Effect of economic crisis on America’s small businesses [slides]
docs.google.com
docs.google.com
The solution is aggressive, continuous testing so that people can feel safe going back out.
1. Make hundreds and millions of the rapid tests available. 2. Deploy them to every business, every institution. 3. Test everybody coming into work every morning. 4. Isolate and quarantine the positive ones. 5. Elderly and immunocompromised self-quarantine.
Lets find the actual contours of this infection within the population. And then squeeze it down.
- Want to get into a theme park? You need a negative test result on your phone from this morning.
- You got tested at one of the thousands of mobile test stations. You received a code with your test.
- 15 minutes later, you get a test result on your phone - also sent to a national database in real time.
- The theme park worker scans your phone and validates the result.
This is not a fool-proof system. But it or something like it will instantly reduce anxiety of people trying to work.
If you knew that everyone at your coffee house, at your gym, in your lecture hall, etc. tested negative in the morning. You'd feel safer and we'd all be able to move forward.
Maybe the no-contact thermometers could be a scalable approach. Go to the bank? Forehead scan to get in. Go to the grocery store? Same. At least until--and maybe even after--we can scale the RNA testing.
And think about it, I'm only talking about getting up to 10 mil or so here. We'd need a lot more than that to implement the plans being proposed on this thread. Logistics really does demand that medical personnel, and emergency responders be tested regularly to ensure their continued fitness for purpose under such schemes. Consider, there are right around 12,000 law enforcement officers alone in Washington state. Not counting doctors, nurses, EMT's and firemen. (And lest we forget the most important emergency worker of all right now, the Walmart stock boys.)
Add all that up. Multiply it by 50 states, some much larger than Washington. Under the plans you guys are proposing, we'd need multiple tests as the crisis goes on for each of these workers to make sure they aren't out infecting citizens when they interact with them. (Or when they put food on shelves that a customer picks up 4 hours later.)
Please, try to be reasonable. Maybe the current approach is not tenable, but the ideas being proposed on this thread are problematic as well.
Also, where do you draw the numbers of primer production capacity from? IIUC, the only other things that an amplification needs are enzymes (just DNA polymerase for PCR) and "food" (nucleotides), but that I assume is not a bottleneck?
How difficult is it to safely dispose of amplified samples? Can you basically just dump them in the toilet?
Like in war profits will probably be huge but if there is enough pressure government cna seize stuff too.
This is the reality in China. Literally every single public place have a remote thermometer they scan on your forehead. supermarket? scanned. subway? scanned. restaurant? scanned. If you have a fever you'll go into quarantine in no time.
I disagree, and strongly.
This would be a knee-jerk, hyberbolic, and woefully ineffective over-response.
Typical for the times.
The only thing this might achieve is creating an even greater climate of fear and loathing.
There will be false positives. And false negatives.
There are with every medical test.
Back-of-the-envelope calculation: Assuming we "test everybody", and assuming both a 5% rate for both false positives and false negatives -- which is better than we currently do with influenza testing![1] -- we would needlessly quarantine 12.5 million people, and fail to quarantine an equal number of infected carriers.
Not to mention, the data about COVID-19 is all over the map. We still know very, very little about this disease. Understanding it well enough to calculate the appropriate response will take time.
Testing is part of the solution, yes. But the economic and social impact of "test everybody, every day" would be catastrophic.
Until then, in the short term, there are things we can, and should, be doing, as individuals:
(1) Limit your physical contact with others.
(1a) Especially at-risk individuals. The elderly, young children, etc.
(2) Support your local businesses through delivery, online ordering, and gift certificates.
(3) DON'T HOARD SUPPLIES! You do not need a decade's worth of toilet paper. Three months' worth is fine.
(4) Related to the above, maybe use this as an opportunity to live a bit more sustainably.
I'm down to four sheets per wipe -- certainly fascinating, relevant, and not at all disgusting to all of our readers -- which means that a single CostCo-sized pack of TP might keep my household going for well over six months.
On that note, I'm learning to garden. Let's see if I can manage to actually grow a fucking potato this year, all I got last year was a big leafy plant with zero tubers.
A discussion on government policy in response to this is a big ball of... things that require four sheets of Kirkland Signature, so I'm so not going there.
[1] https://www.cdc.gov/flu/professionals/diagnosis/rapidlab.htm
As opposed to needlessly quarantining 300 million people?
There is a massive gap between "test everybody!" and "test nobody!"
We have a finite capacity to test. Tests have accuracy limitations. We can work within both of those limits to mitigate risk as much as possible.
Drastic times require effective measures.
Well, the failure the quarantine would be the false negative rate times the infection prevalence. A significantly smaller number than the false quarantine rate, until the whole gadonkun no longer matters.
We need to develop that capability. Imagine the next pandemic was worse, spread more asymptomatically and/or required a longer isolation time to get over without spreading combined with higher fatality rate, or fatalities in a younger demographic.
This could also help us learn how to deal with more tangentially related things like grid disruptions (hopefully we don't eliminate cash in response though as that might hurt in that scenario).
Is that actually true though? What resource are we low on? Do we not have enough nonperishable goods or public funds to pay for utilities and basic infrastructure?
Debt has metastasized and spawned many industries, so its retraction is unlikely to be a peaceful event. But it is a cancer that will kill our society some time. The only question is if now is that time, or if some patching will get the system through this and we can go back to pumping the stock market as a false idol of productivity.
We have:
* work to be done
* people willing and able to do the work
* resources with which to do the work
So what exactly is stopping us from putting those three together?
The worst case on such a scenario is that an economy sits on rationing for a period of time, followed by a strong and possibly inflationary demand spike, but businesses and people's balance sheets could be partially paused.
The issue really isn't the virus but the fact that people who end up spreading it, don't know they have it. Shutting down the economy is a backwards way of solving this...it is assuming that everyone has it.
I am not sure how exactly we get to that point and you are kind of hoping that people who have it isolate...but testing really should be priority. My govt is ramping up but the numbers they are talking about are still ludicrously small...total tested is 0.1% of population, and they are saying it is a resource issue (whilst they are spending literally hundreds of billions on stuff that is being caused by their testing strategy).
So there’s a middle ground here somewhere.
South Korea has been aggressively testing, contact chasing, and quarantining from day 1. Look at their number of tests per capita compared to ours.
China did indeed shut down the entire economy for months for provinces containing 900M people iirc. In barely hit provinces they have teams of thousands of people doing aggressive testing, contact tracing, and quarantine.
I mean, yes, that's great, but it's not as widespread as people are implying.
https://www.worldometers.info/coronavirus/country/south-kore...
The article you linked is based on a single day’s new case count.
China’s approach (lots of temperature taking, testing everyone with a fever) might not eradicate the disease here, but it could keep it manageable until a vaccine is deployed.
And most importantly, those with immunity can go on to lead a normal life and participate in the economy.
Why not? This is a matter of survival. If the economic system breaks because of one pandemic that will last less than a year maybe that economic system needs to die and be replaced by something more solid and useful for most.
No, this is people breaking. Peoples lives and livelihoods break due to this kind of economic and social strain.
And the quarantine effects everyone severely, not just 14% of people.
Out of curiosity, why do you think it's likely that something more solid and useful to most is likely to come out of an economic collapse? Economic collapses have happened before - are there any instances of a solid and useful system coming out of them (maybe the new deal after the great depression? That one is arguable though).
Didn't even last a decade until they got themselves an emperor.
> Arguably the Russian Revolution if you accept the USSR as a step up from feudalism.
Considering that the USSR killed orders of magnitude more of its own people than feudalism under the Czars ever did, I'm going to vote "no" on this one.
Not that it's a model to imitate. Although some folks in this thread sound rather ready to sacrifice millions of people, for the sake of keeping the economy limping along...
That’s because they believe they are young and would fight off the virus with no problem. Change one of those variables and they will change their tune.
So Sweden has right now 1,639 confirmed cases with 16 deaths so far. There are some young people treated in critical care but so far it has been older people who has passed away, often with other diseases as well. Sweden currently only tests older people, people with severe symptoms, healthcare workers and similar personal and those who can work from home these days and travel is discouraged.
One expert estimated that we have around 100k infected in total right now and discussed that some things like shutting down schools for younger kids will have a large effect on society but not do that much on the spread of the virus. Instead you should focus on protecting vulnerable groups, stay home if you feel any symptoms of cold etc.
100k out of 10 million population would fit roughly with Iceland who did random sampling and found 1% of their population affected.
Of course he acknowledged that there is no way to know and taking extreme measures are better than taking too small but emotional/political reactions vs practical is really a discussion to be had.
Are there reasons you see why a more robust cannot be developed? I suspect HN could easily come up with a substantial list of improvements. Limiting stock buybacks seems like a good place to start.
We all work in the system, some would make more than others but even those who work the least or not at all would not be left behind. So if you make more you can enjoy more "stuff" and gadgets and if you make less you are still stress free about life.
Would we have $1000 phones or shopping shelves filled with hundred of fake choices? Most likely not but at least we won't have people rationing insulin or people living in the street of the richest city in the richest country.
We live in a world with so much production and people spend their time worrying about surviving and getting ahead instead of relaxing and making the world a better place.
Let me put it in simple word: you'll loose your job. Your friends and family will loose their jobs.
As a result, when your savings run out, you'll loose your appartement. And so will your friends and family.
You won't be able to afford food without government assistance.
And even if shutdown lasts only 30 days, it'll wreck the economy for a long time. Once a restaurant defaults and closes, it won't just re-open. Those jobs will be lost for a long time.
Now, maybe you're one of the lucky ones with enough savings to ride this out and this won't affect you. But it'll affect millions of others.
that's the wrong way to think about it, and also a misunderstanding of economics.
If a teacher is paid the way a CEO is paid, there won't be enough money for very many teachers. You'd find it hard to afford a teacher for your kids, let alone free education.
A doctor, back in the middle ages, is only affordable to the nobility. These days, doctors are still quite highly paid (too high imho), and that is one reason why medical services are expensive.
Imagine if you associate the "importance" of a resource with its price. Water would cost more than diamonds and gold! Water is needed for sustaining life - you die without it. Therefore, in theory, it's so important that you end up paying infinity amount of money to have it, under your system!
The fact that we have water so cheap (literally 0.000001 cent per cup), is a good outcome. Everybody can afford water.
No thanks.
> If a teacher is paid the way a CEO is paid
You are thinking about it wrongly. We should pay the CEO the same as the teacher. Managing a bunch of adults can't possibly be harder than teaching children. Education is an actual investment. Bullshit inc not so much.
Anyone is free to start a corporation, name a CEO, and pay him whatever they want to (from their money). They can even name themselves CEO!
This is not true for publicly traded companies - where the board (consisting mostly executives at other companies) determines compensation on behalf of the owners
We have a finite amount of labor and a finite amount of resources available to us.
The thing our governments lack since the days of lords and god kings is direction. This is necessary since a group of people poorly working together isn't smarter than the smartest person in that group.
We all do stupid shit at times, if a lot of people decide to support the same stupid thing it is entirely possible to dedicate all time and resources to throwing virgins in the volcano, smoking opium or borrow money in stead of printing it. Who knows, someone might create the ultimate video game, we could retool our entire civilization to play the game non stop.
A [proverbial] god king would have other priorities, there might be a war coming with the neighboring country, there might be regular floods, there might be an insect plague, there might be a disease or the food might be running out.
We have distributed wealth recklessly (to put it blunt) and ended up with millions of little emperors who pay their little generals whatever they like. They are constantly at war with the next little empire.
The plague or the flood simply become economic developments that one can leverage for ones advantage. What is left of our government is a vending machine that one can use as a weapon to do whatever each little empire is willing to pay for.
I should mention we've made a ton of technological progress with this role playing game. It might just be that we've created the ultimate game already and that everyone is playing it. If so I'd have to argue we have one shitty dungeon master. The adventures planned out for most of us are not very interesting. Most of us are simply chasing the carrot on the stick. The heroes are not gaining as much experience points as they could, they are not learning as many new skills and abilities as they could. We can do better and we know it.
Say you are in charge for sake of argument. The orc's are getting ready to attack from the east, the goblins from the west but all your population cares about is opium. Would you dedicate resources to making swords and training or would you give the CEO of Opium inc in his competitive struggle with Meth corp the 10 000 men he wants for a promotional parade? The people might be enraged. If we make swords who will care for the poppy fields??
> Anyone is free to start a corporation
Indeed, I could create a product triggering superior production of endorphins. I could win a large market share and then present myself as if a philanthropist on a mission to help humanity with its struggles. I could prove it by moving funds into a non profit organization that might not do anything by design or struggle hard not accomplishing anything.
It's almost funny, the real needs retooled into a vehicle for public relations. If you play enough candy crush we will be sure to defeat the orc's.
Thanks for your time.
There is an infinite amount of labor available - because of improvements in efficiency. The manpower required to make a shirt has declined by something like 99% in the last 200 years. For growing food has dropped a similar amount. And on and on.
Resources are infinite because they can always be re-used and re-purposed for other things. For example, despite everyone eating chicken and ham, there is no looming shortage of chickens or pigs, because people figured out how to raise them efficiently.
If humanity can't react appropriately to pandemics like this, then how can we expect to survive in the eventuality that something even worse comes along? And any economic system that gets crushed by this proves that it simply wasn't prepared and needs to be replaced, lest it cause even more damage to individuals.
Even without this pandemic, we live in a World where there is enough shelter, food and drugs for everyone but we still have homeless people, people starving or at the least malnourished and people dying in a rich country because they have to ration fucking insulin.
This economic system is not working at all. People die every die directly because of this system[0]. This pandemic just brings it to light.
Of course socialism is a failed economic model but hey maybe this time it will work /s
Just go ask Argentina[0], collapsing months after IMF was praising the "good" work Argentina was doing and how a good Capitalist country it has become[1].
This pandemic just made most people feel what the lives of billions is like all year long under Capitalism. And your dismissive comment is just shameful and disgusting.
[0]: https://en.wikipedia.org/wiki/1998%E2%80%932002_Argentine_gr...
[1]: https://www.imf.org/external/pubs/ft/fandd/2000/03/pou.htm
ohh I dont know, the millions upon millions that have died in starvation due to socialism over the many decades that it has been tried
but those where not "real socialism" right....
Pointing to one good that some people can not afford (the reason is largely due to government control not capitalism BTW) does not in any way "prove capitalism failed"
it is true that sometimes with capitalism you will get breadlines, but with socialism sometimes you get bread
If everyone is tested, the disease can be controlled:
https://www.theguardian.com/world/2020/mar/18/scientists-say...
It all comes to what part of the curve the country is now, the choice being total lockdown incl. economic shutdown vs aggressive testing.
Considering US lapsed on aggressive measures in the beginning and that proper test kits are just being flown in from Italy[2]; total economic shutdown seems to be the only option left.
P.S. There are still high-risk countries which hasn't gone into lockdown neither doing aggressive testing as of now, claiming the number of cases are low although the day-to-day delta is increasing exponentially.
[1]Italy correspondent of Aljazeera gave this information multiple times on live, couldn't find static link to it as of writing.
[2]https://www.msn.com/en-us/news/us/air-force-flew-500000-coro...
That's quite the overreaction.
Italy found that among fatalities the median age is over 80 (older than the average lifespan of an Italian man).
99% of fatalities were among people with a prior illness. About 50% of the deaths were people suffering from at least three other illnesses.
https://www.bloomberg.com/news/articles/2020-03-18/99-of-tho...
To put it another way: most of the folks dying from COVID-19 were already dying. This disease is the straw that broke the camel's back.
Should we just give up on them? No! But instead of quarantining everyone, and sending us back to the stone age, we should work to quarantine these folks while the rest of us return to normalcy and build up our antibodies and herd immunity.
So far... wait until you get the number of critical cases above the number of ICU beds and you'll see 18 year olds dying from this
"With demand outpacing supply of beds and respirators, medical workers are told to prioritize younger patients."
"The principle of "first come, first served" has been abandoned, said Mario Riccio, an anesthesiologist who works at a hospital in Cremona."
- https://www.politico.eu/article/coronavirus-italy-doctors-to...
”As of March 17, 17 people under 50 had died from the disease. All of Italy’s victims under 40 have been males with serious existing medical conditions.”
They reached maxed capacity of beds or ventilators right? We read stories of doctors having to make life & death decisions. Where are the dead 18 year olds?
Spreading info like that on a hunch, or an exaggeration, is counterproductive if not damaging.
They just started to reach max capacity, and not in every region, every hospital at the same time...
”Pandemics begin with an investigation phase, followed by recognition, initiation, and acceleration phases. The peak of illnesses occurs at the end of the acceleration phase, which is followed by a deceleration phase, during which there is a decrease in illnesses. Different countries can be in different phases of the pandemic at any point in time and different parts of the same country can also be in different phases of a pandemic.”
So, we know not all the hospitals are experiencing the same levels at the same time. A big reason I wish we were more precisely targeting shutdowns and quarantines.
It doesn’t make sense to throw these blanket executive orders over entire states. As we can see from the slides, the economic consequence are dire. Why not target the cities entering acceleration only?
In the meantime, start building drive thru testing. Distribute thermometers. Practice social distancing & aggressive sanitation, but not destroy out national security in the process.
But this part,
”All of Italy’s victims under 40 have been males with serious existing medical conditions”
Sure it’s early, but even in Italy, in one of the worst places in the world for the virus right now, that information should be very illuminating to us I think.
Because the long incubation period and the lack of sufficient testing makes it impossible to know which cities are infected early on.
And, to put more bluntly, because we have two models to look at and choose from: the Chinese one, with harsh containment measures that were very effective (if you believe their numbers) and the Italian one, with moderate containment measures and a lack of sense of urgency from the populace, which resulted in a downward spiral with more deaths than China despite having only ~58% the number of cases.
> I should have said, ”In some areas”.
And no, you shouldn't have said that, you should just wait another week.
Quantifying undetected COVID-19 cases and effects of containment measures in Italy
https://www.researchgate.net/publication/339915690_Quantifyi...
The idea that relatively young (most of folks here) will be just fine is not true. With overwhelmed healthcare, most criticals will simply die. Once doctors will get sick (and they will), it will make everything, I mean literally any disease and injury much more dangerous. Sure, most will survive, hopefully without any permanent lungs/kidneys/testes damage (was this confirmed or just a rumor?).
Maybe as humanity we've grown weak and can't tolerate medieval mortality rates anymore, but this is who we are right now. There is no easy solution to this. There is unavoidable harsh economic impact coming. Nobody has clue which option will be at the end better than others.
Accept it, and try to find ways to help fellow human beings instead. We are in this all together, rich and poor, left and right alike.
I don't know about the law in Switzerland but unless you are lying that is something she could be fired for in many countries.
I don't think any one is under some kind of delusion that some young people will die. The only question is what percentage and what changing those numbers will cost. Picking specific examples of bad outcomes and pretending the risk is as high as older people isn't doing anyone any favors.
The narrative that this disease only affects the economically unproductive is dangerous at best, and inhumane at worst.
My feeling is that I'd rather be chronically sick in a good economy than in a depression. What happens when medicine becomes unavailable due to supply chains being cut off?
Do you just assume we'll treat chronic health issues as a priority in a depression? I'd like to think we do as well, but the point is that things may well just stop working.
I expect the economic impacts to be rough either way. We don’t have a choice for “no economic impact” anymore. Either we do it in a coordinated and somewhat controlled manner now while we still have a handle on cases vs illness, or the impacts hit, roll, and peak along with the cases of illness while well/well-ish people try to improvise individual responses which probably have similar econ impacts but may not be as effective.
Or did we think that thousands on thousands falling ill at once wasn’t going to hurt economically?
To me it seems likely the difference between a recession (guaranteed) and a real, extremely serious depression which will be fully capable of exacting its own toll on lives.
Second, I expect that the illness impacts will hit even broader, both in sheer numbers and crossing demographic expectations, resulting in people directly absent from work and consumption for weeks at a time.
Those are the first order effects. The second order effects on psychology among a large number of folks having loved ones dying and acquaintances suffering are going to produce some behavior changes. Some of them would be similar to those we're seeing with lockdown, but as I said, improvised rather than coordinated, probably combining some degree of the same impacts but with less of the benefits.
The recession might be milder if we trade a higher death toll. Might.
But the financial markets sure didn't think we were going to escape one even before US civil measures started ratcheting up.
[0] https://medium.com/@juliael84791135/this-isnt-a-normal-flu-i...
I'd rather a strong, comprehensive public health response than trying to economic recovery ourselves out of this problem. IMHO, the economy is a distraction to numb us from the tsunami of ICU patients and deaths to come.
The economy is not sacred, and is cyclical, and needs a good purge and rebalancing every 8 years or so. Recessions reallocate capital to be used more efficiently. After 2008 they were politicized as something to be avoided at all costs.
What isn't sacred are the people who own all that. They are as disposable as are any other parts of the economic machine. Replacing them is probably a good idea.
It’s a solution ( it wouldn’t work the way you think, but it’s an option), but at least admit it clearly and live with it.
How long can you just shut down industries, keep kids out of school and will it make a significant dent in the total mortality? It could be that a couple of weeks of social distancing will be enough but can it be months and what are the comparable effects.
I know it is more dangerous than the normal flu and I will not downplay that but take Italy (that yes, would be worse of without shutdowns) you have 4k deaths so far; mostly old people while a couple of seasons ago they had 24k deaths attributed to a bad flu season.
The social distancing and shutting down society needs to work reasonably fast otherwise I wonder if it is worth it, at least in countries where you already have widespread disease.
Obviously, the illness itself was always going to cause an economic blow by killing and sickening people.
And then there would be damage from behavioral changes. People were pulling kids out of schools, canceling events, and avoiding travel without being ordered to do so.
It doesn't seem like the "good economy" you suggest was ever an option.
https://www.statista.com/statistics/505995/adults-with-hyper...
The state with the lowest incidence of hypertension still has roughly 1 in 4 adults with hypertension. West Virginia is at the top with more than 1 in 2 adults. What do you think happens to them when they develop COVID-19? Hypertension is at the top of the list of co-morbidities that worsen outcomes. Medication to treat hypertension is often extremely inexpensive even without insurance ($10-$20/mo at the low end) and thus hypertension is often easy and inexpensive to manage.
How many folks working at pharma companies do you think have hypertension? What happens to the supply chain when people are incapacitated?
Even if a minority of the population will need hospitalization (hell, even if the minority is small enough to avoid overwhelming hospitals)... how many do you think will work through a SARS-CoV-2 infection?
The gravity with which I treat this pandemic is in large part based on government action. China quarantined nearly 100 million people. Iran is building mass graves. The uber-pro-business trump crony that serves as the secretary of the treasure took one look at the GOP plan and essentially said "double it, and make it cash with no means testing."
The folks arguing for immediately disruptive action aren't ignoring the economic consequences, they've decided that the economic consequences of doing nothing will be worse.
It's not just fatalities, hospitalisation i.e. exhausting healthcare facilities is the primary concern with COVID-19.
There is no guarantee that young people wouldn't make up high mortality list in a poor country with high younger population, rich countries should get their acts together to stop that from happening in vulnerable countries.
https://www.imperial.ac.uk/media/imperial-college/medicine/s...
There are 40 million 40-somethings in the USA, you're proposing that 100% of them will have lung damage.
Let's imagine that 80% of the population is infected, that 80% of cases are symptomatic, and that 80% of the 4.90% of hospitalised cases (this 4.90 is direct from the report) get damaged lungs. This is one million 40-somethings, not the entire population.
1 million sounds like a lot, but its only 2.5% of the population at that age range, and assume worst-case.
You know what causes reduced lung functionality in adults? Asthma, driven by air pollution from vehicles and coal power plants. 7.7% of adults have Asthma. Where is the war-scale drive to eliminate fossil-fueled vehicles and power generation?
Might as well just shut the economy down to eliminate that.
Vaping. I see most of the young adults doing this. Its probably why they're having the higher hospitalization rates with coronavirus. They already have lung damage.
This thing has evolved three strains with only a couple hundred thousand cases. A couple billion turns it into a shit show.
(my bad, it's not easy to go through the slides on a phone)
Edit: by "skew" I imply mix the two categories COVID Vs "all other causes" and will give false average if we are trying to focus only on the COVID cases.
Here is why you'll get tarred and feathered, because right now the media is covering the health costs of the virus extensively, but it's not covering the economic costs, which are already unfolding now in the form of businesses dropping vendors and announcing layoffs because their anticipated revenue until further notice is zero.
I've seen so many bros on my feeds who puffed out their chests a month or two ago and said, this virus is not a big deal. Then there were cases in their state and the media was reporting the deluge of new cases in the US and they said oh I was wrong, we need to be on total lockdown, and they're hiding in their apartments.
What will happen next is the jobless claims will come in, which we can clearly predict based on current business activity, and they will break records. I saw one estimate of around 1.5 million jobless claims this week, which is a record. I guess the bros will start squawking about the economic damage in 2-3 weeks once the media has covered this widely and people they know are out of work.
Small businesses (and some large ones too) typically don't have large cash reserves like Google. They also don't know whether this will last for one month or six. So they are in the process today of shutting down and telling everyone to go home without pay, they have to do this until they know what the long-term outlook is.
Nothing changes, most people are sheep, they parrot whatever's in their feed, they are poor at prognostication and self-examination, their attention is occupied by whatever narrative is being shouted most loudly. Nothing you can do.
Also...
You make the error of assuming that (A) high blood pressure, diabetes, and heart disease mean that a person is "already dying," and (B) people who survive don't become debilitatingly sick.
The virus is just a convenient excuse; a crisis would have hit at the first sign of trouble.
Sure, the market was seeming to be overheated and due for a correction.
Without the virus, maybe it's 2008.
With the virus, it's starting to feel like 1929 again.
Huge numbers of people are unemployed right now that wouldn't be in a normal recession.
Wait till the unemployment numbers come out.
> 99% of fatalities were among people with a prior illness. About 50% of the deaths were people suffering from at least three other illnesses.
This is true, but what about the overcrowded hospitals this causes? People who weren't gonna die will now die. And what do we do about the doctors and nurses who are pleading with everyone to act?
Perhaps something along the lines of strict contact tracing could have been done, but now it seems like it's out of hand.
Selection bias. They're so overwhelmed they're using age as a primary factor to triage patients. Clearly, if you put your medical resources towards saving the younger patients, the younger people are going to have a better survival rate. Lack of a ventilator, when you have a severe lung disease, is a massive risk factor at any age.
> 99% of fatalities were among people with a prior illness. About 50% of the deaths were people suffering from at least three other illnesses.
Again, if you look at the oldest people, you're probably going to find more diseases there. This could easily be just another consequence of age-based triage.
On the other hand, we cannot pause the economy for too long. The damages are already done but what is going to happen if we wait too much?
I cannot imagine the level of stress the people working at the government must be under now... Whatever solution they come up with could be the collapse of the US as we know of now.
Pretty sure that ship already sailed.
Thinking abstractly, why not? If the businesses are open, the money is there to pay everyone. If you send everyone in the economy home, where has that money that would have been used for salary gone?
Someone is holding it rather than distributing it, that's the only reason. So, take a look at who is hoarding money like a dragon sleeping on a pile of gold, tax it, and pay everyone else enough for a roof and food.
The economy is a circular river system. If it stops one day, there is going to be areas of drought in places, as well as huge reservoirs protected by dams. Money does not disappear, it only moves. You lose money on stocks, someone else on the other side of the world made money with their short position.
Perhaps that dollar is held up in some whale's cash account after they closed their positions. You would tax that whale for that cash, and redistribute it to the working class to afford food and shelter.
In any recession, the big stall is capital being too skiddish to pay for labor, resulting in lowered consumer spending, justifying less demand for labor, and creating a worsened financial crisis due to even lower consumer spending levels. If you are able to keep the working class afloat, you can conceivably keep consumer spending afloat, and therefore keep the economy afloat, even if capital is fearful.
Example: I go to a clothing store and give them an amount of money that I value less than the clothes they give me in exchange. We are both better off because we have made that mutually-beneficial exchange. If the exchange doesn't happen because the store is closed, then there is no revenue (let alone profit) to divvy up.
The only way to simulate that transaction in a way that gives money to employees is to literally take it from customers who receive nothing in return.
My solution would be to tax you redistribute that money from your pocket to the people who need food and shelter, the same people who stimulate consumer spending, because you are unable to currently do that yourself due to shelter in place orders and/or perceptions of the state of the economy.
What you are describing is essentially how to ration the dwindling supplies of goods during the epidemic.
Enacting arbitrary taxes where the government simply appropriates funds from entities that have it and gives it to those who don’t is unfair, dangerous, and will undermine trust in the rule of law. It will be ripe for abuse and predatory behavior. It is also a system that loses the critical information market mechanisms provide, instead replacing with “command” based allocation which is a dangerous precedent.
The way to achieve what you propose that is not at odds with civil society is for the government to “print” new money, and distribute it through moderately means based criteria.
The US has unlimited capacity to increase its money base as a sovereign entity. Normally this is done through the Fed buying bonds from the treasury. The treasury has the authority to create money directly if they choose.
This has the effect of devaluing the currency as a whole. By distributing the new currency ti citizens that need it, it is effectively a transfer of wealth that is distributed throughout the economy in a decentralized and proportional way.
It is only necessary to target those who need help, opposed to harder problem created when the need to target who can “afford” to sacrifice their savings is added.
This doesn’t address the problem of productivity lost, but it allows what productive output there is to be more fairly rationed.
It also less subject to being the legal and political nightmare your suggestion entails.
The economy is the collective action of people producing the goods and services that you and I consume - food, haircuts, medicine, video games. Money is a claim on some portion of that stuff that has been or will be produced. Redistributing money is not going to suddenly make us productive again when most people are only leaving their house once a week to stock up on groceries.
There are two sides of our society; production and consumption. If we aren't producing, how are we continuing to consume?
Instead of going to a restaurant, I make a sandwich, instead of buying a new shirt, etc. GDP has indeed dropped, and some people have no cash flow (fixable), but I'm not seeing physical (excluding the abstraction of the banking system) reasons why this can't be sustained for months if necessary.
I am voluntarily (10% family-preservation, 90% community service) staying in my house. I’m now “hoarding” (to use your hyperbolic term) all the money that would normally go to fuel, eating out, and entertainment.
The restaurant, movie theater, and gas station owner would, circumstances permitting, surely prefer to be able to serve me and I likewise.
Why don’t I just mail checks to people that I’d normally buy from? Because I don’t know what my own economic future looks like. Will I have a job in 6 months? What will my retirement savings look like then? Plus, I can’t just send the money where it would have gone and also send it to the people who are now selling me more at-home food or new goods/services that I need to be productive at home.
I’m fortunate to work as a W-2 office worker/spreadsheet miner, at least for now. If I were a bar, movie theater, or auto repair shop owner or worker, I’d be in a lot worse shape.
This is not a Bezos, Gates, Musk driven problem. This is driven by the inability of the consumer to consume normally.
As a moral issue, we are choosing to continue to pay our every-other-week house cleaner to not clean our house. Everyone else is getting paid iff they provide current goods/services. We have our own financial survival to look out for until more is clear about the economic outlook.
By the time you're done developing the app, deploying "thousands of mobile test stations", figuring out a way to get test results in 15 minutes (!!!) and implementing security checkpoints at each establishment from gyms to workplaces, we'll all be infected.
> Want to get into a theme park?
Nobody cares about theme parks right now. We care about getting infected at the supermarket, or bringing infected bags home. You're missing the forest for the trees.
The Swiss Federal Council is setting aside billions of CHF (I think the total is currently at 32 billion) for exactly this: some relief for small and medium sized businesses. They've recently announced a process to have 80% of your salary insured up to a certain high cap, between 150k and 200k CHF.
There might be vastly different political and scale differences between the USA and Switzerland that make this infeasible for the USA. But Switzerland is showing that in principle it can be done. Making your blanket statement for the whole world, false.
And yes with these measures essentially any income is now assured: Salaries, salaries of SMB owners (normally excluded from unemployement benefits for obvious reasons), hourly workers, limited contracts, internships/apprenticeships, self-employed (i.e. without being employed by an LLC or something else like that) business like artists. Also daily stop-gap money if you have to stay home for more than a few days to figure out how to take care of your homeschooled kids.
Plus like 20 billions in credit guarantees for small businesses to avoid a cash flow squeeze.
All measures use existing infrastructure for paymenet (commandeering the banks for the cash flow squeeze credits) to guarantee the money has arrived by end of the month, latest. And that it will continue to flow, like regular pay check.
In their panic, people want "something" to be done. In a couple years, we will be talking about how 90% of policies enacted during this crisis were a net negative, and 50% of them directly made the problem worse. Not to mention the ethical concerns of legal overreach.
* Disclaimer: It's a serious situation and I do not endorse a hands-off approach. That doesn't mean we can't have a civil debate about the complexities of trying to mitigate it, though.
They are shutting down many businesses, and more or less forcing people in to situation where the virus will spread further.
the Panic in society currently right now will do more to spread this virus than anything.
But hey lets destroy our economy as well, that will do wonders to stop the panic
Well in my country (Poland) with all the noise and confusion some rational procedures get implemented. Supermarkets limit strictly the number of customers inside. Cashiers get physical protection from customers. Contactless payment limits have been doubled. Etc.
So we are getting time for implementing changes and the life can start returning to 'new normal'.
Compared to what? An exponential explosion, like what we saw in Italy, prior to the measures, but ten times worse, because you don't even do anything to check it?
Also HIPPA laws prevent what you propose.
That's what happened in South Korea, as far as I understand. They missed just one guy out of 31, and he started a massive infection.
Yes, massive testing is indeed better than what we do now, but if you let people to just walk around, it will do absolutely nothing.
I assume in your system that everyone would need to be tested before going to work every day, because that's the most common in-person gathering for most people. The USA has run fewer than 50,000 tests in the months since this began. Your plan would require 100,000,000 tests in the USA every day.
No need to make the test stations "mobile". You could put 1,000 in every city, and they'd never have time to be moved. Every sidewalk downtown would be lines of people waiting for a test -- which itself would be a bigger gathering for me than just going to work.
Unfortunately, this virus is highly contagious (to the point that the vast majority of countries won’t contain it) and fairly lethal. We don’t actually know how lethal, but it appears 1%-3%, but without widespread testing we wouldn’t know.
At the moment, we just reduced our GDP by 30%-50% in regions under quarantine. Think about that for a second...
Now consider the fact that the supply chain is also all kinds of messed up and with the loss of jobs people have less money.
Finally, save this, but I don’t think the US quarantine is going to do much to lower the curve. Simply put, the west is not prepared. Our checkouts are run by people without masks or gloves. People still are closer than 2 meters (or 6 feet).
To lower the curve we’d need strict quarantine (no leaving the house) for a month or two. Even then we won’t have enough masks, hopefully we’d have enough ventilators and tests by then...
Point is, we are tanking our economy and mark my words — it won’t work. People voted, had spring break, celebrated st. Patrick’s day went out shopping in droves. It’s likely too late, one sick per household and they infect the whole house.
All this to say: we are losing our economy and probably this isn’t effective.
This happened repeatedly in China; in fact, the nature of a lockdown sort of encourages this. But an infected household of 5 ppl is significantly easier to contain than 1 infected person going on to infect 4 people from 4 different walks of life.
Last week my brother suggested instead of working from home I work from a Starbucks.
I feel like people don’t understand how serious this is and it’s really bothering me.
People should cooperate and keep distance, but it's not a big deal to just be outside a reasonable distance from small numbers of other people.
Then I remember I’m at the park too...
And it might help to keep them from going stir crazy from being cooped up inside too long...
Generally, clusters are OK for people that live together anyway.
Doing my part (I have asthma), I haven't left the apartment since Sunday :^)
Usually Hacker News middlebrow skepticism is just in poor taste. On this topic, it is foolish and farcical. One of our doctor friends is already telling us that her hospital is under stress and she's not in one of the hardest hit states.
You absolutely do not know that and should not be saying any such thing with confidence!!!
Shibuya Crossing: https://www.youtube.com/watch?v=0vishEDtgdw Times Square: https://www.youtube.com/watch?v=mRe-514tGMg
Of course better compliance from larger numbers of people has even more impact, but it's not a binary condition.
That said, we probably aren't doing enough to prevent hospitals from being overwhelmed, or to even push that very far into the future.
Projections are 500k dead by June. Maybe with the precautions we can slow the millions dead by the end of the year. It remains to be seen.
Looks fairly exponential to me. (log y axis) And that's just confirmed cases.
As governor Pritzker said: "I fully recognize I am choosing between saving people's lives and saving people's livelihoods, but ultimately you can't have a livelihood if you don't have a life."
This only ends with a vaccine and enough people recovered after infection we arrive near enough herd immunity. Until then this will have to burn through populations. Regardless, I can appreciate and support Pritzker’s response, and efforts to “flatten the curve”. It’s an unfortunate situation with no clear path to success.
The cases from 2 weeks ago are seeking medical care.
I'm slightly optimistic, testing has ramped up the last few days with a large spike instead of an unimaginable one, and we will get a clearer picture as they start broadening the criteria.
This the the doctors delima, that does not factor in quality of life in to the "life" equation, life with no quality is not much of a life.
Further I have big problems with the Governer or the government making that choice, it should not be the government choice of my livelihood over my life, in either direction. No only is it shocking how fast people willing toss the economy aside and expect government checks to save them, it is also shocking how fast people simply toss aside all civil liberties.
I don't envy the local governments trying to contain this with almost no data and no help or direction from the federal government.
In our system of government the State Governments are suppose to be the most powerful, not the federal government
it is a Union of States after all.
The fact that in the last 100 years or so we continually have centralized more and more power into the hands of the federal government is a huge issue, but instead of recognizing that issue people seeming want to put more and more power federally and continue to strip their local governments of power
The smaller the unit of power the faster it can react to local changes. In situations like this it SHOULD be local government leading the charge not a slow monolithic federal government
Especially if you think Illinois is a model everyone should be following
That’s the fatality rate within a functioning medical system. It’s safe to assume that if the virus is uncontrolled the rate will be substantially higher.
https://img.buzzfeed.com/buzzfeed-static/static/2020-03/13/2...
https://www.nytimes.com/2020/03/12/health/coronavirus-midlif...
If hospitals can get the supplies they need, and testing and health department capacity is there to do contact tracing, the lockdowns can loosen, and our economy can start back up. Bonus points if the warmer weather in the coming months helps fight the virus.
Is this true though? I'm not trying to be insensitive, but according to reports, ~15% of the infected need hospitalization, and the distribution of those people are mostly over 60[0]. Is having these people hospitalized on a large scale more detrimental to the economy than shutting everything down? Serious question.
If this continues for more than a few weeks - 50% of American business dies. 50% of America is unemployed. Contagion from massive defaults and write-offs spreads throughout the entire economy. Money printing at a rate heretofore unimaginable and probably hyperinflation to follow.
It is no less than committing hari-kari in a moral panic. Hopefully we will wake up from the fever dream before it’s too late.
“Flatten the curve” is a terrible lie. The extent and duration of the measures required would bankrupt 95% of the country.
ICUs being overrun is actually an argument for getting the COVID cases out of the way quickly, not dragging it out over, say, 24 months.
If you can get your head around the scale involved, if 80% of people are going to be infected and 14% of those are going to need serious treatment (doubtful, but the same assumption the “flatten” exercise is based on), there is actually no way to keep COVID cases “at or below” ICU capacity. They will absolutely take 100% of capacity and beyond for more than a year, if you drag it out.
The longer you have COVID cases overwhelming your system, the longer you have non-COVID routine emergencies getting untreated.
Either you can contain it in a few weeks or you have to let it burn through. There is no “slow smolder” scenario I can see that leaves society intact.
But also, if there's enough people sick enough to overwhelm the hospitals, your average workplace is going to have a bunch of people out sick, and that's going to be an issue. Plus, like everybody who is well is going to be out for the funerals of the old people.
Part of the reason my kid's school shut down before they were compelled to was that they were having trouble with staffing, because staff were sick or in the vulnerable groups. No school means less workers for other jobs too.
Sounds a lot like Philly' Spanish flu parade,[1] as compared to St. Louis' lockdown during the same.[2]
[1] https://finance.yahoo.com/news/chart-1918-spanish-flu-shows-...
[2] https://media.zenfs.com/en-US/quartz.com/df26ee36f79f85f57ad...
You’ve seen the critical, largely elderly population get tested and from that you get that number that’s freaking people out.
Stop spreading panic. With those kinds of numbers China alone would have 10M+ dead. In Japan, Singapore, surrounding nations more millions dead.
Use a bit more common sense. We know we haven’t tested enough in the US, yet we don’t have bodies piling up on the street. You don’t have families of 4 where 2 suddenly die. This has been going on for greater than 3 months now.
Stop spreading fear. The only thing to fear is the terrible consequences of those stuck inside the fear bubble
They may still have those numbers after they lift the quarantine.
26 dead at the washington nursing home, 50 tested positive: https://www.businessinsider.com/coronavirus-deaths-washingto...
Death rates by preexisting condition: https://img.buzzfeed.com/buzzfeed-static/static/2020-03/13/2...
America has 42% obesity rate and a huge population with diabetes and heart issues, the numbers for 30-60 year olds might end up looking a lot worse than in Asia and Europe.
It would probably be much easier to see who is infected, and thus "eliminate" the problem. In the US, there are plenty of bullets and guns everywhere.
Also those co-morbidities like high blood pressure have the all important age distinction missing. So yeah if you’re 70 and have high blood pressure it’s worse.
It’s perverse to stop world for some low rate CFR for the elderly. The world is made for the young. We shouldn’t destroy it for the elderly.
Also actuarial tables for a 75 year old is extremely haunting. People magically forget that a sick 75 year old doesn’t have much time left to live in the first place.
We should treat them as best as possible but not by stopping the world.
Look up the actuarial tables for a 70 year old. Living another year is significantly different than for a 45 year old.
Then lookup the survival rates for a 70 year old with influenza, suddenly the numbers keeping you up at night start looking weak in comparison.
Flu varies by season but it’s no where near that for the same age group.
Obviously when this matures that rate will go lower because the denominator will grow but the denominator that people care about is the one we have now: who is sick enough to need a test because if I get sick, and thus become part of that denominator, the current rate gives me a good picture of my chances. Was the parent comment slightly hyperbolic, maybe. But you are way underselling the seriousness of this disease and the rationality of being scared of it.
What you see going to the hospital and getting tested CLEARLY is the most critical number of cases. It’s possible that for every person tested, there are 100 or more that are asymptomatic. Run some numbers on this “highly contagious” disease.
Another point why we are in a fear bubble is that everyone parrots the same fear gospel and there’s very few dissenters.
Bring on the downvotes you scared folks
Regardless, the death tolls kind of speak for themselves. What's more, the increase in death toll too. In Italy alone there are over 4000 dead, with a few hundred more a day now. Italy has a population of 60 million. Extrapolating even the current death count in Italy to the rest of the world, and that's 400k deaths. All indications are that it'll be higher than that uncontrolled.
Maybe people are overreacting. But in this case isn't it better to error on the side of caution? Otherwise by the time we realize we're wrong and millions are dying, what do we do then?
1. Significantly older population
2. Shitty healthcare
For context many years ago, the state of Ohio in the US had more MRI machines than all of Canada combined. It’s very possible that due to budget constraints and other things, they have terrible health infrastructure.
Why do we believe that all nations are equal? I can take a look at the Olympics and notice that isn’t the case. Italians make better cars as compared to the French. So maybe they have terrible elderly healthcare? That seems more likely than “super disease kills only Italians and now comes after Americans”
1. Chloroquine is hepotoxic and since cytokine storms is already one of the way covid19 leads to death there is a lot of question whether chloroquine can actually help (in terms of aggregate effect on CFR).
2. Remdesivir didn't work for ebola (original target) and there is no reason to think it would work for covid19.
3. Favipiravir shows activity against many viruses (SARS-CoV-2 included), but doesn't actually reduce mortality for other viral illnesses (unknown for convid19).
Key to understand, many things show activity with the virus but don't actually improve the disease progression.
Importantly, "It did, however, show efficacy against SARS and MERS in vitro" So the drug is promising. Not saying it's a silver bullet but definitely promising.
-- " In Guangdong province, for example, there were 320,000 tests done in people coming to fever clinics, outpatient clinics. And at the peak of the outbreak, 0.47 percent of those tests were positive. People keep saying [the cases are the] tip of the iceberg. But we couldn’t find that. We found there’s a lot of people who are cases, a lot of close contacts — but not a lot of asymptomatic circulation of this virus in the bigger population. And that’s different from flu. In flu, you’ll find this virus right through the child population, right through blood samples of 20 to 40 percent of the population.
If you didn’t find the “iceberg” of mild cases in China, what does it say about how deadly the virus is — the case fatality rate?
It says you’re probably not way off. The average case fatality rate is 3.8 percent in China, but a lot of that is driven by the early epidemic in Wuhan where numbers were higher. If you look outside of Hubei province [where Wuhan is], the case fatality rate is just under 1 percent now. I would not quote that as the number. That’s the mortality in China — and they find cases fast, get them isolated, in treatment, and supported early. Second thing they do is ventilate dozens in the average hospital; they use extracorporeal membrane oxygenation [removing blood from a person’s body and oxygenating their red blood cells] when ventilation doesn’t work. This is sophisticated health care. They have a survival rate for this disease I would not extrapolate to the rest of the world. What you’ve seen in Italy and Iran is that a lot of people are dying. "
https://www.vox.com/2020/3/2/21161067/coronavirus-covid19-ch...
I got my groceries from people wearing masks. Everybody in the store kept 6 feet distance.
I've been working from home for 2 weeks and will continue to do so for at least 3 more. Company wide mandate.
Almost every business other than groceries/other essentials (where some are surprisingly "essential", granted) are closed so people have no reason to break quarantine except to perform essential tasks. So overall, I'd say we are doing exactly what we need to be doing. Hopefully the rest of the country follows suit
The economy will recover, especially since EVERY country is taking a hit, I don't think it will take very long for the capitalist engine to roar back to life. That's the beauty about capitalism -- you're turning the ingenuity of humans loose to be productive. As humans we're great at figuring out how to be productive.
The percentage of effectiveness isn't really measurable if the standard isn't followed. You're assuming its 50%, but it very well could be 0% because your equipment is just as contaminated as your hands. So you have not helped yourself, AND you have decreased supply of essential equipment from someone who ACTUALLY needs it. That's a big fail.
I'm not assuming that they are 50% effective either, I pulled the 50% number out of my ass, but so is your 0%, and I find it hard to imagine a physical reality where me keeping a 6 feet distance to an infected person decreases my infection probability significantly more than that person wearing a mask. Anecdotally, South Korea, Japan, Hong Kong, and Taiwan, where wearing masks is quite commonplace all seem to be doing better in transmission rate than the Western world, and all that without killing their economies. And considering that we're producing around 2 billion disposable plastic bottles a day, I'd currently bet money that we should be able to ramp up the supply of cheap masks for a sum that's a lot less than that of halting 50% of the Western economy for several months. Obviously, it can't happen in a day, but I'm not really seeing anyone try, except for perhaps Trump after his recent epiphany that Corona is not a Democrats' hoax. I'm willing to be dissuaded by someone who's actually thought it through, but sadly I haven't seen any such analyses.
So believe what you want, but I'm gonna go with the experts on this, not someone who's only support is his own conjecture lol. They're not even the only ones saying this. Go Google some reputable sources yourself and stop guessing.
https://www.bmj.com/content/339/bmj.b3675.short
If your collaborators can point you to peer-reviewed studies that rebut these results, or to a serious current analysis that shows the impossibility (or estimates the price and time frame) of ramping up PPE production, please post it.
Dismissive tone? Take a look in the mirror pal. I'm done.
The most vulnerable groups, the working class that pack like sardines in public transit every day, either continue work or are laid off. Tenement conditions still exist in Los Angeles, with multiple families cramming into a 1br apartment.
Quarantine is really only affecting the knowledge workers who make up a minority of the population, and who interact with a sliver of the population to begin with. Effective quarantine would include protections for the working class, but there isn't any political will.
I'm legitimately fearful of hitting the breaking point. Maybe some would call it overblown, or hysteria, but this is a city that endured three days of looting after a verdict, requiring the national guard to stabilize the situation. Men with rifles used to take positions on the roof of my grocery store. This isn't ancient history, unfortunately, it's who we are when pushed past our limits with nothing left to lose.
We'll come around, once it's too late. "Americans will always do the right thing — after exhausting all the alternatives."
Fixed this for you.
(Additional comment: I will counter with I'm really amazed how quickly people threw away the economy in an effort to reduce lost lives. Normally, I expect people to be much more mercurial)
1.) Hedge funds levered up their capital 5 - 15x to make more money, then got caught with their pants down. So they all panic sold at once, crashing the market.
2.) CEOs of large corporations used cash to buy back their stock, inflating the stock price, and depleting their cash reserves. So now those same companies are on the brink of collapse, causing the credit markets to collapse, the stock market to collapse, and the rest with it. They can buy 50B worth of their own stock, but cant pay employees for a month without revenue.
This whole mess is in part due to financial engineering taken down by a black swan event. CEOs should be in jail and so should finance professionals. Laws need to be passed so that finance individuals cannot ruin the market for their own financial gain.
Companies dropping 50% because they miss 3 months of revenue?
I suspect this is a 12-24 month economic event, maybe longer before it fully rolls through.
I'm gonna go with:
0) A pandemic has caused the government to shut down a double-digit percentage of the economy.
You need to have enough saved to survive 6 months w/o income is preached a lot in personal finance and somehow this is not practiced for businesses.It is understandable that cash-strapped startups can't afford to do this but the companies buying back shares to increase their stock price certainly could.
When times are good, these companies divvy up the profits to give large bonuses.
When times are bad, they divvy up the bailout money to give smaller bonuses.
It certainly seems like there is no connection between compensation and performance once you are too big to fail.
And there is a very convenient "heads I win, tails you lose" structure in favor of the large companies.
Uncertainty and desire to cash out alone was enough. The stock market is based on opinions and emotion.
2) Businesses exist to make a profit for their shareholders. Yes, they should have some retained earnings as a rainy day fund, but some of these companies are losing 75-100% of their revenue (airlines, cruises) and it doesn’t make sense to try and self-insure for the most extreme tail risk ever. So they return profit to shareholders. And for various reasons, buybacks are often preferred to dividends.
Would you be this up in arms if they had never done a buyback but had been paying a regular dividend to return those profits?
It is an insidious and morally bankrupt myth that this is the only purpose of a company.
If that return is at the cost of the stability and welfare of society at large then sorry, but no. No-one "deserves" a return and nothing happens in a vacuum. Larger society comes first, full stop. Seems this is a lesson we humans forget, and need to collectively and painfully relearn, every few decades.
Ah, the rallying cry of 20th-century tyrants. You can justify just about anything with that statement.
Clearly the past year has proven why it should have stayed banned.
Or maybe you’re suggesting we should have liquidity requirements for all businesses like we do for banks? That’s actually not the worst idea in a world where we’re going to be bailing companies out. If you want a bailout, you have to have a rainy day fund to make it less likely you’ll need one.
Yes, liquidity requirements and add personal liability for executives if their firm goes through bankruptcy, or restructuring. Goldman Sachs was a partnership until the 90s with each banker personally liable for the firms debts. They took risk much more seriously then.
So are buybacks
If you wouldn’t have chosen to reinvest your dividends, you can sell a fraction of your shares to achieve the same effect.
You may think there are social or cultural reasons why one return of capital is preferable to another (I can’t tell, you haven’t made any of those arguments as far as I can see), but mathematically, a return of capital is cash in existing shareholder hands, and there’s no difference between the two approaches.
Share buybacks have an impact on taxes paid, but we have a system where people are encouraged to minimize taxes, so you’d need to make an argument about tax rates for that to make sense.
It’s true that changing the number of shares for the same size pot of money has an impact on share based compensation schemes, but that’s an argument about not liking share based compensation.
If an executive is paid in stock, and has compensation tied to stock price then there is an incentive to conduct stock buy backs and not issue dividends. Further, declaring a dividend sets future expectations of performance that management is hesitant to be tied to as missing dividend payments lowers stock prices.
My point is that these incentives causes management to spend more company resources on buy backs than they would on dividends because there is a personal benefit. This harms stockholders because they lose the option to use the dividend. Not every investor wants to reinvest, some want to use the dividend. So no, they are not equivalent as you say. There are meaningful practical considerations that make dividends better for shareholders and buy backs better for managers.
> Stock buy backs make stock prices go up. Dividends do not.
Not true. https://en.wikipedia.org/wiki/Dividend_discount_model
> If an executive is paid in stock, and has compensation tied to stock price then there is an incentive to conduct stock buy backs and not issue dividends.
You're touching on agency costs (https://en.wikipedia.org/wiki/Agency_cost), which is a broader issue than stock buybacks. Management can always game their actions to favor their self-interest (compensation) over shareholder interests. They can also choose to invest in projects that will make the company look good in the short-term at the expense of long-term profits to shareholders, because management can always just stick around for a few year before shit hits the fan. See, e.g. what Jack Welch did to GE https://www.foxbusiness.com/markets/ge-ceo-feud-welch-vs-imm...
My point is the fact that share buybacks are yet another avenue for management to mismanage a company for their own benefit doesn't make them bad per se, or worse than stock dividends. Investors should evaluate share buybacks on a case-by-case basis to assess whether they believe
The solution is improved corporate governance predicated on having an top-tier Board of Director structure with a significant share of independent directors vs. an entrenched BoD. That's why ESG is an increasingly relevant theme. https://en.wikipedia.org/wiki/Environmental%2C_social_and_co...
Who is this guy? Also where can I learn more about this and related topics. I’ve taken an interest to learning about our economic system in my free time and would love it if someone could point me to some good resources/podcasts/whatever.
https://www.forbes.com/sites/stevedenning/2013/06/26/the-ori...
The amazing thing is when you compare this with the history of corporate structures. For much of history after the joint stock ventures were created in the 1600s they were extraordinary one time grants from the king and only for very very risky ventures. Basically they were used to induce businesses that wouldn’t exist but were vital for society. In exchange there was an express charter that laid out the obligations of the firm. There were expectations on how the company would act in society. There were obligations to employees, bond holders, the community etc.
What mistakes? Is it a mistake to not keep a rainy day fund that will allow a company to weather a once-in-a-hundred-years shutdown of the entire economy? If this turns out to last a year, will you think it's a mistake that companies didn't keep a year's worth of reserves?
Especially since we're talking about SMBs here. Your local electrician, who has a staff of 3, should keep enough money saved up to pay all staff for the next year just in case?
You're saying a bunch of buzzwordy slogans kind of like "limited liability is bad" or "obligation to shareholders was invented by Friedman", but not dealing with the actual facts on the ground or the current catastrophe.
In the last 20 years we have had at least 3 “once in 100 years events”, so yes, maybe corporations should be required to be more prepared for down turns as a condition of being granted the right to operate with limited liability.
These are not buzz words, I practiced law in New York and worked on the bankruptcy of American Airlines, Lehman, GM and others. I saw the conditions on the ground, the incentives management responded to; I saw $200M bonuses for traders that lost $1B, I saw how decoupled management was from the risks they engineered. There is a prevalent attitude that as long as the short term reward hits before they quit then they should do it.
Since 2008, airlines have experienced one of the most profitable periods in their history with drastically lower competition and low oil prices. What did they do with that? They wasted significant amounts of cash on buy backs. American Airlines reduces outstanding stock by 37%, thats massive. Why? Because executives are taught in business school that there is an obligation to maximize shareholder value. No such obligation exists in law and I am arguing that is really bad social policy.
Employees are going to be decimated as this unfolds, are they more responsible or in a better position to plan for these once in 100 year events?
Fair enough - I was mostly talking in the context of the article (SMBs).
And to be frank, it sounds like you're much more knowledgeable about this issue than I am, certainly in terms of actual practice.
That said, I still disagree with you and not sure why you arrived at your conclusion.
Let's put aside for a second the question of whether shareholder primacy is good social policy or not in the general case - and I agree with you here - it's not mandated by law, and even if it were, we could change that if we decide it's bad policy.
Your specific contention here is that companies are using buybacks to prop up their share price, and thus are reducing their reserves. And that they should keep more reserves around.
So firstly - tax structure aside, I've never understood why anyone treats buybacks differently than dividend payments. It's just a way of giving money back to shareholders. Do you agree with that or not?
Secondly, how much reserves should a company actually keep? If this situation/recession drags on for a year, will you be saying that it's bad that companies didn't keep a year's worth of reserves? Two years?
I think that's both an unrealistic demand, and a supremely inefficient one. No company could've, nor should've, had to predict this kind of disaster happening, and been prepared for it. I'm generally a libertarian, but this is exactly the reason we have governments - this kind of crisis should be prevent by the government - both in terms of preventing a pandemic in the first place, and in terms of fixing the economy once we're in this situation.
In other words, I don't see any good way to change the market to incentivize companies to keep tons of cash lying around as a rainy day fund - and I don't think it would make sense for so many companies to hoard so much money. Much better to have them return the money to shareholders, to go invest in new companies.
Where do we disagree?
But even if they were banned, these companies wouldn't just have piles of cash reserves sitting around. To remain competitive, they would've had it invested in resources like additional personnel that would've gotten the axe either way when the belt has to be tightened.
There needs to be better financial planning and regulations - a lot of them.
But the best thing that could've helped here is better planning for national emergencies like a pandemic. Bill Gates and others have been clamoring for a long time about these dangers and we should've taken them more seriously.
The core of the current financial crisis is that demand has evaporated over the course of a week or two and / or businesses can't operate; both due to COVID-19. As a result many small business won't survive. By extension many people are impacted, won't make rent, won't make lease payments, won't make credit card payments.
The stock market dropping is reflecting the above reality unwinding. And yes prices were inflated, and still are (QE is trying to hold them, we'll see how long that lasts...).
Unlike the 2008 crises that had synthetic derivatives, and shitty rating agencies to blame - this isn't the case here.
Though don't get me wrong I still think there are many sketchy things that go on, and many people who need to answer for them. Let's starts with the politicians that sold their shares given insider information, followed by others who curry favor with wall st.
Company leadership should focus on returning capital when appropriate. They should not be repurchasing shares at obviously inflated prices as a last-ditch effort to further raise share prices so they can cash out their bonuses. They should be using that money to improve the business.
Basically, leadership needs to think about long-term health, instead of making poor business decisions to improve executive bonuses.
Black swan events are unpredictable and outside of what is normally expected.
There were also 3 other localized outbreaks (SARS in 2003, Swine Flu in 2009, MERS in 2012) so that to me sounds like we were 3 viral mutations away from this being the 4th global pandemic in 20 years.
If we're structuring business and our economies such that they fall over or require ~1 trillion dollars for bailouts, every 4-7 years on average, then something is vastly, massively, completely, extremely wrong with our approach.
I don't care how many economics nobel prizes are racked up by theorists; or about efficient market theory and blah blah blah. These systems are failing in the real world and that's the only existence proof needed.
Running a just-in-time razor-thin-margins all-profits-reinvested-no-savings business is great in theory but apparently the wind blowing from the wrong direction destroys it all. It has the feeling of the economics/finance version of a physicist assuming a spherical car in a perfect vacuum with a point source of gravity when designing a system that has to survive actual usage.
Those who prepare well (3-6 months of reserves) will be ok, other businesses will need to perish to teach others a lesson.
You are literally advocating "Privatize the gains, socialize the losses", no?
'It's ok that the (public) government bails them out, because the (private) companies made even more money'
The point is, unprepared leaders will see their firms go out of business, but based on the number of firms that seem to never be prepared, it seems the standard incentive isn’t enough. Thus it warrants discussion on how to align leadership incentives to prepare in advance. If we had businesses that could weather 3 months of crisis, whatever the crisis without triggering a depression the entire economy would be better off. Yet here we are.
A recession is not.
From https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...:
1969, 1973, 1981, 1990, 2000, 2007 - a recession of US economy at least every 10 years, like a clockwork.
So, if you're a CEO of an airline and you're giving away 90% of your cash to shareholders instead of saving it to last few months when business declines, then it's an obvious failure of planning.
Or, more accurately, it's yet another case of "It Is Difficult to Get a Man to Understand Something When His Salary Depends Upon His Not Understanding It."
CEO salaries and bonuses are tied to performance of the stock (because they are set by board of directors, who are there to represent shareholders). So they spend the money to buy back the shares which increases the share price and their bonuses.
It's really simple if you know the incentives.
The big problem is that companies are focused on the quarter rather than the decade. Imagine the innovation we would have in technology if companies were willing to take a loss for years on worthy inventions, rather than only putting forward readily profitable projects.
Not only that, but they also use borrowed money with corporate debt to buy back stocks.
https://www.bloomberg.com/news/articles/2019-08-08/companies...
2) Stock buybacks are simply a more tax-efficient way of distributing profits to shareholders. Redistribution of profit to shareholders is a fundamental trait of capitalism, so you can't really blame the CEO for doing this. You seem to be blaming CEO's for not preparing for a black swan event. If CEO's are forced to prepare for every possible black swan event, their companies would go nowhere.
This is:
1. irresponsible, due to so called black swan events
2. price manipulation, don't forget this
So my question is, when do we learn?
What other events are you referring to?
I think the general sentiment is that we cannot just organically let most companies fail, so we are forced to bail out. But if we are breaking capitalism by bailing companies out, we should at least try to incetivize them to learn from mistakes rather than learn that they can do whatever when the times are good and get bailed out when the times are bad.
Generally speaking, Boeing and others should not be bailed out. Capital should flow to the small businesses to keep their doors open, their people employed.
I'd also argue strongly against bailing out companies that shifted their work overseas. There needs to be a price to their actions. This is a just price IMO.
If your competitors are all borrowing money at low interest, you do the same or you're not competitive.
The problem is we lowered interest rates in response to the housing crisis and then left them there. Because doing so inflated (really reinflated) such a ginormous credit bubble that it would take more than an entire market cycle for real economic growth to catch up to it, and (absent printing money) you can only raise interest rates to the extent that borrowing demand from real economic growth exceeds the reduction in credit caused by the higher interest rates, or you cause deflation and an economic downturn.
This is also why the rate of inflation has been below historic norms since the housing crisis -- reduced to that level just by raising rates the tiny bit that they did. And now even that's gone and interest rates are at zero.
This is what the fallout of long-term low interest rates looks like. The only way out of it within our lifetimes would be mass defaults (which would cause a depression) or enough inflation to devalue the outstanding debts.
Considering that we're also now facing deflationary forces from these quarantines, maybe it's time to start printing some money. Certainly countering the deflation by encouraging even more borrowing would just be trying to dig our way out of a hole.
People who invested in index funds fared better than hedge funds. And there was no real price discovery thanks to Fed put; even many small hedge funds closed their shops when they couldn't beat ETFs based on indices like SPY, VOO, QQQ, etc.
Now both bonds and stocks are crashing, as the commercial paper becomes junk.
Will. Never. Happen.
Banks committed outright fraud in 2009, by the dozens, by the hundreds. Thousands of people should have gone to jail. Not a single. Goddamn. One. Did.
So in this case, the cash ends up with the stock owner, isn't it? What are the differences between cash in the hand of company vs cash in the hand of stock owners?
The stock market is reflecting that the damage this will do on the economy is real, and currently unknown but expected to be pretty bad.
Give everyone money, no criteria. If we do impose income limits, and since viable proposals do -- we ought to discuss it. Give them a check now anyways. We cannot be worried people will be "annoyed" if they owe their check back come next tax season. Future annoyance is a small price to pay if these businesses can't stay afloat. We will be feeling the effects for far longer than a quarter. The helicopter money needs to be distributed as soon as possible.
In the situation today the physical basis of wealth is not under attack, the "human capital" is.
As long as the food and water keep coming we'll eventually be all right, keep your head, and keep your eye on the fundamentals: In approximate rank order from most important to lesser-but-still-very important, the base of Maslow's Hierarchy of Human Needs:
+Water (also soap!)
+Food Production & Distribution & Waste Management.
+Communications (under which I include governance)
+Electric Power
Pervading and fundamental to all these are keeping a level head and a civil society.
"It may seem a ridiculous idea, but the only way to fight the plague is with decency." ~Camus
We can shelter-in-place as long as needed. And no businesses go under, and no one loses their home.
Totally agree, it is insane that some families are under the threat of eviction because they live paycheck to paycheck and cannot afford to pay rent now. Same for small businesses who cannot afford to pay rent.
I'm sure some landlords will do the right thing, but we can't trust all landlords to do the right thing. Something has to be done at the federal level, and it's now or never.
UBI would be another way to get around this BTW.
Keyword: all. That includes landlords' financial obligation to their landlords. And their landlords. And their landlords. And their landlords. Ad infinitum.
It's also not pausing all revenue. If I order something from Amazon, everyone gets revenue. And if Google decides not to furlough employees but get a 3-month lead in R&D, it's not pausing employee revenue.
This sounds like a very interesting solution. Although from a technical point of view, it seems impossible to implement.
That's what this month has felt like. The grave error, in my opinion, was refusing to take dramatic action early on. We couldn't tolerate any economic slowdown, so dice were rolled, and here we are. Add in the (criminal) failure of testing in the United States...
It's been a week and you see plenty of calls to 'think of the economy', and put an end to the shelter-in-place. One week. But like I keep saying, this isn't a binary choice. It's not clear that we could just 'chose the economy' at this point, because of the path that was chosen weeks ago – which is a narrower, far more dangerous path, to both the global health, and the economy. Short-term thinking at its worst.
But this is not a literal plane crash. The majority of us will live. It's about the kind of world we want on the other side of this. What we need now is global cooperation to share knowledge and resources. We need people to come to their senses so we can make smart decisions and make sure we don't throw out our constitutional rights in the process. We need as much urgency in bailing out the millions of people who are already losing their jobs, as there is for the airlines that spent the vast majority of profits on buying back their stock.
There's cognitive dissonance at play. "This can't really be the situation we're in?" Well, it is. This path was chosen. Now we need to buckle-up and learn rapidly from the mistakes we've made.
Previous commenter has nailed it directly: opportunists see a mountain of money heading out from government to the public and they want to insert themselves in the middle and grab a big chunk of it.
I mean, these businesses file tax returns and the government has an address and even a bank account on file for them. Government could... write them a check. I've just provided all the value Womply provides in getting money to small businesses, pay me.
There was a major flu epidemic that killed 100K+ in the Soviet Union in 1977-78 (long after gulags and all the scary Soviet stuff, when living standards were among the world's top, comparable to poorer Western European countries like Italy and Spain). None of my older relatives ever heard of it. just some old people died, that's it. Absolute zero of economic or social consequences. I think kids didn't go to school for some weeks and maybe streets were cleaned bit better than usual, nothing worse.
I'm _not_ saying we shouldn't help the rest of the world. That's the very next thing. I'm saying, let's make sure we're not drowning before trying to help others not drown.
This is a really weird line of reasoning because I don't think it even holds in the case of a broader unity.
I see the immediate health layer as subject to physical limitation, the economic layer subject to informational limitation. If by resources you mean money, then yes, I very much agree.
Sure, I have no gripe with the author(s) of the article, but reading it makes me feel like they just don't get the big picture.
1. Freeze mortgages, rents and interest for 90 days.
2. Send everyone checks for around $2,000 a month, let people choose to cash them if they need to, correct for it on 2021 tax returns based on your income.
Avoid having small businesses shut down and lay everyone off, call it a vacation and give people homework for the next 2-3 months while we focus on fighting this pandemic.
Plan B: https://docs.google.com/document/d/1YbtJGn7ida2IYNgwCFk3Sjhs...
Other countries, and developing countries, may.. Will not be so lucky.
A similar situation is happening to Louis Rossmann who doesn't have business interruption insurance because they require flood insurance and weasel out of covering disasters.
Another situation is Michael Moore's nonprofit movie theaters won't be reimbursed to pay or govt pay their employees' salaries, and building lease/rent.
Also, tip-based workers are screwed too.
Only 20% of workers are getting some money, with a little promise of temporary UBI to some people.
And then the government has the gall to offer interest-bearing loans instead of no interest loans and grants? WTF!
The situation is there will be people working to put food on the table sick or not, and riots if people aren't made whole. The US economy will crash and burn for decades if this isn't handled correctly by clawing back some of the tens of trillions the MIC, corporations, and the rich stole from the little guys and regular folks.
Commercial landlords are likely thinking about it. the solution is to figure out who else rents from the same landlord/other small businesses in proximity, team up in solidarity and demand a rent freeze. The alternative is owning capital in either a ghost town or Bartertown (https://en.wikipedia.org/wiki/Mad_Max_Beyond_Thunderdome).
For the skeptical, think back to the Occupy movement of around 2011, which mostly took over public space. With so much private space sitting empty, the outcome would be very very different this time.
Waive late fees as in, expect to be paid for all months back rent in the first place?
Gosh, that’s cute. Small businesses forced to shut down aren’t going to be gritting their teeth and paying back rent when the government decides they’re allowed to re-open.
I would guess most businesses forced to close at least 6 weeks will be write-offs. Walk away from the debt and start again if you can / dare. Unless someone else (govt) is picking up the tab.
IME if you needed capital, you weren’t approved for capital. If you were cash flow positive with solid income and 2 years of operating history and tax returns, you could put up collateral and refinance at a lower rate.
Over ~5 years I was denied ~5 times, discouraged from applying ~3 times. I was approved once after several years of track record with a co-signer pledging a property with 100% collateral.
That small business (exited 2019) would have really struggled to survive right now. It would also be a difficult time to ask friends, family or spouse to help.
I wish I had a better policy suggestion to offer; it's a hard problem. Good luck to all small businesses out there, I’m pulling for you.
They look for essentially a business plan that has been thoroughly thought out. It sucked for us because we had to report EVERY DAY someone missed their payment until it was paid. The SBA gives a decent rate for what it risks, but they are an unmovable force. You cannot explain to the the situation or what. Follow the terms to a t or get yanked.
But this can mostly be fixed by law, with a law that retroactively changes all rent, leasing, mortgage, employment contracts and in general any contract that involves periodic or future payments to be stopped at will, subject to no longer enjoying the service or product.
Then they can just stop paying rent and paying employees and cancel all supply deliveries, since they no longer need those, and they will not lose any money.
Then add a temporary UBI and a ban on actually evicting from rented spaces (since the economy is shut down, and thus there would be no other tenants) so that people can still have a home and food.
People of low means do not like getting told that they must go back to work and accept the risk of losing their parents and getting permanent lung injury. They will also not like getting told to stay at home and default on their rent and mortgage.
People in a situation like that can take desperate measures, especially when there’s many millions of them.
You guys really need to step up the political measures to take care of these folks. Emergency bailout style. The time has never been more ripe to test out basic income.
Many sport studios quickly moved to online classes. Not everyone can of course. The climbing gym near my house is closed and who knows if they ever reopen. I'm not saying that we're not in a middle of a small businesses catastrophe, just that many small businesses find ways to survive. But obv they won't be able to for too long.
That is, that after 3 months of strict lockdown and 9 months of pervasive social distancing, the only virus you will be able to catch is the covid-19 virus, until new viruses coming from animals appear.
* large businesses not being able to pay for maintenance of tools.
* small businesses not being able to pay employees, rent, services, etc.
* people not being able to pay for rent and food.
What are possible solutions for a long-term lockdown?
* for large businesses: bail out.
* for small businesses: rent should be free.
* for people: rent should be free, food should be distributed like in times of war.
What about property maintenance?
The usual reason against shutdown is because people have mouths to feed, mortgages to pay. But seriously, most of the products and services people are selling not really important or even any useful - that's why people have to advertise them so hard - it's not as straightforward as advertising cars, houses, and Coke. But those jobs are very important to those individual employees because it's their only source of income if their business were shut down, they wouldn't have roofs over their heads.
So the capital is the way to let people claim their part of the economy. It's so vulnerable that it's not even doomsday yet and people start to lose their source of income, and even without shutting down things. If we're going to shut down non-mandatory industries, people from those industries would get broke immediately - it's so deeply coupled so effective measures could not be taken.
In a perfect world, less than 10% of people working, or everyone working one day per week could feed everyone effectively. As automation goes on, the percent could keep shrinking. As a comparison, at the end of the day of a capitalist world, most of the "meaningful" jobs would done by very few persons because of the automation, and the rest of the world can only earn money at their mercy by doing "barely meaningful" jobs. Other than that, those who can't even get "barely meaningful" jobs have to working hard on futuristic versions of TikTok trying to become superstars - it's their only way of claiming their part of the economy.
Furthermore, the well-connected people get tested first as Trump suggested (or naturally happens in the US) is also a capitalist way of doing things. If we take Asian countries as an example, the testing kit is soon promoted as strategic resource mostly instructed by the government, which should eventually come from health care institutions, they have ideas to allocate those test kits in order to make maximum use of it, instead of blindly testing people back and forth.
If Karl Marx is not for you, it's always worth taking a look at Singapore where they did most things correctly most of the time. It's perfectly balanced in economics, politics and many, many other aspects (Though usually bashed by Western media as an authoritarian country). People can afford to buy houses, education is excellent and at a reasonable price, eating outside is cheap and easy, health care is affordable, and people are relatively free. Everything is carefully planned and designed by the government.
As a comparison, at a first glance, Hong Kong seems to be similar to Singapore to those people who haven't been there, but Hong Kong is a more western-style democratic society compared to its neighbors (at before 97 if you protest). But the rent is out of control, things are messier, there's no specific plan for things.
Again, I'm not evangelizing communism but those problems Karl pointed out have been overlooked largely nowadays.
Edit. Thanks to the wonders of HC I can’t reply to you so I have edited this post. The declaration of war is symbolic in one way, but it captures what needs to be done. The entire economy needs to be swung around to getting this pandemic under control as quickly as possible.
Once war is declared we can start conscripting people to do the things that need to be done like enforce curfews, do door to door testing, build hospitals, keep people fed, etc, etc.
We are going to end up at this point anyway, so we might as well do it now and save lives and the economy.
What I tried and failed to get at in my other comment is that massive resources are already being marshaled to produce more tests and find treatments and find a vaccine and so on. Federal leadership appears to be…poor, but that isn't stopping people from stepping forward.
So when you step past the slogan, what does Congress write in their declaration?
It won't be long before there's no one left alive who remembers mandatory rationing, price and wage controls, and production mandates.
Small businesses (all, businesses) will suffer quite badly, but if your company cannot continue operating because its shut/slowed down for 2 weeks then it’s likely that your business was running on a knifes edge and /any/ shock would have killed it.
Arguing that many people have done this is not just cause to bail them out (speaking from a purely logical non-empathetic position)
EDIT: ok. Our entire economy is built with no buffers in place and people here seem to have no issue with that. From a personal finance perspective I ensure that I live beneath my means and have capacity for a couple of months lost revenue. (Shit happens) and I’m not “well paid”.
Welcome to... life? This is how America or even the world works. Most people live on knife's edge. One missed paycheck? Homelessness just got its greasy hands on you. Two missed paychecks? Go pack what you have left... Most business are not any different, especially those run by regular people.
In my family we have a quite successful business in the sense that the person running it, has quite a fancy lifestyle and can afford it. But you have to realize that most business have terrible margins. Our family business has maybe a margin of 10%. That means, for every 10.000$ you take home before taxes every month, your business has running expenses of about 100.000$ per month. Now restaurants are all closed... Nobody will buy your stuff anymore, but your employess still need to get paid. So now you have those 100.000$ monthly costs and not a single dime coming in... There is no reasonable expectation to save this much buffer.
In short, even business that run extremely well, will die within A MONTH, if all expenses continue and no income is generated. This is why I think what they are doing for this petty virus is quite insane. They are destroying the middle class for some "theoretical" projection that might not even play out the way they think. What is guaranteed though is that businesses will die in troves and the economy and middle class with it.
Look at the age of the people making the decisions. If you were 60+, unhealthy, and had the option of minimising your own risk of catching the disease by stopping the economy, you sure you wouldn't take it, regardless of the long term damage it would do to the country?
Our top political leadership would not be left wanting for medical care if they needed it. Pelosi and McConnell are both in for keeping congress together in DC vs running and hiding at home. "Going down with the ship" so to speak.
Top marks for your cynicism. Low marks for the focus of it.
>Pelosi and McConnell are both in for keeping congress together in DC vs running and hiding at home. "Going down with the ship" so to speak.
Correct me if I'm wrong, but haven't all the lockdown decisions so far been made by state governors, not the federal government?
Nearly all businesses in reasonably competitive markets have thin margins. You buy a widget and sell it for 30% more, but then most of that 30% goes to rent and utilities and salaries etc. Your actual net profit margin is more like 2%.
The result is that most businesses do fail if they're hit with any kind of major shock. Which happens all the time. It's supposed to. Mistakes have consequences. A business failing here and there is reasonable and expected.
But it's a completely different kind of problem when it happens to everybody all at once.
I'm not sure I care.
The world is suddenly embracing a lot of practices I've pursued for years because of my medical condition. I've spent a lot of years trying to develop alternate mental models and an alternate lifestyle to avoid germs so I can stay off all the drugs doctors think I should take.
I run r/GigWorks and r/ClothingStartups. Neither has much traction.
I have long wanted to actively foster the development of small independent business. The founding fathers of the US believed small business and entrepreneurship was critical to a healthy democracy. You can't speak your mind or vote your heart if you have to live in terror of being fired for it and unable to get a new job.
I can run my big fat mouth as much as I do in part because I work for an online writing service. If everyone absolutely hated me on every forum and in the small town where I live, I can keep earning an income anonymously online through the writing service.
I am only one person. I've long been a loser and social outcast. As such, I've been failing to get traction.
But you are all invited to check out GigWorks and ClothingStartups and try to be part of the solution.
The old guard never goes quietly. They go kicking and screaming. Things usually don't really change until a bunch of people die.
We've been here before. We survived as a species.
I think the most important question right now is "What kind of future would you like to see rise from the ashes?"
Answer that question and then actually do it. Don't just leave it as a mental exercise.
For me, that means continuing to try to find ways to foster small and micro business success via the Internet to give stability to a top heavy economy that is sucking the air out of the room politically for reasons foreseen by our founding fathers.
So in a way, it’s good for the valley if more of the economy becomes more corporate.
People often romanticize the "mom & pop" places, but there's a reason that most consumer-facing companies are very large, and those reasons were enumerated by the OP.
Also, there's a good deal of selection bias going on. If you had a successful business, why wouldn't you look to expand it to multiple locations? Running a single store makes your business vulnerable and usually requires a lot of time.
Some people are content with what they have, or find running one location stressful enough, or whatever reason.
There are also weaknesses in the face of some threat because there is no diversity to survive it.
Biology is not designed or run by any intelligent agent that we know of. When people apply the diversity argument to non-biological systems, it makes me think they are actually and really arguing for intelligent design of biology.
My argument still holds, if you over centralize or lack diversity (not in the social science race or sex based sense) then you’ll run into issues. Examples include Russian central governance, as opposed to more independent localized governance and sustainability. Another is non diverse economic production, for example many middle eastern countries.
So, with loss of small business, we lose access to certain unique perspectives of how those kinds of businesses should be run. We lose the character that those businesses add to our cities and towns. Furthermore, there is an economic cost to the loss of those businesses for our cities and towns.
If it’s better for tech, it doesn’t mean that it’s better for humanity.