> "because we like them and we feel a patriotic/moral/righteous duty to help them"

Sounds like an abusive relationship. Again, if a company wants to be bailed out by the tax payer, I don't think it's a stretch to ask that they pay taxes.

Otherwise it's like me, a foreigner with no connection to Denmark other than that I've 'helped the economy' when I went on vacation there last year asking for a bailout.

> But if the answer is "to help workers keep their jobs", then the distinction might not be relevant.

In many European countries, social safety nets exist so you don't have to reward cancerous businesses for terrible business practices, while still ensuring individuals are looked after in the event things go sideways.

Just replying to myself, I was incredulous that cruise lines were requesting a bailout from the US taxpayer. They've been registering their ships in Panama, the BVI and Liberia to avoid minimum wage law, labor laws and paying taxes. They make staff work 8-20 hours a day 7 days a week for months on end, paying well below market wages. [1]

Need a bailout? Ask the Liberians.

Similarly, these companies should be asking for bailouts from the tax havens in which they are registered. Surely all those "registration fees" they've been paying to avoid taxes are being kept safely for just such an occasion.

None of this is making me feel super patriotic/moral/righteous duty for them.

[1] https://www.businessinsider.com/cruise-line-workers-reveal-g...

> I was incredulous that cruise lines were requesting a bailout from the US taxpayer.

Why wouldn't you expect them to ask for free money? It doesn't cost them anything. They didn't receive the bailouts for the reasons you mentioned.

I mean I can ask for anything I want, that doesn't make it a good look haha.

> In many European countries, social safety nets exist

They only exist because they are funded by taxing economic activity. If governments could just will them into being without restriction than every country in the world could have European level social safety nets.

If economic activity declines, so does the money faucet funding the social safety nets.

Even more reason not to bail out companies that don’t pay taxes then.

On the long run yes, on the sort run they could do some money printing to fill the hole. (which is what we're seeing now)

The government has unilateral ability to invent jobs and even invent money if the goal is to help workers keep their jobs and/or remain fed and housed. So I feel that no company should get a bailout. If they fail, they fail, and the government can scoop up the workers and create an agency or just government-staked company that does the same thing, find some work in the country that needs doing and put the workers on it, or stipend the workers until they find a new job.

Of course, that means the failed company's executive board has to also find a way to actually add value...

The government can invent jobs, but it can't invent infinite jobs that accomplish something that people want, and even when it can the task won't generally be accomplished as efficiently as a private company would. It's also very difficult to remove a government agency once one is created. Government has all kinds of incentive problems that private companies don't, so generally (IMO) it's best to only use government to accomplish a task that the private sector does very poorly because of some market failure.

There's also a large cost to having people reallocate from one job to another, and from having businesses go under. There's physical capital that needs to be reallocated and "organizational" capital (not sure the right word, but I mean the way the business is organized) that may be permanently lost.

On top of organizational capital, you're also losing tacit knowledge when a business dissolves.

For historic reasons states have built systems that prevent normal governments from inventing money at scale: Independent Central Banks. It's of course an important ongoing debate in economics whether this is still appropriate, but it's unrealistic to expect governments to so dramatically alter the fundamental structure of monetary policy. That said, of course it's even more unrealistic to expect them to do so absent a massive external shock.

> For historic reasons states have built systems that prevent normal governments from inventing money at scale: Independent Central Banks.

Could you explain this? I think the CB system does not quite prevent money creation, it just makes it less transparent. Inventing a jargon to nice sounding words to hide the creation of money (yes I look at you "quantative easing") also does not help.

If govts wanted to limit their power to create money, they could have made some constitutional law or smth.

I feel the CB system is more an invention by the bank(er)s, than by govts. If you look at the timing and trickery involved in singing the CBs into law all over the world, you will see this is not something done with full governmental/public awareness and consent. To the contrary.

It's about people being able to trust their currency. Let me explain: suppose that your government was creating a huge amount of money out of nothing. It would result in a massive inflation and, with the value of money being completely unstable, people would resort to alternative ways of paying for thing: a more stable foreign currency, gold, crypto currencies, or even barter. You can see it happening in countries with a massive inflation (Zimbabwe, or Argentina in the early 2000's are the examples that are on top of my mind). So, this is a scenario the governments have to avoid at all cost, and in theory they should create just enough money so the inflation matches the growth of the country.

However, the growth of the country is very hard to measure (directly taking the growth of the GDP would not necessarily match it), so there is no consensus on what the inflation should be exactly, which gives the authority in charge of creating money some leeway on exactly how much money to create. If this authority was the government, it would be tempting to have the inflation be slightly higher than the country's growth, in order to "trick" people into believing that they got slightly richer and have them spend more. And this could work for some time, but at some point people would become wary of the government and as a result would spend less, slowing down the economy. So it becomes a game (in the sense of game theory) between the government and the consumers, and the solution is to have an independent entity in charge of money creation, so people can know with more certainty that the "right" amount of money is being created.

I think it's the other way around. CB create money as compared to governments, and they are rather insulated from pressure to create money in normal times. The point being to limit the danger of runaway inflation if governments decide to print money arbitrarily. BUT I am very very far from being an expert or even terribly well read on any of this.

It seems to me it would be a lot more useful if we create money and the government spends it (e.g. on infrastructure, or by distributing it directly to people most likely to spend it), rather than indirectly creating it through QE (which in mechanism, if not in effect seems quite different from printing money), etc.

QE still is recognized as a liability on the balance sheet and funds have to be raised and repaid via treasury bonds. That’s actually quite a long ways away from arbitrary printing.

The government can’t invent jobs that bring in more revenue than they cost though. If everyone does unsustainable jobs with printed money, you’ll have hyperinflation and then collapse.

> If they fail, they fail, and the government can scoop up the workers

This is a government forced failure. That’s a great way to turn every small business owner (a huge part of the middle class) against the pandemic containment efforts and the government in general.

"The government can’t invent jobs that bring in more revenue than they cost though."

Why not? Is there some reason why a private medical researcher is somehow better than a government medical researcher?

Because a private medical researcher has to actually be funded. In other words, the expected value of the researcher is in excess of the researcher’s cost.

Nobody pays medical researchers without expecting an ROI unless it’s for a charity (in which case it’s funded by other excess value in the economy).

There isn’t really a meaningful difference between the government spending $100 to get $2 of value and spending $100 to get $0 of value. If we’re going down the unsustainable jobs path, it would be much easier to just pay everyone $80k/year to do nothing.

"In other words, the expected value of the researcher is in excess of the researcher’s cost."

So what magical property of being hired by a government destroys that expected value?

I think "to help workers keep their jobs" is not a good enough reason. I might be wrong but to me the main beneficiaries of companies staying open are not regular workers, but the owners / CEOs / shareholders.

What if the answer is "to strike a balance between many workers being able to keep their jobs and disincentivizing tax-avoidance"?

The best way to disincentive tax avoidance would be to not allow it in the first place. A one-off policy like this punishes tax avoidance without necessarily discouraging it in the future. It depends on how likely businesses think it is for something like this to happen again.

I think there is a lot of lobbying for tax avoidance. But maybe that's just my perception of govts using democracy as a banner while in reality policy is much more influenced by lobby effort than voters sentiment.

I'm sure you're right. Lobbying for tax avoidance is a classic example of rent-seeking. I'm just trying to point out that this is an empty gesture from the government. It makes people feel good but it doesn't really prevent tax avoidance in the future. If that was the goal, there's a much more direct way to do it.

That could be the real answer, for sure. Or the aggregate answer, maybe, in the sense of "we need to do X, but can't do too much of Y, because then voters will notice and get angry." In that case, it might not be a deliberate choice at all, just the reality of politics in a democracy.

If it was a deliberate choice, my instinct would be that designing one policy with a dual mandate sounds a lot more complicated and less effective than designing two policies. It's a lot simpler to target a bailout to saving jobs only, say, and then separately change the tax code to disincentivize tax havens. That would also separate the part that needs to be done urgently, from the part we could do whenever.

>But if the answer is "to help workers keep their jobs", then the distinction might not be relevant.

But this sets up a relationship where now the company can use the employee's employment as a form of hostage.

> this sets up a relationship where now the company can use the employee's employment as a form of hostage.

Well, at least in this occasion there is an external factor at play. So the hostage situation is not premeditated as much as when a company uses the hostages as leverage when negotiating tax break.

Because keeping jobs is important as it is harder to create them.

Joblosses are talent moving away. Shops that will never reopen.

There is some truth to that line of thought.

Either it is legal to avoid taxes, then no distinction should be made. Or it is illegal, in which they should be persecuted.

But making this distinction as a means to "punish" certain companies seems to conflate two unrelated issues.

Bailouts are a reward. Not getting a reward is not a punishment.

If you buy a lottery ticket and win, your neighbor was not punished for not buying a ticket.

That's just semantics. Whether you see it as a reward for some or a punishment for others is besides the point. The argument is about companies getting treated unequally with no just cause.

To spoonerize a colonial slogan, No representation without taxation.

Is there just cause to use tax money to help companies who have not paid taxes? Is that fair to the companies who put their money in that pot, to have it doled out to those who didn't? Should companies be treated equally, when they don't behave equally? Because I'm unconvinced that countries owe tax-dodgers a dime. I think that their employees, being taxpayers, should have a safety net in case their employers neither pay taxes nor save for a rainy day. Let this be a lesson to the executives and let their ventures fail.

The point I'm trying to drive at is that bailouts are not a reward. If they were a reward, we wouldn't wait until emergencies to issue them. Rather, they're an emergency response, and in that sense they should really be optimized for effectively addressing the emergency, regardless of what feels fair.

It's not that. The issue is that companies have figured out that ups and downs happen, so if they sail close enough to the wind they capture the upside while their limited liability and bailouts protect them from the downside. Privatize profit, socialize risk. The people they are placing that risk onto are not obliged to accept it.

Just like there aren't enough masks and ventilators to go around for the patients, there's also not enough money to bail everybody out. Hence, triage.

Bailouts are there to create incentives for the future. In the future companies know they can save money by going to tax haven but potentially not get a bailout.