There is a wide expanse between running your business razor thin as a profit extraction machine and keeping 12 months of cash reserves. This policy simply looks upon the former as a poor choice.

Almost no one keeps 12 months of cash reserves. Apple, with is famous cash hoard, is around that mark.... I can't think of other large companies offhand that are.

That was only used as an example as the other extreme.

Edit: Very few business have that cash on hand, but will usually have access to credit revolvers that could carry them through this. I am aware of many firms that have drawn down their entire revolver.

And I'm aware of a bunch of companies that are explicitly not drawing on their available revolvers because the banks involved are not necessarily in a position to provide that liquidity right now... This is the issue with a systemic problem that affects the entire economy, which is quite different from a single company being affected. And note that even "cash on hand" would be in practice money markets or bank accounts, which would make drawing it down look a lot like a bank run.

Now whether we should be bailing companies out, that's a separate question.

Fundamentally, if 2020Q1/Q2 GDP is effectively down 30% or whatever the number is, and we want to "replace" that loss, it's hard to see where that sort of money can come from except "all of us" in various forms (higher taxes due to government bailouts, higher prices, higher inflation, etc, etc). The main question is where the incidence of the economic pain will fall. Letting companies go out of business places that incidence partially on the shareholders and partially on the ex-employees and partially on the ex-customers. Unemployment insurance and the like can partially help the employees in the short term. The shareholders seem to get little sympathy, understandably, though note that they include things like pension funds and whatnot. Customers (who can no longer get the goods the company used to provide) may be just out of luck or other companies might at some point spring up to address the demand. In the short term they are just out of luck.

It seems to me that a lot of economic readjustment will take place no matter what, with open questions about speed and smoothness.

Perhaps this should be a cost of doing business in the future? We all pay for this anyway, so why should taxpayers face all the risk and none of the reward.

>so why should taxpayers face all the risk and none of the reward.

Simple, bail the companies out (thus saving all the jobs), but wipe out (or significantly dilute) existing shareholders.

The problem then comes (regrettably) when national/regional/local government next tries to get another round of capital-intensive fixed investment form the captains of industry.

They find themselves talking to themselves for the money.

They hate that.

There is a middle ground between having enough cash reserves to survive for months, and not having cash at all because everything has been bled out in dividends and buybacks; namely, having enough cash reserves to survive for some time, but not for several months.

Why not for several months. If you are a large corporate doing share buybacks why the f shouldn't you be able to weather several months of disruption?

Because your competitor who ploughs all their money into growth and rewarding shareholders would crush you within a year. Everyone loves to watch their 401k go up every quarter but hates the reality of how that happens. Sort of like people who love cooking meat but are disgusted by an image of a slaughterhouse.