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No insight into Japan, but the US in particular should be aggressively shoveling money at business payroll as well. Some reasons why: First is to keep workers
by millstone 6y ago
No insight into Japan, but the US in particular should be aggressively shoveling money at business payroll as well. Some reasons why:
First is to keep workers out of state unemployment insurance programs. These differ per state, but are often deliberately miserly and/or burdensome so that they motivate recipients to go find a new job. But we don't want the unemployed to hit the bricks. Payroll support is then a more easily-administered form of federal UI. (Plus state UI is written in COBOL, they will literally crash.)
Also, retaining workers will help to ensure a V-shaped economic recovery. Once the health crisis ends, retained workers can just go back to work. But layoffs followed by rehires means more retraining (not retaining), and a slower recovery.
The point is that we literally cannot pinch pennies now: anything we "save" will hit us twice as hard as a new entitlement cost, or a cost to the states, or in reduced tax revenue, or whatnot.
Money is a fiction; the real risk is mouldering factories and disused skills. If a year from now the US is trillions more in debt, and prices are 2% higher, YET we are healthy and working and productive, we will have been successful in countering the health and economic crisis. We should be so lucky.
- myko 6y agoYep, companies are losing the ability to pay employees all over the US right now. Stay at home orders are almost certainly the right thing to do - the government needs to make it easy to do them.
- khuey 6y agoThe $600/wk benefit that the Feds added was precisely to make unemployment sufficiently generous that people would not be motivated to go find a new job right now.
- newacct583 6y agoYes, but this is a bonus on top of existing state benefits. And as mentioned upthread, it's actually proving surprisingly (or... not) difficult for people to actually apply, qualify for and receive benefits in some states.
- millstone 6y agoBoosting state UI is a good idea and I'm happy the Feds did it. But every state's UI is designed to be short-term help in a functioning economy. No US state has a "pandemic-ready" UI, and in many states unemployed workers are literally unable to reach state admins on the phone because of the call volume. That's why the Feds should be striving to keep workers out of the overwhelmed state UI programs. "Stimulus" now is incredibly cheap, perhaps even negative cost, because the alternative is people sitting at home on the phone for hours, hoping to reach a state UI admin. That is not an exaggeration.
- dantheman 6y agoDo you think the feds can set up a whole new system to funnel billions of dollars to small companies in a short time? Quicker than unemployment systems?
- vegetablepotpie 6y agoThe Feds do have a system to funnel billions of dollars out of small companies once a year, so in theory that pipe could go the opposite direction.
- _curious_ 6y agoWhy use the same old pipe when you can make more jobs laying new ones?
- millstone 6y agoAgreed, good point. The Feds should not set up a "whole new system", but also not expect much from state UI, which wasn't designed for this crisis. So what should the Federal response be? To start with, the Feds should identify existing agencies with the capacity to administer payments. Like the IRS: one coarse-but-quick approach is for the Feds to instruct the IRS to eliminate SSI withholding. That makes it cheaper for every business to employ workers. Beyond that I don't know; this is where Federal leadership should step in.
- manigandham 6y ago
- tapland 6y agoHey, if anything can handle the volume it's the cobol. But you'll also have an explosion of the bugs and exceptions noone ever wanted to pay to fix that get manually sorted every morning by the two 67 year and twice retired old devs who didn't get laid off to save money.
- capdeck 6y agoWhat I saw today driving through the neighboring small town - half of the main street shops and restaurants are closed. Not just temporarily, but the space is empty and there is a big "for rent" sign in the window. I've been going to some of those restaurants for decades - and now they are all but a memory. It is not enough to give corporations money for payroll - in NY large part of the cost of running business is the space itself. Also I don't understand all these "lending" programs - all they do is defer an even larger payment for later - most of the businesses will not be able to repay that if they have been closed for months. You are basically taking a loan to pay the rent so you can go bankrupt later. Doesn't make any sense. I don't know what to do but we need to give money and healthcare to people independent of work. Let businesses fail (big and small) and rebuild new ones once this blows over. Corporations will only buy back stocks and and line shareholders' pockets with dividends. Single digit percentage points of the stimulus money will reach employees. Bankruptcies aren't that bad - usually companies are not dissolved, but go through restructuring and gain a new management team (which one, knowing there is no bailout in the future, will plan better for emergencies like this one). What we are doing now is perpetuating corporate negligence that will now factor in 100% government bailout and run on even thinner margins and bigger stock price growth and dividends for the shareholders.
- thawaway1837 6y agoIndividual bankruptcies are not bad. Mass bankruptcies are terrible.
- RhysU 6y agoAgreed. Most important thing is to flatten the bankruptcy curve.
- jandrewrogers 6y agoThe forced economic shutdown has decimated the entrepreneurial class in the US, particularly small businesses, I anecdotally know of many (non-tech) examples in my own circle of friends. The jobs they created will not come back for the foreseeable future in many cases. It isn’t like they can just reboot with a clean slate, much of their capital was destroyed in the process. For a lot of businesses, “pausing” them is a death sentence, and there won’t be nearly as many people stepping up to replace them.
- Retric 6y agoMany small business are minimally impacted. A small government contractor updating a website is hardly going to need additional government assistance when everyone is already remote. Trying to hand out money to all small business is a nightmare which does not actually accomplish much for the money.
- femiagbabiaka 6y agowhat? Small businesses are shuttering permanently all over the country.
- Retric 6y agoMany != Most != All Some companies are suffering others and are uneffected and a few are even benefiting. Restaurants may be shut down, but farmers are still growing food, and some tiny toilet paper factories are operating at 120% capacity. Trying to subsidize everyone erodes the idea of capitalism, it’s politically expedient but that’s not to say it’s a great idea.
- sky_rw 6y agoMaking it illegal to do business also erodes the idea of capitalism.
- Retric 6y agoA great many companies are still doing business just fine. I can name several that are doing better than normal. The capitalistic approach is to say this is the 3rd major respiratory pandemic of the last 110 years. Get some https://en.wikipedia.org/wiki/Business_interruption_insurance https://en.wikipedia.org/wiki/Business_interruption_insuranc... if you’re at risk for a prolonged shutdown or accept the risk of failure. Governments trying to hedge business risks are a giant slippery slope that doesn’t end. If you disagree that’s fine, but perhaps come up with a general idea of how you want the country to operate longer term for the next crisis. Or worse, as what’s considered a crisis changes over time.
- cjlars 6y agoUS included a payroll protection program (PPP) in the CARES act last month, which pays for payroll for small businesses with some forgiveness provisions. The forgiveness terms are very roughly summarized as, "don't lay anyone off and the government will cover 8 weeks of wages for anyone making less than $100k / yr". News this week is that a second round of funding will go out for the program.
- throwlaplace 6y agotoo bad much of the money got eaten up by large corps https://www.forbes.com/sites/eriksherman/2020/04/24/public-companies-ppp-loans-money/#682e04c140d2 https://www.forbes.com/sites/eriksherman/2020/04/24/public-c...
- swasheck 6y agoAnecdotally, 100% of the legitimate small businesses in my area have been denied access to PPP due to lack of availability of funds. The research of others has shown that the lack of funds is due to big businesses receiving them. Seems to kinda go against the purpose.
- manigandham 6y agoThe total funding was barely enough to cover 1 million small businesses, and there are close to 30M in the USA that are affected in some way by this pandemic. The second round of funding was just passed but the pace is too slow. Most small companies will be bankrupt within 3 months without any cash flow.
- Gibbon1 6y agoMy take you could very quickly funnel money through payroll companies. They have all the contact and banking information needed. Lots and lots of small businesses use payroll companies. Steps would be pretty easy, business sends paperwork to the payrol company, they cut the checks, and bill the Feds. Easy.
- hkai 6y agoThe health crisis doesn't "end" by itself. I'm sure most people would rather get back to work than stay at home and receive free money. Let them do that.
- tanilama 6y agoI am curious, why stopped at a one time 1,200 dollar check? If the Congress had already ordered to print money, they surely can do more than that and for longer. Instead they delegated to existing programs for the rest, which aren't optimized enough to roll out that much money at this short period of time.
- partingshots 6y agoIt’s more efficient to implement a universal basic income. Having to funnel it through businesses just adds dead weight. Many businesses are no longer economically viable or sustainable, and that will only continue to accelerate as time goes on. We place far too much emphasis on jobs, which doesn’t work in the age of automation as humans become, at least productivity-wise, more and more unnecessary. Once you decouple a person’s worth from their productivity though, then you can start to better see the inherent value that exists in everyone which is both foundational and immutable.
- lawrenceyan 6y ago> Once you decouple a person’s worth from their productivity though, then you can start to better see the inherent value that exists in everyone which is both foundational and immutable. A valuable point.
- hyko 6y agoNot even proponents of UBI pretend that it’s the end of human labor. The original idea is that you replace all welfare programmes with one payment. If you remove human labor from the economy, you’re facing a 50-60% fall in GDP overnight, undermining UBI and ever other human activity. Every person has inherent worth, but that doesn’t mean that everyone can live without being productive in the near future.
- partingshots 6y agoI think you might have misread what I’m trying to say. Human labor is becoming increasingly unnecessary, with the key point here being increasingly. The pool of available work will never completely disappear, but as the job pool decreases in size due to being replaced by some combination of machine/computer, providing stimulus through the intermediary of businesses begins to fail as it no longer reaches people efficiently.
- mntmoss 6y agoYes, this argument is one shared with some arguments for minimum wage. When a sector of the economy can set wage freely, it often races to the bottom on price competitiveness, neglecting automation and training improvements; businesses that attempt to raise their quality get pummelled by the higher costs and risks relative to competition. A rising minimum wage standard therefore encourages modernization of the work environment. With UBI a similar effect is had on the demand side: If you assume a higher base of income, then consumer credit, payday loans, friends-and-family-favors, etc. become less of a necessity for low-income workers. Higher-income workers with long-term debts like mortgages and student loans become free of their debt more quickly, and face fewer consequences if their income takes a hit. The workforce is therefore disentangled from a set of predatory financial interests that chain them to needing their current job and to stay in the good graces of their financial backers. Even a very small amount of UBI will create a substantial reduction in poverty traps, domestic abuse, and labor mistreatment.
- jonahbenton 6y agoThis is true, and even the negative consequence- "trillions more in debt"- is a (to a first approximation) fiction. Central bank balance sheets are supernatural entities of essentially infinite capacity. We need to use them now. We don't necessarily know how to properly measure the various economic entities and activities we care about when balance sheets are used this way- but that's an accounting problem. We can clean it up in post.
- OrgNet 6y agoLuckily we have Trump in power, and not Hillary... I think that he will do whatever is needed.
- arbitrary_name 6y agoHahaha. Yes, the man telling us to inject bleach. Thank goodness.
- OrgNet 6y agoDon't stop drinking your city water and you'll be alright.
- _curious_ 6y agoHow easy it is for some to back and say that the government should be doing this or that. As these attitudes of entitlement continue to supplant those of self reliance, what happens? "...Payroll support is then a more easily-administered form of federal UI. (Plus state UI is written in COBOL, they will literally crash.)" Given how PPP just played out and considering the history our government has with opacity surrounding public-private finance...do you believe that such a broad strategy in US could be done with competence and integrity? If so, how? "The point is that we literally cannot pinch pennies now: anything we "save" will hit us twice as hard as a new entitlement cost, or a cost to the states, or in reduced tax revenue, or whatnot." Could you elaborate on this premise? "Also, retaining workers will help to ensure a V-shaped economic recovery." There is no ensuring of anything! Positioning it as "will help ensure" is a linguistic setup strangely reminiscent of how politicians like to manipulate words (and people). But "Money is a fiction"...what does this even mean?