A Better Way to Spend 1 Trillion Dollars in Response to Covid-19

[lionking]

You're comparison is flawed in too many ways to bother even pointing out.

Hopeless dodge.

You may not have noticed that a great many economists are calling for “a new Marshall Plan”. It’s not just me who thinks an international plan is called for.

 

[JoeMorgue]

We shouldn't dump money into "American companies" if the money is only go into the offshore accounts of a few high end executives.

The Cruise Lines don't build their ships in America, don't flag their vessels in America, and don't hire American workers. Why are they asking America for a bailout?

If most of your money and workers aren't in America, don't ask America for a bailout. This isn't rocket science. Spare me the "Trickle down" spiel.

 

[Meadmaker]

The Cruise Lines don't build their ships in America, don't flag their vessels in America, and don't hire American workers. Why are they asking America for a bailout?

But....but....I own their stock! (And yes, I do. Turned out not to be a good investment.)

However, I agree with you. Bailouts of specific industries shouldn't occur unless there is a very good reason for it. If the economy depends on them, and they provide something that is required for the maintenance of our society. Car companies fit that bill, but not cruise lines. Airlines? Maybe.

And bankruptcy should be the first option for all companies.


However, that's not really the point of this thread. If you were to bail out cruise companies or car companies right now, no one would book a cruise or buy a car. It's too dangerous. The cruises stopped selling because of passenger safety. The car companies aren't producing because of worker safety.

No bailout or stimulus is going to change that. Only stopping, or at least dramatically slowing, the spread of the virus can change that.

That's why I think the "stimulus" money ought to go toward measures that could slow the spread of the virus. "Stimulus" is just a side effect.

 

[Doghouse Reilly]

Menial schmenial, and no one is forced.

The difference between the great depression and what I'm saying is that those were make-work jobs with some possible general societal benefit.

The problem with this economy is not cash flow, which is what Keynesian economics tries to deal with. This economy, i.e. the one that is about two weeks old right now, involves a very specific problem that is not money related, but is preventing people from working.

I'm saying actually use the money to attack the problem. The problem is the spread of the virus. It's not lack of funds. The virus is spread by people hanging out together. Make it possible for people to stay in their homes where they cannot contract and cannot spread the virus.

It is my understanding that the generally accepted view now is that everyone, or almost everyone, will be exposed to the virus within the next couple of months. The governor of California said today that they project 56% of Californians will contract coronavirus within the next 8 weeks.

If that's the case, what, exactly, is the purpose of keeping people holed up in their houses? Why would we want to spend extra money to keep them holed up?

 

[Meadmaker]

It is my understanding that the generally accepted view now is that everyone, or almost everyone, will be exposed to the virus within the next couple of months. The governor of California said today that they project 56% of Californians will contract coronavirus within the next 8 weeks.

If that's the case, what, exactly, is the purpose of keeping people holed up in their houses? Why would we want to spend extra money to keep them holed up?

You haven't been following that whole "flatten the curve" discussion, then?


Beaumont Hospital, our area's largest hospital network, today asked for donations of medical supplies. Have you ever heard of that happening? That's not normal.


However, whether you agree with the strategy of keeping people locked up in their homes or not, that doesn't really matter for purposes of this discussion. The fact is that we are keeping people locked up in their homes, by force of law in some states.

Case 1: That's a good idea.

If so, then right now there's this glaring problem with implementing the strategy. It's the grocery store. People are still sharing germs there. My proposal is a way to make the social distancing strategy, including the massive business shutdown that we, as a nation, are doing, more effective. It has a side effect of also employing some of the people who have been thrown into unemployment by that strategy.

Case 2: Mandatory social distancing is a bad idea.

Ok. Then stop it. Everyone go back to work, including restaurants and cruise ships. If you get the disease, you get the disease. If we do that, there's no need for a trillion dollar stimulus package, because we're going back to work. Maybe some sort of small stimulus is needed because our brief panic messed everything up.

I'm not even really going to discuss whether Case 1 or Case 2 ought to be done, because as a nation we've already chosen case 1 as a strategy, from Trump to the CDC to most governors. That's what we're doing. So, let's make it work.

 

[Roboramma]

Interesting.

Someone is delivering groceries to you every day right now. Correct?

Yep.

Are you paying for that?

Yep.

But it may be cheaper here than elsewhere. Grocery delivery was pretty common in Shanghai even before this virus.

ETA: And more to the point, if you gave people money to spend as they wish, would they spend it on grocery delivery? Obviously not, because they could right now, but they aren't.

That doesn't follow. If it costs more to get groceries delivered, it might make sense not to do it when you have to be careful with your money, but make more sense when you have more funds available.

Moreover, you're supposing that you know that the best thing to fund is grocery deliveries. Another issue is, for instance, taking time off work when you're sick. Or to care for children who can't go to school. If people don't have money for those things (or other things that you and I may not think of that are important right now), they may find solutions that put us all in danger. For instance going in to work even when ill. Or sending their children to go and stay with someone else so that they can go to work, risking their children getting ill.

 

[Sherkeu]

It is my understanding that the generally accepted view now is that everyone, or almost everyone, will be exposed to the virus within the next couple of months. The governor of California said today that they project 56% of Californians will contract coronavirus within the next 8 weeks.

If that's the case, what, exactly, is the purpose of keeping people holed up in their houses? Why would we want to spend extra money to keep them holed up?

That was his reasoning for doing it. The 56% model was based on doing nothing vs mitigation orders.

Still, nothing gets back to normal until outbreaks can be prevented, not just controlled to acceptable numbers. Everyone will be watching for the next cluster to pop up until there is a vaccine. It will be lockdown, and then whack-a-mole for at least a year.

Younger people can work again but the older population will have a very rough year of extreme caution.

 

[Roboramma]

Hey Meadmaker, any thoughts about this?

https://marginalrevolution.com/marg...ge-loans-for-economically-troubled-firms.html

 

[Meadmaker]

Yep.


Yep.

But it may be cheaper here than elsewhere. Grocery delivery was pretty common in Shanghai even before this virus.




That doesn't follow. If it costs more to get groceries delivered, it might make sense not to do it when you have to be careful with your money, but make more sense when you have more funds available.

Moreover, you're supposing that you know that the best thing to fund is grocery deliveries. Another issue is, for instance, taking time off work when you're sick. Or to care for children who can't go to school. If people don't have money for those things (or other things that you and I may not think of that are important right now), they may find solutions that put us all in danger. For instance going in to work even when ill. Or sending their children to go and stay with someone else so that they can go to work, risking their children getting ill.

I don't know if you've been following the news from here, but right now there are 10s of millions of people for whom it is illegal to go to work.

I know that we are trying to get people to stay in their homes, sometimes by force of law. As I wandered around the grocery store on Friday, wondering how many of the people around me were infected, I got to thinking about how we could get rid of that germ exchange spot. This is what I came up with.

 

[Meadmaker]

Hey Meadmaker, any thoughts about this?

https://marginalrevolution.com/marg...ge-loans-for-economically-troubled-firms.html

It's all well and good, but here's a line from it:

so any workers who have been laid off in the past two weeks because of the crisis would be reinstated.

They are missing the point. Totally.

Businesses did not shut down due to lack of business. People still wanted garage doors. People still wanted cars. The economy was booming.

But it wasn't safe to go to work, or in the case of restaurants, entertainment, schools, and similar workplaces, it wasn't safe to patronize them.

They can't reinstate their worker because it is still unsafe to work, or because they are still closed by government decree. What good would a loan be that is conditioned on an action that cannot be taken?

ETA: At some point, we will decide that it's worth the risk to go back to work. Maybe not all at once. At that point, the economy may have gotten kicked in the teeth so badly that we are then in a more classic recession, in which there are lots of people wanting to work, and the only reason they can't is that there isn't money to employ them. At that point, bridge loans make sense, or maybe some sort of stimulus, or something to kick start the economy. I'm referring, though, in this thread, to what we can do right now. Right now, 1,000 dollars in your pocket won't restart the auto plants or reopen the theaters.

 

[Roboramma]

I don't know if you've been following the news from here, but right now there are 10s of millions of people for whom it is illegal to go to work right now.

Yes, I'm aware of that. But there are still others who are going to work. And there are certainly other ways in which people can engage in dangerous behavior that can make this easier to spread.

I know that we are trying to get people to stay in their homes, sometimes by force of law. As I wandered around the grocery store on Friday, wondering how many of the people around me were infected, I got to thinking about how we could get rid of that germ exchange spot. This is what I came up with.

Yeah, I think you're found one major issue, which is people having to go to grocery stores to get food, and thus being surrounded by many other people. It's one of the few things that we have to do that puts us all at risk.

As such, your idea of a targeted solution to decreasing that risk makes sense.

But to the extent that people are motivated to decrease that risk to themselves and others, and I think that most people are right now, having more money available should help them to do so, even in ways that you and I won't think of. That can include spending money on grocery delivery. It might mean alternatives to public transport.

To the extent that people are motivated by other things they might spend that money in ways that actually increase the danger. Like for instance, where restaurants are still open, going out to eat.

But I think people are generally taking the situation pretty seriously right now and are likely to target these funds in a more efficient way than government. Though a combination of your approach and a more broad hand-out style is probably better than just one or the other.

 

[Roboramma]

It's all well and good, but here's a line from it:




They are missing the point. Totally.

Businesses did not shut down due to lack of business. People still wanted garage doors. People still wanted cars. The economy was booming.

But it wasn't safe to go to work, or in the case of restaurants, entertainment, schools, and similar workplaces, it wasn't safe to patronize them.

They can't reinstate their worker because it is still unsafe to work, or because they are still closed by government decree. What good would a loan be that is conditioned on an action that cannot be taken?

I think the point is that the loans would help pay the salaries of workers who can't work right now, until they can work. Those people need to eat and live, and having an income and hope for the future is important during this period, even if they can't actually work for some time. But those businesses also can't afford to pay those workers without the loan.

I'm reading it as the loans doing more than just paying salaries, but that would be part of it. And yes, we'd be paying people not to work. That seems to be necessary at the moment. I'm actually paying some of my staff not to work right now.

ETA: At some point, we will decide that it's worth the risk to go back to work. Maybe not all at once. At that point, the economy may have gotten kicked in the teeth so badly that we are then in a more classic recession, in which there are lots of people wanting to work, and the only reason they can't is that there isn't money to employ them. At that point, bridge loans make sense, or maybe some sort of stimulus, or something to kick start the economy. I'm referring, though, to what we can do right now. Right now, 1,000 dollars in your pocket won't restart the auto plants or reopen the theaters.

But it will pay the rent and grocery bill.

 

[Meadmaker]

I think the point is that the loans would help pay the salaries of workers who can't work right now, until they can work. Those people need to eat and live, and having an income and hope for the future is important during this period, even if they can't actually work for some time. But those businesses also can't afford to pay those workers without the loan.

Ok. So, it's a loan to businesses, conditioned on the businesses using the loan to pay workers who aren't working?

In this upside down world, it might not be a ridiculous idea. But after their employees come back, they owe the government the money they paid the workers when they weren't working? That seems like a mountain of debt for the businesses.

Still, it would be better than throwing money in all directions. However, I still think the best thing is to use money to actually help mitigate the problem, in whatever way we can. I'm glad to see some developments this week on private businesses repurposing production facilities to make masks, gowns, and ventilators. That's a step in the right direction. I think that step could have been taken a month ago, but better late than never.

 

[lionking]

It's all well and good, but here's a line from it:




They are missing the point. Totally.

Businesses did not shut down due to lack of business. People still wanted garage doors. People still wanted cars. The economy was booming.

But it wasn't safe to go to work, or in the case of restaurants, entertainment, schools, and similar workplaces, it wasn't safe to patronize them.

They can't reinstate their worker because it is still unsafe to work, or because they are still closed by government decree. What good would a loan be that is conditioned on an action that cannot be taken?

ETA: At some point, we will decide that it's worth the risk to go back to work. Maybe not all at once. At that point, the economy may have gotten kicked in the teeth so badly that we are then in a more classic recession, in which there are lots of people wanting to work, and the only reason they can't is that there isn't money to employ them. At that point, bridge loans make sense, or maybe some sort of stimulus, or something to kick start the economy. I'm referring, though, in this thread, to what we can do right now. Right now, 1,000 dollars in your pocket won't restart the auto plants or reopen the theaters.

This is not true. Plenty of businesses can keep operating with hygiene and separation protocols. Construction is a perfect example. Buildings can still proceed safely, but it is slowing down. Why? This has nothing to do with health and safety concerns and everything to do with developers, builders and investors holding on to their cash. This is one area where stimulus should be directed, and now.

 

[angrysoba]

This sentiment doesn’t surprise me. Thank goodness it didn’t prevail at the end of WWII where the Marshall Plan helped rebuild the world and usher in decades of almost unbroken prosperity.

Just when we need international cooperation and a global plan, all we seem to get From some is “let’s look after ourselves and the rest of the world can get .......”.

I think you are missing the point. Many people are not going to be happy with businesses that get bailed out with taxpayers' money when those very businesses are structured specifically to avoid paying taxes. Why should they get to benefit like that?

 

[lionking]

I think you are missing the point. Many people are not going to be happy with businesses that get bailed out with taxpayers' money when those very businesses are structured specifically to avoid paying taxes. Why should they get to benefit like that?

Jobs.

 

[The Great Zaganza]

Jobs.

soo... the Government is giving money to Companies so that they can give the money to their employees ...


seems like there is an unnecessary step there - just cut out the middleman.

 

[lionking]

soo... the Government is giving money to Companies so that they can give the money to their employees ...


seems like there is an unnecessary step there - just cut out the middleman.

Not quite (but you know this). The stimulus money goes to the business so it survives and, yes, pays wages. Without the business, yes the government makes welfare payments. The lesser outcome, don’t you think?

 

[Sideroxylon]

No need for government intervention or hand outs. The Free Market God has got this one.

 

[Planigale]

One idea: finally do INFRASTRUCTURE WEEK!

Let anyone who was laid off because of Covid sign up to assist in a vast infrastructure project once the lockdown is over. Start organizing them by skill, see what kind of online job training is possible.

Build the wall?