As long as the money is given to folks who need and/or will spend it, it feels like this is the exact situation where the federal government steps in for stimulus.
There’s no pull yourself up by your bootstraps talk right now and there shouldn’t be.
I know the single parent working a couple of jobs will spend every dime they’re given in a time like this, just to survive. A yuppie like me would just park it in my savings account until I feel we hit bottom, then invest it.
I’m not the type of person you want to give money like this to. Save it for folks who are really living hand-to-mouth and don’t shortchange them.
I mostly agree; the only caveat I'd give is that it's tough to say how much longer any of us are going to be yuppies right now; I work for one of the many big megacorporations whose stock is tanking right now. If the stock doesn't pick up soonish, there's a non-zero probability of me being laid off.
While I'm not that worried (I've been able to find work in bad economies in the past), I also do feel a bit of paranoia about this.
Why? The price of the stocks does not affect company in any way. If the company sales are going down or clients stop coming this is an issue, stock value is important only for those who hold/speculate using them. You company has already got the money from selling stocks, nobody is going to take them away.
Because if the stock price is tanking, there's an incentive to figure out how to either a) increase profits or b) decrease spending.
Since the market is tanking, there's a likelihood that people will be spending less, thus leading to less profits for my company; as a result, the only easy way to keep investors happy is to reduce costs, and the easiest way to do that is to start doing layoffs.
That only applies for long-term recession projections where the company is seen as doing a poor job, not now where stock is down because there's a pandemic shutting everything down and market volatility is going batshit. As long as the company has enough cash on hand to ride the pandemic out they'd want to retain everyone so they can ramp up again as fast as possible
> The price of the stocks does not affect company in any way.
That would be the case in the ideal world. However, stockholders care a lot about stock prices being low, and they elect the board, which in turn chooses/advises the CEO (and other executives). When it's the CEO's butt on the line, the company will be reactive to share prices; just to make sure the stockholders are happy.
A secondary concern is that low share prices makes a company vulnerable to non-/hostile takeover bids - which again is bad for CEO job security.
TL;DR: The tenure of the top echelon (board & executives) of public companies is directly tied to (relative) stock performance due to share voting rights.
I struggle to understand how those two things can happen at the same time, to the same company, due to the same cause. I mean, if it's harder to retain talent, presumably this means some people leave the company, leaving the company more dependent on those who stay. Why would they fire them?
Stock prices are leading indicators of future revenue. Not perfect indicators obviously, but the stock prices reflect lower sales/profits/etc due to reduced mobility, supply-chains etc.
Products for sell on a shelf now have been in the pipeline for months. The stock market is looking past the immediate now, and is looking at the tomorrow, next week/month. If factories are closed and not manufacturing things, the supply stops. That doesn't affect the retail end today, but will in a few weeks/months.
This is a situation where much of the global economy is going down if this doesn't stop in 60 to 90 days.
The sick leave programs, either public or corporate, will all fail in a short amount of time when strained by 90 or more days of hyper low economic activity. The US and EU can't afford $2 trillion in sick leave programs every 90 days; especially when the future is unknown as to whether that will continue indefinitely (meaning there is weak production to support the huge costs), the entire financial system collapses if that keeps going.
Sometime in the next few months a decision will have to be made, about going forward, going back to normal life, and accepting the deaths that will occur. This will have to be made by essentially all nations in unison, and or the smaller nations will get pulled along into the decision by the larger nations regardless.
First we need to know how common the virus is among the population, in terms of how many people are walking around with few or no symptoms. Some large nations need to be doing massive randomized testing for Covid, to compare positive results versus how many are walking around with it and don't know it. This is data we absolutely must have immediately.
If there are really 10x or 20x the cases and the mortality rate is that much lower accordingly, then we do two things: we go back to work, and we do quarantine and care for the most vulnerable and most ill simultaneously. We ramp up medical supply production further to focus on those people, who will saturate our ICU systems. Everyone else goes back to routine, to keep the global economy functioning. If that all shuts down, far more people will die, and far worse chaos may ensue, including potentially war as tensions rise globally.
The stock price is determined by dicounted cash flow valuation of profit, or at least what stock traders estimate it to be. If the stock price is crashing, that means traders are predicting reduced profits. Reduced profits mean layoffs.
The stock could also be crashing because the perceived value of the asset was distorted by market conditions, and the stock index corrections have now produced a far more realistic and scary environment in which value is better understood.
First, huge stock market panics are fear-driven. Partly they're responses to fear, partly they create more of it.
When fear sets in, people get nervous. First-order, that means more concern about protection, downside risk, and survival. In business, that means, how much cash is in the bank? Can we pay our bills to employees/landlords/utilities? Since it's harder to wiggle out from long-term contractual commitments (debt service, leases), employees are often but not always the first to go, simply because they CAN be let go. Not ideal, but it happens. Additionally, hiring slows and since some level of frictional unemployment (google it) is bound to exist, those people won't be as easily re-absorbed into new jobs.
Second point: executives, salespeople, and others "at the edges" are driven by market forces. Interior decision-making, especially at large businesses and far from top management, isn't driven by external market forces to any real extent. A better model I just read in the economist explained it as companies being little miniature command economies (dictatorships), mediated by market forces in their interactions with the outside world. A few examples that come to mind: (a) wages aren't typically adjusted internally when salaries rise externally, (b) most funding decisions are made by management, not external banks/stock market. So probably wise to assume, unless sufficient evidence to the contrary, that mid-level decision making in companies won't be market-driven, it will be done by (potentially more efficient) command mechanisms. A manager tells you to do something and you do it, there isn't some auction mechanism held where people bid on tasks. We do it that way because it's more efficient.
There is a bit more to be said about how wall st places more value on layoffs than other adjustments to a company's balance sheet. Employees are seen as a generally ugly long term money sink.
I agree wholeheartedly, investors really dislike raises and bonuses for line employees, and will punish companies for it. Shareholder primacy theory is insanity.
Speaking of insanity, Art Laffer is advising the current administration re: stimulus. How that guy isn’t immediately laughed out of any room he walks into is beyond me.
I mean, I don't know that it should, but my understanding is that when the stock price dips, and investors start wanting a return for their investment, executives look for quick ways to decrease spending, thus increasing profit (at least in the short term).
One of the easiest thing to do to lower spending is to cut some workers and push their work onto the remaining workers. It's not an ideal situation for anyone, except maybe the executives.
Stock price going down means market expects less profit
Directors who can react to this change and minimise loss or find opportunities, should.
This can be increasing revenue (assuming that's tough, otherwise the stock price wouldnt be tanking), or reducing cost (some development work created, a lot of other work lost, including dev / management)
All jobs at a publicly traded company are related to stock price. When a company goes public its primary duty is to the stockholders. So in times of hardship it has to reduce cost to increase income / stock price. The primary way of doing this is layoffs.
Sure people in the top 10% are not likely to need this money, but giving it to everyone is a lot easier and faster than figuring out who needs it the most.
Even in that top 10% there are still people that live paycheck-to-paycheck. I was there not long ago. It's a lot better to give everyone the money and be wrong about ~10% of the people needing it then delay it for people who have bill past due right now.
I lived in the bay area with a family and moved to Ohio in the middle of 2018. 1/3 of the population living on minimum wage in a 50k population town in Ohio. That is $18,000 per year.
$100,000 has much more purchasing power than $18,000. For you saving $5000 is easy. For someone making minimum wage, saving $500 by the end of the year is impossible.
If you have a car, your deductible might be 250-500. The majority of the minimum wage earners deductible is 500. They usually don't have that when accident happens. When the boiler goes out, it usually cost same to fix it for high earners and minimum wage earners.
Yes, $18,000 has less purchasing power than $100,000, but a lot of people still have this conception that people making $100,000 can't possibly be living paycheck to paycheck.
I generally challenge anyone who claims this to post a detailed budget. SF is expensive, but if it were so expensive that someone making $100k could not cut any expenses, it would not be able to function. Stop contributing to your 401k or something.
So that's $350 for a family of two at the end of the day to spend on life, in a city where two cheeseburgers can cost $50. A lot of times for me this would be spent flying home for holidays. It would take about 8 years to save up enough of an emergency fund to cover 6 months of expenses if 100% of that were put into savings, which isn't realistic. This is a salary that provides a comfortable life, but like I said, it's paycheck to paycheck. If I had a disruption in my income, I would be out on the streets in short order. None of that can really be cut except cell and internet.
First, thank you. Now, I'll make cuts according to how people without means would.
Rent: There are studios and 1-bedrooms to be had. Depending on who your +1 is, share a bed or put someone on the couch. $3166->$1500-$2000
Health insurance: Hah. Order your meds from overseas and cross your fingers. Or go without. $600->$0-$200
Groceries: Everyone on HN keeps telling me healthy food is cheap, you just have to be responsible enough to cook. $400->$250-$300
Cell: Budget plan and wifi. $150->$50-$80
Cut a few bucks from electricity by being super thrifty on energy usage, and save a bit of that debt for your tax refund.
Looks like a few thousand dollars a month in "fat," and you still don't have creditors hounding you. Nice.
I'm not saying that it's ideal to make these kinds of cuts. In fact, in the richest country on the planet, it's practically unconscionable that someone would work full-time and not live with the kind of stability, if minor uncertainty, you currently enjoy. I'm just saying that some of us also dropped half their paycheck into rent, at a quarter the pay, and made due. Well, lost ~$150 a month.
With all due respect, there's zero chance I'd be irresponsible enough to be making 6 figures and still be living paycheck-to-paycheck. I say this not as an attack, but as a call for you to maybe interrogate and recalibrate your expectations for your spending and, by extension, your expectations for other people's spending.
I agree with you that most people can, and should, make some cuts, however, some of your listed cuts aren't feasible in the short term.
Rent: From my experience (n=1) most lease agreements force the remainder of the terms rent due within 30 days of early cancellations, making it infeasible to drastically reduce in the short term.
Health Insurance - If you are getting it through your employer most follow open enrollment periods and cannot be reduced/eliminated in the short term
Groceries: Fairly accurate for a single person, but in the context of the nCov situation many of the more affordable options are out of stock leaving more expensive alternatives.
Cell: Simple expense to cut in the short term, I would add non-essential subscriptions (streaming, etc.)
In order to live a fiscally responsible life, you cannot have such high expenses you are forced to live paycheck to paycheck. Hopefully this will be a catalyst for people to live within their means, but I don't think it is reasonable to expect extremely drastic cuts in the short-term (though I am not saying it was a prudent idea to put oneself in this financial position in the first place).
Setting up the bureaucracy to manage indirect funding would take significantly more time than we have.
People are losing their jobs as we speak, and weeks-long quarantines are happening right now too. I have a couple of friends who have literally no idea how they’re going to stay housed and fed.
If I'm a person who doesn't actually need this to pay my rent, then I'm just going to use the rent voucher and take the cash I was going to use to pay my rent and stash that instead.
Why do you care if some people just save it instead of spending on the necessities?
What about people for whom this is pretty close to their rent/food/entertainment budget anyway? You want them to sit in their houses staring at each other with no way to pay their bills for [insert streaming entertainment service here]?
Well, it's not the government that vends those things. So that's much much harder to administrate than stuffing and mailing millions of plain old paper checks, or even dealing with direct deposit. (Granted that checks have their own problems -- thousands of people don't have banks.)
It is impossible to know from demographic information alone exactly how people will spend a windfall. If we're doing helicopter money, we should do it for everyone equally. Maybe instead of food I buy a bunch of video games or beer or some other good. Still keeping the economic engine running.
I think that we can assume that for people worth low income, savings rates will be much lower than for richer people.
Sure, we can't "exactly" know from demographic information, but the fact that if you have a higher income you have a higher savings rate is pretty basic.
Why not do a progressive amount based on income (available from the IRS)? Those in higher income brackets would receive less, while those in lower income brackets would receive more.
Because some people live in very high cost of living areas - high income alone is not sufficient. Ultimately if you don't hand out the benefit equally you're making some kind of value judgement: you ought to live this way, and not this way, to be worthy of support from the government. This is a _hard_ problem to even quantify. The real goal here is to keep the economic engine running (even on idle). Adding a political dimension will only slow down or block this, which will hurt everyone.
> The real goal here is to keep the economic engine running
I would say that the real goal is to keep people from suffering because they lack necessities, including housing. Granted that the economy is how we supply those things, so we need it to work, but I would say it is a close second priority-wise.
> Because some people live in very high cost of living areas - high income alone is not sufficient.
No system will be perfect, but the government certainly can make adjustments based on dimensions like residence area. (They already do something similar with GS pay scales.) Similar income distribution programs exist in other Western countries (Kinder Geld in Germany comes to mind) so it's not like variations of this have never been successfully implemented before.
There is a degree to which people who make more need more in cases like this, i.e. if one person makes $80,000 and another makes $40,000 and they both have their hours cut and lose half their income, the one who "makes more" just had their income reduced by a larger amount and is likely to have higher recurring expenses to carry.
On the other hand, the person who had been making more has had more opportunity to save. So it goes both ways, and giving people the same amount of money is a middle ground that also has the advantage of being much administratively simpler.
At this point, you would have to use 2018 tax year info. 2019 tax filings aren't due for another month, and I think most people file in the week before the deadline.
There's a lot that can happen to income levels in that time period.
The government pulled more money than this out of thin air to throw at the stock market just the other day, only to watch it vanish just as quickly. Money is a fiction that we have invented to grease the wheels of commerce.
Why bother creating a bunch of rules that people have to apply in the middle of a crisis? You are living human who has not received this month's stimulus yet, great, here you go, good luck and blessings upon your health. Bureaucracies take time to spin up, more complex rules take longer to apply, and there are a huge number of people whose jobs are destroyed by "don't go outside until the virus dies off".
If you are way too rich for a thousand bucks to mean anything, then give it to someone who needs it more. Maybe a super-broke friend, maybe just withdraw a few hundreds and hand them out to homeless folks, whatever.
Implied in your comment is that today's crisis is one similar to 2008 in that the economy needs "stimulus."
Today's crisis is different. The regular economy is grinding to a halt because we have to in attempts to slow the spread of the coronavirus.
What individuals and every component of the economy need are deferral and cancellation. Rubidium talked about it in another post. [0]
$1,000 to a family that is living paycheck to paycheck doesn't solve the problem. Do a search and most surveys put America at somewhere between 70-80% of workers living paycheck to paycheck.
So let's discuss giving Americans money but only to move the Overton Window. Then let's lead that discussion to solutions that address the fragility of our economic problems at their root--both in the short-term and long-term.
In general, giving things only to poor people generates opposition to the program giving it. The attitude is, "Why should my hard work pay for those lazy people." Means testing can also add a lot of overhead and headaches for the people involved.
My suggestion: use it to pay down your upcoming tax bill, give it to people you know could use it, if you order food, leave some really fat tips for the delivery guy, donate to charity.
How charitable, now to implement that everyone has to prove their level of income and assets before receiving aid and will unnecessarily screw people on the margins in situations you didn’t imagine up front. Stuff like that gets implemented (usually, in America) as a non-refundable tax credit meaning the poorest get nothing as well.
Just cut the check, tax the rich, and don’t make more paperwork.
Issue with not giving it to everyone is that a large portion of people with a good, financially secure job could find themselves unemployed in a week or so as layoffs ramp up. We are going to see massive layoffs in the next few weeks, especially in retail, food services, travel and entertainment.
In addition, we should be flooding individuals and households with money right now to ensure survival. An over payment of 10% is far less harmful than an underpayment of the same amount.
"Means testing is hard. [Sending a check] is easy." Don't add the overhead / cost / etc for the benefit - speed is key, just cut the check in my opinion.
Or perhaps stop obliterating an economy and let them actually live.
My sister and I were raised by a single mother in Russia in the 90ies, and we did relatively well compared to many. Mom mentioned once that she didn't really regret not having any hobbies or personal life for 10 years, not only because she loves us, but because she really didn't have time or mental effort required to seriously ponder these things, in almost a decade.
That was all, mostly, because of economic mismanagement.
If you look at the life expectancy chart for Russia at that time, and births - both, again, affected by economic mismanagement - it's quite obvious that it would have been much better even in terms of literal years life lost to have a magical smooth economic transition in 1991, followed by a 100% unchecked coronavirus epidemic.
The unchecked covid-19 would have caused far less harm that what the real loss of life was; and that is before you consider lives wasted - the struggle to survive, but also drug use, alcoholism, crime, suicide statistics from the period.
Oh and of course the end result - in Russia, most now want stability at any cost, so you have an emperor for life.
This recession is looking like it's going to be bad, and politicians from NZ to Malaysia to the UK are saying it's going to be worse than the last one or 1997 one; the way Fed is handling it here indicates they expect something worse than Great Depression, or they are out of options and are going to run it completely into the ground.
Meanwhile, the damage from the actual virus /so far/ is zero, literally zero, a rounding error. Yes, I know about Italy - the deaths there up until now are still a rounding error. Yes, I know about the exponential growth - the current levels are still a rounding error; they will grow exponentially, but exponential growth runs out very, very quickly when it has an upper bound of the entire population.
It would have been much better to have a one-month-long healthcare collapse where a million people with an average age of 60+ die, instead of a prolonged recession or a depression where tens/hundreds of millions of people in US alone, disproportionately young, children, the poor (not even speaking of the people in developing countries), have their life completely ruined - for many, forever; and many die.
Under normal circumstances, we could make it opt-in. This was a stipulation of Andrew Yang's UBI policy.
It could be argued that under current circumstances, creating an opt-in mechanism might increase administrative complexity. That said, I imagine you still need a simple mechanism to figure out eligibility. Do non-citizens qualify? Permanent residents? Short-term visitors? International students? Only people with SSNs?
So if there's going to be an administrative layer anyway, the difficulty of adding an opt-in mechanism to that layer would be marginal.
"Opt-in" systems have disappointing levels of people who need the benefit but are too proud or scared to claim.
Where possible avoid this problem and give the benefit to absolutely everybody. The administration is simpler, it will get to all those who need it, and if you become concerned Bill Gates is getting too much free childcare or whatever, feel free to increase his taxes accordingly.
> "Opt-in" systems have disappointing levels of people who need the benefit but are too proud or scared to claim.
Is there any source to this claim when it specifically comes to giving people money for opting in for something?
Using some nordic countries as example, many of them help people by giving them money each month in order to survive. These people are not too proud or scared to claim free money when they need it. My guess is that people from the US will act similarly.
Specifically for giving cash money? No. But the UK has experience with benefits that are automatic versus have to be claimed and it's noticeable.
As an example elderly people in the UK are entitled to use some types of public transport at no cost so as to ensure they don't end up isolated (of course right now isolating them is a good idea, but ordinarily it's a problem). But the entitlement takes the form of a smartcard with photo ID. So of course you need to do paperwork to get it. The very wealthiest may not bother, if you have a chauffeur who cares about free bus travel? But the poorest don't apply at anywhere close to expected rates, because somebody needs to explain to them that they need to apply, help them take a photograph and upload it, and so on.
Are you sure about Nordic countries just "giving people" money with no strings attached? They have much better social safety nets than the US, which are important for softening things like this - but an improved social safety net is not free money.
How do you decide who needs it? I think the sane option really would be to give it to everyone and increase taxes to compensate. Progressive taxes fall most heavily on those that can afford them. They are the best tool for this job.
Of course to really get this fair, you should tax wealth too, which tends to be difficult...
I've seen people mention putting some sort of "use it or lose it" time limit on the money, so that people are motivate to inject it directly into the economy instead of just sitting on it.
I'm not sure how feasible such a thing is or if it would hurt the cause of keeping the economy moving.
I just don't know how you would enforce this and even if this money "only" helps a family with some means have a cushion to worry a bit less so they can continue as they were it would be productive for markets.
Say you send a prepaid Visa card (this would be terrible because of fees but go with it) to everyone with an expiration date, it'd be easy to parlay that into vehicles that were not "spending" (gift cards, other pre-paid cards, etc) and regulating that is a nightmare.
Once you get into qualifiers and enforcement regimes you're slowing things down and adding percent costs to each dollar provided. I'd say keep it simple.
> As long as the money is given to folks who need and/or will spend it, it feels like this is the exact situation where the federal government steps in for stimulus.
No, it's still a bad idea as stimulus.
It might or might not be the right idea from a humanitarian point of view. No opinion on that topic.
But if you care about nominal spending in the American economy, the Fed can do the job just fine. Just have them buy assets until total nominal spending (and thus also inflation) is up where you want it. Start with American government bonds, but if that's not enough, expand to other assets as well and keep buying.
You may ask: what if this doesn't work to raise spending nor inflation?
Well, that's the best case! Congratulations: that means the Fed just bought up all the assets in the world in return for some ink and paper. [0] And all that without devaluing the dollar, since we assumed no inflation would result.
Your negative example of people _not_ spending the money they are given turns into the best kind of person you want to be buying assets from, if you are the creator of said money.
Of course, in practice this will raise spending. Especially if you announce the policy in a clear and credible way, spending will increase almost immediately even before you implement anything. Markets are all about anticipating expected events.
No need to enlarge the government budget or the deficit.
Oh, and if you are looking for practical steps to raise spending in the economy and the above programme is too radical for you; then a simple first step is to eliminate positive interest rates on (excess) reserves that banks park at the Fed.
In the Fed's defense, they lowered the interest on excess reserves to 0.1%. But you can argue that they should lower it further, perhaps to -1%. Make banks pay to park money at the Fed, so that they prefer bringing that money into the real economy. Either by spending it themselves, or by lending it to people to spend it for them.
[0] To be more precise: in return for some even cheaper to create numbers in a computer. Nobody prints these sums of money any more.
There are a lot of businesses out there that are non-essential services, that will be hit hard by this. Someone still has to shop at the local bookstore when this is over, because those people – even with direct stimulus – will be struggling to stay afloat. If we want to start the economic flywheel spinning again, it's gonna take stimulus at pretty much all levels.
Most working class people will spend that money directly on essential goods and services. But for the health of the overall economy, it's important that enough people will have enough that they feel confident they can start going out again and supporting all sorts of shops.
normally a stimulus works because if you give people $1000, people will go and spend at least some of it. With most options for discretionary spending shut down, there's really just two things left to spend on: rent and groceries (and i guess: amazon orders).
$1000 to every american right now will end up just being a huge payment to landlords. i'm not saying it's a bad idea, people still need to make rent and buy food, but it's not going to stimulate anything. grocery stores are already bringing in record revenues, and landlords don't need the money. It's financial aid, not a stimulus.
> There’s no pull yourself up by your bootstraps talk right now and there shouldn’t be.
Joint statement by conservatives Stephen Moore, Art Laffer, Steve Forbes: "Don’t expand welfare and other income redistribution benefits like paid leave and unemployment benefits that will inhibit growth and discourage work" [1]
I think the simplest solution is to give money and raise taxes on the top 60%. Undo what Trump put in place and go back to taxing Americans a little more.
This way the benefit only applies to the bottom 40% of tax brackets and at 40-60 you pay some if not all back and 60+ you pay it all back and more. Then it's a fair safety net that everyone can see might be necessary in these times.
This is just a thought, I'd actually just put Yang in charge of this.
I agree in the sense that money will go further when pooled, than if you just give it UBI's style. But, this is a societal crisis, not an individual one. It is not fair to ask people to pull themselves out of a situation that they did not create, but that our unaccountable government did create.
An example: restaurant are struggling and some people need food. Give money to Town gov, so they can buy food from restaurants and serve that in community center. Adjust volume as needed.
Plus the whole financial easing they are trying is dumb. It would be useful if the intention was not to control what is happening with the public markets. We just do not really control those, not on a daily basis anyway. Algorithms heavily relying on market volatility control those, and that is what they are doing right now. So, seeing an administration believing that humans are in control of a mostly automated trading system is dumb.
While the evolution of new virus with pandemic property is not something we control. Its propagation to pandemic level is something we have absolute control on. We are failing as a society, because we allow those things to happen.
Economics is an interesting field of study with what seems like endless amount of differing views and such.
However, it seems that if you're looking for economic stimulus one of the most sure fire ways / proven ways / agreed upon ways to get bang for the buck is to give poor people money. Poor people will spend it, and you can be pretty dang sure they'll put that money into the economy and quickly.
I think it's important to realize that this tiny stimulus, whatever it ends up being, $1k, $3k, whatever, is just the sugar to help the massive bailouts go down.
All the companies that took extra profits from the last round of stimulus saved cash and bought back stocks to inflate the stock prices.
The virus was only the needle that popped the good times bubble. Now the market is in free fall, stopping only to bounce off of the branches (circuit breakers) on the way down the cliffside.
How about we accept the individual stimulus and fight against the bailouts this time? These companies aren't too big to fail. They are just too big to be run by profiteering gluttons who fall back on the taxpayer when their business plan is shown to be a failure.
I agree giving poor people money (possibly just everyone money right away rather than sorting out who is poor first) is the right thing to do now, but I think about it slightly differently:
I don't think "economic stimulus" is the right goal. The public health officials are doing their absolute best to bring the economy to a near-halt, at least any part of it involving non-essential physical interaction. I don't want to second-guess or undermine them.
I think the right goal is to make sure people have money to survive, including paying for food, medicine, and housing, paying off their debts, and building their savings, so they can make it through until we're ready to restart the economy. I wouldn't consider the measure to have failed if it's not all spent right away or if the stock market doesn't rise.
It's also impossible. How many millions would I have to pay you for you to take a skiing trip to Italy right now (flight, hotel, ski lifts, ...)? No matter the size of the economic stimulus, some parts of the economy will grind to a halt (demand shock), whereas others will be overstressed (supply shock - food, toilet paper, medical services). I think any stimulus should be targeted at those parts specifically, otherwise you're just wasting resources.
The gov has to set parameters and then they can go by payroll data/IRS data. I’m sure there’s lots to think about if you want, but the important data is quite available.
Like high viral coefficients, the marginal propensity to consume at (or even above) 1.0 has a huge multiplier effect that beats the heck out of a tax cut or other spending.
Agreed, and this makes total sense in a crisis like this.
Even better: folks will actually need the money and it will be doing some concrete good, quickly.
The most important aspect of the claim about spending money is the broken window fallacy. Henry Hazlitt wrote a great book on the subject called Economics in One lesson.
The simple example is that we can't go around breaking windows to stimulate the economy. Sure, the window manufacturer and the window replacement companies might benefit, however that money which went towards the window could have gone elsewhere.
Engineering taught me one very important lesson. We can never get something for nothing. There is always a trade off. If the government is handing out money, it has to come from somewhere. Its either taxes, which means that tax money collected can't be spent elsewhere. Or it has to be printed, which is inflation.
Some people say, people aren't spending it, they are saving it! Thats important too. Unless they are keeping it in their mattress, that money is deposited in banks, which loan out the money for capital improvements, etc.
Lastly, my anecdotal experience is that "free money" tends to be squandered more than earned money. Which means poorly allocated funds towards resources less valuable to a strong economy.
"money has to come from somewhere" is not a bad thing. Not all the money is reasonably allocated with equivalent side-effects.
For example, it could come from the $748 billion dollars that are allocated for the military budget, which would take away $327 billion and still leave the US as the country spending the most money on the military.
Maybe that means we stop wars that break windows in other countries for a year to focus on healthcare issues, and maybe even, down the line, we find money to improve education for the future generations.
We spend more on Social Security and Medicare+Medicaid. Not that we want to use the money from either over Defense, but the notion that we spend more on the military is a myth.
Money given to people benefits people. Money given to the military benefits fewer people per dollar spent, and silly percentages of that military money is wasted and lost.
Every dollar you take from SS/Medic* impacts a person. You could cut the military budget by a large chunk before you'd have to actually impact a person.
The simple example is that we can't go around breaking windows to stimulate the economy. Sure, the window manufacturer and the window replacement companies might benefit, however that money which went towards the window could have gone elsewhere.
You misunderstand. The window is already broken. Everyone would be better off if the windows was fixed, but if the government doesn't help pay for it the window will never get fixed, the glass company goes out of business, the store with the broken windows goes out of business, and everyone gets addicted to meth.
keeping it in their mattress
Apple has $16bn under various mattresses overseas.
Exactly, and bank deposits are the source of loanable funds so they are still very much a critical part of the living economy. This isn't the 1920's where people literally had wads of cash completely removed from the banking system, nobody does that shit anymore.
Has there been any research done on the different economic effects of businesses putting their money in a bank account (indirectly creating more loanable funds) compared to other things they might do with it?
If banks aren't lending then having more loanable funds available means the money is effectively under a mattress. Unless it's being invested in equities or something instead of being loaned out.
The costs are inflation and national debt; Which with the Federal Funds rates at 0% are already costs that the monetary supply is accommodating.
Beyond that, we're still below inflationary targets and the dollar has grown accidentally stronger (and exports have decreased in ratio) under current economic policy. In effect, an inflationary effort could be significantly beneficial.
It's hard to be an Austrian and a decent human being. Moral hazard is real, but it's hard to stand by and watch humans suffer in a world full of abundance.
> It's hard to be an Austrian and a decent human being. Moral hazard is real, but it's hard to stand by and watch humans suffer in a world full of abundance.
Pardon the negativity, but this is a childish way to disagree with someone. Very few people think "I don't care what happens to people", mostly simply think there are better ways to do the most good. A person's inability to understand someone else's morality doesn't make that person superior, it makes them arrogant and ignorant.
It's much better to "steel man" a point of view, find the strengths in its arguments and understand it, then argue against those rather than just dismissing it out of hand because it doesn't align with your presuppositions.
Nothing is stopping all of the people who feel that wealth redistribution is required to be "a decent human being" from contributing voluntarily to charity. You're not being magnanimous by demanding that somebody else do something.
EDIT: and further, you're adopting the air of moral superiority while happily hurting people who haven't even been born yet.
>Its either taxes, which means that tax money collected can't be spent elsewhere. Or it has to be printed, which is inflation.
I thought the lesson we learned from the largest money printing in modern history is that printing money doesn't directly equate to inflation. Especially in a world with active Global Trade.
No. In this case, monetizing the direct subsidy would be creating less deflation, not inflation. And deflation is something we all want very badly to avoid because of all the concomitant pathologies for monetary velocity and contractionary effect.
> Engineering taught me one very important lesson. We can never get something for nothing. There is always a trade off. If the government is handing out money, it has to come from somewhere. Its either taxes, which means that tax money collected can't be spent elsewhere. Or it has to be printed, which is inflation.
If we leave the money aside for a moment, what we're looking at here is the need to massively reorganize our way of life to fight this virus. We need more medical care, more ventilators, less contact, less travel, etc. This is going to be really expensive. We're trying to turn a big portion of the economy on a dime.
Think of it like WW2, when the US converted automobile assembly lines to build planes.
There's going to be economic dislocation, and it's going to be rough. We need to reallocate resources rapidly. Once we've figured out what we need everybody to be doing, we can work out the money end of things.
And yes, we will pay for this with diminished wealth and higher taxes in the future. But if we allow this virus to spread freely, it will overwhelm our medical system and millions will die.
there is so much hyperbole here. Massively reorganize our way of life? Lets keep perspective. We're talking about building some temporary hospitals, temporarily increasing our respiratory support. This isn't the Spanish Flu. We have months of data showing so. Millions won't die.
What makes you say that this isn't the Spanish flu?
If we look at the mortality rate in places that are doing heavy testing, such the Diamond Princess and South Korea, it looks like we have slightly below a 1% fatality rate among people who test positive assuming adequate modern medical care for everyone.
The CDC's worst case scenario is 1.7 million dead in the US. Some British epidemic modelers put it closer to 2.2 million dead in the US assuming no health care overload.
But of course, medical systems in Lombardy, Washington and the Bay Area are already stretched to the limit. Wuhan had 80,000 patients and had to be reinforced by multiple Chinese provinces. And these overloads were with just a few 10s of thousands infected. The natural peak, assuming current numbers are correct, would far exceed our medical system's ability to cope.
At which point that 2.2 million number goes up. I've been staring at the numbers, running the calculations, and I keep getting roughly the same worst case answers as the CDC.
Unless there's some critical number that we're missing, we're in an ugly fight until we have a vaccine, or treatments that allow most people to breathe unaided. Until then, our best hope is to figure how to live life outside lockdown while preventing exponential growth.
>The simple example is that we can't go around breaking windows to stimulate the economy. Sure, the window manufacturer and the window replacement companies might benefit, however that money which went towards the window could have gone elsewhere.
The "windows" in this metaphor are already broken by the coronavirus. Our only choice now is how soon to fix them and which windows get fixed first.
>Unless they are keeping it in their mattress, that money is deposited in banks, which loan out the money for capital improvements
This isn't borne out by evidence, banks refused to lend during the 2008 recession.
hey i remember when we did this in 2008. There was a huge economic meltdown, I just lost my job and was living out of my truck, and the Republican party wasnt looking like a real winner in the upcoming election. So it was decided that everyone gets a "stimulus check."
I got $700 from the Republican party...and it basically felt like $700 to keep my mouth shut about how Bush didnt care to find Osama Bin Laden. it was a few hundred and in return i was expected to stop complaining about how TARP bailed out big banks but left me living in a stale coffee scented Dodge Ram. I am a little bitter about the whole gesture but let me tell you what I spent that money on: credit card debt.
Now here we are in 2020 and the Republican party is looking at cutting checks for everyone again and I gotta wonder why. What is this really hoping to achieve? Write me a check and in return I stop complaining about how my health insurance doesnt cover a flu shot? or how the country has more prison beds than hospital beds? That basically everything the president promised he'd do he either ignored or buck-passed to Obama?
I dont want corona cash. I want an economy that doesnt shit the bed like clockwork every ten years and send me out looking for handyman jobs. Id like a healthcare system that doesnt include ambulance rides that are as expensive as a used car.
I've heard people say this won't change anything, and that rich people will just use it to buy gold-plated toilets while poor people will use it to buy meth waffles.
I remember the last time everyone got checks from the government.† The $1,200 I got was enough to keep my family from living under a bridge.
There are tens of millions of people living paycheck-to-paycheck, so even if this helps some people, I'm in favor of it.
It's funny how much people can be influenced by the media and other people without any actual facts. Who cares what rich people do with the money? And not everyone is poor because they are drug addicts. "If we just give everyone money what incentive is their to work?" That's another one of my favorites.
Hmm. A lot of businesses will get into big trouble over the coming weeks and potentially months. Bars, event organizers, even shopping malls. They're all going to go down to almost zero profit for a while.
The problem is if you just give people money right now, they literally can't spend it on those things because they are or will be closed during that time. Money isn't the reason they're not going, Corona is.
The money would be spent on things that are doing well now anyway (rent, food and netflix/videogames/etc.).
Maybe right now the focus should be on not making people homeless, but then giving people money after the crisis so they can spend it in the industries that are suffering right now.
Some absolutely will. That's not really what I'm trying to argue against, people who would become homeless or starve should absolutely be helped.
However, a lot of people seem to be under the impression that this would boost the economy (because the idea is that almost everyone gets money so they can spend it instead of specifically helping with rent or food), which I don't think it will currently, or at least it won't in a meaningful way that helps the businesses who need it.
Not yet but businesses are closed. So employees can't work and owners can't make money. Employees still have other bills to pay.
When the businesses open people could be so indebt they aren't able to start spending again quickly. The 1000 dollars won't boost the economy right now but will help recover faster when things start going back to normal.
There are going to be a lot of interesting conversations with landlords in the coming months. "If you make me pay rent, I won't be around when the crisis is over. If you let me off paying rent, I will get back in business and start paying rent again faster than any other way you could fill my space."
> Maybe right now the focus should be on not making people homeless
I think this is the primary motivator for providing money to all Americans. Many people on HN who are salaried and able to work from home might not be worried about making rent but many people who work hourly jobs aren't getting a paycheck this week.
Corona isn't the reason, the government response is. I'd like to keep reminding people of this denotation, even if you currently disagree with the connotations.
Last global pandemic of most compare - the Spanish Flu, we had a society that was savings conscious.
Past few decades have seen a turn towards interest rates so low that borrowing over saving has prevailed.
So whilst this may help a little and more so for some, it will do nothing for many who are debt rolling from one payday until another. That without intervention upon loans and debt repayments over this period will cause more chaos and impact.
Though most will need fuel, food and essentials in this time, might be better if you had those delivered to those who are stuck and in direct need.
Otherwise, I wouldn't be supprised if ration books become norm for a period soon. Certainly for toilet roll.
WOW, how the interest rate can be higher than the base rate is somewhat interesting. Meanwhile in the UK and many other places the saving interest rate is way closer to the base rate and usually less than that.
It's almost as if you could borrow cheap and get interest higher than the interest on the loan, alas an avenue that for many is not as easily accessible, but if you have money, you can make money.
I'm curious, in current proposals, would a UBI be limited to citizens only? I'm guessing not, given the "universal" nature of it. If that's the case, I can't say I see support for a UBI gaining wide-spread support, or economic viability, in the US without first securing our boarders. It seems mutually exclusive, given that it would result in an unprecedented flood of economic migrants.
I may be misunderstanding the scope of "universal" in this context. If that's the case, I'm curious what the typical requirements for access are.
> I'm curious, would a UBI be limited to citizens only? I'm guessing not, given the "universal" nature of it
That's the conclusion you came to because of the word "universal"? Have you watched fear mongering entertainment news lately? You assume that everyone who happens to be in the country gets money? So this will cause the others to invade our perfect utopia that we can't defend without a magical wall. Do tourists who happen to be in the country get money too? I'm curious if illegal immigration has affected you personally in some way.
Everyone who comes to CA for example, citizen or not, can get a drivers license and access to a variety of social programs and they are protected by the state against federal prosecution. It's a legitimate concern.
We're in the midst of a pandemic and you still think giving undocumented/illegal immigrants access to social programs is a bad idea? Not doing so would seed clusters of infection that will cross over to citizens without asking to see their papers first. I suspect even the most nativist person in the country would agree that ICE arresting people in the ER would be a terrible idea, based on self-preservation alone.
While you may not agree with it, the idea of discouraging people from lurking in the shadows comes from a place of pragmatism, not kumbaya hippiness. Even red states apply this principle to combat opiate addiction.
We should never have been in a position in the first place where we have to care for illegal immigrants at the expense of our own population. Countries with the most successful response to this situation locked their borders down hard and fast. Now you're talking about illegal immigrants taking up beds in the ER, that's going to be a priceless commodity soon that many American citizens will probably be forced to go without.
The pragmatic thing to do would've been to protect our borders in the first place, both in terms of illegal immigration and restricting travel when the pandemic first began. Now that the situation is completely untenable and there's a massive underclass of millions of untraceable illegal immigrants, the 'pragmatic' thing to do is spend precious resources caring for them (both in terms of healthcare and financially) at the expense of the native population? 'Pragmatic' doesn't seem like the right word considering that line of thought is what caused the problem in the first place.
If you're worried about people coming to funnel this money overseas, UBI could be excluded from expatriation of money with deportation/blacklisting from UBI being consequences for sending the money abroad. Otherwise I don't see why a migrant being an "economic" migrant would make much of a difference. The basic premise of UBI is that ultimately that money is going to flow through the economy (it is going to be spent), why does it matter if it is a citizen spending it on a Big Mac or rent versus an H1B migrant versus a lottery visa holder versus an "economic" migrant?
I have never seen a proposal for UBI that is not limited to citizens. You obviously have to draw a line somewhere and obviously you would not give money to tourists. Maybe long term residents could be included though, e.g. those who live 5+
or 10+ years in the country.
They would need some sort of registered paperwork to guarantee that some aren’t being double paid. On Wikipedia it mentions legal residents so my guess is it would extend to work visas too possibly
The disease doesn't preclude work, the government response to the disease does. Whether it's the right response is a separate question; I just want people to keep the distinction in mind so they can look clearer at the evidence either way.
In my opinion, it feels more like damaged image management to me.
Direct cash flow to citizens gives immediate association to the source of the cash and helps restore faith in the current US economic system and government, or at least makes people a little less cranky to soften the blow.
People want change and these issues are further highlighting massive systemic problems in the US to the population at large who are already looking for significant change.
To most, a onetime $1000 (the idea that was floating, this could be different) may pay one months rent or part of it to some, but it's not going to help when it comes to layoffs and downsizing businesses are sure to follow up with. To me, the elephant in the room will be medical expenses many are sure to incur and their associated fallout that's going to be very hard to make people forget.
The point is that that one month's rent may buy enough time for the economy to stabilize.
Make no mistake, unless everything picks back up nearly instantly (aka "when pigs fly") people will lose jobs and miss payments and be evicted and all sorts of other bad things just like in every other downturn. The point of the $1k (or whatever amount) is to buy a month for the COVID19 situation to stabilize thereby minimizing the downturn, or at least that's how it works in theory.
You could do this with the major banks and associations, but poorer Americans are already unbanked and have no available credit.
In addition, where a major component of our economy is housing and that's a major concern; there are many private landlords that depend on that income; targeting just landlords with a credit would require an entire amdministration.
One of the goals of UBI is it cuts the bureaucracy. Instead of a person or group of people deciding who benefits how, it goes to everybody indiscriminately.
The debt payments go to someone. Suspending those still creates a cashflow hole.
I haven’t fully thought through the effects of handing out cash, just wanted to point out that suspending debts isn’t costless. Landlords would reduce spending, and banks might slip into crisis.
And what of those with no debt, but who can’t work due to virus? Or those with debt, but who can’t work? They still need to eat.
You would also have to suspend payments for food, paying rent, child care, health care, heating, ... The list of potential things that has to be suspended is endlessly large and by picking winners you are potentially creating a moral hazard. Rich homeowners with mortgages get bailed out while renters who have missed one payment may miss their second and third one and then get thrown out.
Both would be better, obviously. And I don't think any house owners are looking for debt forgiveness, I think they, like renters, know that an economy where there are no jobs but debt is still owed is unsustainable.
I think someone pointed this out in a recent discussion that handing out money is literally 100x simpler than fiddling with debt payment, interest collection and other sort of fianicial tools which may have unforeseeable consequences.
Hmm unless they buy the loans and we have to pay the government for that... doesn’t sound like it would work but I’m curious of what the economists here think of that
Why can't we collectively say, no Americans have to pay mortgages/rent for x months. No small/medium sized businesses have to pay business loans for x months. Everyone focus on social distancing and making sure everyone has food and shelter. Weather this out, and start back up after peak infections/hospitalizations has been dealt with.
> Why can't we collectively say, no Americans have to pay mortgages/rent for x months.
Who would say this? The Federal government? I'm no lawyer, but essentially, they would be voiding hundreds of millions of contracts (?)
The Government can't just wave a wand and take an action like this. Even if they could, I don't think you would feel very good about this 'eat the rich' approach for long.
Think about it: Why would I as a landlord keep paying utility bills, taxes, insurance when my tenants don't pay me rent? Why would I pay my mortgage? I wouldn't. I would simply walk away. How long after you stop paying rent before your apartment doesn't have running water?
The real estate market would be decimated. Banks would fail. Trillions and trillions in value and investments destroyed. Unemployment would skyrocket. Goodbye recession, hello depression.
A back door approach to this is a moratorium on evictions, which some states have done. Good luck trying this approach if you're a tenant tho. If this crises is shorter than expected, you'll shortly be evicted and carry that on your record.
I think you're operating on the misconception that landlords and businesses are making outsized margins and 'hoarding' wealth. To think that they somehow would have the ability to continue providing you with services and incurring all expenses without any income is naive.
Direct cash payments to all taxpayers is the easiest, fastest, and probably cheapest way to achieve your goals of bailing out those at risk.
Yeah, I feel like this would be cheaper without propping up banks or landlords who don’t have a mortgage. I don’t know if most payment software can handle it but you basically set back any mortgages by N months. Similar for rent you somehow mark it as paid, whatever that arrangement looks like.
Rent too? What about car payments? Utility bills? Student loans? That's fine, but then the banks go out of business? So, do we bail them out? How much is appropriate? And now we're a central-planned economy...
Just curious: will this help the economy recover, when for large parts of it (entertainment, dining, travel, etc) the reason it's closed is due to the virus and not due to lack of money?
If only the problem weren't self-reinforcing where existing homeowners have the majority of their net worth tied to their home and thus double down on fighting any policy that would reduce home values.
Is this actually a problem? Why would people want more of their net worth tied up in their home? Wouldn't cheaper homes make the properly ladder game more accessible? Are people leveraging their current home value enough to need it to be higher?
It's not that they want it to be such a fraction of their NW, it's that it already is, because they were doing that which is popular and makes them higher-status. Given that it already is, I can see how they might be fine with some kind of grand compromise whereby they lose the potential NW gain from the home, and get something in return without the malicious incentives, but that would probably be too expensive to get majority support.
People use their homes as part of their retirement plan - this is doubly so for those of us that expect Social Security to be gone by the time we retire.
You have to account for the "I got mine so screw the next guy down on the ladder" mentality. One of the _real_ cross-party political issues is just how selfish and anti-community most Americans have become.
Another real cross-party issue is how quick people are to label other people doing their best to make it in complex systems as selfish and immoral.
If you have a $400k mortgage on a $500k asset, and I'm proposing systemic changes to make it worth $250k, you'll end up owing $150k more than it's worth. If something happens and you lose your job, you're screwed. You can sell and refinance and you'll still owe nearly as much every month as the person who bought your newly cheaper house, but now you don't have a house.
It's not about "I got mine, fuck you" so much as "this is my life's savings you're talking about making dramatically smaller" and "I'm super leveraged on this asset."
Yeah, but if that happens, the economic factors leading to a housing crash (i.e. mass unemployment) will almost certainly also prevent most people who need affordable housing from being able to purchase it.
All else equal, getting rid of superfluous zoning rules that are preventing new construction and thereby lowering prices, wouldn't harm those who close to being able to afford housing today. Relaxing zoning doesn't hurt the economy. If anything, restricted zoning limits the economic growth we need.
That I completely agree with. It just sounded like the parent suggested that a housing crash would somehow make real estate affordable for everyone, which clearly isn't the case, based on what happened in 2008.
A 'serious correction' would erase the wealth of the home-owning middle class. A pause on mortgage payments and interest simply extends the mortgage schedule by a year.
Exclude all for profit property, and all second homes. All of America is suffering right now. If we protect the land owners we're only lengthening the noose around all of necks.
I was not clear. Give mandatory breaks to all renters in for profit apartments. Give breaks on primary residences up to the median home value less the top 10% of homes. No breaks for people holding vacant, second, vacation, rental, speculative, or comical I commercial for profit properties. If they can't weather the storm they don't deserve to keep the properties.
> Give mandatory breaks to all renters in for profit apartments.
> No breaks for people holding [...] rental [...] properties.
Some of those rental properties might no longer be rental properties if their owners are insolvent, particularly in the case of 1 or 2 family homes. Banks do not want tenants.
The housing market is in bad shape as-is. Prices falling for housing would be good for a struggling middle class and below. Some states, like California, have policies that distort a free-functioning market. Many cities have artificially constrained housing stock by limiting new development via zoning.
I agree that zoning is a big part of this and would be an easy release valve for people who want to own homes. I'm betting with everyone going work remote as well, cities can be more diffuse when commutes become less important.
Corporations are owned by people. "84 percent of all stocks owned by Americans belong to the wealthiest 10 percent of households."[0] Bailing our corporations bails out the wealthy.
Send money to everyone equally. It's fast. It's fair. And it will quickly increase the velocity of money. [1]
I feel we need to do something along these lines for the immediate, but at the same time wonder if it's practically possible to give enough money to actually matter.
To me it seems this crisis is exposing several fallacies underlying our civilization. 1) The idea that infinite debt based economic growth is workable long term. 2) The notion that somehow we can beat natural evolution and selection long term with science.
Both of these ideas work very well in the narrow slice of human history we have lived in, but longer term maybe are just fallacies.
Should also include suspension of residential rent payments. Otherwise renters are accumulating debt during the crisis (at best) which will also drag the economy and housing market down.
Sitting at home reading a book may not feel like a real job, but it is a job! In this unique situation, the government is asking/requiring people to stay home and alter behaviors. It is not a free handout for doing nothing. People giving up jobs and staying home and doing nothing is serving a purpose of not spreading the virus. People should be compensated for that service.
Yep that is part of Yang's policy. Human value vs economic value. Right now our economy doesn't value human life. A stay at home parent who looks after the kids is judged as 0 economic value but raising productive children provides great value to society.
For today... as a human you are very valuable if you stay the hell home.
Means testing would take too long. Don't be concerned that rich people get it too.
1. There are far fewer rich people
2. Rich people just took a 20+ percent haircut, they did and are paying for it in decreased economic activity
This is a great idea, I just wish the government didn't make it necessary in the first place. Or perhaps that they at least tried it before the insane measures the Fed is taking to prop up the stock market.
How does direct cash help the underlying problem? People can’t go outside and do stuff. We need loans for businesses and relief for companies to weather a pause (so layoffs and closings are mitigated).
It is not meant to fix the underlying problem. It is meant to help those in need buy essential items like food and medicine, and possibly even pay their rent, but it probably won't be enough for even that when your family needs to eat first.
I think direct cash to individuals is only one small part of the bigger picture though. And to your point, businesses are going to need help too. It's not a matter of choosing only one or the other path, but finding a balance employing multiple strategies simultaneously.
If this virus does very little to zero damage in the US, I’m afraid it will become the worst “cry wolf” situation in the history of humanity.... when the truly dangerous bug arrives.
Even if the US had a magical force field that kept the virus out, it would still do a considerable amount of damage.
The supply disruptions that hit China are now moving to the rest of the world.
The largest companies in the US do a large amount of foreign business - I’ve heard up to 40% or so of the revenue of the S&P 500 comes from outside of the US.
I think this AND the payroll tax elimination for a period of time is a one-two punch combo. The first directly helps the people, the second keeps them employed.
Giving money != printing money. If I give you $20 that doesn't mean I fabricated the bill myself. The money could come from any numbers of places in the vast Federal budget.
The budget already has a huge deficit. They'd have to cut funding to something, in order not to increase it further. Or they could add it to the deficit (which means borrowing the money), and that translates to higher inflation, pretty much, as banks create the borrowed money. Recent lowering of the interest rates by the FED also plays into this.
I think any kind of stimulus will almost certainly translate to higher inflation.
It's not necessarily bad. It's a bit of an equalizer. You give money to everyone, money loses value somewhat, but only the people who have the most money at the moment, will suffer from the inflation in absolute terms (money received vs value of savings lost).
I am sorry but how is this a reasonable idea, instead of you know making paternal/maternal leave state, health care system and salary insurance program government funded?
Temporary economic injections will not transform peoples lifes nor save them from an unsustainable lifestyle.
Based on inventory levels at my area supermarkets, is MORE consumption really needed right now? I could see a mortgage/rent holiday for a month or two. Just don’t want folks going out buying a thousand dollars worth of toilet paper.
"Mandatory quarantine delayed the peak of the pandemic, but when cost was taken into account, mandatory quarantine was not an economically effective intervention against the 2009 H1N1 pandemic"
Isolations only delay the peak, they don't prevent it, and the wreak havoc on the economy. Plus all the curve flattening talk are just poorly written computer simulations. Zero evidence it will happen.
From the paper here are the key objectives of isolation, none of which apply to covid-19 in the USA (unless hospitals are adding tens of thousands of new beds, respirators, and nurses in the next few weeks).
"Objective 1: To gain time for an initial assessment of transmissibility and clinical severity of the pandemic virus in the very early stage of its circulation in humans (closures for up to 2 weeks)
Objective 2: To slow down the spread of the pandemic virus in areas that are beginning to experience local outbreaks and thereby allow time for the local health care system to prepare additional resources for responding to increased demand for health care services (closures up to 6 weeks)
Objective 3: To allow time for pandemic vaccine production and distribution (closures up to 6 months)"
Of course you're some newly created sock-puppet account too afraid to post under your real handle.
COVID-19 will absolutely cause the death of millions in the US alone if proper steps aren't taken to reduce R0. If not from the disease itself, then from hospitals being completely overloaded.
Edit: Let's be real: lockdown/isolation is going to have to persist for at least a month or more to have a real chance of preventing the spread to most of the population in the US. 2 weeks is not going to cut it.
"R0 is not a biological constant for a pathogen as it is also affected by other factors such as environmental conditions and the behaviour of the infected population." [0]
If we hold R0 down long enough through change of behavior then we can absolutely flatten the curve.
From wiki "What these thresholds will do is determine whether a disease will die out (if R0 < 1) or whether it may become epidemic (if R0 > 1), but they generally can not compare different diseases."
If seasonal flu (type-B?) has an R0 of ~1.3 can we reasonably call seasonal flu an epidemic?
H1N1 (spanish and swine flu) is ~1.8 and had major outbreaks in 1918 and 2009.
Is it realistic to expect we can sufficiently influence covid-19 using NPIs to achieve R0 < 1?
"Isolations only delay the peak, they don't prevent it, /.../ Zero evidence it will happen."
Isolations and shutdowns limit virus transfers. This is 'flattening the peak'. The peak will always be there and since the only way not to have a 'peak' is to not have virus to deal with from the start!
I agree a temporary reprieve of infections from isolation will happen and based on the type of pandemic isolations can be an appropriate response.
What I haven't found is good evidence of what happens after isolation ends? Why won't a peak happen soon after? Any scientific sources you can point me to?
Also, the economic affect of isolations must be taken into account when implementing NPIs. The paper from the CDC states the economic disaster of isolations outweighs its general usefulness. This seems especially poignant for covid-19.
What happens after isolation ends will depend on a bunch of things.
If testing capacity and health department capacity is available to do contact tracing on new cases, we would see (significantly) reduced spread as unknown carriers could be tracked down.
If the virus has reduced viability in warm weather (as has been suggested) and isolation ends during warmer weather, that will reduce the rate of new infections vs today without isolation.
If many people with undiagnosed cases heal during isolation, they may not transmit to anyone, and they may emerge with some immunity afterwards, reducing spread when isolation ends.
There's certainly a chance none of this works well. There's also a real chance that the (mostly longer term) negative health effects from isolation outweighs the (mostly shorter term) negative health effects from an uncontrolled epidemic.
I think it's pretty unlikely that the peak after isolation will be as high as the peak without isolation, and there's hope that with isolation, the health system won't be overwhelmed with this to the exclusion of other urgent needs. The economy is going to be a big mess with either isolation or an uncontrolled epidemic.
Your assumption seems we should spend an infinite amount of money keeping everyone alive. While admirable that is not the world we live in. Every day doctors, corporations, and politicians make decisions weighing how much to spend to keep individuals alive.
Your healthcare plan has a max spend. Your life insurance has a max payout. Our police force has a max enforcement capacity for keeping people safe. Etc, etc.
So given we have never been willing to spend infinity to keep everyone alive. What is a reasonable compromise for a given risk scenario?
Covid-19 is 99.9999% survivable for those under 70 with no pre-existing conditions. Should we tank the economy by trillions of dollars for months or years? Should we negatively affect 300 million Americans - their jobs, education, housing, etc - instead of calmly reviewing alternative measures to mass isolation?
The real question is how do we keep the roughly 49 million Americans over 70 safe. Instead of destroying our economy, why not spend millions of dollars to provide programs to help them stay safe. Far more reasonable and inline with the specific threat of covid-19.
Mass isolation feels like using global variables. It's quick and looks reasonable to newbies, but in the end creates worse problems than it solves.
If you have scientific evidence supporting mass isolation for a pandemic like covid-19 please share.
I appreciate the correction from 99.9% to 97% survival rate for those under 70.
Thank you for sharing the link to the imperial college article. Here are some of my key take aways:
- 100,000's of people will still die even under ideal isolation conditions (didn't see an exact #).
- Isolation must happen until a vaccine is available (likely 12-18+ months).
- If isolation ends before a vaccine is found infections will quickly spike thus only delaying the dreaded hospital overflow.
- Best reasonable NPIs appear to be isolating 70+ and having sick people stay at home.
- The authors state there are many uncertainties in NPI policy effectiveness.
As with any complex topic, nuance and detail is important. The American populace is accepting of mass isolation for a few weeks, but what about months or years?
Do we really want to be isolated for the next 18+ months? Are we comfortable with families losing their jobs, home, and more?
Are we comfortable with the elderly losing a big chunk of their retirement investments which may not rebound before they need it?
Again, if we don't mass isolate until a vaccine is discovered, then all we're doing is wasting time and money with mass isolations.
There are lots of diseases in this world that kill people and we can't control them all. This is a normal and sad part of the circle of life. We must evaluate reasonable measures, with clear and honest public discussions (a stretch, I know).
I understand my perspective against mass isolations isn't popular, but I'm not seeing much evidence to refute it.
Welcome to philosophy. Here we can argue about what life is and how the utter meaningless life would without icecream.
Now, welcome back to reality. A overloaded health system will kill people. Doctors will need to triage. People with no relation to COVID-19 will die who would otherwise make it. Because of overloaded health systems.
I think this is one of these situations in which doing nothing has a higher cost than doing something, even if that something(give people money for free) is generally bad in most circumstances.
The goal is to make the economy to recover quickly. Fail fast, learn the lesson, make things cheap and keep unemployment low. Or do something against centuries of experience and see what happens.
Avoiding short-term pain by trading it for a much worse problem later is what made us so vulnerable to a not-so-deadly virus. Zombie too big to fail banks and corporations and a real estate market out of control. Same happened everywhere, not just US.
we don't have a functioning nation-wide social safety net. Some say it's the price we pay for innovation and market driven prosperity. That's fine, I guess. But I'd rather pay for this in the future than having to deal with rioters and looters now. Not to mention living in a healthy and civil society where people don't have to worry about the first level in Maslow's pyramid of needs. There was a quote about being X meals away from anarchy.
Yeah, and if my (high) income goes towards helping people who need it, THAT'S GREAT. I'd love to give more to those in need, but my cost of living is a function of competition with other high earners, many of whom would also probably give more if not for the high cost of living. If we all give, problem solved.
We have this already. It's called unemployment. We don't need stimulus for people with existing paychecks.
We need conditions and durations on unemployment temporarily lifted, some for of access for self-employed or under-the-table workers, and some form of block grants for companies that would otherwise face bankruptcies (which would cascade) and and obviously enormous increases in funding that would be required by this.
edit: why am I downvoted? The problem is not giving extra money to those with jobs, the problem is giving money to those without jobs.
Yes, and this begs the question of what will happen with state budgets, many of which have balanced budget amendments and have no legal flexibility to deal with this. The answer is federal block grants to backstop national unemployment changes. Removing waiting periods and extending benefits indefinitely is essentially temporary UBI, which is what we need.
So yes, this form of changes to unemployment would _require_ a federal response. And we require far more federal response than that, far far more. But payroll tax holidays and $1000/adult responses are not serious policy and waste invaluable time.
There’s no pull yourself up by your bootstraps talk right now and there shouldn’t be.
I know the single parent working a couple of jobs will spend every dime they’re given in a time like this, just to survive. A yuppie like me would just park it in my savings account until I feel we hit bottom, then invest it.
I’m not the type of person you want to give money like this to. Save it for folks who are really living hand-to-mouth and don’t shortchange them.