6 ms·

Capitalists or Cronyists?

54 points by hliyan 7y ago

pmoriarty 7y ago
"If you're seeing this message, that means JavaScript has been disabled on your browser, please enable JS to make this app work." How annoying. Does anyone have a link to a plain text version of this article, or at least something that doesn't require javascript to read?
- viklove 7y ago
 If you want to incapacitate yourself out of some irrational hatred for a programming language instead of just employing a tracking blocker like uBlock Origin, you kinda have to live with the consequences.
 - knolax 7y ago
 It's not irrational to not want to run arbitrary, poorly sand-boxed code just to read some text.
 - pmoriarty 7y ago
 Enabling javascript means exposing myself to: - javascript vulnerabilities - tracking - ads (which themselves are well known vectors of malware) No thank you.
 - tehlike 7y ago
 That's why he mentioned ublock - to prevent ads and tracking.
 - pmoriarty 7y ago
 I do run uBlock, but it can't catch every novel JS tracking or advertising mechanism, while disabling JS can. In addition, I prevent exposure JS vulnerabilities and malware. This is defense in depth, and has nothing to do with hating JS as a language, and everything to do with a desire for more security and privacy.
 tehlike 7y ago
 I approach defense similar to Swiss cheese model. You can't cover everything at every level, but if you have multiple levels, the probability of failure drops significantly. You can decide not to drive a car in order not to die, at the cost of inconvenience and money because now you limit your options for groceries etc, and you limit the fun you have because your travel options are limited.
 - roenxi 7y ago
 > some irrational hatred Wasn't there a time when webcrawlers struggled to read such a site? And isn't there still at least a slight risk of being unindexable? Regardless; the article is a page of text. It is pretty much exactly what the use case for HTML was envisioned to be. Even if people aren't browsing the web the way you want them to we should all take a moment of silence in awe of whatever fool butchered their site design so badly that it requires JavaScript to display formatted text. I do hope Dr. Galloway didn't put money into this botch-job of a personal website.
- Nicksil 7y ago
 I agree. It's all static content, as well; there's no excuse. Anyhow, I did what I could: [Sub-]Headings and image annotations were added by me, the rest of it verbatim. [1/2] Capitalists or Cronyists? ================= April 10, 2020 Lenin said nothing can happen for decades, and then decades can happen in weeks. Yes, a pandemic pulls the future forward, and there’s a lot to learn. Another phenomenon that forms rain clouds of perspective is, wait for it … death. Or, specifically, being close to it. My father is approaching 90, recently divorced (for the fourth time), and spends his days watching replays of Maple Leafs games and abusing Xanax. His affinity for Xanies is a feature, not a bug, since at the end of your life “long-term effects” lose meaning. He’s near the end, exceptionally intelligent, and high. In sum, he’s my Yoda. Our calls are mostly me yelling short questions (“HOW ARE THE LEAFS LOOKING FOR NEXT YEAR?”) and waiting for something profound in return. Occasionally he delivers. “You must unlearn what you have learned!” Just kidding, Yoda did actually say that. But when I asked him what he thinks makes America different, he said: “America is a terrible place to be stupid.” That’s why he immigrated here. A pillar of capitalism is you can’t reward the winners without punishing the losers. I worry our government has been co-opted by the wealthy and is focused on protecting the previous generation of winners, even if it means reducing future generations’ ability to win. Aren’t we borrowing against our children’s prosperity to protect the wealth of the top 10, if not 1, percent? [IMAGE] https://api.profgalloway.com/wp-content/uploads/2020/04/NM_Share-of-US-Aggregate.png https://api.profgalloway.com/wp-content/uploads/2020/04/NM_S... In Depression-era Scotland, my dad was physically abused by his father. His mother spent the money he sent home from the Royal Navy on whiskey and cigarettes. He took a huge risk and came to America. My mom took a similar risk, leaving her two youngest siblings in an orphanage (her mom and dad had both died in their early fifties), and bought a ticket on a steamship. She had a small suitcase and 110 quid that she hid in both socks. Why? Because they wanted to work their asses off and be rewarded for the risks they were willing to take. This is capitalism, a beacon of hope for people who are smart, hard working, and comfortable with risk, promising a greater share of the spoils than those who are not. However, no more. Modern-day “capitalism” in America is to flatten the risk curve for people who already have money, by borrowing from future generations with debt-fueled bailouts for companies. We have consciously decided to reduce the downside for the wealthy, thereby limiting the upside for future generations. CNBC guest: Equity holders deserve to get wiped out. CNBC host: Why does anybody deserve to get wiped out in a crisis like this? This is a natural disaster, why does anybody deserve to get wiped out? Wouldn’t that be immoral in and of itself? “Immoral,” here we go. Morality for CNBC, and the current administration, is not capitalism but the worst type of socialism, cronyism. Rugged individualism and capitalism on the way up, privatizing the gains — and then socialism/cronyism on the way down as we socialize the losses with bailouts. Red Envelope ----------------- In 1999, the firm I co-founded, Red Envelope, was drafting an S-1 in anticipation of an IPO. At 31, I stood to register $30-60 million on the IPO. The bursting of the bubble damaged us, but the injuries weren’t fatal, and we were the only retail IPO of 2002. In 2008, a longshoreman strike left all our holiday merchandise hostage on a cargo ship 8 miles off the shores of the port of Long Beach. Then, as the credit crisis began to take hold, a prescient analyst at Wells Fargo decided to pull our credit facility. Within 90 days we were Chapter 11. That event, combined with divorce, reduced my net worth 97%. I didn’t deserve to lose near-everything. What happened wasn’t my fault — ok, maybe the divorce. Regardless, was this fair or (im)moral? Just as there’s no crying in baseball, there’s no fairness in shareholder accretion or destruction. Looking at jets at 31 wasn’t moral or fair either. So, what happened? Exactly what’s supposed to happen in a market economy — downside registered against commensurate upside. Red Envelope went through something also uniquely American … and productive — bankruptcy. The equity holders (e.g., yours truly) were wiped out (#bummer). However, we did our duty as board members and found a buyer, Liberty Media, who paid our vendors and kept the employees. No job loss, all debtors paid. When a 31-year-old is shopping for jets in November, part of the agreement with the invisible hand is he may lose most/all of it by March. There’s a word for that … capitalism. The capital structure of private firms is meant to balance upside and downside. CNBC/Trump want to protect current equity holders at the expense of future generations with rescue packages that explode the deficit. They also want to protect airlines, who spent $45 billion on buybacks and now want a $54 billion bailout, disincentivizing other firms (e.g., Berkshire Hathaway) that have built huge cash piles foregoing current returns. The rescue package should protect people, not businesses. From 2017 to 2019, the CEOs of Delta, American, United, and Carnival Cruises earned over $150 million in compensation. But, now … “We’re in this together” (i.e., “bail our asses out”). [IMAGE] https://api.profgalloway.com/wp-content/uploads/2020/04/NM_Exec-Comp.png https://api.profgalloway.com/wp-content/uploads/2020/04/NM_E... And what happens if they (gasp!), go out of business? Simple, the equity holders, and unsecured debt holders, get wiped out. These are the cohorts who, despite the recent meltdown, have registered a 3.3x increase in the Dow since the lows of 2008. As long as they keep making old people, and younger people want to take their kids to Disney’s Galaxy’s Edge, there will be cruise lines and airlines. Since 2000, US airlines have declared bankruptcy 66 times. Despite the obvious vulnerability of the sector, boards/CEOs of the six largest airlines have spent 96% of their free cash flow on share buybacks, bolstering the share price and compensation of management … who now want a bailout. They should be allowed to fail. Bondholders will own the firms. Ships and planes will continue to float and fly, and there will still be a steel tube with recirculated air waiting for you post molestation by Roy from TSA.
- deleted 7y ago
 [deleted]
- 3xblah 7y ago
 Here is a sed solution. cat > wp.sed 1i\ <pre> s|\"post_content\":\"|&</pre>|g;/\"comments\":/s||<pre>&| s|}]}|&</pre>|;s|{|\ {|g;s|||g;s|\\n||g;s|&nbsp;||g; s|||g; s|<\\/em><\\/p>||g;s|| |g; s|||g;s|||g; s|| |g;s|||g; s|\\u2019|\'|g;s|\\u2026|...|g;s|<\\/p>||g;s|||g;s|\\u201c|\"|g; s|\\u201d|\"|g;s|\\u2014|--|g;s|\\u2018||g;s|||g; s|<|<|g;s|"|\"|g;s|>|>|g;s|\\||g;s|",\"|\ &|g;s|comment_content\":\"|&</pre>|g;s|\",\"comment_approved\":\"|<pre>&|g; curl https://api.profgalloway.com/wp-json/pg/v1/nmnm/slug/capitalists-or-cronyists |sed -f wp.sed > wp.html firefox ./wp.html
lordnacho 7y ago
This is a good point again, in the same line of reasoning as the Social Capital commentator. If we don't allow businesses to fail now and again, there's never an opportunity for young people. Everything will always cost too much to be able to afford doing something on your own. Case in point is myself. Shortly after uni, I worked for a hedge fund that grew to a billion dollars. The boss took a huge bet that went wrong during the GFC, and I ended up starting a new firm with a few other guys, using what I'd learned as well as the reputation (it wasn't the same kind of trading) to a new place, giving me a much bigger stake. If the boss hadn't screwed up, I'd still be an underling, the opportunity cost of leaving would keep it that way. A similar story can be made for non-labour assets. I'm sure there's some smart operators in the airline industry with some ideas about how to run an airline business. But if we bail out the airlines, he can't buy the planes/landing slots cheaply, and most of the staff will correctly guess that their jobs are safer with the old airlines. And they will be around to compete with Airline 2.0. Same in every other business, from mom and pop restaurants to investment banks. The forest fire is an opportunity for saplings.
js8 7y ago
I have a feeling that the same article could have been written 100 years ago, and still would be correct. (And even 200 years ago, Adam Smith was writing in the same vein, that we should have a meritocratic system, not cronyism.) I think that capitalism, in the sense as described in the article, has always been just a dream, and never historically accurate. What actually somewhat changed it was adoption of social democracy as a response to the Great Depression (and the rise of USSR to some extent).
- llamaz 7y ago
  Social democracy is still fundamentally capitalism. Adam Smith was a left-wing radical living in a transnational period period between feudalism and capitalism where the main Tyrannical force was the state - now that has changed to corporations. Whether you're left or right wing economically, it's an accepted fact that capitalism has a cycle of boom and bust built into it. Right-libertarians (e.g. The Democrats and The Republican Party) believe that this can be avoided by freeing the market by removing deleterious incentives, centrist Keynesians (e.g. FDR with the New Deal, Bernie Sanders) don't trust capitalists to self regulate and instead accept the cycle of boom and bust, but try to avoid the social unrest by smoothing out and mollifying the crises, and left-libertarians (e.g. John McDonell, Richard Wolff, Paul Cockshott) try to eliminate the cycle of boom and bust, much like the right libertarians. This framing (e.g. of Democrats as economically right) may be provocative to Americans, but is natural in the rest of the world. I'm Australian and Bernie Sanders is to the right of our right wing party.
- TomMckenny 7y ago
  The Great Depression and the fact that vast quantities of capital were annihilated in two world wars which seriously reduced the power of those who own society. There is another point you hint at that I want to underline: nations freely use ideological rhetoric to hide the same thousand year old wealth patterns. China is not communist, N Korea is a kingdom, the NSDP outlawed and jailed socialists and, as the article points out, social mobility in the US is fought by the ruling class at every opportunity.
skybrian 7y ago
There is an argument that if a business was okay before the pandemic and would still be okay after the pandemic, maybe it should survive the pandemic, because new businesses aren't that easy to build. If it's not okay after the recovery, let it fail then. A counterargument might be that starting over isn't such a bad thing, as long as the former employees are taken care of. I expect that it depends on the business.
- roenxi 7y ago
  People probably will argue that but it has some weaknesses. If a business was okay before and expected to be okay after a crisis then its creditors probably will let is survive the crisis. It is appropriate for the government to act in the short term (especially while enforcing quarantines) to make sure everyone can feed themselves and nobody is left homeless. But business bailouts are fundamentally silly; capitalists are more than capable of keeping a business alive on life support if they think good times will come again in 6 months. Capitalists and bankers are self interested, not stupid. If given any freedom to make choices they aren't going to shut down a good business because the government shuts things down for 6 months.
  - skybrian 7y ago
    There's a funny thing about a market panic: the creditors disappear. This has little or nothing about the strength of the business in normal times.
    - roenxi 7y ago
      The pandemic has made the situation binary for most businesses; either shut down if non-essential or face an abnormal surge of demand if they supply basic goods. Although credit might help neither of those cases requires new creditors. The former case does require relief from their existing debts. Any existing creditor who insists on payment isn't going to get very much out of the situation vs. one who lets them off the hook for 6 months and then has a viable business paying back their debt. Deals would be worked out. Creditors are looking to maximise their return. If a business is likely to bounce back after a temporary blip then they aren't going to insist on payment now. Not to say it won't hurt; but someone has to be hurt in all this and the social contract is that the people who get hurt when the economy collapses are capitalists not taxpayers. The businesses would by and large survive.
sails 7y ago
> Letting firms fail, and share prices fall to their market level, also provides younger generations with the same opportunities we, Gen X and boomers, were given: a chance to buy Amazon at 50x (vs. 100x) earnings and Brooklyn real estate at $300 (vs. $1,000) per sq. ft. Just as we pretend our service men and women are heroes, and then treat them like chumps, CNBC advertisers and Peter Navarro want to pretend they give a sh*t about younger generations so they can protect the wealth of old people and management/advertisers. Enough already. Scott Galloway often refers to this "wealth transfer" from the young to the old in his writing. I think it is an interesting idea and seems to be somewhat novel.

54 points by hliyan 7y ago

"If you're seeing this message, that means JavaScript has been disabled on your browser, please enable JS to make this app work." How annoying. Does anyone have a link to a plain text version of this article, or at least something that doesn't require javascript to read?

viklove 7y ago
If you want to incapacitate yourself out of some irrational hatred for a programming language instead of just employing a tracking blocker like uBlock Origin, you kinda have to live with the consequences.
- knolax 7y ago
  It's not irrational to not want to run arbitrary, poorly sand-boxed code just to read some text.
- pmoriarty 7y ago
  Enabling javascript means exposing myself to: - javascript vulnerabilities - tracking - ads (which themselves are well known vectors of malware) No thank you.
  - tehlike 7y ago
    That's why he mentioned ublock - to prevent ads and tracking.
    - pmoriarty 7y ago
      I do run uBlock, but it can't catch every novel JS tracking or advertising mechanism, while disabling JS can. In addition, I prevent exposure JS vulnerabilities and malware. This is defense in depth, and has nothing to do with hating JS as a language, and everything to do with a desire for more security and privacy.
      - tehlike 7y ago
        I approach defense similar to Swiss cheese model. You can't cover everything at every level, but if you have multiple levels, the probability of failure drops significantly. You can decide not to drive a car in order not to die, at the cost of inconvenience and money because now you limit your options for groceries etc, and you limit the fun you have because your travel options are limited.
- roenxi 7y ago
  > some irrational hatred Wasn't there a time when webcrawlers struggled to read such a site? And isn't there still at least a slight risk of being unindexable? Regardless; the article is a page of text. It is pretty much exactly what the use case for HTML was envisioned to be. Even if people aren't browsing the web the way you want them to we should all take a moment of silence in awe of whatever fool butchered their site design so badly that it requires JavaScript to display formatted text. I do hope Dr. Galloway didn't put money into this botch-job of a personal website.
Nicksil 7y ago
I agree. It's all static content, as well; there's no excuse. Anyhow, I did what I could: [Sub-]Headings and image annotations were added by me, the rest of it verbatim. [1/2] Capitalists or Cronyists? ================= April 10, 2020 Lenin said nothing can happen for decades, and then decades can happen in weeks. Yes, a pandemic pulls the future forward, and there’s a lot to learn. Another phenomenon that forms rain clouds of perspective is, wait for it … death. Or, specifically, being close to it. My father is approaching 90, recently divorced (for the fourth time), and spends his days watching replays of Maple Leafs games and abusing Xanax. His affinity for Xanies is a feature, not a bug, since at the end of your life “long-term effects” lose meaning. He’s near the end, exceptionally intelligent, and high. In sum, he’s my Yoda. Our calls are mostly me yelling short questions (“HOW ARE THE LEAFS LOOKING FOR NEXT YEAR?”) and waiting for something profound in return. Occasionally he delivers. “You must unlearn what you have learned!” Just kidding, Yoda did actually say that. But when I asked him what he thinks makes America different, he said: “America is a terrible place to be stupid.” That’s why he immigrated here. A pillar of capitalism is you can’t reward the winners without punishing the losers. I worry our government has been co-opted by the wealthy and is focused on protecting the previous generation of winners, even if it means reducing future generations’ ability to win. Aren’t we borrowing against our children’s prosperity to protect the wealth of the top 10, if not 1, percent? [IMAGE] https://api.profgalloway.com/wp-content/uploads/2020/04/NM_Share-of-US-Aggregate.png https://api.profgalloway.com/wp-content/uploads/2020/04/NM_S... In Depression-era Scotland, my dad was physically abused by his father. His mother spent the money he sent home from the Royal Navy on whiskey and cigarettes. He took a huge risk and came to America. My mom took a similar risk, leaving her two youngest siblings in an orphanage (her mom and dad had both died in their early fifties), and bought a ticket on a steamship. She had a small suitcase and 110 quid that she hid in both socks. Why? Because they wanted to work their asses off and be rewarded for the risks they were willing to take. This is capitalism, a beacon of hope for people who are smart, hard working, and comfortable with risk, promising a greater share of the spoils than those who are not. However, no more. Modern-day “capitalism” in America is to flatten the risk curve for people who already have money, by borrowing from future generations with debt-fueled bailouts for companies. We have consciously decided to reduce the downside for the wealthy, thereby limiting the upside for future generations. CNBC guest: Equity holders deserve to get wiped out. CNBC host: Why does anybody deserve to get wiped out in a crisis like this? This is a natural disaster, why does anybody deserve to get wiped out? Wouldn’t that be immoral in and of itself? “Immoral,” here we go. Morality for CNBC, and the current administration, is not capitalism but the worst type of socialism, cronyism. Rugged individualism and capitalism on the way up, privatizing the gains — and then socialism/cronyism on the way down as we socialize the losses with bailouts. Red Envelope ----------------- In 1999, the firm I co-founded, Red Envelope, was drafting an S-1 in anticipation of an IPO. At 31, I stood to register $30-60 million on the IPO. The bursting of the bubble damaged us, but the injuries weren’t fatal, and we were the only retail IPO of 2002. In 2008, a longshoreman strike left all our holiday merchandise hostage on a cargo ship 8 miles off the shores of the port of Long Beach. Then, as the credit crisis began to take hold, a prescient analyst at Wells Fargo decided to pull our credit facility. Within 90 days we were Chapter 11. That event, combined with divorce, reduced my net worth 97%. I didn’t deserve to lose near-everything. What happened wasn’t my fault — ok, maybe the divorce. Regardless, was this fair or (im)moral? Just as there’s no crying in baseball, there’s no fairness in shareholder accretion or destruction. Looking at jets at 31 wasn’t moral or fair either. So, what happened? Exactly what’s supposed to happen in a market economy — downside registered against commensurate upside. Red Envelope went through something also uniquely American … and productive — bankruptcy. The equity holders (e.g., yours truly) were wiped out (#bummer). However, we did our duty as board members and found a buyer, Liberty Media, who paid our vendors and kept the employees. No job loss, all debtors paid. When a 31-year-old is shopping for jets in November, part of the agreement with the invisible hand is he may lose most/all of it by March. There’s a word for that … capitalism. The capital structure of private firms is meant to balance upside and downside. CNBC/Trump want to protect current equity holders at the expense of future generations with rescue packages that explode the deficit. They also want to protect airlines, who spent $45 billion on buybacks and now want a $54 billion bailout, disincentivizing other firms (e.g., Berkshire Hathaway) that have built huge cash piles foregoing current returns. The rescue package should protect people, not businesses. From 2017 to 2019, the CEOs of Delta, American, United, and Carnival Cruises earned over $150 million in compensation. But, now … “We’re in this together” (i.e., “bail our asses out”). [IMAGE] https://api.profgalloway.com/wp-content/uploads/2020/04/NM_Exec-Comp.png https://api.profgalloway.com/wp-content/uploads/2020/04/NM_E... And what happens if they (gasp!), go out of business? Simple, the equity holders, and unsecured debt holders, get wiped out. These are the cohorts who, despite the recent meltdown, have registered a 3.3x increase in the Dow since the lows of 2008. As long as they keep making old people, and younger people want to take their kids to Disney’s Galaxy’s Edge, there will be cruise lines and airlines. Since 2000, US airlines have declared bankruptcy 66 times. Despite the obvious vulnerability of the sector, boards/CEOs of the six largest airlines have spent 96% of their free cash flow on share buybacks, bolstering the share price and compensation of management … who now want a bailout. They should be allowed to fail. Bondholders will own the firms. Ships and planes will continue to float and fly, and there will still be a steel tube with recirculated air waiting for you post molestation by Roy from TSA.
deleted 7y ago
[deleted]
3xblah 7y ago
Here is a sed solution. cat > wp.sed 1i\ <pre> s|\"post_content\":\"|&</pre>|g;/\"comments\":/s||<pre>&| s|}]}|&</pre>|;s|{|\ {|g;s|||g;s|\\n||g;s|&nbsp;||g; s|||g; s|<\\/em><\\/p>||g;s|| |g; s|||g;s|||g; s|| |g;s|||g; s|\\u2019|\'|g;s|\\u2026|...|g;s|<\\/p>||g;s|||g;s|\\u201c|\"|g; s|\\u201d|\"|g;s|\\u2014|--|g;s|\\u2018||g;s|||g; s|<|<|g;s|"|\"|g;s|>|>|g;s|\\||g;s|",\"|\ &|g;s|comment_content\":\"|&</pre>|g;s|\",\"comment_approved\":\"|<pre>&|g; curl https://api.profgalloway.com/wp-json/pg/v1/nmnm/slug/capitalists-or-cronyists |sed -f wp.sed > wp.html firefox ./wp.html

lordnacho 7y ago

This is a good point again, in the same line of reasoning as the Social Capital commentator. If we don't allow businesses to fail now and again, there's never an opportunity for young people. Everything will always cost too much to be able to afford doing something on your own. Case in point is myself. Shortly after uni, I worked for a hedge fund that grew to a billion dollars. The boss took a huge bet that went wrong during the GFC, and I ended up starting a new firm with a few other guys, using what I'd learned as well as the reputation (it wasn't the same kind of trading) to a new place, giving me a much bigger stake. If the boss hadn't screwed up, I'd still be an underling, the opportunity cost of leaving would keep it that way. A similar story can be made for non-labour assets. I'm sure there's some smart operators in the airline industry with some ideas about how to run an airline business. But if we bail out the airlines, he can't buy the planes/landing slots cheaply, and most of the staff will correctly guess that their jobs are safer with the old airlines. And they will be around to compete with Airline 2.0. Same in every other business, from mom and pop restaurants to investment banks. The forest fire is an opportunity for saplings.

js8 7y ago

I have a feeling that the same article could have been written 100 years ago, and still would be correct. (And even 200 years ago, Adam Smith was writing in the same vein, that we should have a meritocratic system, not cronyism.) I think that capitalism, in the sense as described in the article, has always been just a dream, and never historically accurate. What actually somewhat changed it was adoption of social democracy as a response to the Great Depression (and the rise of USSR to some extent).

llamaz 7y ago
Social democracy is still fundamentally capitalism. Adam Smith was a left-wing radical living in a transnational period period between feudalism and capitalism where the main Tyrannical force was the state - now that has changed to corporations. Whether you're left or right wing economically, it's an accepted fact that capitalism has a cycle of boom and bust built into it. Right-libertarians (e.g. The Democrats and The Republican Party) believe that this can be avoided by freeing the market by removing deleterious incentives, centrist Keynesians (e.g. FDR with the New Deal, Bernie Sanders) don't trust capitalists to self regulate and instead accept the cycle of boom and bust, but try to avoid the social unrest by smoothing out and mollifying the crises, and left-libertarians (e.g. John McDonell, Richard Wolff, Paul Cockshott) try to eliminate the cycle of boom and bust, much like the right libertarians. This framing (e.g. of Democrats as economically right) may be provocative to Americans, but is natural in the rest of the world. I'm Australian and Bernie Sanders is to the right of our right wing party.
TomMckenny 7y ago
The Great Depression and the fact that vast quantities of capital were annihilated in two world wars which seriously reduced the power of those who own society. There is another point you hint at that I want to underline: nations freely use ideological rhetoric to hide the same thousand year old wealth patterns. China is not communist, N Korea is a kingdom, the NSDP outlawed and jailed socialists and, as the article points out, social mobility in the US is fought by the ruling class at every opportunity.

skybrian 7y ago

There is an argument that if a business was okay before the pandemic and would still be okay after the pandemic, maybe it should survive the pandemic, because new businesses aren't that easy to build. If it's not okay after the recovery, let it fail then. A counterargument might be that starting over isn't such a bad thing, as long as the former employees are taken care of. I expect that it depends on the business.

roenxi 7y ago
People probably will argue that but it has some weaknesses. If a business was okay before and expected to be okay after a crisis then its creditors probably will let is survive the crisis. It is appropriate for the government to act in the short term (especially while enforcing quarantines) to make sure everyone can feed themselves and nobody is left homeless. But business bailouts are fundamentally silly; capitalists are more than capable of keeping a business alive on life support if they think good times will come again in 6 months. Capitalists and bankers are self interested, not stupid. If given any freedom to make choices they aren't going to shut down a good business because the government shuts things down for 6 months.
- skybrian 7y ago
  There's a funny thing about a market panic: the creditors disappear. This has little or nothing about the strength of the business in normal times.
  - roenxi 7y ago
    The pandemic has made the situation binary for most businesses; either shut down if non-essential or face an abnormal surge of demand if they supply basic goods. Although credit might help neither of those cases requires new creditors. The former case does require relief from their existing debts. Any existing creditor who insists on payment isn't going to get very much out of the situation vs. one who lets them off the hook for 6 months and then has a viable business paying back their debt. Deals would be worked out. Creditors are looking to maximise their return. If a business is likely to bounce back after a temporary blip then they aren't going to insist on payment now. Not to say it won't hurt; but someone has to be hurt in all this and the social contract is that the people who get hurt when the economy collapses are capitalists not taxpayers. The businesses would by and large survive.

sails 7y ago

> Letting firms fail, and share prices fall to their market level, also provides younger generations with the same opportunities we, Gen X and boomers, were given: a chance to buy Amazon at 50x (vs. 100x) earnings and Brooklyn real estate at $300 (vs. $1,000) per sq. ft. Just as we pretend our service men and women are heroes, and then treat them like chumps, CNBC advertisers and Peter Navarro want to pretend they give a sh*t about younger generations so they can protect the wealth of old people and management/advertisers. Enough already. Scott Galloway often refers to this "wealth transfer" from the young to the old in his writing. I think it is an interesting idea and seems to be somewhat novel.