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On the eve of passing the first $2 trillion stimulus package, final deliberations in the US Congress about the "best" way to use the funds devolve into partisan

On the eve of passing the first $2 trillion stimulus package, final deliberations in the US Congress about the "best" way to use the funds devolve into partisan deadlock: One side insists that the only rational policy is for approximately 100% of the funds to be used to prevent business failures, arguing that "1) citizens need businesses to employ them so they can earn the monies they need to avoid starvation and homelessness with enough leftover (or at least a line of credit) for consumer consumption to collectively drive 70% of the economy; 2) the economy is literally made out of businesses and if too many die, then by definition so will economy; and 3) failed businesses take longer and are more costly (in capital investments) to repair/replace than are the jobs/homes/lives of the employees that must be sacrificed to save the company. "On the contrary!", says the almost-equally-sized other half of the legislature, "Approx 100% of the funds to be distributed directly to citizens, $6000 each, thus 'cutting out the the middleman employers' and maximizing the number of citizens saved from homelessness and starvation due to unemployment. THIS is the optimal policy, both economically AND morally!" To break the deadlock, Congress selects YOU as stimulus policy czar: your job is to decide and justify how best to distribute the stimulus funds - primarily distributed to businesses, primarily distributed directly to citizens, or some compromise between?

100ideas 6y ago
I’m going to take an extreme position in the hopes it “stimulates” conversation: the best course is $6k direct citizen payments. Business that fail create new niches some of the gritty but solvent ex-employed can try to exploit with new startups. Also, if the stimulus in the scenario was $4 trillion total, each citizen could be given/loaned ~$12000; by pooling their stimuli payments, tens of individuals and/or large families could potentially have enough capital to take a risky shot on a startup / small biz.
- ianai 6y ago
  It’s bizarre that this is an extreme position. It underscores how far and extreme US politics has become that supporting people is viewed so negatively while bailing out multinational corporations goes without saying. Being too big to fail is a sign that a company should be busted up into smaller companies, but I digress... I highly doubt startups would form around families just due to people getting one time large payments like 12k. If you have a family of 10 you’re going through 120k plenty quickly with just food, shelter, and other necessities. So much so that the money would have a huge multiplier effect at sustaining local demand for essential goods and services.
TheOtherHobbes 6y ago
It's strange that nuclear devastation for small businesses was never been a consideration during previous recessions. Then the narrative was always "Cyclical recessions happen - deal with it." Followed by "And how about some tax cuts?" Beyond that, your question is a solved problem. The answer is called Keynesianism, also known as the New Deal. Handing out money for nothing is clearly madness. But there is a lot of work that needs to be done, and isn't being done - including affordable health care, infrastructure repair and expansion, more diverse food supplies and farming, education at all levels, and so on. None of this will happen with the current incumbent, but countries that don't make the leap from a greed economy to a need economy are very likely to end up as failed states within ten years at the outside, economically and politically.
- DuskStar 6y ago
  > The answer is called Keynesianism, also known as the New Deal. Because that worked out so well. Aren't there more and more economists saying that the New Deal made the Great Depression longer?
  - ianai 6y ago
    No, Hoover’s austerity policies are viewed as having elongated the GD. Without the ND the Hoover dam wouldn’t exist. LV, NV wouldn’t exist - pretty sure the US would be much less developed all around and thus poorer. I’d posit the US losing WWII without the ND.
    - DuskStar 6y ago
      Well, here's a few examples of people saying that the New Deal either had no major effect on the Great Depression or even extended it: https://www.wsj.com/articles/SB123353276749137485 https://www.wsj.com/articles/SB123353276749137485 https://fee.org/articles/fdrs-folly-how-roosevelt-and-his-new-deal-prolonged-the-great-depression/ https://fee.org/articles/fdrs-folly-how-roosevelt-and-his-ne... https://www.nas.org/blogs/article/ask_a_scholar_did_the_new_deal_end_the_great_depression https://www.nas.org/blogs/article/ask_a_scholar_did_the_new_... (I basically googled "did the new deal extend the great depression" to find these) Now, you could say that these are all "conservative" sources, and thus invalid. (Of course, you'd then have to throw out support for the New Deal from "progressive" sources, which might also be painful) But either way, it does show that "The New Deal didn't help" is a position held by people.
mindslight 6y ago
Option 3: put a moratorium all loan payments, interest, rent, and real estate taxes denominated in USD. Loan principal stays the same, everything else is zeroed. Stop feeding the debt black hole. When times are back to normal, actually raise interest rates so we aren't so pathetically overleveraged. And if need be, change the customary decimal separator to a comma and add a digit for mills to make the finance bros happy.

100ideas 6y ago

I’m going to take an extreme position in the hopes it “stimulates” conversation: the best course is $6k direct citizen payments. Business that fail create new niches some of the gritty but solvent ex-employed can try to exploit with new startups. Also, if the stimulus in the scenario was $4 trillion total, each citizen could be given/loaned ~$12000; by pooling their stimuli payments, tens of individuals and/or large families could potentially have enough capital to take a risky shot on a startup / small biz.

ianai 6y ago
It’s bizarre that this is an extreme position. It underscores how far and extreme US politics has become that supporting people is viewed so negatively while bailing out multinational corporations goes without saying. Being too big to fail is a sign that a company should be busted up into smaller companies, but I digress... I highly doubt startups would form around families just due to people getting one time large payments like 12k. If you have a family of 10 you’re going through 120k plenty quickly with just food, shelter, and other necessities. So much so that the money would have a huge multiplier effect at sustaining local demand for essential goods and services.

TheOtherHobbes 6y ago

It's strange that nuclear devastation for small businesses was never been a consideration during previous recessions. Then the narrative was always "Cyclical recessions happen - deal with it." Followed by "And how about some tax cuts?" Beyond that, your question is a solved problem. The answer is called Keynesianism, also known as the New Deal. Handing out money for nothing is clearly madness. But there is a lot of work that needs to be done, and isn't being done - including affordable health care, infrastructure repair and expansion, more diverse food supplies and farming, education at all levels, and so on. None of this will happen with the current incumbent, but countries that don't make the leap from a greed economy to a need economy are very likely to end up as failed states within ten years at the outside, economically and politically.

DuskStar 6y ago
> The answer is called Keynesianism, also known as the New Deal. Because that worked out so well. Aren't there more and more economists saying that the New Deal made the Great Depression longer?
- ianai 6y ago
  No, Hoover’s austerity policies are viewed as having elongated the GD. Without the ND the Hoover dam wouldn’t exist. LV, NV wouldn’t exist - pretty sure the US would be much less developed all around and thus poorer. I’d posit the US losing WWII without the ND.
  - DuskStar 6y ago
    Well, here's a few examples of people saying that the New Deal either had no major effect on the Great Depression or even extended it: https://www.wsj.com/articles/SB123353276749137485 https://www.wsj.com/articles/SB123353276749137485 https://fee.org/articles/fdrs-folly-how-roosevelt-and-his-new-deal-prolonged-the-great-depression/ https://fee.org/articles/fdrs-folly-how-roosevelt-and-his-ne... https://www.nas.org/blogs/article/ask_a_scholar_did_the_new_deal_end_the_great_depression https://www.nas.org/blogs/article/ask_a_scholar_did_the_new_... (I basically googled "did the new deal extend the great depression" to find these) Now, you could say that these are all "conservative" sources, and thus invalid. (Of course, you'd then have to throw out support for the New Deal from "progressive" sources, which might also be painful) But either way, it does show that "The New Deal didn't help" is a position held by people.

mindslight 6y ago

Option 3: put a moratorium all loan payments, interest, rent, and real estate taxes denominated in USD. Loan principal stays the same, everything else is zeroed. Stop feeding the debt black hole. When times are back to normal, actually raise interest rates so we aren't so pathetically overleveraged. And if need be, change the customary decimal separator to a comma and add a digit for mills to make the finance bros happy.