It was not sold as a stimulus, it was to allow businesss to pay furloughed employees (in a bizarre ill-thought-out privately-run unemployment insurance scheme) to continue to pay ongoing expenses.
What didn't make sense, of course, is what those people were supposed to be buying, since the reason they were furloughed was because.... people weren't buying things, because of lockdowns and such. Hence, inflation when aggregate $ exceeded stuff worth buying.
> It was not sold as a stimulus, it was to allow businesss to pay furloughed employees (in a bizarre ill-thought-out privately-run unemployment insurance scheme) to continue to pay ongoing expenses.
Can you clarify what's your rationale for believing that a program designed to "allow businesss to pay furloughed employees (...) to continue to pay ongoing expenses" does not correspond to an economic stimulus program?
Source: I was furloughed April 2020 while my employer at the time received over $2m in PPP. Furloughed employees were explicitly told to collect UI.
Yet, at the same time, they were forcing parts of the economy to shut down. Nothing like hitting the gas and the brake at the same time.
I think the criticism is that the stimulus worked too well and we’re suffering inflation and whatnot now.
Someone who did want the money (enough that they were willing to sell some GME stock to get to) got the money instead.
And now the person who didn’t need the money hasn’t got any money.
Justice served?
And what's wrong with that? Aren't we talking about an economic stimulus program? What do you think is the whole point of an economic stimulus program, other than stimulating the economy?
1) there could have been more money for people who actually needed it and were negatively impacted by losing their job or getting sick or whatnot
2) buying lots of “luxury” items drove up inflation. This is bad for a whole slew of reasons we are seeing now.
If we wanted to stimulate the economy, we could have done it in more effective ways that didn’t hose us.
How so? buying stuff cures inflation. Are you referring to supply chain shortages making non-luxury stuff not get produced?
But we could have put rules in place that were enforced retroactively. Something like “you get $600 if you lost your job. Everyone who asks gets it. But when you file your taxes if you didn’t lose your job and you took the money, you have to pay it back.” Stuff like that.
I worked for a consulting company that had a pretty smart expense approval process. They approved everything and audited you severely when you went up for partner. It wasn’t perfect, but it was pretty close as people were really nervous and conservative even though they wouldn’t be audited until years later.
There was also a lot of stuff where unemployment paid more than working so there were perverse incentives to not work and make more money. I had a family member who normally made about$2k/month. He got $600/week in unemployment so took a long time to go back while making an extra $500 per month. Stupidly, he bought a car with the extra money (but he’s been able to keep making the payments).
Just having some cap that paid 80% of your salary in unemployment would have been super simple to implement.
Or some programs ran for over a year. So the emergency stuff could have phased out after 3 months or 6 months.
There’s lots of ways they could have designed interventions much better.
On an instinctive level I prefer hearing a story like this to the kind of story that would have been more common/worse without the very broad aid that was given, but perhaps this sort of event is quite damaging as well. I'm not sure it's possible, but it would be interesting to see attempts at quantifying the difference.
> Just having some cap that paid 80% of your salary in unemployment would have been super simple to implement.
There is nothing super simple about government unemployment insurance programs, especially in recent years. What about Uber drivers, per diem nurses, people whose employer was dependent on events in Wuhan so their pay was cut?
Even if there are easy answers to these questions, UI is administered by the states so there are going to be more than 50 versions of each answer.
How is that close to perfect? I assure you that some people who would need and actually deserve that payout wouldn't apply for it just out of the irrational fear that it will cause them problems later.
I have multiple friends in tech who switched to remote and literally used the extra stimulus cash to trade with Robinhood and crypto.
I doubt this is representative. But people making $100k who ended up saving money from no longer needing to commute did not need thousands of dollars in stimulus. Of course, it was neat getting the money, but it resulted in a lot of extra cash.
Comically, I also have friends who just paid down debt and didn’t buy anything.
But my anecdotes are lucky in that I didn’t know anyone who lost their job or got seriously ill.