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There's still a real possibility that there might actually be a full recovery - what's closing is small businesses, not megacorporations. The rich seem to do ju

There's still a real possibility that there might actually be a full recovery - what's closing is small businesses, not megacorporations. The rich seem to do just fine even now. Even if most individual restaurants close, some will open back up, and more chains will move back in. In every scenario I can imagine, one thing seems inevitable - most people in this world are going to get poorer and suffer more. But I'm not convinced that the economy itself will sputter; we might just be ushering in a new economy that's far more unequal. In that case, the stocks might never go down again and people who have held off from investing are never gonna get back in.

changchuming 7y ago
Megacaps don't just print money out of thin air. If you have a faltering middle class, who's gonna be there to spend money? Unless you institute some kind of universal basic income, I don't see people's buying power staying the same. Remember, 70% of the economy is driven by people buying shit.
- KaoruAoiShiho 7y ago
  I think we're going to see just how small the mom and pop sector of the economy is.
  - mvkel 7y ago
    There was a survey that went out that said 80% of small businesses can't afford more than 3 months under the current economic climate. If that's true, does that mean we will see all small business evaporate before the end of 2020?
- somebodythere 7y ago
  > Unless you institute some kind of universal basic income More than 100% of pre-crisis income for the service industry is being financed through the expanded unemployment and small business grant programs.
  - jcfrei 7y ago
    > More than 100% of pre-crisis income for the service industry is being financed through the expanded unemployment and small business grant programs. Do you have any sources for that claim?
- christophilus 7y ago
  Sounds like you’re in the minority, but I think you’re right. Mega caps are built on the foundation of a broad consumer base that has been eroded faster than at any other time in history. Even those who seem insulated will feel the effects when their mega cap customers begin cutting costs because of their exposure to the consumer markets.
- nerdponx 7y ago
  Doesn't this depend on the company? Demand for agriculture, petroleum, and financial services (among many other things) are fairly inelastic. People are going to consume all of that stuff regardless of how financially well-off they are.
  - pedalpete 7y ago
    Demand for agriculture is inelastic, but I don't think the same of petroleum or financial services. Without travel, demand for petroleum has dropped significantly, to the point it was below 0 for a short time. Financial services can come to a screeching halt as well if people stop buying on credit or taking loans out on housing and cars. Maybe I'm being short-sighted in only considering the consumer aspect here.
- fladrif 7y ago
  What's the last 30%?
  - DSingularity 7y ago
    My guess is government and corporate spending.
  - tfehring 7y ago
    GDP = Consumption + Investment + Government spending + Net exports [0] The investment component is dependent on companies' expectations about consumption (or other companies' investment, or government spending) in the future, and obviously the net export component depends on consumption in other countries. So in that sense the ~70% [1] due to direct consumption understates the true importance of consumer spending to GDP. [0] https://en.wikipedia.org/wiki/Gross_domestic_product#Components_of_GDP_by_expenditure https://en.wikipedia.org/wiki/Gross_domestic_product#Compone... [1] https://fred.stlouisfed.org/series/DPCERE1Q156NBEA https://fred.stlouisfed.org/series/DPCERE1Q156NBEA
- mvkel 7y ago
  UBI doesn't produce goods, though. You still need companies (open and) employing people to make the goods that people buy. Both need to be present.
  - taneq 7y ago
    UBI doesn't stop people working. It just stops them starving if they don't/can't work. It allows them to re-skill without risking ending up on the street. It provides a safe path out of poverty traps. People will always get bored and people will always want nicer things, so they'll always eventually be motivated to go and get work to improve their lot. UBI won't change that. In fact, it will facilitate it.
    - samdamsamm 7y ago
      UBI doesn’t do that. Unless tied to something like land-value tax, UBI just raises rent cost. Of course it doesn’t happen immediately, but within a year or so UBI will be consumed by rent cost.
      - taneq 7y ago
        Shouldn't the free market take care of that? Rental costs in a given area are driven by supply of, and demand for, rental housing in the area.
        netjiro 7y ago
        Housing is generally supply blocked due to zoning/regulation/bureaucracy/etc. It's a severely dysfunctional market in most areas.
- dorchadas 7y ago
  That's exactly why tax cuts to the rich don't make any sense to me. Give tax cuts to the middle and lower classes, they're the ones who go out and actually buy shit, which drives everything else, really.
  - lsiebert 7y ago
    They make perfect sense if your goal is to enrich the wealthy in the short term.
  - samdamsamm 7y ago
    The rich people create the value so they deserve whatever they want.
zhoujianfu 7y ago
I agree... Covid is actually making the world more “efficient”, in the sense people are only doing the things that really “matter”, but the problem is it’s a big shake-up and there are going to be a lot of losers to go along with the winners. That’s why I think we REALLY need to take the opportunity to pass a real UBI. So everybody gets to enjoy the efficiency gains.
kart23 7y ago
I agree with this take the most. Everyone with a decent amount of cash or a job that lets them work remote is a-ok right now. In fact, they're doing great: picking up all kinds of assets for cheap right now, stock, cars, land, you name it. People who have lost their jobs are selling all that, since they need the money. Notice who is losing and gaining value in this situation. $megacorps arent dying, they're thriving. The economies of scale they have built are doing great right now, since all the smaller players are essentially stopped, and people still need their stuff. I honestly believe that every recession, the economy gets a little more inequal.
sjg007 7y ago
The rich always do well. I am surprised we put up with billionaires and rich Senators saying we need to go back to work when they could easily pay us to stay home for a few months. Essential workers could operate on shifts to reduce transmission rates of the virus.

changchuming 7y ago

Megacaps don't just print money out of thin air. If you have a faltering middle class, who's gonna be there to spend money? Unless you institute some kind of universal basic income, I don't see people's buying power staying the same. Remember, 70% of the economy is driven by people buying shit.

KaoruAoiShiho 7y ago
I think we're going to see just how small the mom and pop sector of the economy is.
- mvkel 7y ago
  There was a survey that went out that said 80% of small businesses can't afford more than 3 months under the current economic climate. If that's true, does that mean we will see all small business evaporate before the end of 2020?
somebodythere 7y ago
> Unless you institute some kind of universal basic income More than 100% of pre-crisis income for the service industry is being financed through the expanded unemployment and small business grant programs.
- jcfrei 7y ago
  > More than 100% of pre-crisis income for the service industry is being financed through the expanded unemployment and small business grant programs. Do you have any sources for that claim?
christophilus 7y ago
Sounds like you’re in the minority, but I think you’re right. Mega caps are built on the foundation of a broad consumer base that has been eroded faster than at any other time in history. Even those who seem insulated will feel the effects when their mega cap customers begin cutting costs because of their exposure to the consumer markets.
nerdponx 7y ago
Doesn't this depend on the company? Demand for agriculture, petroleum, and financial services (among many other things) are fairly inelastic. People are going to consume all of that stuff regardless of how financially well-off they are.
- pedalpete 7y ago
  Demand for agriculture is inelastic, but I don't think the same of petroleum or financial services. Without travel, demand for petroleum has dropped significantly, to the point it was below 0 for a short time. Financial services can come to a screeching halt as well if people stop buying on credit or taking loans out on housing and cars. Maybe I'm being short-sighted in only considering the consumer aspect here.
fladrif 7y ago
What's the last 30%?
- DSingularity 7y ago
  My guess is government and corporate spending.
- tfehring 7y ago
  GDP = Consumption + Investment + Government spending + Net exports [0] The investment component is dependent on companies' expectations about consumption (or other companies' investment, or government spending) in the future, and obviously the net export component depends on consumption in other countries. So in that sense the ~70% [1] due to direct consumption understates the true importance of consumer spending to GDP. [0] https://en.wikipedia.org/wiki/Gross_domestic_product#Components_of_GDP_by_expenditure https://en.wikipedia.org/wiki/Gross_domestic_product#Compone... [1] https://fred.stlouisfed.org/series/DPCERE1Q156NBEA https://fred.stlouisfed.org/series/DPCERE1Q156NBEA
mvkel 7y ago
UBI doesn't produce goods, though. You still need companies (open and) employing people to make the goods that people buy. Both need to be present.
- taneq 7y ago
  UBI doesn't stop people working. It just stops them starving if they don't/can't work. It allows them to re-skill without risking ending up on the street. It provides a safe path out of poverty traps. People will always get bored and people will always want nicer things, so they'll always eventually be motivated to go and get work to improve their lot. UBI won't change that. In fact, it will facilitate it.
  - samdamsamm 7y ago
    UBI doesn’t do that. Unless tied to something like land-value tax, UBI just raises rent cost. Of course it doesn’t happen immediately, but within a year or so UBI will be consumed by rent cost.
    - taneq 7y ago
      Shouldn't the free market take care of that? Rental costs in a given area are driven by supply of, and demand for, rental housing in the area.
      - netjiro 7y ago
        Housing is generally supply blocked due to zoning/regulation/bureaucracy/etc. It's a severely dysfunctional market in most areas.
dorchadas 7y ago
That's exactly why tax cuts to the rich don't make any sense to me. Give tax cuts to the middle and lower classes, they're the ones who go out and actually buy shit, which drives everything else, really.
- lsiebert 7y ago
  They make perfect sense if your goal is to enrich the wealthy in the short term.
- samdamsamm 7y ago
  The rich people create the value so they deserve whatever they want.

zhoujianfu 7y ago

I agree... Covid is actually making the world more “efficient”, in the sense people are only doing the things that really “matter”, but the problem is it’s a big shake-up and there are going to be a lot of losers to go along with the winners. That’s why I think we REALLY need to take the opportunity to pass a real UBI. So everybody gets to enjoy the efficiency gains.

kart23 7y ago

I agree with this take the most. Everyone with a decent amount of cash or a job that lets them work remote is a-ok right now. In fact, they're doing great: picking up all kinds of assets for cheap right now, stock, cars, land, you name it. People who have lost their jobs are selling all that, since they need the money. Notice who is losing and gaining value in this situation. $megacorps arent dying, they're thriving. The economies of scale they have built are doing great right now, since all the smaller players are essentially stopped, and people still need their stuff. I honestly believe that every recession, the economy gets a little more inequal.

sjg007 7y ago

The rich always do well. I am surprised we put up with billionaires and rich Senators saying we need to go back to work when they could easily pay us to stay home for a few months. Essential workers could operate on shifts to reduce transmission rates of the virus.