There's a lot of weirdness lately about people expecting companies to not take the money.
The virus wasn't any company's fault. The choice to respond to the virus by shutting down the economy wasn't any company's fault.
Previous epidemics in human history have been dealt with by simply accepting a death rate that modern society, via government policy, has chosen to not accept. This was an unprecedented response that no business could have predicted.
Why do so many of us view businesses who pay employees as the enemy? Agreed 100% on the fact that many of us on this board got stimulus checks that were later spent on mountain bikes or other luxury items. Members of the privileged keyboard class didn't need them at all. People who work with their hands ought to be pretty pissed off they simply didn't get double what they got while we received nothing.
Not all businesses shutdown. The issue is that a bunch of businesses took the free money who didn’t need it. We made a choice not to take it because we are booming during crisis. The stimulus checks had criteria to receive them and most people who are doing very well did not get a stimulus check. PPP could easily had a requirement that it had to be paid back if sales/rev increased during 2020 tax year. Instead the more likely scenario is that businesses that were most affected by covid will have to pay back the loan because their revenue fell to 0 and they had to cut employees. This money isn’t free, it is added to our national debt.
There's a strong case to be made that, given our position as the world's reserve currency (without any clear challenger) and our dirt-cheap borrowing costs, the national debt is pretty close to free money. It's not like we're ever going to roll up our sleeves and pay it off, or even down. We'll just inflate it away. I'm not arguing for unrestricted spending, but a couple trillion to avoid economic collapse, borrowed at effectively 0% interest, seems like a deal worth taking.
The issue with this line of thinking is that it doesn't end...until it does. Neither you nor I will likely be alive, but our children may very well be :/
I'm not arguing for unrestricted spending, but a couple trillion to avoid economic collapse, borrowed at effectively 0% interest, seems like a deal worth taking.
Would it be better to let the city burn down today because we're worried about a water shortage in 100 years?
> We made a choice not to take it because we are booming during crisis.
What's strange about that is that there were/are so many unknowns. Sure, you could be booming, but what if the unexpected strikes and you are suddenly not booming due to yet another unforeseeable event? The worst estimates were that millions would die and we'd be heading into an era that would eclipse the great depression.
As prepped as you were, and as well as you were doing — taking every opportunity to add layers of resilience would seem like the smart thing to do, especially when you've got employees with families, customers that depend on you, etc.
I agree with this. Any argument about moral hazard is out the window. Any argument about this being like “too big to fail” is misapplied. Banks in 2008 created the crisis and their risky loan portfolios and balance sheets. No company created Covid or state shutdowns. Let’s come together with a spirit of generosity and cooperation. Not petulance and resentment.
Those things didn't cause covid, but they did cause the companies to be unable to handle the crisis. The outrage is mostly centered around companies who are wildly profitable and/or spend tons of money on stock buybacks and dividends instead of planning for an inevitable disaster.
Look at this: in 2019 Delta Airlines spent around $2b buying their own stock [1]. They also spent $300m buying their own stock in March 2020. In April 2020 they received $5b in government assistance [2]. What if instead of spending billions of dollars to improve their stock price, they saved some of that money in case they ever had a crisis to deal with?
It's not like this is the first time the airlines have been bailed out before, either. 9/11 wasn't that long ago.
Valid points. My argument though is that focusing on these types of cases will result in preventing other, more deserving businesses from getting and using funds. When the SBA threatened criminal prosecution to stop companies that are public, highly profitable and well financed from using PPP the real effect was to scare EVERY business and loans stopped almost immediately. I know a few businesses that need funds that chose to go out of business because the owner “didn’t want to go to jail”.
The thing is, if we don’t want to help companies that conduct stock buy backs during times of plenty, then need help during times of famine, 1. The time of famine or pandemic is not the time to fight that battle. Let’s revise stock but back law later. 2. Honestly, no policy can be designed to handle a global pandemic. This is not a normal time. Let’s leave the blame and moralizing for a few years from now.
Stock buy backs used to be illegal. Maybe they should be again. Or maybe only after a company has passed a financial stress test.
The thing is, the more we design the system for these unexpected edge cases the more complicated it gets. Maybe it just be better to have something like FDIC insurance that all companies buy and kicks in automatically.
All the talk about companies shouldn't take the money happened after the fact. At the time the program was publicized as "we're injecting cash, no questions asked, into all businesses". Basically just like the "checks mailed to everyone" done at the same time.
The virus wasn't any company's fault. The choice to respond to the virus by shutting down the economy wasn't any company's fault.
Previous epidemics in human history have been dealt with by simply accepting a death rate that modern society, via government policy, has chosen to not accept. This was an unprecedented response that no business could have predicted.
Why do so many of us view businesses who pay employees as the enemy? Agreed 100% on the fact that many of us on this board got stimulus checks that were later spent on mountain bikes or other luxury items. Members of the privileged keyboard class didn't need them at all. People who work with their hands ought to be pretty pissed off they simply didn't get double what they got while we received nothing.