On it’s own, just this time, it’s no big deal. But this is the 4th black swan extraordinary event leading to bailouts in the last 20 years and they don’t stop coming. If we are giving up on the idea of capitalism, perhaps we should consider what we are replacing it with.
We should be looking at the "black swan" events as systemic failures of capitalism and be looking for ways to replace it.
Fast forward a hundred years to the early 1900s and you have things like the Kern Resolution finding peonage and unfree labor in West Virginia mines.
Another century later and today we have ~7 million people under the purview of the prison system in the US [1], including people in prison for debt. (And in many places, these people are used for forced labor.) We have poverty level minimum wages and many systematic failures that prevent people from participating in democracy. It's subtler now than it was a hundred years ago, but there are still plenty of people who are excluded from participating from the economic or democratic institutions in this country.
Also, even if everyone had access, we used to have a vigorous labor movement, and socialism was considered a valuable part of our society. [2] There are plenty of people today who would argue that our society is at least partly socialist (and should be more socialist).
You can't claim a representative democracy and capitalist economy if there are unfree people and forced labor. Or if there are unequal access to either.
[1] https://www.prisonpolicy.org/reports/pie2020.html [2] https://en.wikipedia.org/wiki/Solidarity_Forever
So, if your argument is we where something other than a representative democracy that’s fine. But, you’re making a semantic argument.
It's confronting now because a small amount of it is going to people instead of corporations where it isn't as visible.
The lessons learned then led to the New Deal as a response to the crash of 1929, and that did include handouts.
Try charting the pandemic here: https://en.wikipedia.org/wiki/Depression_of_1920–21#/media/F.... VS. https://en.wikipedia.org/wiki/Spanish_flu#/media/File:1918_s...
The point is that we learned from that and reacted differently in 1929.
A major halt of economic activity in order combat a pandemic is not normal, and no different than similar drastic changes that have occured during world wars. Serving the people, especially in exigent circumstances, is the entire purpose of government. Keeping the commercial sector artificially afloat is in the best interests of everyone so that we have a quick recovery instead of a global depression.
So, your argument is society has become more brittle over time, but that’s hardly a reason to make companies even more dependent on government handouts. People and companies are over leveraged, based on assumptions that don’t line up with reality. The basic capitalist idea is lot let them benefit or lose their shirt when reality hits them in the face.
There is no such thing as a completely free market. There are constant regulations and oversight by government to provide a fair and stable environment to conduct business. When that changes, government again steps in to restore the balance. Again, it's there to serve the people. What exactly is the benefit of letting everything fail and plunging the country into another depression?
However, I can agree with you in principle. Let’s start with the banks though — who have received so much in subsidies over the last two economic downturns that they’ve actually made money. Oh and can’t forget investors, who have been kept afloat by the Fed pumping money into the economy. If we let them fail in practice, it is likely that large companies/hedge funds/investors would be much more careful. But of course, that would also eliminate much of the wealth held by people in tech. Probably yourself included? Are you ok with that in service of pure capitalism?
I guess this all comes down to what kind of society you want to build. Part of the myth of prosperity after the US turn towards a service economy and away for manufacturing has been the idea that scrappy entrepreneurs can build their own businesses. So much of society and economic policy has been built around that idea. If we remove that, economic inequality would probably be too much for the average person to bear — where will the jobs come from when 74 percent of the employers are gone? The unrest that would appear in our society then would surely make 2020 feel a lot more like 1918 as well.
The capitalistic approach is to say this is the 3rd major respiratory pandemic of the last 110 years. Get some https://en.wikipedia.org/wiki/Business_interruption_insuranc... if you’re at risk for a prolonged shutdown or accept the risk of failure. Governments trying to hedge business risks are a giant slippery slope that doesn’t end.
If you disagree that’s fine, but perhaps come up with a general idea of how you want the country to operate longer term for the next crisis. Or worse, as what’s considered a crisis changes over time.
And before someone links the Wimbledon, they have bargaining power beyond most companies' capabilities, and their insurance was custom written. There's no way standard businesses will ever be able to get insured against pandemics.
PathogenRX, a product it launched in 2018 to provide financial protection to companies hit by an infectious disease outbreak in the United States and Asia. The product includes a policy underwritten by Munich Re, one of the world's biggest providers of cover to protect insurers against big losses. Sales had been slow, partly because the insurance was viewed as expensive given the risk, Christian Ryan, the head of US hospitality, sports and gaming at Marsh, told CNN Business. But the coronavirus pandemic is rapidly changing that perception, he said. https://www.cnn.com/2020/03/19/business/pandemic-insurance-c...
It was considered expensive specifically because companies where underestimate the risks.
The target industries for this product are Hospitality & Gaming, Travel & Tourism, Aviation, Public Entity, Education, Real Estate, Sports & Events and Retail/Wholesale Food & Beverage. https://www.marsh.com/us/campaigns/pathogenrx.html
Well doesn’t that sound exactly like the industry’s at risk during a shutdown.
Put another way, laissez faire capitalism might be fine when the system is operating in a normal regime, but most capitalists don't take that as a prohibition on taking action when things like wars or natural disasters strike. All of the usual arguments in favor of letting the market just do its thing break down when you're temporarily in an environment that differs hugely from business as usual, and letting the market decide for itself could end up optimizing for the wrong behavior. Specifically, we probably don't want to allow a natural selection event that cuts so deep that anyone without a 12 month cash buffer goes bust, since if every company operated to maintain that it would not be optimal behavior during the steady state.
For instance, environmental externalities could justify an endless list of regulations, a massive carbon tax and/or cap-and-trade policies, as well as tariffs for countries not complying with environmental regulations. Because the markets does not work. Yet this is clearly not something everyone agrees with, despite being a market drive the economy but intervene to keep them spinning until the (climate) crisis passes.
I do not mean to enagage in politics and suggest the example I gave is what we should or should not do.
My point is that most people beliefs about the economy are a lot more specific than "markets with some intervention".
I agree that when and how we intervene is important to discuss, it's just important to argue the details, not "but muh capitalism" as a way to argue against every government action ever.
Some companies are suffering others and are uneffected and a few are even benefiting. Restaurants may be shut down, but farmers are still growing food, and some tiny toilet paper factories are operating at 120% capacity. Trying to subsidize everyone erodes the idea of capitalism, it’s politically expedient but that’s not to say it’s a great idea.