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COVID19 represents an extraordinary circumstance where otherwise perfectly healthy businesses would fail due to revenue, quite literally, dropping to zero due t
by harryh 6y ago
COVID19 represents an extraordinary circumstance where otherwise perfectly healthy businesses would fail due to revenue, quite literally, dropping to zero due to an external shock.
When businesses fail and employees are fired real value is destroyed: working relationships are severed & institutional knowledge lost.
It is in all of our interests to do what we can to preserve these businesses until the external shock ends.
- chroem- 6y agoIs it still an external shock if these supposedly healthy and rational businesses took on large amounts of debt to buy their own stock, and are now in trouble because they can't pay their bills?
- harryh 6y agoYes.
- TheSoftwareGuy 6y agoThe coronavirus was not caused by rampant buy backs and borrowing. So yes
- toomuchtodo 6y agoAhh, but the buy backs and borrowing is what put over leveraged businesses into a precarious position where they were extremely vulnerable to economic shock. It didn't have to be a pandemic, it could've been any number of other events that caused a credit and demand shock. Strip the equity, give the assets to someone who can properly manage the business.
- economicslol 6y agoThat's such a bullshit Ayn Rand take. We can barely get a single $1200 payment to people who need it but Corps that have spent billions on buybacks when times were good get Billions in easy money and they layoff their workers anyway? Disgusting.
- tossmeout 6y agoYou'd make your point more effectively using logic and reasoning rather than an emotional outburst. Otherwise, as a genuinely curious reader looking to learn from "both sides," your side comes across as motivated more by emotion than reasonable argument. Which is fine for preaching to the choir… but that's about it.
- economicslol 6y agoBoth sides? Do you make the same argument for hearing from literal Nazis? You just need to weigh the arguments for and against the final solution? I'm not directly calling Libertarians Nazis but the analogy holds, I find very little of value from their point of view. Generally Ayn Rand type libertarians are cash worshiping dragons of the Smaug variety. Their only real contribution to discourse is about the power of markets and I think we can discard them because belief in markets is not unique to them.
- harryh 6y agoWhat do libertarians have to do with a central bank executing a massive increase in its balance sheet to execute a nearly unprecedented intervention into the national economy? There are many words I might use to describe this policy. Libertarian is not one of them.
- charlesu 6y agoWhy should that matter? It's not like the businesses will evaporate. Equity will lose their shirts and we should let them.
- thebean11 6y agoWhy don't they sell that stock back to the public to raise money for operating expenses? Because they'd have to sell it for much less than they paid a year ago? I hate this idea that the taxpayer needs to subsidize risk for corporations. It creates a huge moral hazard where companies are incentivized to act as irresponsibly as possible. There are no consequences.
- x86_64Ubuntu 6y agoSocial Safety nets are designed for "extraordinary" circumstances too, but those are always on the chopping block.
- aeternum 6y agoIsn't it healthy to frequently re-evaluate which government services should be expanded or contracted?
- x86_64Ubuntu 6y agoThat's not what we see in practice. In practice, we see that any program that is deemed to benefit the "wrong" group is thrown onto the chopping block regardless of need and efficacy.
- number6 6y agoYeah but the beauty in this approach lies is this: While Social Safety will level out the social inequalities in the long run, meaning that someday your wealth runs out and you are on food stamps like everyone else. This system freezes you social status. Management will still earn 100x more while others earn next to nothing. It might also cost more, maybe a lot more, but it stabilizes society. True there might be a shift downwards but this is inevitable; most people will be staying on their social stage or at least the distance will be the same to the guy above and under you. This seems to be very important. Always wondered why some guys are passing you just to stand in front of you at the same traffic light? Same same.
- economicslol 6y agoThey should have had an emergency fund of 6 Months of expenses for emergencies. Maybe they should stop eating so much avocado toast.
- bpodgursky 6y agoBig business: It's not actually good for the economy to have untold trillions in rainy-day payroll costs locked up in bonds or other safe funds. That money is best reinvested into the economy, through wages, growth, or whatever. Apples $200B or whatever cash stockpile wasn't doing useful work in safe bank. Small business: Have you ever actually run a small business, or even known anyone who did? Do you understand how ridiculous it is to tell a local coffeeshop "Oh, just have six months of payroll and rent in a safe"? These business contribute a lot to communities, and telling them "oh, you don't deserve to exist unless you are capable of withstanding once-in-a-lifetime pandemics" is asinine.
- orhmeh09 6y agoYet this is the advice politicians, businesspeople, and landlords dole out to ordinary citizens in the face of not only threats like eviction but just their day-to-day immiseration...
- bpodgursky 6y agoBusinesses optimize to produce goods and services and sell them to the world. People optimize for health, happiness, and personal utility. (1) It's reasonable for us to guide society towards different financial goals for people vs businesses. Business failure is part of life (not that we should try to make it happen). Personal failure is catastrophic. The risk/reward tradeoff is different. (2) You'll notice I'm also not advocating for letting people starve in the streets, if they don't have savings. Help people. Help businesses. We're adults, we can do both.
- harryh 6y agoBusinesses and people are different entities. There is little reason to expect that good advice for one would be good advice for the other.
- billfor 6y agoWhen businesses fail they can declare bankruptcy. The business still exists and the jobs can still exist. They don't necessarily need a handout from the government.