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Hazard pay in focus as essential workers earn less than the jobless (npr.org)
296 points by coronadisaster 43 days ago | hide | past | favorite | 339 comments



> When she got her unemployment benefits, she realized something unheard of: She was making more money not working.

The temporary COVID unemployment bill was so rushed that they didn’t index the unemployment to the person’s earnings. If you lost your job or had your hours reduced, you get an extra $600/week on top of state unemployment. About half of people receiving this are receiving more from the combined unemployment measures than they did from their jobs.

This is was a necessary compromise to get the relief enacted as quickly as possible. We didn’t have an easy way to implement a more complex unemployment system at a national level, so we compromised with a flat rate for everyone. Unfortunately, many people are misinterpreting this and assuming that unemployment is always this lucrative (it’s not, and the $600/week ends after July) or assuming that our government has enough money lying around to pay everyone this much all of the time (we don’t, this is actually very expensive for the taxpayers).


Our Quantitative easing and corporate bailouts are in the trillions, why would we not pay out significantly less for people who are struggling to find jobs? Why does the till start counting when its normal people affected?


> why would we not pay out significantly less for people who are struggling to find jobs?

The CARES act allocated most of the money to individuals, state and local governments, public health, and education initiatives.

The amount given to large corporations (much in the form of loans that will be paid back) is less than that given to individuals:

NPR has a good breakdown. The idea that corporations are receiving “trillions” in cash payments is a myth. https://www.npr.org/2020/03/26/821457551/whats-inside-the-se... I fully agree that the allocation and lack of oversight around the funds to corporations is not good, but it’s incorrect to suggest that trillions are going to corporations or that more money is going to corporations than individuals under this bill.

Furthermore, you can’t compare loans and measures like quantitative easing to cash payments like that. Giving someone a cash payment and giving a loan to a business have very different actual costs in the long-run, obviously.


That breakdown is missing the trillion dollars of corporate debt that the fed is now engaging in purchasing. Correction: in terms of direct corporate debt purchase, they have currently committed to less than half a trillion dollars of purchases independent of the CARES act. But the breakdown is also missing $210 billion of reduced corporate taxes!

The CARES act is a good attempt at providing fair outcomes for everyone, but that is just one of the things the fed is funding. Take a look at their balance sheet from their own website: it went up over 2 trillion in the blink of an eye and they are not done yet: https://www.federalreserve.gov/monetarypolicy/bst_recenttren...

There are winners and losers in what is going on now, and corporate America is without doubt the biggest winner. By proxy, the wealthiest Americans that are the biggest owners of the financial assets the fed is supporting are also the biggest winners. Since we are accomplishing all this by printing money, those that don't win lose even more because their dollars are worth less. The long-term result on the current course will be even greater wealth disparity between the rich and the poor.

You might have noticed many people complaining about this wealth disparity during the recent economic recovery in which the fed has added almost 4 trillion dollars to their balance sheet (again see the fed's chart).

These wealth gaps historically lead to populism, which gets us our current president.


They have not bought anywhere close to trillion dollars worth of corporate debt. As you can see in the breakdown [0], most of what they are buying is our own governments debt (the same debt used to fund the CARES act) and US mortgage backed securities.

[0]: https://www.federalreserve.gov/releases/h41/current/h41.htm


Sorry, it is hard for me to untangle all this. Some of this money is authorized by CARES, and some is independent action. We are already at a trillion dollars to the largest companies now when you combine CARES and the fed's commitment to debt purchase.

In June they just committed to deploying an additional $250 billion https://www.wsj.com/articles/fed-will-amass-corporate-bond-p...

Add this to the existing billions of debt already purchased and we could easily be at half a trillion dollars of independent fed action to buy corporate debt in a short time frame.

The CARES act also reduced corporate taxes by 210 billion. So There is at least half a trillion dollars not mentioned in articles like the one from NPR.

The CARES act separately authorized 500 billion just to the largest corporations in America. Some of the additional hundreds of billions deployed to "small" businesses is really to large companies as well.

It would be great to get a detailed breakdown of what the fed is doing, I am certainly not doing it justice in my description.


A debt purchase and unemployment are very different things.

Unemployment is money given away to another. It's a permanent giveaway.

A debt purchase is either money that was given to you, that you're now returning (Treasury securities) or money that you're giving to others which will be returned (corporate bonds). It's not a giveaway at all - the net exchange is $0.

These cannot be compared as equivalent.

The tax reduction changes the way loss is calculated to better capture the reality of the economy falling apart in one year, letting losses be deducted from income generated in past years. There's a tax savings, but it's reflective of real loss incurred by business.


> A debt purchase is either money that was given to you, that you're now returning (Treasury securities) or money that you're giving to others which will be returned (corporate bonds). It's not a giveaway at all - the net exchange is $0.

The corporate tax reduction is equivalent to a handout since it won't be paid back. As is the paycheck protection program.

I agree that debt is not a 100% handout, but it is definitely not a 0% either. The fed is not that worried about qualifying its purchases and some of these companies will still go bankrupt: those cases may be 100% handouts. The debt is being purchased at above market rates and inflating prices for the asset so that's still a noticeable percentage of handout for the loans that get repaid.

But I wouldn't assume that corporate debt will ever truly get repaid until I see the fed balance sheet go down. They tried to unload just a little bit last year and the stock market went down so they stopped. We now have 1.9 trillion in mortgage backed securities even though the housing crisis is over and housing prices are back to the levels of the prior bubble.


It's true that bad debt isn't paid back, but in a bankruptcy the investors are wiped out so it would be disingenuous to frame those monies as "corporate bailouts." The funds will have gone to sustaining the business and employing the employees -- not to shareholders.

The tax change isn't a reduction per se, it's a change in the way we account for losses across multiple years. It's also very new -- it's removing a new carryover rule that was added in 2017. I think it's also disingenuous to frame this as a reduction as the losses would be carried forward anyway. It is, like most of the other "corporate handouts," more of a shift in when the money is paid rather than a change in the amount.


It's a bad outcome to temporarily sustain zombie businesses even if you stop shareholders from benefitting.

Thanks for the correction on the corporate tax reduction.


I agree that a business folding is a bad outcome. I think the goal is to have the business not fold at all, paying back the investment. Open question how many businesses will ultimately fold or survive -- no way to know yet, right?


Even if the business survives there are bad outcomes. Creative destruction does not occur and moral hazard is increased. I agree that there is a huge benefit to society to avoid a wave of mass bankruptcies, but there are huge costs as well.

Purely from the financial side, another way of looking at this is: if bail outs were really net positive then the private sector would handle it. If the government has to handle it, it is a bail out. Governments almost always lose money on bail outs. Sometimes, like the last one, it is falsely claimed that the government made a profit. It probably lost money [1] and we still have 1.9 trillion mortgage backed securities on the fed's books that are unaccounted for in such claims.

I agree that these things are not a 100% handout, but they are most definitely a bail out.

[1] http://gcfp.mit.edu/wp-content/uploads/2019/02/BailoutsV12.p...


Additionally, purchases of corporate debt are not the same thing as issuance of grants to individuals or companies, examples of which are unemployment benefits or a portion of the PPP small business program.

Historically, looking back at 2008-2009, purchases of corporate debt by the government either turned a profit or lost very little money. The 'bailouts' had aggressive terms and were repaid.

If it does turn into a subsidy, the correct measurement is the difference between what the government pays today and what they sell it for later, or, if it defaults, the bankruptcy settlement value (which in the case of collateralized loans is rarely zero). Not the dollar amount of bonds purchased or money lent.

This year, purchasing of corporate bonds has been focused on investment grade debt. It is unlikely they will experience any significant loss on this.


Buying corporate debt at above market prices is a grant. Stopping your massive business from going under and being replaced by a more agile competitor is oligarchy.


Depending on the situation, the Fed could take on government securities from banks so that the banks may extend more credit to private lendees (mostly companies) without running too low on required reserves. This balance sheet may not reflect what other agreements are attached to the treasury assets in holding.


In case you missed it, the Fed has removed almost all reserve requirements.


> These wealth gaps historically lead to populism, which is how we ended up with our current president.

Yet our current president is presiding over exactly what you’re describing.

Also, as the other commenter explained, there are several problems with your understanding of the Fed’s operations and what they mean in terms of long-term budget. It’s not correct to compare cash payments to individuals with counter-cyclical quantitative easing.


Can you clarify why it's not a valid comparison?

My lay understanding is that if you recycle your debt at 3%, and now you can recycle it at 1%, that is a 2% "bailout". You quite literally have a lower cost of funds (cost of doing business), and it is artificially low due to government intervention.


They're both handouts, yes. But a $100 cash handout is $100, while a $100 loan at 2% below prevailing rates is $2.

It becomes an invalid comparison when you compare nominal values without making the appropriate cost adjustment (multiplying the loan by 2% in this hypothetical).


This is a good point. It's interesting to note, though, that the fed's balance sheet never really goes down and that today mortgage backed securities are still a huge part of the balance sheet and that the fed is still active in this area even though the MBS purchase program was ended.

We should also note that some of the companies will go bankrupt and the fed is doing little to qualify its loans. So it is not really a loan in the traditional sense (it is a low interest rate loaned handout).

Combining these two together, we have the potential to create a situation like Japan where the government is constantly managing the debt of some of the private sector. The cost on society for this can be much higher than the difference on interest rates shows.


Except that the loans they are making are not $2 below prevailing rates. Many of these businesses are near insolvency and are unable to get loans in the open market. These loans are huge gifts; if they were given by private equity, they would additionally come with a large equity position. When they don't, they are gifts, equivalent to the equity position that isn't taken and the high interest rate avoided.


Right, I suspect that the interest rate differential is higher than 2%. In some cases the businesses receiving loans are insolvent and the loans are effectively non-repayable, i.e. gifts -- but not all.

The true cost is almost certainly somewhere between 2% and 100%.


If the wealth gap gets him elected, of course he’s gonna do the best he can to maintain it.


I doubt this was even considered by him. 4 years is not enough time to make a meaningful impact on this issue. It matters to the party, but not the candidate.


Eliezer Yudkowsky explained it nicely[0]:

This just in! The Fed will allow schools and hospitals to use its $1.5T repo line, letting any school with $1B in Treasuries temporarily exchange them for $1B cash for 3 months. "We have no idea why you wanted this," said a confused Fed. "Are you sure you know what we do?"

[0] https://mobile.twitter.com/ESYudkowsky/status/12388153445353...


> The amount given to large corporations (much in the form of loans that will be paid back) is less than that given to individuals:

Much of the $377b in Small Business PPP money actually went to large corporations like Shake Shack, Ruth's Chris, Kura Sushi. And of the $2.3t, only about 1/4 went to individuals, so it's a bit misleading to paint the picture as if individuals got the lions share here.

Also there are additional benefits to large corporations not reflected in that $500b figure such as $210b in loosened tax deductions for interest and operating losses. https://www.reuters.com/article/us-health-coronavirus-usa-bi...


> The idea that corporations are receiving “trillions” in cash payments is a myth.

Some were more clever in how they got the money:

https://www.youtube.com/watch?v=14Ygl2DiUdQ


> Giving someone a cash payment and giving a loan to a business have very different actual costs in the long-run, obviously.

I want to stress this because many are missing it.

- Money to people = cash gift or grant.

- Money to companies = loan.

Companies have to pay it back, with interest. This also happened during the recession and the US made a hefty profit from it.

I often run into people that think that companies received these loans as grants. This of course makes for a lot of confusing discussions because two people are operating with completely different mental models.


Most of the PPP corporate loans will automatically convert to grants, as long as the funds are spent in a qualified manner, like payroll...that is why it was set up. Are you not familiar with this?


That’s just a less direct way of giving the money to individuals, with the benefit that it facilitates preserving pre-pandemic formal economic relations. The money is still ending up in the pockets of the workers.


What do you think businesses' number one cost is?


>loans that will be paid back.

hoo boy.


The bailout have totally changed my mind on why you should work for a fortune 500 company

Individuals will never have political power like a billion dollar corporation.

If you can rise up the ranks, you get some of this power.

Sure it's a moonshot, but how many self made people make billion dollar companies? You could count them.

I think I'm going to pick a major fortune 500 and leach off it. Even if I hang around there for 30 years, I get profits and tax payers will subsidize the losses.


i've sort of came to this conclusion too. I've spent most of my career in the small biz and startup world. I'm over worrying about the fate of the entire company every hour of the day. I have a family and these days I just want a paycheck that isn't late, a 401k, and PTO. Maybe i'm officially old... or maybe just more wise ha.


My employer isn't public, but is a large insurance company. The issues with working for a large company is bureaucracy and corporate lethargy. Of course this depends on your team, the company, etc.

And while you might have job security, that can be tenuous as well. Really just depends on how savvy you are at promoting yourself and managing up.


The medical insurance is typically really good too. When my fiancé quit her job due to the hazards of working retail it turned out that for only 200 more a month we could retain her insurance and shave 12000 off the cost of having a baby. They pay for IVF too if we need it which is normally a six figure procedure.

Having a baby was otherwise so expensive we weren’t sure we could afford it.


IVF shouldn't cost six figures. When we did it, it was about $12K.


That's about what it cost my friends.


As I commented, we didn't pay that much.

https://www.verywellfamily.com/how-much-does-ivf-cost-196021....

The drugs are separate, but I think we paid around $5K for them.

Now if you're unlucky, you might have to go through multiple cycles, but our specialist only charged us the base cost. We had to pay for the additional drugs however.


That's not a fair comparison. QE are loans that get paid back, and bailouts are equity purchases. The government makes money on these programs.

Stimulus payments are gifts, and the government loses money on them.

To be clear, the stimulus payments are essential for helping people and are a great thing for the wider economy. But you can't compare them dollar-for-dollar, as they are not like each other.


QE is much more than loans that get paid back. The fed's balance sheet actually went up by 4 trillion dollars during the 2008 recovery [1], even though the loan program was less than 1 trillion. Much of QE finances government debt. But the fed also still holds more than a trillion dollars of mortgage backed securities.

[1] https://www.federalreserve.gov/monetarypolicy/bst_recenttren...


Government debt and MBS are loans that are continuously being paid back.


Yep - and the US government actually MADE money on the MBS it bought.

People who are angry seldom take the time to understand how finance works.


That's 1.9 trillion in MBS on the balance sheet now. It seems like you have counted those eggs before they have hatched! If we could really make money on these we would get them off the balance sheet, but that is proving to be impossible to do.

I guess you could argue that we're making money, but that's only because we get to print money to buy these for free and de-value everyone else's dollars.


It's not really surprising, that the same dumb accounting mistakes that got all these "2B2F" banks in trouble in the first place, are also made by their ardent fans on HN. GP is the same joker who dismisses people as "angry" and "uneducated" elsewhere ITT, but doesn't actually have any idea what happened. Reading Timmy Geithner's book doesn't help...

https://www.rollingstone.com/politics/politics-features/2008...


Do you think the government will get paid back for buying junk bonds from companies likely to go bankrupt?


Bond holders are high on the ladder in terms of who gets paid if a company defaults. For the few companies that do go completely insolvent they will still receive most of the principal back


Yeah, probably. They won't necessarily get all of the principle, but with the equity holders wiped out, there's probably enough to divy up.


When was profitability added to governments' remit?


The government is not chartered to make money, but that's frequently a side effect of lending and equity. You can see the numbers here from the last bailout:

https://projects.propublica.org/bailout/

The government handed out $634B.

The government recouped $390B + $364B = $754B.

So, $120B profit. Again, I'm not saying we should bailout corporations and ignore the little guy. The stimulus checks are critical. But you can't compare them dollar for dollar.


It's not profitability for profitability's sake. It's a positive number on a budget balance sheet. At the end of the day, they have some kind of budget to spend on stuff. The sum of the expenses has to fit the budget. If this comes out as a net positive, they can spend more elsewhere, like on unemployment benefits or schools or whatever else they're planning to need money for in the future.


> The sum of the expenses has to fit the budget.

Is this actually the case? They have a money printer. What’s the problem with using it, as long as inflation stays low?

I mean, I suppose technically seigniorage is part of the budget but then your statement is just a statement of definitions, not an insight.


Because bailouts (usually) make the government money in the long run. They're in the form of low-interest loans, they aren't just handing out money to corporations.


Do you think subsidizing the poor enough so our economy doesn't have to choose between immediately collapsing and killing the poor wouldn't save us an enormous set of costs?


I absolutely think we should do that. The problem is it's extremely hard to quantify that cost/gain, while its extremely easy to quantity the cost/gain of low-interest loans.

Not to say its impossible, or that we shouldn't try--we should. But when you have a bunch of senators arguing, it's easier to point to the easy numbers.


Why do we need to quantify it?


Because we shouldn't spend tax money on solutions that show no gain or make things worse for the country as a whole.


We spend tax money to make the nation worse all the time already, why does it matter now when it’s for helping out poor people?


Last 75 years of foreign & drug wars: https://i.redd.it/b4rgt6ovw7k31.jpg


Is it really that difficult to quantify or is it that the government doesnt want to do the work of quantifying it?

I think you said it yourself with your comment about senators arguing. The root cause is an overall lack of political will, not any technical or logistical impediments in modelling impact.


It's less political will than not having simple competence in any arena other than the political that got them there. Throwing gobs at cash at a broken system is what keeps Congress employed. If we had an unemployment system that didn't try to use "one size fits all" numbers, required two minutes on your phone to get enrolled, and two minutes on the employers' part to verify your application, then we wouldn't have have need of a significant number of government employees, and Congress's role wouldn't exist to posture about caring, but instead to simply fund a functioning system simply needed cash.


> It's less political will than not having simple competence in any arena other than the political that got them there.

The U.S. Census, GAO, and various other bureaucratic organizations (USDR, EPA, etc), all seem to be quite competent when it comes to performing studies and gathering data.

So is the IRS, Department of Defense, etc.

Of course there are lots of problems, but the U.S. Federal Government has plenty of agencies able to competently perform some sort of study.


It probably would. But solving that problem is significantly harder than putting out loans to large companies that employ thousands of people. If the airline industry collapsed, many other things would've followed. Certain industries are absolutely essential infrastructure to the economy and cataclysmic events can have massive ripple effects.


Whatever happened to doing worthwhile things because they're hard? Do you know how hard it is to have to quarantine yourself from your family because you've been deemed an essential worker, while getting seemingly nothing in return? Do you know how hard it is to live with the guilt of even possibly infecting others with COVID?

Clearly, the current administration puts corporate profits over the lives of Americans. Clearly, the current administration is allergic to hard work. Hopefully, Americans can send the message in November that there's no room in our government for people like that.


> Whatever happened to doing worthwhile things because they're hard?

People realized that was idiotic? Don't celebrate that someone accidentally did something worthwhile for a terrible reason. Target your efforts at doing things that are worthwhile, not at doing things that are hard.


>People realized that was idiotic?

This

>Don't celebrate that someone accidentally did something worthwhile for a terrible reason.

Doesn't track with this.

>Target your efforts at doing things that are worthwhile, not at doing things that are hard.

I think you're missing nuance.

I say, condemn those who lazily do the easiest jobs that don't interrupt their sleep at night.

Rather, we should all be trying to make the greatest positive impact within 40 hours of work a week. Those who do more are being taken advantage of one way or a dozen. Those who do less are taking advantage.

By setting a floor and a ceiling we limit abuses on both sides and,hopefully,better distribute labor.

Also,doing things that are hard for the sheer sake of it is not idiotic. It can be a positive characteristic, just like avoiding difficulty is a negative one.


Like others have said, I think you're missing the point. In the past we've done something specifically because it was hard (going to the moon) but it would be a controversial statement to say it was done accidentally or for a terrible reason. For example, the state of computer science wouldn't be nearly where it is if it wasn't for going to the moon specifically because it was hard.


> In the past we've done something specifically because it was hard (going to the moon) but it would be a controversial statement to say it was done accidentally or for a terrible reason.

I don't think it would be especially controversial to say it was done for a terrible reason. We didn't do that specifically because it was hard; those are just words from JFK's speech. We did that because the Soviet Union had beaten us to putting a man (and a satellite) in orbit, and we thought it was crucially important to beat them to something related.


And in the resulting flurry of science that came from JFK's speech, we got many amazing and good things. The easy thing to do is say "space doesn't matter" like many countries have chosen to do. We did it even knowing it was hard, because the benefits outweighed the difficulty.

What is "terrible" about advancing science and putting humans in space?


> What is "terrible" about advancing science and putting humans in space?

Neither of those was a reason for the project.


The real reason were not terrible either, neither were they accidental.


Yes, the real reason was in fact terrible. Doing something because you feel pressured to win a race against another country is a really bad reason to do that thing.


I’d love to send that message but the other team seems dedicated to throwing the game. Biden is garbage


There's more than one election. There's also the entire house, a third of the senators and perhaps local elections as well.


You’re right and I absolutely will be voting. I actually regret my earlier comment it didn’t contribute to the discussion.


The loss of jobs and income is going to have cataclysmic cascading effects, worse than if a few large companies had gone under. It hasn't even started yet.


Can you elaborate/link?


What's there to link or elaborate? Look at the number of people applying for unemployment (I looked it up for you [1]). With a record number of people on unemployment and no real end in sight to the pandemic, something has to break.

Basically, it doesn't matter how quickly we re-open if people don't have any money to spend, don't feel comfortable spending, and aren't leaving their homes.

[1] https://tradingeconomics.com/united-states/unemployment-rate


Bailouts usually make the government money in the long run if you ignore the costs.

Let's say the market rate for a loan like this is 4% and the government is loaning at .5%. Sure, the government has "made" .5% (less any defaults), but by any realistic understanding of what's going on, they lost 3.5%.


The government goal isn’t to pursue good investments at a market rate. They are trying to prop up companies that investors don’t want to touch because of their current risk of failure. Spending some money now to keep a company in business can pay off in the long run, for example saving money on unemployment.


I absolutely agree, the government can certainly have other goals other than making good investments.

But don't muddy the waters by saying that they are making money on the program if they're giving below market loans. They might have good reasons to do it, but they're not making money on the deal.


They are making money though. The government doesn't make money for the government. It's not like a corporation. The government makes money for the country. Saving existing institutions from collapse during a disaster tends to be a very good investment for that.


When the Fed creates $xxx billion it "makes" money. The real question is whether the Fed bought something worthwhile.

The fact that a market coalesced around the asset isn't that significant because the Fed can't withdraw from the market now without watching prices for the asset collapse.


The point of my argument is that the government can save money by keeping a company from folding. Having a bad return of a couple hundred million is better than a loss to society of larger proportions. My point is to avoid the whole, a penny wise and a pound foolish, thing.


These companies have no penalty for firing people after receiving bailout money.


Well, pretty much all the bailout money requires that the business not fire anyone (or re-higher anyone that they did fire). For example, thats how the small business portion of the CARES Act worked.

The recent airline loans/bailouts require maintaining the same staff until September 30th.[1]

I would imagine that there will be layoffs once that requirement expires.

[1] https://www.businessinsider.com/airlines-coronavirus-bailout...


Whether you read the statement as malice cloaked in corporate doublespeak, or simply following the rules that were laid out, there's no need to imagine. United, at least, has already warned that layoffs will happen October 1st.

"""But the challenging economic outlook means we have some tough decisions ahead as we plan for our airline, and our overall workforce, to be smaller than it is today, starting as early as October 1."""

-Oscar Munoz, Chief Executive Officer, and J. Scott Kirby, President,

https://hub.united.com/united-message-munoz-kirby-2645729257...


So the government is just punting on problems, again?

Serious question. I fail to see how bailing out mismanaged companies is worth more than an equivalent sum straight to people. Companies can be nationalized if they're essential. Can't raise the dead. Can't squeeze blood from a stone.


I don’t support bailouts of mismanaged companies, and I do think that sending money directly to the people helps substantially. A company not doing well during COVID-19 isn’t necessarily because they were poorly managed. Giving people money, and also keeping companies afloat helps on two fronts. People can survive now, and people still have a job to walk back to once this is all over.


Of course bailouts from the Fed "make" money. When the Fed increases its balance sheet by $2T, it "made" $2T. Indeed if it devoted the entire bailout to buying paperclips or Renaissance art, or S&P500 common stock, the prices of those things would go up (or go down less). However, the question is whether the Fed is buying things that are in the public interest.


>They're in the form of low-interest loans, they aren't just handing out money to corporations.

This is false as related to the PPP loans ($700B program, to put that in perspective during the 2008 financial crisis law makers passed an $800B stimulus to prevent total financial collapse). Its argued the banks paid that 2008 money back with interest (I won't touch that claim), but the PPP loans ($700B) are intended to be forgiven.


>>> Our Quantitative easing and corporate bailouts

>> Because bailouts (usually) make the government money in the long run. They're in the form of low-interest loans, they aren't just handing out money to corporations.

> This is false as related to the PPP loans

GP was comparing unemployment to QE and "corporate bailouts". Forgiveness of PPP loans is contingent on keeping staff on payroll and salary levels constant. So it's very much targeted at helping main street. In this sense, the intended use of PPP loans was closer to augmenting unemployment than a corporate bailout.

To the extent that PPP loans have actually gone to small businesses, my impression is that that's mostly worked out -- it's basically unemployment without the lack of employment. To the extent that they haven't, the federal government should find a way to retroactively claw back abuse and/or exclude abusers from future rounds of assistance.

BTW, worth noting that the PPP loans aren't really a handout if they're not paid back; their interest rate of 1%. Rates of return on fixed income are super low right now.


>Forgiveness of PPP loans is contingent on keeping staff on payroll and salary levels constant. So it's very much targeted at helping main street.

Helps main street? Businesses just got free money from taxpayers. Sure for the forgiveness you have to spend 75% on payroll, in many instances what the amounts to is a business owner paying themselves 8 weeks of salary with taxpayer money and then that loan being forgiven. In the instance it actually goes to employees, again taxpayers basically just paid for 8 weeks of your payroll (these helps politicians by keeping unemployment numbers artificially low for 2 months, and keeping people off the temporary Covid unemployment benefits), the jury is still out if any of these employees will remain employed after 8 weeks (or we will see unemployment again be flooded with millions of applicants, only the extra $600/week won't be there).

>my impression is that that's mostly worked out

Its as much of a scam as the NINJA (no income no job applications) were leading to the financial crisis, people just formed businesses made up salaries and got a free 8 weeks of said salary (up to $100k salary). Or the fact that law makers and their families have specifically been exempt from any ethics review for conflict of interest, and in some cases law makers set up brand new companies just to obtain PPP loans.


> again taxpayers basically just paid for 8 weeks of your payroll

Sorry, I don't really understand why this is a problem. The alternative would be laying those people off and paying them via unemployment anyways, right? The idea was to keep people tied to their employers and keep otherwise productive businesses in tact in order to enable a quicker recovery. Digging into today's jobs numbers confirms this was largely successful: the bounce in employment was mostly ended furloughs.

> people just formed businesses made up salaries and got a free 8 weeks of said salary

Now you're just making shit up. Businesses had to exist prior to February 15, 2020 and the amount received is computed based upon payrolls from Jan 1 to Feb 15 2020. If people are doing this, they are putting a lot of effort into intentional fraud and are 100% going to end up in jail.


>Sorry, I don't really understand why this is a problem. The alternative would be laying those people off and paying them via unemployment anyways, right? The idea was to keep people tied to their employers

If the alternative was laying people off, that is the free market at work. And there is no "keeping employee tied to their employers" as you claim, it is just free money to businesses for 8 weeks of payroll (+25% extra for non-payroll expenses like rent - so taxpayer paid rent for businesses, where is the taxpayer paid rent for taxpayers?). There is no promise or guarantee business will keep employees or even remain open beyond that 8 week period.

Finally, and most importantly, you touch on it:

>paying them via unemployment anyways, right?

Yes, this was about: 1) free money to businesses and 2) hiding the real unemployment numbers.

It was not about employees, if it was there are much better ways to go about it. At minimum law makers wouldn't have been allowed to pass the bill, create a brand new business, and obtain PPP loans for these new businesses (which would normally be prohibited, but both law makers and their family were excluded from these prohibitions against conflict of interest)


> that is the free market at work

The economic shock was caused in part by a government-imposed shutdown of economic activity in response to a pandemic.

> There is no promise or guarantee business will keep employees or even remain open beyond that 8 week period.

Which is why another aid package will probably be passed in July. The initial aid package was not intended as a one-time fix. Even as the legislation was being drafted, its key sponsors were stating that a follow-up package would be required in the summer.

> At minimum law makers wouldn't have been allowed to pass the bill, create a brand new business, and obtain PPP loans for these new businesses

Again: businesses had to exist prior to February 15, 2020 and the amount received is computed based upon payrolls from Jan 1 to Feb 15 2020. If people are doing this, they are putting a lot of effort into intentional fraud and are 100% going to end up in jail.


>The economic shock was caused in part by a government-imposed shutdown of economic activity in response to a pandemic.

No, the economic shock was caused by businesses being over leveraged and not having cash reserves. I keep hearing how this was the greatest economy the World has ever seen, how good could it really be if businesses are existing paycheck to paycheck?

>Which is why another aid package will probably be passed in July.

Exactly why taxpayers and not businesses should have received the lion share of the bailout funds.

>businesses had to exist prior to February 15, 2020

Look up shelf corps or ready corps. There is rampant fraud with respect to the PPP loans, including by law makers, none of them will end up in jail.


> No, the economic shock was caused by businesses being over leveraged and not having cash reserves.

A lot of these businesses didn't have much cash reserve because they were launched by ordinary folks and operate in industries where the profit margins are razor thin. If you're running the local pub, there's simply no opportunity to build up capital reserves that can survive a several-month-long shutdown. Even cutting payroll down to a minimum, rent, utilities and minimal maintenance is expensive.

I don't think there's a reasonable argument to be made that wiping out the current owners of bars, coffeeshops, garages, gyms, etc. is going to result in more resilient or more competent locally owned businesses in the long term. I just don't buy that there's a massive amount of well-capitalized individuals ready to run bars/coffeeshops/garages/etc. better than the current owners.

That said, there is a critical mass of super well-capitalized and competent restaurant/bar/coffeeshop management machines, which can take over if all those local businesses fail.

The effect of the policy you're suggesting would be the walmartification of the last remaining outposts of local ownership in most economies.


You're partially correct. The PPP program is meant to be at least partially forgiven, but only businesses with under 500 employees qualify for it in the first place, and the loan has requirements for which it can be used for [1].

The airline bailout was apparently complex and not all of the info seems to be public [2].

[1]: https://www.paulhastings.com/publications-items/details /?id=7b8f1b6f-2334-6428-811c-ff00004cbded

[2]: https://www.nytimes.com/2020/04/14/business/coronavirus-airl...


That's for small businesses, not corporations.


Some of the bailout loans might break even, but this is only some of what is going on. The paycheck protection loans get forgiven and are essentially just handing out money (with the caveat that it goes to labor costs). We also handed out $210 billion in tax cuts which is just a handout.

On the whole the fed's balance sheet actually went up by 4 trillion dollars during the 2008 recovery [1] even though the loan program was less than 1 trillion. There is a trillion dollars of mortgage backed security purchases there that are a less visible bailout. The fed has already added 2 trillion this time with more to come.

[1] https://www.federalreserve.gov/monetarypolicy/bst_recenttren...


In 2008, the US Gov't made hundreds of billions on the bailout loans they gave.

Let me make that clear. Whenever people say "Wall St was bailed out by the taxpayers", they don't understand finance well enough to know that the taxpayers actually earned a significant PROFIT from that bailout.

...and naturally the media doesn't report on that important detail.

"socialize the losses, privatize the gains" is a slogan based on complete ignorance.


MIT Distinguished Professor of Finance, Deborah J. Lucas, who is also the director of the Golub Center for Finance and Policy would disagree with you: http://gcfp.mit.edu/wp-content/uploads/2019/02/BailoutsV12.p...

She's done research and cites evidence. You CAPITALISE basic terminology to patronise people out of wanting to challenge you.


Since at least some of those companies were insolvent, the US taxpayer would have been better compensated if the companies had been nationalized instead. Wiping out the existing shareholders avoids moral hazard in the future as well.


Nonetheless, bailouts come with the social cost of increasing market concentration and moral hazard.


That's a horrible bar to be deciding who gets a bailout. By that logic, perhaps he should eliminate the safety net because handing out money to poor people isn't "profitable".


> Our Quantitative easing and corporate bailouts are in the trillions, why would we not pay out significantly less for people who are struggling to find jobs? Why does the till start counting when its normal people affected?

Seriously, this is just bleating, tired banker/cronyist narrative we've always seen when the Economy blows up like in 2008; there are billions/trillions for Bankers destroying the economy but if that is re-directed to the People who have lost their jobs because of State incompetence hell breaks loose--I worked in Culinary so I'm one of those, but I have a diverse skill-set so I can pivot unlike mnay of my co-workers. Also, I've been immersed in the Hong Kong struggle since 2014, and when this mystery pandemic kicked off in mid-January and the CCP was forcing borders open there and dissappearing journalists, citizens and punishing physicians I knew the spread was going to happen if all nations didn't contain it as China was not going to. Flash forward to February and the CCD did this despite what was coming out in PUBLIC MEDIA:

https://www.dallasnews.com/news/public-health/2020/03/02/cor...

https://ktla.com/news/nationworld/wuhan-evacuee-released-fro...

Hong Kong was already quarantining by mid Janurary and their economy and the protests started to decrease due to the influx of Mainlanders invading HK and overwhelming the Medical Industry.

The fact that this spread throughout the rest of the World was an inevitability as travel remained, I was personally in San Antonio when they released those people from Wuhan on my way back from Boca Chica headed back to Colorado.

This is State incompetence at its most extreme sense and should be just as a stark wake up call as Police Brutality was for Society; the fact is this is a scale issue, not an individual party one should not be ignored. There was no way anyone would accept a shutdown of the Economy of any significant size,or even on a logistical level even when they were gawking at Wuhan leaked videos in early January and commenting on Social Media about it.

The only ones that did were small city-states like Hong Kong, Taiwan and larger island nations like New Zealand and South Korea who are on constant alarm due to N. Korean and CCP interference and constant missile alarms so knew how to mobolize when needed--a very undesirable.miserable thing when you realize the SK population is 41 million, or roughly that of California.

In summary: some would have you believe that the People, especially those who have had their Industry and entire Life's work destroyed, don't deserve to have financial support but are often those who pay the most in real terms for the ever increase in taxes/cost of living.

But God-forbid the Jamie Dimon's or Lloyd Blankfein's of the World go without their corporate welfare. F-them, seriously: even when Dimon/JP Morgan came out in support of Bitcoin I only hoped he gets his much deserved comeuppance soon.


> The temporary COVID unemployment bill was so rushed that they didn’t index the unemployment to the person’s earnings.

No, it was a deliberate choice to make total benefits bump up to approximately full earnings at a low-but-not-quite-bottom-barrel working income with common state formulas while providing (proportionate to income) less benefit to high income workers (presumed to, when working, have greater surplus income.)

That at the very low end this meant that benefits would be above usual working income was known, but considered by supporters to have limited moral hazard since it required involuntarily becoming unemployed to qualify and unemployment was (and remains) high so that most people with it wouldn't be able to get new jobs anyhow, because of propensity to spend at the low end, the extra income was also viewed as general stimulus as well as individual relief.

It was also controversial from the beginning, with the Right raising moral hazard arguments that it would encourage people to become and remain unemployed, as if that were an option for most recipients.

> or assuming that our government has enough money lying around to pay everyone this much all of the time

Federal spending doesn't come from money laying around, in the first place, it comes from money the government decides to have because it wants to spend it. Even if you buy into the mythology of the fisc, marginal spending comes out of borrowing at, typically, very low interest rates (currently, IIRC, at negative real interest rates), not


>It was also controversial from the beginning, with the Right raising moral hazard arguments that it would encourage people to become and remain unemployed, as if that were an option for most recipients.

I don't get it -- you're talking like the concern was dubious, even as we see that prediction came exactly true.[2] And yes, not seeking re-employment, or not asking to return to work is an option; see all the stories about employers being unable to get employees to return to work because they'd take an income cut [1].

And, to be sure, that may be the desired outcome, that people stay away from work while receiving some income, so as to mitigate the epidemic risk, while preserving financial security. That's a fair argument to make. But the moral hazard concern was 100% correct, that it would layer on an extreme disincentive to work that overcorrects well beyond the incentives we might actually want.

>Federal spending doesn't come from money laying around, in the first place, it comes from money the government decides to have because it wants to spend it. Even if you buy into the mythology of the fisc, marginal spending comes out of borrowing at, typically, very low interest rates (currently, IIRC, at negative real interest rates),

It's true that the federal government can borrow on favorable terms and so it's probably prudent to borrow now for epidemic mitigation -- especially at negative nominal rates! -- but that doesn't make it "myth" that the federal government is not some infinite pot of real resources that will be able to indefinitely cover these expenses; eventually they have to hit a wall. We can debate where that point will be, but it's not mythical.

[1] https://www.newsweek.com/baltimore-restaurant-owner-cant-get...

[2] Even on HN, it was like pulling teeth just to suggest this was a real effect to worry about; see this thread where I tried to point out the effect: https://news.ycombinator.com/item?id=22640082


Is there a number for the "real resources" you note? What is the limit and who's keeping track?

Also maybe the issue is the sad state of low-income jobs, and the lack of hazard pay continuing to encourage people to risk their lives. Again, risk their lives, because the pandemic is NOT over. "Come back for low pay, no medical benefits and be at serious risk of dying or being maimed yourself, or infecting a loved one." It's kinda gross that is not considered the real moral hazard here.


>Is there a number for the "real resources" you note? What is the limit and who's keeping track?

Why do you ask? I was just making (what should be) an uncontroversial point that there's a bound at all, because someone was dismissing all concerns of affordability of any program on the grounds that:

>>>Federal spending doesn't come from money laying around, in the first place, it comes from money the government decides to have because it wants to spend it.

i.e. trivializing those concerns the federal government can (in several senses) print money. So why the extreme scrutiny and demand for rigor? Is it that bad to concede this very minor point? Remember, it allows that we could have plenty of slack to cover situations like this, just that you can't totally dismiss the concern because of a complex variant of "lol money printer go brr".

>Also maybe the issue is the sad state of low-income jobs, and the lack of hazard pay continuing to encourage people to risk their lives.

I think I addressed that:

>>And, to be sure, that may be the desired outcome, that people stay away from work while receiving some income, so as to mitigate the epidemic risk, while preserving financial security. That's a fair argument to make.

But either way, we shouldn't be creating situations in a position where working more reduces your net pay.


I am asking about your note on "real resources" because you seemed to indicate this is a limiting factor, but if you can't quantify or know where the "real resources" limit is, then it's not a very good argument. Like how do we calculate the relationship between the funny money we print and the real resources it's tied to? I don't think they're coupled at all.


Mitigating a real problem requires real resources. Printing money does not give you infinite access to real resources. Thus, there is a bound to what real resources you can apply to a real problem by printing money.

What's so controversial here?


It sounds like you're talking about inflation? I don't think we're near any limits on stimulus as far as inflation is concerned. It does not look like inflation is increasing at the moment, likely decreasing. We could likely continue to push out consumer stimulus until inflation percentage exceeded what we'd consider above normal year over year.


Yes, I am -- that's what happens when you try to use the money printer that currently works and scale it up to unbounded resources (eventually).

And again, it sounds like you're agreeing with the point that I'm making. We can disagree about when it will be a problem, but you can't just trivialize the very idea of any mitigation effort being unaffordable because "we just print the money anyway, so affordability is meaningless", as the original comment was effectively arguing.


Has anyone said we needed unbounded stimulus? I don't think so. However, there are certainly economic theories around those ideas though, such as UBI, so I would not say that it's infeasible for a country to continue to run in such a fashion.

That said, given our current economy, inflation is not a concern. If you are concerned about real resources, such as human lives, then that is basically what we're exchanging right now for hypothetical inflation prevention at some unknown point in the future. We have a very real physical threat now versus a potential economic threat in the future. How many lives are worth preventing a few fractional percentage points of inflation?

Also the economy running without restriction right now greatly inflates medical costs, and overwhelms real medical resources. We're kind of in a catch-22, as the medical system cannot keep up in areas that try to fully open the economy, and that just aggravates losses of "real resources"(human lives). The economy is hitting medical limits before inflation is anywhere near a concern.

Affordability and inflation is murky. Even how we measure inflation is iffy. Cost of living varies greatly by region. There are subsidies obfuscating the real cost of goods. Tons of money has been spent on worse things. It just seems penny pinching always comes out when it comes to social programs that help those with the least to gain, and most to lose from the situation.


>Has anyone said we needed unbounded stimulus?

Somebody dismissed the very idea of there being limitations to our ability to pay for stimulus, yes, which was why I originally entered the thread to address this excessive dismissal:

>>or assuming that our government has enough money lying around to pay everyone this much all of the time

>Federal spending doesn't come from money laying around, in the first place, it comes from money the government decides to have because it wants to spend it.

I said so at the time, and all the other times I referred back to that claim when you asked. Sorry, but I think I'm past the point of diminishing marginal returns here.


The original poster wasn't suggesting unlimited stimulus, the opposite actually, and the person replying to them regarding how federal money is doled out is not terribly far from the mark. If they want to spend the money, they find the money, inflation be damned. It seems way too early to handwring over moral hazards and costs/sustainability of stimulus benefits, when TX and FL are closing back down after their failed experiment.


This money ends in July (or has to be renegotiated), so the moral hazard maybe could apply to a few weeks during re-opening (a rounding error). Or maybe it saves a ton of money for these businesses if re-opening goes south and we have to retreat. If you care about moral hazard you should be frying bigger fish imho.

Also may this finally dispel the myth that servers get made whole with tips. This owner is putting out the numbers, 2400/month is 15/hr, the servers would be making 50%/66% of that so 7.50 to 10 an hour. Minimum wage is $11 in maryland.


>This money ends in July (or has to be renegotiated), so the moral hazard maybe could apply to a few weeks during re-opening (a rounding error).

It applies to the entire time someone could be doing other SIP-compatible work.


Ok so my heart goes out to the 5 possible business owners nationwide who that may have applied to, but that is a completely unserious argument.


Pretty much everyone is capable of working more than one occupational role, and almost always a SIP-compatible one. Where do you get "business owners" as the relevant category? Are you sure you're taking this discussion as seriously as you expect others to?


And in which a SIP-compatible role was open and available, which is probably 5 businesses when unemployment went from 4% to 20%. Moral hazard exists everywhere, especially for people who have known the word longer than 6 months.


>And in which a SIP-compatible role was open and available, which is probably 5 businesses when unemployment went from 4% to 20%.

Pretty much every businesses was offering some kind of SIP compatible role (delivery, remote communication, and socially distanced adaptations). New positions are created and destroyed every day in response to demand. That's how economies work. You can't possibly justify a claim of five businesses.

>Moral hazard exists everywhere, especially for people who have known the word longer than 6 months.

And if it were so obvious, we wouldn't have people being ridiculed for pointing it out early on, or being surprised today at the result of the incentive structure.


>[1] https://www.newsweek.com/baltimore-restaurant-owner-cant-get...

"I can't get my employees to come back because that would mean they would be making less money. I can't envision any solution to this problem"

If an employer wants employees to risk their lives as the quarantine lifts and the second wave continues to spread, they need to offer more money.


You're missing the problem. It's that they lose the unemployment by coming back to work. Even if they were paying (any reasonable definition of living wage plus hazard pay), the unemployment payment structure still disincentivizes them.

It means their pay would have to be some $600 over and above the regular amounted needed to compensate for the inconvenience and utility of work. So they're effectively "taxed" at over 100%. At that point, it's not the employer's fault for not offering enough.

At the very least, they could just make it so that unemployment (i.e. same logic as behind the UBI -- have social benefits, but don't [significantly] contract them as you work more).


> they didn’t index the unemployment to the person’s earnings...we didn’t have an easy way to implement a more complex unemployment system at a national level

This wasn't an oversight or logistical concern [1].

[1] https://www.washingtonpost.com/nation/2020/03/26/coronavirus...


From your own article: >President Trump and Treasury Secretary Steven Mnuchin worked to convince those senators that the universal $600 unemployment boost would be more efficient than varying supplements by income because that would require the federal government to administer funds through a patchwork of state-run unemployment programs, The Washington Post reported.


The point made above is that this was a well-known aspect of the supplement. That the executive had other reasons for pushing the bill anyways doesn’t change that.


Isn't the point to get people to stay home?

"I'm making more doing what I'm supposed to be doing" seems like a good approach, not a side effect of rushed legislation.

Aren't you also not eligible for this unemployment if your work has reopened? You only get unemployment if you're willing to work.


I think the point of the $600 was to keep the economy from seizing up, and keeping people at home was a side effect.


> this is actually very expensive for the taxpayers

Uncle Sam has long since stopped paying for things with tax money. Any new expense is handled by borrowing or printing money.


Isn't printing money when you're short risky economically? My high-school history was a long time ago, but this is what Germany did post-WW1 and it ended in people bartering the family silver for the essentials.


Firstly, it's only somewhat true; look at this graph https://tradingeconomics.com/united-states/money-supply-m0 and note that it's not zero indexed. The raw money supply has doubled .. with surprisingly little effect on prices and wages.

Secondly, people get confused between extension of credit and money printing. For that you want the separate measure "M2".

Thirdly, the real lesson of the hyperinflation crises of Germany, Zimbabwe, Argentina etc. is that you can't print oil, gold, or the foreign currency needed to buy them. Germany was paying a huge amount of reparations to France (which would be where the family silver ended up - 20 billion goldmarks was paid, which had to come from somewhere).

The United States is in a hugely privileged position. It has enough domestic oil and food production for its needs. The gold standard is no longer relevant. Inflation and interest rates remain low.

If you imagine a dial with a yellow warning at "8" and a warning redline at "9", the US is currently arguing over whether turning it from 1 to 2 is going to be the end of the world. The limit does exist, but it's a long way away.


> with surprisingly little effect on prices and wages.

No one - who's talking at least - seems to understand what's going on with this. It's uncharted territory in a world economic system way more complex than when text books were written.

I have to think fundamental reality must catch up sooner or later, possibly unravelling in a sudden crash.

Then again, I do not understand this!


Much of economics these days is fatally contaminated with ideology, so it's hard to find good explanations. "MMT" (modern monetary theory) is also ideological but has some interesting ideas that might explain this.

Conventional explanations include "price stickiness": wages and prices don't change overnight, they have to be deliberately changed by individuals in the market. And the more technical "transmission mechanism": just as an automatic transmission doesn't immediately convert faster engine RPM into faster road speed, there is substantial lag in the mechanisms by which money production affects prices.

The reverse process was seen round about the introduction of the Brazilian "Real". People had become used to inflation and re-negotiating prices regularly. Swapping out the name of the currency helped reset that in the minds of the public. https://en.wikipedia.org/wiki/Plano_Real

One of the more convincing ideas is that, because fiscal policy is either conservative or only expansionary for high earners, monetary expansion doesn't affect most consumption prices and only affects assets. e.g. house prices and the stock market.


>If you imagine a dial with a yellow warning at "8" and a warning redline at "9", the US is currently arguing over whether turning it from 1 to 2 is going to be the end of the world. The limit does exist, but it's a long way away.

The moment people think a currency is shaky, they get their money out of it and into something else. That leads to a huge oversupply of that currency in exchange markets, crushing exchange rates, and making the prophecy of inflation self-fulfilling. Much like borrowing, the moment people think you need to print money to survive is the moment everything goes to hell.

That being said, I think the fed's policy has been pretty reasonable. Europe and Japan have been more aggressive with monetary policy than the U.S. over the last decade, making the dollar very strong and worsening the trade imbalance.


The US does not generally print money the way Germany did in the early 20th century. While we do perform some small amount of monetary expansion through printing money in the colloquial sense, the vast majority is done by the Fed paying dollars for assets. The Fed will at a later point destroy said dollars when it sells back the assets.


Selling the ~4 trillion created is going to take a while. Though I have reservations about that happening at all. Iirc the last time the Fed tried to unwind their balance sheet the market panicked.


Note the graph of the money supply in the pjc50 sibling post.


dissertation after dissertation have been written on the subject. To me, it boils down to as long as the world sees value in the US dollar, or there isn't an alternative, the Fed can print as much as they want.

It certainly helps that US debt is denominated in its own currency so debt is as much of a burden on the US as the Fed wants it to be.


https://inflationdata.com/Inflation/images/charts/Inflation_...

Seems to me like breaking the gold standard has lead to quite a bit of inflation.

One problem with our view of inflation is that it's compounding...

Now, I think the real reason we have compounding and printing of money is that it's a form of taxation (on currency holders) and it makes government debt cheaper and cheaper each year that passes.


That graph is misleading because you're plotting cumulative inflation on a linear graph rather than a logarithmic graph. The basic issue is that you should expect every 20 pixels to have the same weight, but you feel the impact of inflation as later/earlier rather than later-earlier.

For example, compare 1940 to 1950 with 1990 to 2000. Cumulative inflation rises 110% for 1940-1950 and 450% for 1990 to 2000. But, $1 in 1940 will be worth 57¢ in 1950 (145%/255%), and $1 in 1990 will be worth 77¢ in 2000 (1365%/1775%).

There are two ways to fix this: you could plot yearly inflation, but it's difficult to see long-term trends; or you can plot cumulative inflation on a logarithmic scale, but people aren't as used to logarithmic scales.

yearly: https://en.wikipedia.org/wiki/File:US_Historical_Inflation_A...

cumulative: https://uploads-cdn.omnicalculator.com/images/cpi-inflation/...


understood, but the issue with assuming logarithmic expansion is "normal / desirable" is that it hides the fact that exponential inflation is the same as negative compounding returns on cash. With compounding inflation eventually it will take all of the money currently(today) in circulation just to buy a single loaf of bread.


Sort of, but it's complicated. The us had printed enough money to quadruple the USD money supply since 2008 and there has been no change in inflation.


The measure of inflation is problematic.

We have seen large inflation in stock prices, houses, etc.


^huge ...medicine, college education...


That reduces the purchasing power of dollar holders, who are mostly Americans. It’s another kind of tax that doesn’t offend the proles as much.


I'm not an economists, but I don't think that's how it works.


> Uncle Sam has long since stopped paying for things with tax money.

That’s very disingenuous. Obviously we all know that spending is financed by debt.

But where do you think we get the money to service that debt? We can’t borrow infinitely.


Where do you think money originates? Before dollars are paid to the government in the form of taxes, they are printed by the government.


That was an extremely good thing actually, because it incentivized more people to stay home knowing that they could be financially secure. Slowing the spread of COVID is the goal. Prioritizing means testing in this situation out of some sort of sense of pragmatism is deeply twisted.


That’s a factor, but not the primary.

Remember that PUA applies to normally disqualified workers like gig economy and 1099 workers. No processes exist to process and monitor wage data for these workers. (By design, there’s a reason why Uber, etc uses “contractors”) With normal employees state labor departments have near real time monitoring of employer tax filings and can recapture fraudulent benefits.

States administer the programs, and their ability to pivot their systems ranges from “meh” to “lol”.

End of the day, the moral hazard of letting people pay rent is pretty minor compared to the benefit of getting aid available quickly, etc. Ironically the people in congress worried about the morality of this were/are fighting to keep direct payments to companies secret.


It's not a bug but a feature! It wasn't just that the policy debating was rushed (it was), but it was also that precisely calculating how much you "should" earn is actually a really hard thing to do.

Do you use this years tax return? What if they haven't filed it yet? Maybe last years? Well what about tipped income? What about seasonal workers? What about people who do not typically qualify for unemployment? etc etc etc.

Frankly, it's just easier (from as administrative stance) to sorta throw money at the problem, and sorta hope it all washes out in the end. And since many states are reimposing shut down, it seems prudent to extend enhanced UI for the time being (at least until we're able to safely reopen). People like to bash against the US for "only" giving a one time payment of $1,200, but to ignore enhanced UI as part of the stimulus is intellectually dishonest.

Will this policy cost us? Sure it will! It will likely mean higher taxes (and not just on wealthy people, but certainly they're the place to start) to maintain a stable GDP/debt ratio in the future. But the cost of not doing so and tanking the US economy is almost certainly worth it.


Republicans acctually did try to anticipate this problem with an amendment but Democrats pushed it through. [1]

I don't know how long an amendment would delay the bill, but depending on the time period an argument could be made that this was intentional. Yes, if this was going to delay the bill a few weeks, it probably was just rejected to get it out, but if it would be a few days I think it would be reasonable to consider it.

[2] https://www.vox.com/2020/3/25/21194278/lindsey-graham-corona...


If the Republicans had held up the bill, then Democrats would've pushed on less corporate bailouts. It's the same argument they always have.. who matters more, big business or individuals?


Who consumes the products?


Just to nitpick a bit with language I dont think "problem" is the right word.

The real problem is that the law lets companies pay so many people so little to begin with.

Not saying you necessarily disagree. I think language has a tangible and often unconscious impact on our thought porcess so wanted to point it out.

In America, large companies should be required by law to pay their employees a living wage. Its not OK for working people to be food insecure, unable to save for retirement or their childrens education, etc. Id say that is the root problem.


> The real problem is that the law lets companies pay so many people so little to begin with.

Economists pretty much across the board disagree with you.

If you don’t allow companies to pay market rate for low-value labor, they’re simply not going to hire those people at all. They’re not going to lose money paying $15/hr (or whatever) for a job that only nets them half that.

All a “minimum wage” law actually does is eliminate categories of employment available to people with low skills or ability. You’re not helping those people by unemploying them.


What do economists have to say say about the living conditions, healthcare, lifespan, and overall societal contributions of people paid less than minimum wage? From what you said it seems they're fine with lawless favelas as long as the strawberries get to the markets the economists shop at.

Your position that people are hurt by not having access to what is essentially slavery, because that is precisely what you're advocating for here, hurts people is absurd. Minimum wage laws put a floor on just how much you can abuse your staff. The fact that you don't understand this shows that you take your considerable privilege for granted without even appreciating it.


> the living conditions, healthcare, lifespan, and overall societal contributions of people paid less than minimum wage?

You’ve obviously not grasped the point - these people are not paid “less than minimum wage” - they are paid nothing, zero, because well-intentioned but economically clueless people have decided that it’s not morally proper for low-skilled people to make whatever their labor is worth.

> Minimum wage laws put a floor on just how much you can abuse your staff

No, it puts a floor on who is employable, hurting the least capable people the most.

> you take your considerable privilege for granted

Chastising me doesn’t work - try again with a reasonable economic/utilitarian argument. Thus far you haven’t said anything to suggest you’re approaching this from any kind of reasonable framework.


>they are paid nothing, zero,

Incorrect. Disability, social security, etc are payments. Payments that we all bear when people, rightfully, opt out of this oppressive, toxic, dog eat dog workforce. Or worse, when someone's body is sacrificed for the sake of profits. If you're getting rid of minimum wage you should probably get rid of all social safety nets to deal with perverse incentives.

>because well-intentioned but economically clueless people have decided that it’s not morally proper for low-skilled people to make whatever their labor is worth.

eesh. Let's play out what happens when you treat human beings like livestock, from living memory: We get the company town(1). We get China's foxconn suicides(2). We get slave labor camps (active in China and the United states, like today, right now(3,4)). Then, or concurrently we get death camps for the infirm(5); if we can't hope to pay even a subsistence wage for all labor then how can we possibly allow these parasites to live on, homeless and impoverished, with the ills those kind bring to a civilized land.

>No, it puts a floor on who is employable, hurting the least capable people the most.

That's merely a point of debate, not a fact, as you suggest(6). In light of the cited history I've outlined, I would argue that such an argument is debunked and does not merit further discussion without extraordinary evidence.

In regards to your last statement. What you've arguing for has been tried before, and is explained, with citations, for you to read at your leisure, on the Wikipedia page for minimum wage. I beg that you take a cursory examination of the available history and literature. I would rather like to avoid repeating the bloody mistakes of history.

1. https://en.wikipedia.org/wiki/Company_town

2. https://en.wikipedia.org/wiki/Foxconn_suicides

3. prisoners, many due to racist laws under the guise of paternalism(see paternalism from (1)).

4. https://en.wikipedia.org/wiki/Xinjiang_re-education_camps

5. https://www.hmd.org.uk/learn-about-the-holocaust-and-genocid...

6. https://en.wikipedia.org/wiki/Minimum_wage


This is probably the (unintentionally) funniest comment I’ve ever seen on this site - you don’t have any coherent understanding of the economics of price controls, so you just go on about Communist China and and the Holocaust. Surely at some level you realize this is embarrassing?

> how can we possibly allow these parasites to live on

Private charity is and always has been more effective than government welfare, although the proponents of government welfare would like you to believe otherwise. With the elimination of the rule against perpetuities in the West, the Waqf model would be a superior solution to what we have now.


>This is probably the (unintentionally) funniest comment I’ve ever seen on this site -

I'm glad you're having fun. None of these topics are laughing matters, but, like the insults you're throwing, they're not novel either.

>you don’t have any coherent understanding of the economics of price controls

If you had 'coherent arguments' or citations, you would not lower yourself to attacking me instead of my arguments.

>so you just go on about Communist China and and the Holocaust.

If you'd bother to consider my arguments you'll find that my citations are in fact real world examples of what happens when people with ideas like yours take power.

>Surely at some level you realize this is embarrassing?

yawn if I'm wrong, prove it

If you had cogent arguments you would've made them instead of attacking me and moving the goalposts.

>Private charity is and always has been more effective than government welfare, although the proponents of government welfare would like you to believe otherwise. With the elimination of the rule against perpetuities in the West, the Waqf model would be a superior solution to what we have now.

Debunked(1).

Regardless, if you're just going to keep repeating years debunked tea party talking points I'm happy to keep correcting you.

1. https://www.seattletimes.com/nation-world/private-charity-no...


The fact that you clearly don’t understand the difference between an argument and a citation tells us everything we need to know.


1. You talk as if it’s not a single mom making a dirt-low hourly wage at McDonald’s.

2. I’m curious how what you say applies to countries like Sweden, France, Norway, Germany, etc.


If you want to ignore the moral implications of my statement, go right ahead.


> She was making more money not working.

This has actually often been the case I live, because the social welfare system gas a cut off threshold rather than a sliding scale, so if you have, for example, commute or child minding costs, you can easily make less net than you’d get if you stay on social welfare (for minimum wage to low paying jobs), so there isn’t much incentive for unemployed to seek those jobs. I personally know people who gave up on trying to work because they ended up with only €10 or €20 more per week, while being away from their children.


It wasn't that complicated to index it to salary, there was an amendment proposed but Bernie threw a tantrum and it got rejected.

Meanwhile European nations have suffered much lower unemployment because governments decided to subsidize salaries instead of paying people to stay off payroll, the former being a non-starter in the US given the current House composition.


If there were ever a time to spend, this is it. If people didn’t have to worry about being made whole for the duration of the lockdown, we could have locked down sooner, and much harder, and stood a chance at cutting this thing off at the knees.

Instead, we’ve dithered, and the long term economic damage is looking far greater.


The humane solution would be to give additional money to underpaid essential workers, at least during the pandemic, rather than to give unemployed people less. That's the point of the article.


> assuming that our government has enough money lying around to pay everyone this much all of the time (we don’t, this is actually very expensive for the taxpayers).

If you want to learn more about why this statement is completely wrong, read Stephanie Kelton's new book.

Even based on your own assumptions about "paying for it", the COVID unemployment increases/extensions have a negative cost, meaning they saved Americans more money than they cost. Thanks, Keynes.


The biggest problem with the check was means testing. The U.S. has extremely progressive income taxes, there's nothing wrong with sending the same amount of money to everyone, and it would solve all of the problems except the one where you have to finally explain how taxes are calculated to the public.


And the bigger issue is that correcting this is going to be a new political hammer to hit people with.


Respectfully, I believe you have it backwards and the issue needing correcting is this (quoted from article).

"Few employers have compensated extra for on-site work amid the health crisis. A recent survey by the Economic Policy Institute found that fewer than a third of people who had to leave their homes to work during the pandemic received additional pay or benefits. As U.S. coronavirus cases persist and some states are even backtracking their reopening plans, workers have flooded social media with calls for hazard pay."


I don't have any issue with hazard pay.

The concern is entirely about people being paid more than their jobs to stay home. In some conversations I've had with people, there's an attitude that staying at home is just a giant vacation that they'd like to go on as long as possible.

It's an understandable position as well for anybody who won't see much of an impact from the economic side effects. When people begin asking to extend the stay-at-home-pay program, there are a lot of people who will support the idea of getting paid excessively to stay home and anyone who tries to correct that fiscally unsustainable situation is going to be made out to be the bad guy.

Hazard pay for essential workers makes complete sense.

It's the excessive unemployment for people to stay home that's the problem. For a bunch of people, it's a giant vacation. For others who are working through all of this, they are strained, stressed out, worried about getting sick and their nerves are shot.

All in for hazard pay, but fix the unemployment problem. It's completely out of balance.


I guess what I’m saying is, it’s not just hazard pay. So many people in this economy aren’t paid a living wage to begin with.

In an ideal world I would agree with you. In the world we live in my suspicion is that (not saying this is you specifically) calls to “balance” “excessive” (imho a case can be made for unemployment being higher than ones previous pay - parents for example have to home school now in addition to work - they paid taxes for schools but e kids can’t attend them. One theoretical.) unemployment right now are really just political cover for eliminating pandemic-related financial support for citizens from the federal government entirely.


Those are all good points but I want to emphasize that the root issue is that US law basically allows companies to exploit workers and not pay them a living wage, and as we are seeing now this does tangible damage to our society as a whole.

[EDIT: I encourage downvoters to explain why they downvoted and point out what assertion I make about worker exploitation in the U.S. is not empirically verifiable.]


The Capitalist will always try to cut costs at the benefit of shareholder pockets, especially at a period when workers have the least or close to the least working rights of any western country. The most expensive costs are typically labor. Why do you think they started manufacturing in China?

Can anyone explain to me how you get around greed like that in Capitalism?


Strong unions, and strong contract law, without the current union call for elimination of issues addressed by said unions (minimum wage, health benefits) Problem will be taken care of by individual union contracts locally


Why shouldn't the work go to the one who will do it the cheapest? The are billions of people around the world living in poverty, destitution, and with no opportunity. Globalization has been equalizing labor compensation around the globe, which means that Americans as whole have been averaging down but a great many below the global poverty line have been averaging up.

If Americans laborers want to maintain their economic disparity, there are two paths.

One is protectionism. The biggest benefit of maintaining this ”trade war” is not that we will get a better deal, it's that it add enough uncertainty to global labor arbitrage that loss aversion make US workers appear the ”safe bet”.

The other path is higher productivity. In order to pay Americans orders of magnitude more than workers in other countries, they need produce orders of magnitude more. This means, better training and better machines. It's not an accident that computers and networks have both been the dominant machines of the past couple decades and working to create and use them has been accompanied higher compensation.


From the time Congress passed the $6.2T Bill that gave $4T to the FED to prop up the stock market, $700B in PPP loans; and and estimated $300B to the people ($1,200) stimulus checks, it should have put things in perspective.

Ideally the stock market wouldn't have been propped up and the PPP loan program would have been more legitimate to save real small businesses (just wait until all the fraud comes out of this thing). If all that money instead went to the people/taxpayers they would all have received an $18,000 stimulus check instead of $1,200, I think this would have been the best move possible (and maybe some form of healthcare coverage for the uninsured, being in a pandemic and all instead of pretending providing coverage to the uninsured would be taking away their freedom to be uninsured).


> and estimated $300B to the people ($1,200) stimulus checks

It’s not correct to say that people only received $1200. Everyone qualified for that stimulus (depending on income thresholds, it was phased out for higher incomes), regardless of job loss.

Unemployed people receive an additional $600/week from the late-March COVID relief bill through July 31. There are additional measures to extend the duration of regular state unemployment. The combined benefits given to unemployed people are over $10K/person additional, on top of regular state unemployment.

Furthermore, many of the numbers you’re citing are in the form of loans or other non-spending activity. It’s not correct to suggest that we could have simply given that money to the people and arrived at the same budgetary outcome.

I don’t agree with the way all of the funds have been allocated, but suggesting that we could all have received $18K is disingenuous. Proper response should be targeted where needed, such as the unemployment measures and loans for businesses that were forced to close, not just distributed to everyone who kept their jobs and businesses.


> That amount went to everyone, regardless of job loss.

This is provably false. It only went to people who filed taxes in 2019 and who met the qualifications.

Despite both of those things still being true, and having lost my job as a direct result of COVID-19, I was still told I would not be receiving the benefits. I was not given a reason by the automated system and I have yet to reach a human being to explain my rejection. I am far from an isolated case


> This is provably false. It only went to people who filed taxes in 2019 and who met the qualifications.

The stimulus check will be part of your 2020 tax return, and you will claim the money as a refund then if you have not already received your money. Any money incorrectly paid out will likewise be reclaimed via that process.


Paying out next year upon filing taxes doesn't do a lot to keep people afloat who are unemployed now. That's long enough to end up on the street.


All you said is true, but this is the mechanism Congress decided to distribute the money (a universal, early tax refund for 2020), and that are its failure modes - some people will get it later than others if the government doesn't currently have their information on file, or only has paper returns.


> That amount went to everyone, regardless of job loss.

I did not get any notice as such, but my understanding as to why I got $0 was I made too much money to qualify. So I don't think your statement is in any way accurate. It did not go to "everyone"


> That amount went to everyone, regardless of job loss.

No, it didn't.


Okay, to be pedantic because your comment didn’t provide full details:

The $1200 went to adults who were not dependents of someone else and who earned less than a certain threshold, with the amount prorated depending on your AGI and your tax filing type (single, married, head of household).

My point was that everyone qualified for it. It wasn’t dependent on losing your job first. You could keep your job and still receive the (up to) $1200 stimulus if your income met the thresholds.


There are quite literally millions of people who qualified for the stimulus, but didn't receive it. I know several of such people.


Part of the problem is that many people lost their jobs and were/are unemployed for months, but had a tax filing in a prior year above a threshold disqualified them from receiving the $1200.


Fine if you want to add the amount for subsidizing the Unemployment Insurance from the CARES Act the numbers again:

$4T to the FED to prop up the stock market

$700B in forgivable loans to small businesses (PPP program)

$300B in taxpayer stimulus checks

$260B in Unemployment Insurance subsidies

>suggesting that we could all have received $18K is disingenuous. Proper response should be targeted where needed

It is not disingenuous at all to say taxpayers should have received the lions share of these bailouts (bailouts being paid for by taxpayers), or at minimum its not disingenuous to say taxpayers (not law makers beholden to corporate interests) should have dictated where the bailout funds go...I would say it is disingenuous to claim taxpayers would have sent 8x the amount they received to the FED to prop up an overvalued stock market that was already at record highs.


The FED has only bought around 3 trillion dollars worth of assets and basically all of that is being used to buy our own governments debt (the same debt used to fund the CARES act) and US mortgage backed securities, not the stock market as you can see from their balance sheet [0].

[0]: https://www.federalreserve.gov/releases/h41/current/h41.htm


The 2 largest numbers on their balance sheet are:

Reserve Bank credit: 7,009,664

Securities held outright[1]: 6,115,130

[1] Includes securities lent to dealers under the overnight securities lending facility (when people talk about JPow money printer go brrr...this is what they are talking about and nearly every night for 2 months after the FED got the $4T overnight the markets would skyrocket)


This conflates LOANS with GRANTS. Your comparison lacks even the most basic understanding of finance.

In 2008, when the banks were "bailed out" - the government used loans - which ultimately turned a profit.

So all of the anger about "socializing the losses and privatizing the gains" was all baloney. Because the taxpayers literally made a profit on the loans they gave to Wall Street.


Taxpayers should have owned the businesses they bailed out. We gave these banks low interest loans when their only alternative was insolvency. What a crappy bargain! Taxpayers should have owned the banks, helped them recover, and then sold them for huge profits.

What’s JP Morgan worth today? That’s a start in calculating how much was stolen from taxpayers.


The firms should have gone bankrupt. In that case, the government or any solvent entity could have benefited by purchasing the assets at market prices. That the firms did not go bankrupt, was a gift to shareholders from taxpayers.


This is a very uneducated point of view, that ignores the facts in my prior comment.

In a liquidity crunch, perfectly solvent and functional companies can go bankrupt. ...and indeed those that had balance sheets hopelessly underwater DID go bankrupt (ie Lehman Brothers, Merrill Lynch, as well as dozens of other smaller banks).

The fact that the government was able to extend LOANS to other banks is not a "gift" at all, because those loans were paid back with significant interest.

Do you understand, the taxpayer profited from the Wall Street loans of 2008.

Allowing solvent but illiquid companies to go bankrupt is needless economic destruction that serves zero purpose - and the fact that they survived despite having to pay back the gov't loans with interest is evidence of that.



Congress didn't give the Federal Reserve $4 trillion. They gave the Treasury Department $500 billion, which the Federal Reserve leveraged to give out about $3 trillion in loans.


> If all that money instead went to the people/taxpayers they would all have received an $18,000 stimulus check instead of $1,200, I think this would have been the best move possible.

Everyone I know would choose their entire retirement fund over a one time check of $18,000 . I understand your sentiment, and it does feel like we got less that we deserve, but stimulating the stock market was absolutely the right move.

Another depression wouldn't help anyone, and a majority of Americans have a 401k. The idea that only the super rich benefit from a good stock market is plain wrong - most people depend on it.


> and a majority of Americans have a 401k

Source?

According to the 2017 US Census, only 32% are saving in a 401k. [1]

[1] https://www.fool.com/retirement/2017/06/19/does-the-average-...


What fraction are retirees who have rolled over their 401k into an IRA?


Excluding children and retired people, 74% have retirement savings.

[1] https://www.federalreserve.gov/publications/2019-economic-we...


Over 70% of workers have access to an employee retirement plan, and 56% of all workers participate in one[1]. So I did misremember the stats slightly. Its all workers instead of all Americans, and a generic "employer sponsored retirement plan" vs specifically a 401k, but my point still stands.

If we exclude children and people who are already retired, only 26% are without retirement savings[2]. The ability of these people to retire is linked to stock performance.

[1] https://www.bls.gov/ncs/ebs/benefits/2019/ownership/civilian...

[2] https://www.federalreserve.gov/publications/2019-economic-we...


Great, now how much does the median retiree have saved?

Also, the vast majority of people shouldn't give two licks about keeping the market high today because the vast majority of people are more than a decade out from retirement. What should have been an event that allowed people to build wealth instead became one to preserve the wealth of those who already have it.


“I’m decades away from retiring, so I’m happy to let these businesses fall apart, destroy trillions in value, and layoff millions of people so I can buy some shares at a cheaper price!”

This is like letting your neighbor’s house burn down because you’ve always wanted to buy the land under it.


This isn't an either let all businesses fail or prop up the entire stock market with cheap cash choice and your framing of it as such is intellectually dishonest.


I didn’t frame it as an either/or. I literally just reframed what you said: that people far away from retirement shouldn’t care if the stock market crashes, because they’ll benefit if it does.


The market making a correction != businesses failing. The market is severely overpriced as-is, it didn't need to be propped up. Companies don't fail because their share price has dropped.


> Great, now how much does the median retiree have saved?

Whatever that number is, it's going to be much smaller after a stock market crash.


It also wipes out the opportunity for future retirees to benefit from market corrections which are historically how most wealth for middle class retirees is built. So you've now sacrificed far more future retirees accounts for those who shouldn't have such high market exposure that they are hurt by a correction.

If this isn't a wake up call that individuals have no business managing their own retirement, I don't know what is.


I put $750 into 401k last year (I was tech ''''contract'''' worker and wasn't being paid well in the first place and ended up with a cool $459 in my 401k at the end of the year and I stopped contributing until 2021. Technically I'm contributing so I'm in that stat, but I've lost money. Yes I know that can happen in 401k's temporarily, but I'm not in a financial place for that to be acceptable. How many people are contributing their minimum 3% in a small paycheck for a 1% match and in the end have an extremely small 401k, but get counted in your statistic? How many earn $10/hr, put 3% in and it ends up being like $22 bi weekly and they only began contributing a year ago? 401k's aren't really a great measurement of much in my opinion. You can't assume everyone has thousands saved up in them and I'd be willing to bet less than 50% of 401k contributors have even more than $5000.

That $18,000 check would have given me the ability to pay off my medical debts immediately, and have complete economic security and peace of mind through COVID.


401k might be a great option to store money if you are in medical debt. Its near impossible to get money out of a 401k if you declare bankruptcy or default on loans


Not everyone works in a corporate environment where this is offered. Go ask your local restaurant if they offer their employees A 401k.


If everyone got 18000 a lot of the money we spent on the top half of the economy becomes unnecessary. For example, there will be no evictions and so that sector doesn’t need propping up.

More importantly people would have stayed home and so we could have tamed the virus which would mean the economy opens up quicker and safer.

This is a people issue and not an economic issue. Dealing it like that would have saved the economy better IMO. Our politicians and companies would never let a good crisis go wasted without appropriating money for themselves.


> This is a people issue and not an economic issue.

Take it a step further: All economic issues are really people issues, in one way or another.

The economy exists to serve people. We do not exist to serve it. Whenever there are measures that are "to help the economy", but which are detrimental to ordinary workers, they're not really to help "the economy"—they're to help the people at the very top, at everyone else's expense.

We need to refocus on what helps actual people—what helps the most people—rather than on the misleading abstract of "the economy."


>Everyone I know would choose their entire retirement fund over a one time check of $18,000

I am assuming you don't know a single person in the 40% that don't have $400 saved up for emergencies.

>it does feel like we got less that we deserve, but stimulating the stock market was absolutely the right move.

It isn't without merit...until you look behind the curtain at OZ. The stock market was already in a bubble and we just inflated the bubble even more. P/E ratios in the public markets are beginning to make revenue-less tech unicorns look reasonable.

>a majority of Americans have a 401k

Ok, so they have a conflict of interest in the matter (25% of Americans have no retirement). Of those with a 401K aged 35-44 the median balance is $22k (so its pretty much a wash for them). Then on the very harsh side of things, the free market side, you risked your money by investing, if a portion of your portfolio includes stock in overvalued companies with runaway P/E ratios that didn't have cash reserves to whether the storm, you invested poorly and you should expect taxpayers to bailout your poor investments.


> I am assuming you don't know a single person in the 40% that don't have $400 saved up for emergencies.

This is an oft misunderstood stat[1][2]. The actual stats from the survey show that 61% of Americans would choose to pay a surprise $400 bill in cash. The remaining people would prefer to use a credit card or other ways of paying. Only around 12% of respondents said they would actually have a hard time paying the bill.

> Ok, so they have a conflict of interest in the matter (25% of Americans have no retirement). Of those with a 401K aged 35-44 the median balance is $22k (so its pretty much a wash for them). Then on the very harsh side of things, the free market side, you risked your money by investing, if a portion of your portfolio includes stock in overvalued companies with runaway P/E ratios that didn't have cash reserves to whether the storm, you invested poorly and you should expect taxpayers to bailout your poor investments.

I think you're moving the goalposts a bit. I could just as easily say "Why should tax payers bail out your poorly chosen career? Just work from home." The point my parent was making is that $6T was allocated for relief but too much of it went to the stock market. My point is that stimulating the stock market has benefits for all. The individual checks sent out should have been bigger, but the question is "Money has been allocated for relief, should a significant amount go towards the stock market?" and the answer is definitely "yes".

If you believe the government should not "bail out" citizens when they need it, that's fine, but be consistent.

[1] https://www.bloomberg.com/opinion/articles/2019-06-04/the-40...

[2 (non-paywall)] https://www.illinoisreview.com/illinoisreview/2019/06/americ...


Can you speak to how propping up the stock market has benefits for all?


Well I already talked about how most Americans have money in the stock market, so there is that immediate benefit of seeing your savings increase. But there is also a line of logic that goes like this:

An economic depression is bad for everyone. Therefore avoiding an economic depression is good for everyone. Quantitative easing has been shown multiple times to alleviate / avoid massive economic downturns. Therefore QE is beneficial to all.


>Well I already talked about how most Americans have money in the stock market, so there is that immediate benefit of seeing your savings increase.

This is inaccurate. Your savings don't increase until your portfolio is liquidated. If it's liquidated at a time there is blood in the streets, you might has well have taken everything out ahead of time, paid your taxes and been done with it.

The only reason it's "good" to avoid Depressive price movements is because every single academic has demonized the creative destruction resulting from pruning overly wasteful business models. It's unthinkable that people should have all their money anywhere else but in the hands of people virtually guaranteed to not be interested in improving your local community.


Then you don’t know poor people who don’t have any investment in the stock market. Who absolutely do benefit from the immediate cash. Who drive your Uber, driver your door dash, serve your meal at your restaurant, probably cleaner your house, do you yard work, sell you shoes at the store, check you out at groceries, stock your groceries, serve you drinks at the bar.

Stimulating the stock market was not the right move. You want to talk about putting the money and letting the market do it’s thing, give it to people and let them decide where to put.

Putting the money in the stock market has only benefited those already in the stock market and those with the money to enter it.


> Putting the money in the stock market has only benefited those already in the stock market and those with the money to enter it.

Quantitative easing has been shown time and time again to alleviate and avoid economic downturn. Do grocery baggers and bar tenders benefit from an economic depression? Do you think Obama made the right choice to stimulate the economy in 2008? This is exactly the same thing.


>Do grocery baggers and bar tenders benefit from an economic depression?

People need groceries even during a depression. Its often said alcohol is recession proof, in fact alcohol sales seem to thrive even during a pandemic.

I'll tell you what isn't

>Do you think Obama made the right choice to stimulate the economy in 2008? This is exactly the same thing.

Actually Bush took out a Stimulus of ~$800-900B before he left office and then Obama took our another $800-$900B when entering office. And I would say the vast majority of people I speak with would rather have seen the banks fail rather than taxpayers bailing them out (for massive fraud they perpetrated to issue bad loans/mortgages and then package them up and sell them to others knowing they were "toxic assets"). Banks used taxpayer money to buy their competitors to concentrate the market and fund foreclosure litigation to foreclose on the taxpayers that bailed them out. In hindsight most people agree the Bush/Obama bailouts should have gone directly to the homeowners, but it was considered a "moral hazard" encouraging bad behavior in the future, whereas ironically they didn't see the moral hazard in rewarding the banks that bear the most responsibility.


You just nitpicked his two examples (and for a nitpick back bartender != liquor store clerk). I don't know enough about econ to have a side here but I would be interested in hearing a counterargument that actually addresses the impact of economic downturn on the class of jobs being discussed here (waiters, retail, cleaners, drivers, etc.)


Do you think Obama made the right choice to stimulate the economy in 2008?

Does anyone think that? Bailing out mismanaged financial dinosaurs was a monumentally poor decision. He didn't even have W's excuse: high suggestibility due to low intelligence.


>Everyone I know would choose their entire retirement fund over a one time check of $18,000

We live in a bubble. There are VAST SWATHES (millions and millions) of people whose ENTIRE NET WORTHS are less than $18,000.


Tell that to Acme supermarket workers who are seeing their pay slashed because their employers are preparing for an IPO [0]. The stock market is not the economy. It's a part of it that has little baring on your average American [1]. As such, it should not be such a high priority in this case to prop up the stock market.

0 - https://www.inquirer.com/news/albertsons-acme-ipo-lubert-202...

1 - https://www.cheatsheet.com/money-career/why-a-booming-stock-...


I did some searching and seemed to find that the majority of Americans do NOT have a 401k or do not contribute a significant amount.

"The typical household approaching retirement had $135,000 in combined 401(k)/IRA assets. These assets will provide $600 per month in retirement, an amount whose purchasing power will decline over time with inflation. Moreover, only half of house-holds have any 401(k)-related holdings." [1]

[1] http://crr.bc.edu/wp-content/uploads/2017/10/IB_17-18.pdf


> and a majority of Americans have a 401k

You are living in a confirmation bubble, one easily disproven by data. I'm a career engineer and I don't even have a 401k


> stimulating the stock market was absolutely the right move

False. The stock market has zero connection to the health of the actual economy right now, and is only enriching the privileged. Propping up the stock market was a political farce to make it look like the economy is doing fine when it clearly is not.


It's funny because the people who kicked and screamed when China did the same thing are the same people who think it's okay when their country does it.


I think it mainly highlighted an unfortunate part of our economy.

The $600/wk thing looks like making sure everyone gets a living wage on unemployment until they thought we'd be able to reopen the economy fully and they'd be able to get a job as normal.

But, it just highlighted how many people are working and not earning a living wage in the first place.


>But, it just highlighted how many people are working and not earning a living wage in the first place.

Exactly, we allegedly had the best economy the world has ever seen, record high stock prices/markets, and lowest rate of unemployment.

But the reality the economy was revealed to be weak and not even capitalism (capital based ownership) but some form of debtism (some form of financial servitude, in lieu of ownership). In the best economy ever and 40% of the population couldn't afford a $400 emergency. Our public companies with their record stock prices needed $4T for the FED to "stabilize the market" (political speak for taxpayers are buying these stocks at these overvalued prices). Customized taxpayer bailouts for entire industries that don't have any runway of capital to service their debts.


> not even capitalism (capital based ownership) but some form of debtism (some form of financial servitude, in lieu of ownership).

Eh, I'd argue it's still capitalism. Nothing about capitalism says how concentrated capital can't be.


With that allowance, feudalism would be considered capitalism though. The problem isn't just a skewed concentration of capital. It's that most people do not have any capital and their situation is denominated by debt.


Was not the abolition of private property possible at an earlier time? No. Every change in the social order, every revolution in property relations, is the necessary consequence of the creation of new forces of production which no longer fit into the old property relations.

Private property has not always existed.

When, towards the end of the Middle Ages, there arose a new mode of production which could not be carried on under the then existing feudal and guild forms of property, this manufacture, which had outgrown the old property relations, created a new property form, private property. And for manufacture and the earliest stage of development of big industry, private property was the only possible property form; the social order based on it was the only possible social order.

So long as it is not possible to produce so much that there is enough for all, with more left over for expanding the social capital and extending the forces of production – so long as this is not possible, there must always be a ruling class directing the use of society’s productive forces, and a poor, oppressed class. How these classes are constituted depends on the stage of development.

The agrarian Middle Ages give us the baron and the serf; the cities of the later Middle Ages show us the guildmaster and the journeyman and the day laborer; the 17th century has its manufacturing workers; the 19th has big factory owners and proletarians.

It is clear that, up to now, the forces of production have never been developed to the point where enough could be developed for all, and that private property has become a fetter and a barrier in relation to the further development of the forces of production.

Now, however, the development of big industry has ushered in a new period. Capital and the forces of production have been expanded to an unprecedented extent, and the means are at hand to multiply them without limit in the near future. Moreover, the forces of production have been concentrated in the hands of a few bourgeois, while the great mass of the people are more and more falling into the proletariat, their situation becoming more wretched and intolerable in proportion to the increase of wealth of the bourgeoisie. And finally, these mighty and easily extended forces of production have so far outgrown private property and the bourgeoisie, that they threaten at any moment to unleash the most violent disturbances of the social order. Now, under these conditions, the abolition of private property has become not only possible but absolutely necessary.


Honestly, the "debtism" as you describe it is more of a cultural issue of consumerism in America. The amount of people buying new $35,000 cars while they're making $40,000 a year is shocking.

It's been hard for me to understand, but from what I've read the Fed isn't buying stocks directly, although that is somewhat pedantic as they are trying to prop up the stock market through other means. I still don't see how that can be a good idea in the long run.


People don't understand how to use debt properly. It should be obvious that being able to borrow against your future earnings is an amazing tool, but so many people are just careless about it and go overboard.


The fact that you could easily earn more on unemployment than not was a bizarre feature of the US COVID response. Most, if not all state unemployment schemes cover part of your wages if unemployed, not more than you made before.

It creates a strong incentive to be considered partially or fully laid off.

I'm pro basic income, but definitely don't support paying more to be unproductive than productive.

This benefit ends this month (July), so that is good.


> I'm pro basic income, but definitely don't support paying more to be unproductive than productive.

And if COVID has proven anything, its that the most productive workers are the ones who didn't even get a chance to earn the additional $600.

The essential employees, the ones that keep the country running, are forced to continue making a less-than-livable wage.

It's a very outdated notion that there is a linear correlation between "productivity" and pay.


>It's a very outdated notion that there is a linear correlation between "productivity" and pay.

This graph clearly shows how productivity and wages were decoupled in the US in the 1970s, even as productivity skyrocketed:

https://www.epi.org/productivity-pay-gap/


I always thought the point was to keep people home during the pandemic instead of working odd jobs to compensate. Incentivizing people to not work by paying them more to stay at home was a public health policy choice. Of course, the bills were passed really rapidly and maybe weren’t that thought out.


Incentivizing people to stay home was a bug, not a feature. There is absolutely nothing that suggests the federal government is interested in doing this on purpose (and we might see a lot more people outside if the eviction protection measures aren't revisited by the end of the month). Quite the opposite - the message has constantly been that they want to get people out working as soon as possible in deference to "the economy", public health be damned.

Your local government's response and motivations might be different, but I largely doubt it.


The federal government is made up of many different actors with different goals. The $600 unemployment pandemic bonus was only added to the relief package because of the house democrats insistence. I think it’s hard to believe that was not their goal.


> Incentivizing people to stay home was a bug, not a feature.

> There is absolutely nothing that suggests the federal government is interested in doing this on purpose

These are two separate statements, that do not necessarily correlate.

That the government may not have intended the benefit to incentivize people to stay home (thus improving public health) does not mean that people staying home and improving public health is not a feature for the vast majority of people.


There is some logic to what you say, and it wouldn't be the first time a bug turned out to be a feature, but I think "odd jobs" are typically done in the gray market anyway, and the income not declared, so I don't think it would keep people who are receiving unemployment from taking odd jobs, for the most part. But it may have had an effect at the margins.


> I’m pro basic income, but definitely don’t support paying more to be unproductive than productive

This problem cuts both ways. The government capitulated largely because they knew pegging stimulus to the minimum wage wasn’t going to be enough and they didn’t want to risk the political fallout of that situation. I see this largely as an admission by our leaders that minimum wages aren’t high enough.

Wages in the US simply haven’t kept up with the cost of living for years now. Employers have been complaining for years that they can’t find qualified candidates for jobs while more and more people leave the workforce and don’t ever return, but the conversation is always framed as a shortage of labor as opposed to a market unwilling to raise wages to attract qualified candidates.

If we had ensured years ago that those working would make enough to meet their basic needs, we wouldn’t be in this situation.


>the conversation is always framed as a shortage of labor as opposed to a market unwilling to raise wages to attract qualified candidates.

I had sorta thought it was Microecon 101 that these two things are mathematically equivalent. If the labor market doesn't clear due to a "shortage", you're either in the immediate aftermath of a war, or you need to raise wages.


> I'm pro basic income, but definitely don't support paying more to be unproductive than productive.

I never understand this perspective. Supporting UBI is a statement that all people deserve a bare-minimum existence, even if they don't or can't work. I would expect that UBI would create a less productive workforce in the same way that 40 hour work weeks and environmental protections make a less productive workforce.

If you think the only path to righteousness is through a lifetime of toil, then it /might/ make sense to judge poor people's merit as a function of their 'productivity' (i.e., ability to make someone else money), but that is a pretty old-school stance in my opinion.


I think you're misreading the comment? He isn't judging poor people. He is criticizing a system where you only get UBI if you don't work (i.e. not UBI). Such a system means that lower skilled workers actually gain nothing from working.

That is a shitty situation to be in. Most people want to feel like they are contributing. And they absolutely do contribute through their roles, even if they are also "making someone else money". They should be rewarded on top of the "bare-minimum existence" for doing so.

I don't see at all how you can jump from "I don't support people getting paid more to not work than to work" to "the only path to righteousness is through a lifetime of toil".


You’re assumption that people are unproductive when they are paid more when not working highlights your view of humans. You believe that it people are paid enough to do nothing they’ll sit around and do nothing.

I have seen friends who went on unemployment and made more than they were making employed. They were not unproductive, in fact they were more productive than when they just checked people in to a airline.

If you were, today, paid more to not have a job would you sit and do nothing? My guess is your answer is no, so why are you the exception but people who are actually in the position to be paid more to not work, expected to be lazy and unproductive?


>I'm pro basic income, but definitely don't support paying more to be unproductive than productive.

Why does this imply that unproductive people should receive fewer benefits? Why shouldn't productive people be paid more? Wages have stagnated for 50 years and the meager COVID bailout meaningfully improved the lives of millions. Shouldn't that be a sign that we need an overhaul of wage laws?


Yup. Even, for example, the UK furlough scheme only paid something like 80% of people's normal wages. The American media kept very quiet about that detail when going on about how much better it is than the American approach and about how the government there had failed people by not implementing something like that.


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