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> You honestly think 2 years is going to be enough to create what may end up being 47 million lost jobs as estimated by the Fed? I think he, and I, are arguing

> You honestly think 2 years is going to be enough to create what may end up being 47 million lost jobs as estimated by the Fed? I think he, and I, are arguing that if you give 47 million people the money they'd earn from their jobs (that's the magnitude of the bailout(s)), they could spend it in any number of ways, including keeping things they way they are. To your original analogy; the bailouts are currently structured to keep fishing poles and nets in place, but do very little to restock the river with fish. What the GP and I are arguing is that restocking the river with fish is a better way to keep the whole system running. EDIT: As a concrete example of this thinking, Nick Kokonas (twitter @nickkokonas), Grant Achatz' business partner in a number of restaurants in Chicago, has been arguing against buying gift cards to support restaurants, and in favor of buying takeout. Gift cards put money in the hands of empty restaurants and leaves them with future obligations. Selling takeout now not only puts current money in the hands of the restaurants, it lets them pay staff with current revenues, and keeps the entire supply chain back to the farm in business now.

malandrew 7y ago
> they could spend it in any number of ways, including keeping things they way they are. Please explain to me how minimum wage for two years allows people to even remotely approach keeping things the way they are? You're not even remotely proposing paying people how much they would earn from their jobs. Minimum wage is far from that. A bailout that gives 47 million people the money they'd earn from their jobs for two years would cost approximately $6T (US average income * 47 million * 2 years), which is an order of magnitude more expensive than the current bailout. The majority of the $2T bailout that passed and the $2T bailout that is proposed is loans not handouts with no obligations as you're proposing. Only about $500 billion is handouts. $250B in direct transfers to Americans and about $250B in pork like the money going to the Kennedy Center. The rest of the $4T is loans to small businesses, states and corporations to help save jobs until this passes. The overwhelming majority of that will be paid back like it was paid back under TARP. Apart from it being an order of magnitude greater amount of money that would never be recovered ($500B vs $6T), another very important question is where would the tax revenue come from to finance that $6T? You've just destroyed all the businesses (corporate income tax, payroll taxes, property taxes, etc.) and all the personal income tax 47 million people. The only tax you'd be collecting is sales tax, which only states can collect. Federal tax revenue would plummet, and that's all BEFORE we get to the point where those that haven't been laid off yet now lose their jobs because we're doing nothing to save the remaining jobs. At this point, the ranks of the unemployed swell far greater than 47 million. If you read the paper from the FED that estimates 47 million unemployed, you'll see that it relies on the assumption that the government makes an effort to save as many jobs as it can via a bailout like we did in 2008. A total collapse in tax revenue would completely tank the value of the dollar and US treasury bills, since the revenue used to service our debt would evaporate. The US dollar and US treasury bills would no longer be considered safe and almost certainly would lose its status as the World's reserve currency. Americans simply do not appreciate how important having the reserve currency is to supporting our quality of life. Furthermore, that restocking analogy totally fails. The problem isn't about how many fish are available. There's no lack of fish in the sea. It only matters how many are in the sea if that's the bottleneck. The bottleneck is being able to catch enough to feed 330 million people before those people starve. The fish is a metaphor for all the opportunities people can put work into in order to produce and feed themselves. If 330 million people found themselves with fully stocked oceans and no nets or fishing rods, a lot of people are going to starve. Market opportunities to support yourself and prosper have never really been lacking at any point in human history. The only thing that has ever been lacking is the labor, talent and leverage (debt, technology, organization) to exploit those opportunities. You're proposing destroying one of the key sources of leverage (organization) that has allowed us to sustain a high quality of life for 330 million people. Leverage multiplies gains on the way up and multiplies losses on the way down. The more and more I process your proposal, considering second and third order effects, the more insane it is. Have you done any back of the napkin calculations here and considered the weaknesses in your proposal at all? It would cause catastrophic economic collapse in the US on par which the collapse of Venezuela or the former Soviet Union.

malandrew 7y ago

> they could spend it in any number of ways, including keeping things they way they are. Please explain to me how minimum wage for two years allows people to even remotely approach keeping things the way they are? You're not even remotely proposing paying people how much they would earn from their jobs. Minimum wage is far from that. A bailout that gives 47 million people the money they'd earn from their jobs for two years would cost approximately $6T (US average income * 47 million * 2 years), which is an order of magnitude more expensive than the current bailout. The majority of the $2T bailout that passed and the $2T bailout that is proposed is loans not handouts with no obligations as you're proposing. Only about $500 billion is handouts. $250B in direct transfers to Americans and about $250B in pork like the money going to the Kennedy Center. The rest of the $4T is loans to small businesses, states and corporations to help save jobs until this passes. The overwhelming majority of that will be paid back like it was paid back under TARP. Apart from it being an order of magnitude greater amount of money that would never be recovered ($500B vs $6T), another very important question is where would the tax revenue come from to finance that $6T? You've just destroyed all the businesses (corporate income tax, payroll taxes, property taxes, etc.) and all the personal income tax 47 million people. The only tax you'd be collecting is sales tax, which only states can collect. Federal tax revenue would plummet, and that's all BEFORE we get to the point where those that haven't been laid off yet now lose their jobs because we're doing nothing to save the remaining jobs. At this point, the ranks of the unemployed swell far greater than 47 million. If you read the paper from the FED that estimates 47 million unemployed, you'll see that it relies on the assumption that the government makes an effort to save as many jobs as it can via a bailout like we did in 2008. A total collapse in tax revenue would completely tank the value of the dollar and US treasury bills, since the revenue used to service our debt would evaporate. The US dollar and US treasury bills would no longer be considered safe and almost certainly would lose its status as the World's reserve currency. Americans simply do not appreciate how important having the reserve currency is to supporting our quality of life. Furthermore, that restocking analogy totally fails. The problem isn't about how many fish are available. There's no lack of fish in the sea. It only matters how many are in the sea if that's the bottleneck. The bottleneck is being able to catch enough to feed 330 million people before those people starve. The fish is a metaphor for all the opportunities people can put work into in order to produce and feed themselves. If 330 million people found themselves with fully stocked oceans and no nets or fishing rods, a lot of people are going to starve. Market opportunities to support yourself and prosper have never really been lacking at any point in human history. The only thing that has ever been lacking is the labor, talent and leverage (debt, technology, organization) to exploit those opportunities. You're proposing destroying one of the key sources of leverage (organization) that has allowed us to sustain a high quality of life for 330 million people. Leverage multiplies gains on the way up and multiplies losses on the way down. The more and more I process your proposal, considering second and third order effects, the more insane it is. Have you done any back of the napkin calculations here and considered the weaknesses in your proposal at all? It would cause catastrophic economic collapse in the US on par which the collapse of Venezuela or the former Soviet Union.