If businesses and people are both broke -- and that's all that's going on, this is a simplified model -- and you bail out the businesses, they go broke again and need to be bailed out again.
Because no one's doing business when we're broke.
Because no one's doing business when we're broke.
If in that simplified model where businesses and people have both just run out of money for no reason, if you bail out the people, they will do business with the businesses, and the businesses have money.
Of course if the businesses are out of money they might not be able to do their end of the business and go under anyway, so we can shoot some money into their systems at the same time.
But if the engine of the marketplace is stopped, or is in the process of stopping, it's more crucial to put the money in the hands of people than businesses. Businesses can't/won't keep the cycle going! Bailing them out just leads to more bailouts.
The Good Idea Version of Capitalism (not the system of power based on means of production but the fluffy idea of like "there's a free market, competition is healthy") requires businesses to compete for our money.
Bailing businesses out directly destroys that.
Bailing businesses out directly destroys that.
The government can bail out financial institutions that made a series of bad and predatory decisions that led to a financial crisis that has banks afraid to make loans leading to a credit freeze that brings the economy to a halt.. but the banks then have no incentive to unfreeze.
They're still nervous and they've learned that the government will prop them up in the event of existential threat so they're going to play it safe.
Meanwhile, the people losing savings and houses to those bad policies are still in trouble.
Meanwhile, the people losing savings and houses to those bad policies are still in trouble.
If we had bailed out the mortgages instead of bailing out the banks, the economy would have rebounded faster. Whole huge groups of people would have very different life stories where they didn't lose houses and jobs and businesses.
Today we have a much bigger and more complicated problem where it's not possible to solve everything by changing where the money is. The threat is external and biological and people are going to die no matter what we do, which means there will be disruption we can't avoid at all.
But everything we do has effects beyond what we do. Bailing out businesses and not people undermines our strategies for containing and mitigating the biological crisis, because it leaves people desperate, vulnerable, and unable to safely comply with the needs of the moment.
Bailing out businesses to keep them open while people are starving and losing their homes and/or going out to work and spreading viruses because the alternative is to starve and lose their home is monstrous, but it also just plain doesn't work.
Just at a ruthlessly practical matter, it does no good to maintain the infrastructure and architecture of a consumer economy that doesn't have enough of a consumer class left to support it. It doesn't work. It cannot work. You're lighting money on fire and dancing around it.
While companies like Netflix and Hulu and video game companies and delivery companies and so on are poised to be short term winners of the coronaconomy, they should honestly be lobbying Congress to bail out the people before many more of us hit the "With what money?" stage.
But every industry should be on board with this. If we bail out the airlines and Boeing but don't bail out people, then even imagining a day when all this has blown over, air travel will be way down because who could afford a vacation? Who could afford business travel?
If travelers can't afford to fly, airlines can't afford to buy airplanes. So now we have to bail out the airlines and Boeing AGAIN to prop them up "until the economy recovers", as if that's 1) magic and 2) a thing that will just happen.
