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Is there any proven mechanism to put a segment of society "on-pause" for while? Each business entity submits a hibernation plan to central authority, funds prov

Is there any proven mechanism to put a segment of society "on-pause" for while? Each business entity submits a hibernation plan to central authority, funds provided and liabilities put on hold by decree. What do governments do historically during sieges and plagues? Are we doomed to live through these boom-bust cycles over and over again?

mc32 6y ago
Historically people starved and tried to make ends meet as best they could. But if you were to ask the Kulaks (basically besieged by their gov), you’ll notice that starvation was a big part. Are we doomed to cycles during (our lifetimes)? No, it could be all downhill for centuries. (Which I think has been the case when empires collapse, be they Roman, Dynastic Chinese, from the steppes, Mayan, etc.
staplers 6y ago
Are we doomed to live through these boom-bust cycles over and over again? Yes, I'd say it's a rather integral part of existing in the universe. All systems experience these cycles on some time scale.
Wowfunhappy 6y ago
The problem is that people can’t hibernate. All of the employees, all along the chain, need to eat.
- thescriptkiddie 6y ago
  There is no shortage of food at the moment. Just pay people to stay home.
  - missedthecue 6y ago
    until what?
  - SpicyLemonZest 6y ago
    You can do that, but then the system's not really in hibernation; you've just replaced it with a temporary UBI. There's no reason to expect the transition back to a normal market economy to be particularly smooth.
    - Dirlewanger 6y ago
      A rocky transition from a temporary UBI to normalcy is better than thousands upon thousands of small businesses permanently closing across the country.
      - SpicyLemonZest 6y ago
        My point is, I'd expect a transition from temporary UBI to normalcy to also involve a lot of small business closures.
  - Wowfunhappy 6y ago
    Right, so the government needs to cover the costs. That's what the Paycheck Protection Program was trying to do, but it wasn't expansive enough and now it has run out.
    - adammunich 6y ago
      Some companies collected those loans and still didn't pay employees. I've seen this unfold personally too and it has really shaken my respect for American businessmen...
      - 1-more 6y ago
        Every business owner is a cute mom-n-pop, just makin' ends meet, we're a family here, don't think of me as your boss type of boss during a bull market. When the chips are down, less so.
      - Wowfunhappy 6y ago
        If the loans weren't used to cover payroll, then they'll have to pay the money back to the government. And, they may have decided that covering e.g. rent was actually more important, since unfortunately without a location there's no business either. As I said, the program was not expansive enough.
        nradov 6y ago
        In theory that's correct, but in reality the law isn't being enforced. There is a huge amount of fraud.
        Wowfunhappy 6y ago
        What makes you say that?
  - driverdan 6y ago
    > Just pay people to stay home. With what money?
    - selectodude 6y ago
      The Fed Money Printer (TM) has been running on overdrive for awhile now.
    - loktarogar 6y ago
      There's always money if they want to spend it. For what they pumped into the markets earlier this year, they could have given $7.5k to every American adult (or $4.5k to every single person inc children) https://www.forbes.com/sites/sarahhansen/2020/03/12/fed-injects-15-trillion-to-prop-up-crashing-markets/ https://www.forbes.com/sites/sarahhansen/2020/03/12/fed-inje...
      - coredog64 6y ago
        The repo market is not a direct cash infusion. It’s essentially the Fed propping up the price of US T-Bills (a good thing).
    - eli_gottlieb 6y ago
      Bottom-left quadrant of this. https://knowyourmeme.com/photos/1789676-money-printer-go-brrr https://knowyourmeme.com/photos/1789676-money-printer-go-brr...
BoiledCabbage 6y ago
Most businesses while closed could have very minimal costs. Let's take a restaurant. Few people dining, so minimal labor costs, reduced deliveries, so minimal cost of goods/foods. But they still have enormous rent costs. My guess is that 90% of businesses could have gone on outside, easily weathered this storm, and picked right back up where they left off if we had simply paused rent payments. This would have meant property owners wouldve been short money to pay mortgages, so we simply hold off on mortgage payments. Banks can weather that without issue, or receive govt loans to tide them over and structure of the economy is ready to pick up where it left off. A similar solution in residential housing could've also worked well.
- mooneater 6y ago
  Its not all mortgages though. What do you tell the property owner who paid off mortgage, and uses the rent as primary income? Should the govt pay these people? I suppose they could get the banks to loan the money interest free...
  - Daishiman 6y ago
    They're not gonna be getting rent if businesses close anyway so telling to them to get stuffed because rentier capitalists are lower in the hierarchy of business to preserve doesn't sound like a bad idea to me.
  - naringas 6y ago
    maybe people shouldn't be able to make a living out awating rent? this is pure 'rent-seeking', I understand the appeal tho... wouldn't it be nice if I didn't have to do anything at all for a living but wait for my tenants to pay up?
    - betterunix2 6y ago
      "maybe people shouldn't be able to make a living out awating rent?" It's not exactly free money -- landlords do have to deal with the maintenance of the property, fixing/replacing broken appliances, and so forth. Before a landlord goes bankrupt they will cut back on maintenance that is not absolutely essential (something I lived through in my younger years, seeing benches fall apart, trash not being removed, and weeds taking over the front and back yards of the building), and eventually would not be able to pay for maintenance that actually is essential (good luck getting your plumbing fixed when your landlord cannot pay the plumber). There is also the matter of cascading bankruptcies when large numbers of landlords are not being paid, resulting in their loans no longer paying (likely dinging retirement accounts and pension funds). The fact is that a major shake-up in how we organize housing e.g. getting rid of rent-seeking landlords would be difficult in normal times. Doing such a thing during a deepening economic crisis would make everything worse for everyone, including people not directly involved.
burtonator 6y ago
It's not that easy... it will have to be supported somehow. It still costs $ just to exist. Economies are like living organisms. You can't just stop breathing. This is why covid could trigger a worldwide depression/recession. Infectivity rate will INCREASE up until 50% and will only slow at 70% when herd immunity kicks in... things will be getting WORSE not better.
Ericson2314 6y ago
Yes. Cancel rent and ensure everyone regardless of employment gets some mini-UBI for essentials. Any effort to preserve employment is stupid. People don't need to work, they need to eat and live under a roof. Small business don't need to exist, either. We might want them too, in which case we should cancel commercial rent too. Or, we might give up on small business (https://www.thebellows.org/the-double-horseshoe-theory/ https://www.thebellows.org/the-double-horseshoe-theory/), and instead increase the public spaces in the city so the fabric of society and adapt.
- grawprog 6y ago
  >Small business don't need to exist, either. Nah, you know what doesn't need to exist? Giant multinational corporations beholden to nobody that do whatever they want with impunity around the world, polluting, crushing local economies, lobbying governments, tracking the population like cattle and selling their data for pennies to the highest bidder. Man the world sure would be better if they didn't exist. Small businesses though, they're the backbone of just about every small to midsize community around the world.
  - Ericson2314 6y ago
    Hey, I'm with you that small business is much preferable to chaebol hell. But, I am also worried how much small business is still possible given modern technology and economies of scale. (But I am also aware that the fact that large business gets so much more government assistance, directly, or via financial markets and fractional reserve banking, means it is hard to tell what is really going on.) What I'm getting at is it may be that under capitalism consolidation is inevitable to a degree that small businesses would have to be completely propped up, in which we may consider other interventions such as workers on board or co-op requirements, UBI, etc. Basically, if no outcome one likes is "natural" (please excuse the capitalist realism), then one should look at the full spectrum of "unnatural" solutions, as opposed to just the status-quo-adjacent "let's just attract and subsidize immigrants to work 3x hard as the rest of us so we can instagram in their restaurants and bodegas".
    - 6y ago
betterunix2 6y ago
"Are we doomed to live through these boom-bust cycles over and over again?" Yes, for a few reasons: 1. The probability of a catastrophic event is low but non-trivial, so every so often society has to deal with some form of destruction on a scale that is larger than what the economy can absorb. In the ancient world the threshold was lower because economies were smaller, but even the largest economies today still have limits that will be exceeded periodically. 2. Debt is a necessary part of the economy, but we are generally bad at determining how much debt we should carry, and so we periodically overshoot. The result of overshooting is a financial crisis, in which many bad debts and unsustainable businesses will be destroyed (resulting in undershooting the optimal debt level, and thus allowing the cycle to start again). Ray Dalio wrote a free book about the debt cycle that is worth reading.
marcosdumay 6y ago
> What do governments do historically during sieges and plagues? Completely disrupt the working of society to gather resources for either combat the problem or run away and have a comfortable life elsewhere. History is not a good guide here. If you insist on using it as a standard, we are doing really, really well on this crisis. We are much better discussing what can improve than what we did wrong.
dillonmckay 6y ago
I am pretty sure that is a plot element in ‘Atlas Shrugged’.
- xkde 6y ago
  We’re going to see a lot of those plot elements in the near future.
thoughtstheseus 6y ago
Debt jubilees were used in circumstances like this.
- zeveb 6y ago
  I think that was most typical when the party declaring the debt jubilee was the lender itself (e.g. the government), or when the lenders were despised by society (e.g. Jews in mediæval Europe). A debt jubilee would not fly so well now when all of our pensions, retirements and endowments are tied up as … someone else's debt.
  - int_19h 6y ago
    Given how many households are deep in debt in US, do you think that cancelling others' indirect debt to them would leave them in the red?
pjc50 6y ago
> What do governments do historically during sieges and plagues? Collapse? Militarise? Trying to think of examples in what one would recognise as the modern era, outside of the obvious wholesale destruction of WW2. It looks like the war itself was bad for small business in the US: https://library.cqpress.com/cqresearcher/document.php?id=cqresrre1945032100 https://library.cqpress.com/cqresearcher/document.php?id=cqr... > The total number of business enterprises in operation in the United States has declined from a peak of nearly 3.4 million in 1941 to the present [1945] low point of perhaps 2.8 million. Certain persons have seen in this decline an alarming tendency toward concentration of economic power in the hands of large corporations, accompanied by a continuous freezing out of small enterprises.
jonahbenton 6y ago
No, no proven mechanism. There are an infinity of answers why, mine: There is no "pause" when it comes to financial relationships. One org's liability is another one's asset. Your rent payment goes to your building owner's mortgage, the payments from which are received by an SPV, which is an asset in the fixed income portion of your investment portfolio, which is itself an asset in which you have shares, the value of which determines the value to you. So like the proverbial butterfly, you not paying your rent hits you on the other side. These are all contractual relationships, usually private, and bespoke. There are legal consequences to you not paying your rent. Consequences to your owner not paying his mortgage. Consequences to the absence of delivery to the SPV. Consequences so the SPV not returning its contractual interest rate. Consequences to loss in value of your shares. All of these consequences are encoded into myriad unique contracts- your lease agreement, the mortgage agreement, etc. There fundamentally is no standardization across these agreements. There is no central registry of all of these relationships and dependencies. There can't be, operationally, as they change in real time, and there can't be theoretically, as maintaining one would violate so many principles of privacy and autonomy and freedom and so forth. Finally, we also live in a world where flows are dependent on work, of various kinds- underpaid and -valued work often performed by women and POC, overpaid and overvalued often performed by high status white men. All, nevertheless, work. When work stops, but flows must continue, what do we do?
- romwell 6y ago
  >When work stops, but flows must continue, what do we do? Pay people to keep these flows going, like all other countries did?
  - x0x0 6y ago
    Yeah. Other countries have had success with putting the cash in at the leaves of the dependency graph (ie the businesses) with the requirement to continue payroll. Then the rest of the relationships already exist, so the cash flows through. Or we can destroy our economy. I suspect there will be a short delay between widespread rent payment failures and contamination of the banks. By then, we're all gonna be on the ride for the duration. Not feeling so optimistic today.
projektfu 6y ago
My bank (Wells Fargo) actually voluntarily suspended payments for 3 months. In times like WWII, the private sector pitched in to help with the coordination of the government on the various levels.
- Mengkudulangsat 6y ago
  In my country (Malaysia), the loan moratorium was ~6 months by government decree, as was electricity & broadband bills. I reckon this was only possible since government-controled funds are the largest shareholders of the companies involved. It's still not enough. I'm thinking service providers all need a new "bare essentials" tier, whereby delinquent customers can keep the service relationship on minimalist when they are desperate. This is preferable to cutting the service and restarting later with bad credit.

mc32 6y ago

Historically people starved and tried to make ends meet as best they could. But if you were to ask the Kulaks (basically besieged by their gov), you’ll notice that starvation was a big part. Are we doomed to cycles during (our lifetimes)? No, it could be all downhill for centuries. (Which I think has been the case when empires collapse, be they Roman, Dynastic Chinese, from the steppes, Mayan, etc.

staplers 6y ago

Are we doomed to live through these boom-bust cycles over and over again? Yes, I'd say it's a rather integral part of existing in the universe. All systems experience these cycles on some time scale.

Wowfunhappy 6y ago

The problem is that people can’t hibernate. All of the employees, all along the chain, need to eat.

thescriptkiddie 6y ago
There is no shortage of food at the moment. Just pay people to stay home.
- missedthecue 6y ago
  until what?
- SpicyLemonZest 6y ago
  You can do that, but then the system's not really in hibernation; you've just replaced it with a temporary UBI. There's no reason to expect the transition back to a normal market economy to be particularly smooth.
  - Dirlewanger 6y ago
    A rocky transition from a temporary UBI to normalcy is better than thousands upon thousands of small businesses permanently closing across the country.
    - SpicyLemonZest 6y ago
      My point is, I'd expect a transition from temporary UBI to normalcy to also involve a lot of small business closures.
- Wowfunhappy 6y ago
  Right, so the government needs to cover the costs. That's what the Paycheck Protection Program was trying to do, but it wasn't expansive enough and now it has run out.
  - adammunich 6y ago
    Some companies collected those loans and still didn't pay employees. I've seen this unfold personally too and it has really shaken my respect for American businessmen...
    - 1-more 6y ago
      Every business owner is a cute mom-n-pop, just makin' ends meet, we're a family here, don't think of me as your boss type of boss during a bull market. When the chips are down, less so.
    - Wowfunhappy 6y ago
      If the loans weren't used to cover payroll, then they'll have to pay the money back to the government. And, they may have decided that covering e.g. rent was actually more important, since unfortunately without a location there's no business either. As I said, the program was not expansive enough.
      - nradov 6y ago
        In theory that's correct, but in reality the law isn't being enforced. There is a huge amount of fraud.
        Wowfunhappy 6y ago
        What makes you say that?
- driverdan 6y ago
  > Just pay people to stay home. With what money?
  - selectodude 6y ago
    The Fed Money Printer (TM) has been running on overdrive for awhile now.
  - loktarogar 6y ago
    There's always money if they want to spend it. For what they pumped into the markets earlier this year, they could have given $7.5k to every American adult (or $4.5k to every single person inc children) https://www.forbes.com/sites/sarahhansen/2020/03/12/fed-injects-15-trillion-to-prop-up-crashing-markets/ https://www.forbes.com/sites/sarahhansen/2020/03/12/fed-inje...
    - coredog64 6y ago
      The repo market is not a direct cash infusion. It’s essentially the Fed propping up the price of US T-Bills (a good thing).
  - eli_gottlieb 6y ago
    Bottom-left quadrant of this. https://knowyourmeme.com/photos/1789676-money-printer-go-brrr https://knowyourmeme.com/photos/1789676-money-printer-go-brr...

BoiledCabbage 6y ago

Most businesses while closed could have very minimal costs. Let's take a restaurant. Few people dining, so minimal labor costs, reduced deliveries, so minimal cost of goods/foods. But they still have enormous rent costs. My guess is that 90% of businesses could have gone on outside, easily weathered this storm, and picked right back up where they left off if we had simply paused rent payments. This would have meant property owners wouldve been short money to pay mortgages, so we simply hold off on mortgage payments. Banks can weather that without issue, or receive govt loans to tide them over and structure of the economy is ready to pick up where it left off. A similar solution in residential housing could've also worked well.

mooneater 6y ago
Its not all mortgages though. What do you tell the property owner who paid off mortgage, and uses the rent as primary income? Should the govt pay these people? I suppose they could get the banks to loan the money interest free...
- Daishiman 6y ago
  They're not gonna be getting rent if businesses close anyway so telling to them to get stuffed because rentier capitalists are lower in the hierarchy of business to preserve doesn't sound like a bad idea to me.
- naringas 6y ago
  maybe people shouldn't be able to make a living out awating rent? this is pure 'rent-seeking', I understand the appeal tho... wouldn't it be nice if I didn't have to do anything at all for a living but wait for my tenants to pay up?
  - betterunix2 6y ago
    "maybe people shouldn't be able to make a living out awating rent?" It's not exactly free money -- landlords do have to deal with the maintenance of the property, fixing/replacing broken appliances, and so forth. Before a landlord goes bankrupt they will cut back on maintenance that is not absolutely essential (something I lived through in my younger years, seeing benches fall apart, trash not being removed, and weeds taking over the front and back yards of the building), and eventually would not be able to pay for maintenance that actually is essential (good luck getting your plumbing fixed when your landlord cannot pay the plumber). There is also the matter of cascading bankruptcies when large numbers of landlords are not being paid, resulting in their loans no longer paying (likely dinging retirement accounts and pension funds). The fact is that a major shake-up in how we organize housing e.g. getting rid of rent-seeking landlords would be difficult in normal times. Doing such a thing during a deepening economic crisis would make everything worse for everyone, including people not directly involved.

burtonator 6y ago

It's not that easy... it will have to be supported somehow. It still costs $ just to exist. Economies are like living organisms. You can't just stop breathing. This is why covid could trigger a worldwide depression/recession. Infectivity rate will INCREASE up until 50% and will only slow at 70% when herd immunity kicks in... things will be getting WORSE not better.

Ericson2314 6y ago

Yes. Cancel rent and ensure everyone regardless of employment gets some mini-UBI for essentials. Any effort to preserve employment is stupid. People don't need to work, they need to eat and live under a roof. Small business don't need to exist, either. We might want them too, in which case we should cancel commercial rent too. Or, we might give up on small business (https://www.thebellows.org/the-double-horseshoe-theory/ https://www.thebellows.org/the-double-horseshoe-theory/), and instead increase the public spaces in the city so the fabric of society and adapt.

grawprog 6y ago
>Small business don't need to exist, either. Nah, you know what doesn't need to exist? Giant multinational corporations beholden to nobody that do whatever they want with impunity around the world, polluting, crushing local economies, lobbying governments, tracking the population like cattle and selling their data for pennies to the highest bidder. Man the world sure would be better if they didn't exist. Small businesses though, they're the backbone of just about every small to midsize community around the world.
- Ericson2314 6y ago
  Hey, I'm with you that small business is much preferable to chaebol hell. But, I am also worried how much small business is still possible given modern technology and economies of scale. (But I am also aware that the fact that large business gets so much more government assistance, directly, or via financial markets and fractional reserve banking, means it is hard to tell what is really going on.) What I'm getting at is it may be that under capitalism consolidation is inevitable to a degree that small businesses would have to be completely propped up, in which we may consider other interventions such as workers on board or co-op requirements, UBI, etc. Basically, if no outcome one likes is "natural" (please excuse the capitalist realism), then one should look at the full spectrum of "unnatural" solutions, as opposed to just the status-quo-adjacent "let's just attract and subsidize immigrants to work 3x hard as the rest of us so we can instagram in their restaurants and bodegas".
  - 6y ago

betterunix2 6y ago

"Are we doomed to live through these boom-bust cycles over and over again?" Yes, for a few reasons: 1. The probability of a catastrophic event is low but non-trivial, so every so often society has to deal with some form of destruction on a scale that is larger than what the economy can absorb. In the ancient world the threshold was lower because economies were smaller, but even the largest economies today still have limits that will be exceeded periodically. 2. Debt is a necessary part of the economy, but we are generally bad at determining how much debt we should carry, and so we periodically overshoot. The result of overshooting is a financial crisis, in which many bad debts and unsustainable businesses will be destroyed (resulting in undershooting the optimal debt level, and thus allowing the cycle to start again). Ray Dalio wrote a free book about the debt cycle that is worth reading.

marcosdumay 6y ago

> What do governments do historically during sieges and plagues? Completely disrupt the working of society to gather resources for either combat the problem or run away and have a comfortable life elsewhere. History is not a good guide here. If you insist on using it as a standard, we are doing really, really well on this crisis. We are much better discussing what can improve than what we did wrong.

dillonmckay 6y ago

I am pretty sure that is a plot element in ‘Atlas Shrugged’.

xkde 6y ago
We’re going to see a lot of those plot elements in the near future.

thoughtstheseus 6y ago

Debt jubilees were used in circumstances like this.

zeveb 6y ago
I think that was most typical when the party declaring the debt jubilee was the lender itself (e.g. the government), or when the lenders were despised by society (e.g. Jews in mediæval Europe). A debt jubilee would not fly so well now when all of our pensions, retirements and endowments are tied up as … someone else's debt.
- int_19h 6y ago
  Given how many households are deep in debt in US, do you think that cancelling others' indirect debt to them would leave them in the red?

pjc50 6y ago

> What do governments do historically during sieges and plagues? Collapse? Militarise? Trying to think of examples in what one would recognise as the modern era, outside of the obvious wholesale destruction of WW2. It looks like the war itself was bad for small business in the US: https://library.cqpress.com/cqresearcher/document.php?id=cqresrre1945032100 https://library.cqpress.com/cqresearcher/document.php?id=cqr... > The total number of business enterprises in operation in the United States has declined from a peak of nearly 3.4 million in 1941 to the present [1945] low point of perhaps 2.8 million. Certain persons have seen in this decline an alarming tendency toward concentration of economic power in the hands of large corporations, accompanied by a continuous freezing out of small enterprises.

jonahbenton 6y ago

No, no proven mechanism. There are an infinity of answers why, mine: There is no "pause" when it comes to financial relationships. One org's liability is another one's asset. Your rent payment goes to your building owner's mortgage, the payments from which are received by an SPV, which is an asset in the fixed income portion of your investment portfolio, which is itself an asset in which you have shares, the value of which determines the value to you. So like the proverbial butterfly, you not paying your rent hits you on the other side. These are all contractual relationships, usually private, and bespoke. There are legal consequences to you not paying your rent. Consequences to your owner not paying his mortgage. Consequences to the absence of delivery to the SPV. Consequences so the SPV not returning its contractual interest rate. Consequences to loss in value of your shares. All of these consequences are encoded into myriad unique contracts- your lease agreement, the mortgage agreement, etc. There fundamentally is no standardization across these agreements. There is no central registry of all of these relationships and dependencies. There can't be, operationally, as they change in real time, and there can't be theoretically, as maintaining one would violate so many principles of privacy and autonomy and freedom and so forth. Finally, we also live in a world where flows are dependent on work, of various kinds- underpaid and -valued work often performed by women and POC, overpaid and overvalued often performed by high status white men. All, nevertheless, work. When work stops, but flows must continue, what do we do?

romwell 6y ago
>When work stops, but flows must continue, what do we do? Pay people to keep these flows going, like all other countries did?
- x0x0 6y ago
  Yeah. Other countries have had success with putting the cash in at the leaves of the dependency graph (ie the businesses) with the requirement to continue payroll. Then the rest of the relationships already exist, so the cash flows through. Or we can destroy our economy. I suspect there will be a short delay between widespread rent payment failures and contamination of the banks. By then, we're all gonna be on the ride for the duration. Not feeling so optimistic today.

projektfu 6y ago

My bank (Wells Fargo) actually voluntarily suspended payments for 3 months. In times like WWII, the private sector pitched in to help with the coordination of the government on the various levels.

Mengkudulangsat 6y ago
In my country (Malaysia), the loan moratorium was ~6 months by government decree, as was electricity & broadband bills. I reckon this was only possible since government-controled funds are the largest shareholders of the companies involved. It's still not enough. I'm thinking service providers all need a new "bare essentials" tier, whereby delinquent customers can keep the service relationship on minimalist when they are desperate. This is preferable to cutting the service and restarting later with bad credit.