 7y ago
  It's an idea and definitely worth exploring, but my gut tells me that that is both far easier said than done and it likely comes with many unintentional consequences that we should figure out first. One challenge is that the world is run by software. I have no clue how we would begin even modifying everything to account for such a dramatic change so broadly. Also, who do we suspend this for? Everyone? Only those that can't pay? This solution gets very messy very fast due to the layers upon layers of creditors, who themselves may have creditors. Among those creditors it's likely you can count both the American government and regular Americans (people with pensions and 401k's). One of the potential consequences that concerns me is what all those creditors do when this is all over? Is there any a new element of risk (suspension of payments) that gets priced in that makes all credit more expensive in perpetuity? Is more expensive credit in perpetuity more expensive than the solutions we're pursuing? Do the creditors pull out of the system entirely and move their money to systems that didn't suspend rent and debt repayment obligations? I really don't know, but doing that is uncharted waters that should not be taken lightly since there may be consequences worse than the solution we're pursuing. All the solutions are going to be imperfect. Generally those solutions that leave the machinery intact are easier to manage and reason about. Messing with the machinery in a time of crisis is generally inadvisable. It's the equivalent of changing code live in production.
  - coliveira 7y ago
    Nobody thinks slowly and hard about the consequences when it is time to give trillions of dollars to Wall Street banks.
pjmorris 7y ago
> Going directly to people does not maintain jobs for people to return to. Every one of the 16 million people who've lost jobs in the last month has some combination of rent, mortgage, food, insurance, and other expenses that they spend money on. Receiving that money is how many companies need to stay in business. Giving the money to the companies doesn't necessarily provide people with their material needs. Money given to people gets spent in to the real economy. Money given to companies might trickle down in to the real economy, but it also winds up just pumping up the financial economy, inflating balance sheets and asset prices, not necessarily providing anything anyone needs.
- malandrew 7y ago
  I don't know why I'm replying but if you read my entire comment, you'd see that your concern is addressed: some of the bailout is going directly to the people to address those needs.
  - salawat 7y ago
    Barely. As in, to the most insignificant drop in the bucket given the infiltration of rent extractors into the average American wallet. 1200 is easily pissing into the winds of a single month, and gets no one far enough out of immediate financial concern that they can start planning how to reorient their productive effort. Honestly, the more I look at the whole situation, the more it looks like two-thirds of the bail-out is going toward major actors in terms of the causative agents of the problem. The difference between a 1 time payment of 1,200, and a payment of 37000 is that: 37000 is 2 and change years worth of salary for someone making minimum wage ($7.50 an hour), a bit less two years for those at $10 an hour, and a year and change at $15 an hour. Given that level of infusion, you've bought people a significant amount of time to contribute to normal economic activity at a level they're already participating at, and in some cases increasing it. You're also, by routing that straight to citizen's, giving people the chance to organize into new business units more adapted to the times. There is also nothing keeping recipients from using said infusion to buy stocks or bonds propping up the Market in traditional ways, but also, by not bailing out companies directly, you give them a shot at dying, and for the price of assets to stabilize at a lower point via sell-off, also freeing up room in consolidated markets unfriendly to new entrants by taking out the least efficient yet too large to die actors. To be honest, I'm shocked more quote "Free Market aficionados" aren't livid about how this stimulus is going down. Instead of dropping the stimulus in the place most likely to do some good, you've given Corporate America yet another infusion with which to become that much more streamlined at wealth extraction, and divorced from the material reality of delivering immediate goods and services through the coordination of primary market actors instead of leaving the primary wealth allocation decisions to a bunch of bankers. I've met my fair share of cranks hung up on the Federal Reserve, but I'll be damned if I'm not starting to find myself aligning toward their general stance. The only difference between these two models of bailout is that one actually frees up and delegates economic power to everyday citizens to reshape the economic landscape as they desire (helicopter money) and one guarantees that entrenched players are in no way threatened in losing control of their systemically advantaged position in terms of controlling overall capital expenditure direction. Sorry man, but I just don't buy it. There is nothing in Free Market economics which states that once you get big enough, your survival takes precedence over the rest of the Market. Yet this policy has clearly demonstrated that our political system as a whole buys that. It is frankly ludicrous. The only message I'm getting out of this move is that legal fictions are more important in the grand scheme of things than actual citizens, which to be frank, has likely been written on the wall for the last 40 years.
triceratops 7y ago
Businesses are legal fictions. Even if they go bankrupt, their assets, employees, and IP will continue to exist and can be used to start new businesses.
- mywittyname 7y ago
  There's a reason you see same companies going into bankruptcy every few years or so. It's relatively cheap to acquire a failed company and shore up their financials. Once that's done, you can loan their stock back to them at an inflated price, then file for an IPO. Things are good for a few years, until they can no longer make their loan payments, then they go bankrupt again and the bondholders acquire the assets of the failed company, lather, rinse, repeat, until there's no longer a viable company left, and the brands & IP are liquidated by the court.
arbitrary_name 7y ago
>We're saving the fishing nets. No. We are saving the owners of the fishing nets. The companies can (and likely will) fire the employees to save themselves. Which should beg the question: why does the owner of the company get the money, and not his customer (who is generally also his employee)? Because we want to save capital formation as it was pre-COVID, instead of letting consumers provide the incentives for capital to reformulate to adjust to new market realities. The reason we persist with the 'freeze the system in place' is 1) We assume the capital class are more capable of redistributing money than the labor class (I think the current approach will favor major corporations and erode the market dynamism that has generally typified the US economy) 2) We assume that the costs of capital destruction are higher than the costs of damage done to the labor class (I think this is faulty) 3) The capital class have taken over the means of distribution and decision-making apparatus (this is inarguable, and is the primary reason the bailout has been shaped so favorably for capital instead of labor). More ossification of the US markets. More preferential treatment for the politically and economically well connected. More penury for the lower and middle classes, especially the younger generations trapped under a growing debt burden without the opportunities to escape from under it. Glad I have another citizenship and the resources to bail if it plays out the way I think it will.
- malandrew 7y ago
  > The companies can (and likely will) fire the employees to save themselves. Some employees. Every business has employees that are critical to ongoing operations and employees that are not critical and will be shed when doing so prevents insolvency. It's better to fire some employees and save some jobs instead of insolvency which results in the loss of all jobs at that company. There should be nothing controversial about this. Even a socialist system is going to dial headcount up and down based on whether or not having extra headcount is providing excess value or destroying value in excess of the resources being put into that enterprise/endeavor. To do otherwise is wasteful/destructive. > and not his customer (who is generally also his employee)? I'm unsure what you're asking here. > reformulate to adjust to new market realities. This is neither free nor instantaneous. The Great Depression, by way of example, lasted for 10 years and without WWII would likely have lasted a lot longer. There's a ton of friction it letting things collapse and waiting for things to reformulate for the betterment of most of society, assuming it ever does. The owners of capital are those that would suffer the least in this scenario. Maybe they can buy one less boat, maybe they escape to another nation where things haven't collapsed. For labor, the consequences of a prolonged reformulation is often dire. The Great Depression isn't the only example of the multi-year cost of reformulation. Zimbabwe is still suffering the costs of its reformulation. Brazil suffered the consequences after hyperinflation that destroyed companies and the damage lasted almost two decades and took the Plano Real to create conditions where things could reformulate. There's also the Weimar Republic and now Venezuela. Reformulation is long and painful and there is no guarantee that what arises from the reformulation is better than what was there before. Given how well the US economy was generally doing before this pandemic, there is strong reason to believe it won't be better simply due to the fact that things tend to revert towards the mean. > We assume the capital class are more capable of redistributing money than the labor class "capable of redistributing money"? Anyone can redistribute money. That's just asking if people can spend money handed to them. Both classes are equally capable of spending money. What's valid to ask is which class will be more effective in spending that money in a way that produces greater returns in the future. The group that spends the money on nets to catch fish in perpetuity will prove far better stewards of that money than those that spend the money on fish to feed themselves until they run out of money. Given that the capital class is generally trained in trying to find invest money to generate future returns, it's pretty safe to assume that they will produce a richer society. That society will most likely be unequal, but the wealth of those at the Nth percentile in a society that invests well will likely be better off than those at the same Nth percentile in a society that does not invest as well. > We assume that the costs of capital destruction are higher than the costs of damage done to the labor class (I think this is faulty) Several examples where the costs of capital destruction result in great damage to the labor class: Venezuela, Zimbabwe, Cuba, the former Soviet Union, pre-capitalist People's Republic of China, Weimar Republic, 80s in Brazil, etc. Even the countries that socialists envy, such as the Nordic countries in the European Union, are only able to provide a strong social safety net because of the preservation of capital and a general high degree of economic freedom. You said you believe that assumption is faulty. Can you provide us with counter-examples where allowing capital to be destroyed we less than the resultant damage to the labor class? > The capital class have taken over the means of distribution and decision-making apparatus (this is inarguable, and is the primary reason the bailout has been shaped so favorably for capital instead of labor). Can you elaborate here? Last The US is a democracy and everyone doing the distribution and making decisions here was elected by the American people by either direct vote (Congress) directly, indirect vote (Electoral College) or was appointed by someone that was elected by the American people. You can't just claim something is inarguable. It's actually a pretty easy point to argue. Near as I can tell, it has been shaped in favor of capital instead of labor because those making the decisions understand how destructive the destruction of capital will be for the entirety of the American people, both those that labor and those that don't. > trapped under a growing debt burden without the opportunities to escape from under it. No one is born with debt. You acquire debt voluntarily. Don't take on debt and you won't have any burden.

throwlaplace 7y ago

>If we don't grab the rod and save it, we're stuck feeding the man for many days, until there is another rod available to use. the man doesn't have food now. not 6 months from now when your fishing line untangles. what do you do?

malandrew 7y ago
Give them the minimum number of fish for them to survive as a stopgap (two $1200 checks, some extra conditional $600 checks and unemployment).
- throwlaplace 7y ago
  these kinds of solutions always assume there isn't enough slack in the system to give more than the minimum when it's clearly not the case because all of the fed models have slippage factored in. but no when it's welfare absolutely every penny has to be accounted for. >some extra conditional $600 checks conditional on what? literacy? drug tests? skin color? why conditional at all?
  - malandrew 7y ago
    > conditional on what? I don't remember. I think it might have been for dependents. Go read the text of the first bailout bill. It's all there.

phkahler 7y ago

>> Going directly to people does not maintain jobs for people to return to. Normally it's the best way to inject money into the economy. Right now the best thing to do would be to suspend rents and debt repayment obligations.

malandrew 7y ago
It's an idea and definitely worth exploring, but my gut tells me that that is both far easier said than done and it likely comes with many unintentional consequences that we should figure out first. One challenge is that the world is run by software. I have no clue how we would begin even modifying everything to account for such a dramatic change so broadly. Also, who do we suspend this for? Everyone? Only those that can't pay? This solution gets very messy very fast due to the layers upon layers of creditors, who themselves may have creditors. Among those creditors it's likely you can count both the American government and regular Americans (people with pensions and 401k's). One of the potential consequences that concerns me is what all those creditors do when this is all over? Is there any a new element of risk (suspension of payments) that gets priced in that makes all credit more expensive in perpetuity? Is more expensive credit in perpetuity more expensive than the solutions we're pursuing? Do the creditors pull out of the system entirely and move their money to systems that didn't suspend rent and debt repayment obligations? I really don't know, but doing that is uncharted waters that should not be taken lightly since there may be consequences worse than the solution we're pursuing. All the solutions are going to be imperfect. Generally those solutions that leave the machinery intact are easier to manage and reason about. Messing with the machinery in a time of crisis is generally inadvisable. It's the equivalent of changing code live in production.
- coliveira 7y ago
  Nobody thinks slowly and hard about the consequences when it is time to give trillions of dollars to Wall Street banks.

pjmorris 7y ago

> Going directly to people does not maintain jobs for people to return to. Every one of the 16 million people who've lost jobs in the last month has some combination of rent, mortgage, food, insurance, and other expenses that they spend money on. Receiving that money is how many companies need to stay in business. Giving the money to the companies doesn't necessarily provide people with their material needs. Money given to people gets spent in to the real economy. Money given to companies might trickle down in to the real economy, but it also winds up just pumping up the financial economy, inflating balance sheets and asset prices, not necessarily providing anything anyone needs.

malandrew 7y ago
I don't know why I'm replying but if you read my entire comment, you'd see that your concern is addressed: some of the bailout is going directly to the people to address those needs.
- salawat 7y ago
  Barely. As in, to the most insignificant drop in the bucket given the infiltration of rent extractors into the average American wallet. 1200 is easily pissing into the winds of a single month, and gets no one far enough out of immediate financial concern that they can start planning how to reorient their productive effort. Honestly, the more I look at the whole situation, the more it looks like two-thirds of the bail-out is going toward major actors in terms of the causative agents of the problem. The difference between a 1 time payment of 1,200, and a payment of 37000 is that: 37000 is 2 and change years worth of salary for someone making minimum wage ($7.50 an hour), a bit less two years for those at $10 an hour, and a year and change at $15 an hour. Given that level of infusion, you've bought people a significant amount of time to contribute to normal economic activity at a level they're already participating at, and in some cases increasing it. You're also, by routing that straight to citizen's, giving people the chance to organize into new business units more adapted to the times. There is also nothing keeping recipients from using said infusion to buy stocks or bonds propping up the Market in traditional ways, but also, by not bailing out companies directly, you give them a shot at dying, and for the price of assets to stabilize at a lower point via sell-off, also freeing up room in consolidated markets unfriendly to new entrants by taking out the least efficient yet too large to die actors. To be honest, I'm shocked more quote "Free Market aficionados" aren't livid about how this stimulus is going down. Instead of dropping the stimulus in the place most likely to do some good, you've given Corporate America yet another infusion with which to become that much more streamlined at wealth extraction, and divorced from the material reality of delivering immediate goods and services through the coordination of primary market actors instead of leaving the primary wealth allocation decisions to a bunch of bankers. I've met my fair share of cranks hung up on the Federal Reserve, but I'll be damned if I'm not starting to find myself aligning toward their general stance. The only difference between these two models of bailout is that one actually frees up and delegates economic power to everyday citizens to reshape the economic landscape as they desire (helicopter money) and one guarantees that entrenched players are in no way threatened in losing control of their systemically advantaged position in terms of controlling overall capital expenditure direction. Sorry man, but I just don't buy it. There is nothing in Free Market economics which states that once you get big enough, your survival takes precedence over the rest of the Market. Yet this policy has clearly demonstrated that our political system as a whole buys that. It is frankly ludicrous. The only message I'm getting out of this move is that legal fictions are more important in the grand scheme of things than actual citizens, which to be frank, has likely been written on the wall for the last 40 years.

triceratops 7y ago

Businesses are legal fictions. Even if they go bankrupt, their assets, employees, and IP will continue to exist and can be used to start new businesses.

mywittyname 7y ago
There's a reason you see same companies going into bankruptcy every few years or so. It's relatively cheap to acquire a failed company and shore up their financials. Once that's done, you can loan their stock back to them at an inflated price, then file for an IPO. Things are good for a few years, until they can no longer make their loan payments, then they go bankrupt again and the bondholders acquire the assets of the failed company, lather, rinse, repeat, until there's no longer a viable company left, and the brands & IP are liquidated by the court.

arbitrary_name 7y ago

>We're saving the fishing nets. No. We are saving the owners of the fishing nets. The companies can (and likely will) fire the employees to save themselves. Which should beg the question: why does the owner of the company get the money, and not his customer (who is generally also his employee)? Because we want to save capital formation as it was pre-COVID, instead of letting consumers provide the incentives for capital to reformulate to adjust to new market realities. The reason we persist with the 'freeze the system in place' is 1) We assume the capital class are more capable of redistributing money than the labor class (I think the current approach will favor major corporations and erode the market dynamism that has generally typified the US economy) 2) We assume that the costs of capital destruction are higher than the costs of damage done to the labor class (I think this is faulty) 3) The capital class have taken over the means of distribution and decision-making apparatus (this is inarguable, and is the primary reason the bailout has been shaped so favorably for capital instead of labor). More ossification of the US markets. More preferential treatment for the politically and economically well connected. More penury for the lower and middle classes, especially the younger generations trapped under a growing debt burden without the opportunities to escape from under it. Glad I have another citizenship and the resources to bail if it plays out the way I think it will.

malandrew 7y ago
> The companies can (and likely will) fire the employees to save themselves. Some employees. Every business has employees that are critical to ongoing operations and employees that are not critical and will be shed when doing so prevents insolvency. It's better to fire some employees and save some jobs instead of insolvency which results in the loss of all jobs at that company. There should be nothing controversial about this. Even a socialist system is going to dial headcount up and down based on whether or not having extra headcount is providing excess value or destroying value in excess of the resources being put into that enterprise/endeavor. To do otherwise is wasteful/destructive. > and not his customer (who is generally also his employee)? I'm unsure what you're asking here. > reformulate to adjust to new market realities. This is neither free nor instantaneous. The Great Depression, by way of example, lasted for 10 years and without WWII would likely have lasted a lot longer. There's a ton of friction it letting things collapse and waiting for things to reformulate for the betterment of most of society, assuming it ever does. The owners of capital are those that would suffer the least in this scenario. Maybe they can buy one less boat, maybe they escape to another nation where things haven't collapsed. For labor, the consequences of a prolonged reformulation is often dire. The Great Depression isn't the only example of the multi-year cost of reformulation. Zimbabwe is still suffering the costs of its reformulation. Brazil suffered the consequences after hyperinflation that destroyed companies and the damage lasted almost two decades and took the Plano Real to create conditions where things could reformulate. There's also the Weimar Republic and now Venezuela. Reformulation is long and painful and there is no guarantee that what arises from the reformulation is better than what was there before. Given how well the US economy was generally doing before this pandemic, there is strong reason to believe it won't be better simply due to the fact that things tend to revert towards the mean. > We assume the capital class are more capable of redistributing money than the labor class "capable of redistributing money"? Anyone can redistribute money. That's just asking if people can spend money handed to them. Both classes are equally capable of spending money. What's valid to ask is which class will be more effective in spending that money in a way that produces greater returns in the future. The group that spends the money on nets to catch fish in perpetuity will prove far better stewards of that money than those that spend the money on fish to feed themselves until they run out of money. Given that the capital class is generally trained in trying to find invest money to generate future returns, it's pretty safe to assume that they will produce a richer society. That society will most likely be unequal, but the wealth of those at the Nth percentile in a society that invests well will likely be better off than those at the same Nth percentile in a society that does not invest as well. > We assume that the costs of capital destruction are higher than the costs of damage done to the labor class (I think this is faulty) Several examples where the costs of capital destruction result in great damage to the labor class: Venezuela, Zimbabwe, Cuba, the former Soviet Union, pre-capitalist People's Republic of China, Weimar Republic, 80s in Brazil, etc. Even the countries that socialists envy, such as the Nordic countries in the European Union, are only able to provide a strong social safety net because of the preservation of capital and a general high degree of economic freedom. You said you believe that assumption is faulty. Can you provide us with counter-examples where allowing capital to be destroyed we less than the resultant damage to the labor class? > The capital class have taken over the means of distribution and decision-making apparatus (this is inarguable, and is the primary reason the bailout has been shaped so favorably for capital instead of labor). Can you elaborate here? Last The US is a democracy and everyone doing the distribution and making decisions here was elected by the American people by either direct vote (Congress) directly, indirect vote (Electoral College) or was appointed by someone that was elected by the American people. You can't just claim something is inarguable. It's actually a pretty easy point to argue. Near as I can tell, it has been shaped in favor of capital instead of labor because those making the decisions understand how destructive the destruction of capital will be for the entirety of the American people, both those that labor and those that don't. > trapped under a growing debt burden without the opportunities to escape from under it. No one is born with debt. You acquire debt voluntarily. Don't take on debt and you won't have any burden.