Is there a reasonable way to prevent economic collapse and plant the seed for an economic bounce? - Politics Forum.org | PoFo

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#15091482
So far, a handful of "economic bills" have passed. Totaling around 3 trillions with congress aimining at additionall bills that could double this ammount. Yet, the first bill basically came and went and it does not seem to have do much, furthermore it is not likely that this bill, not a half dozen like such will make much of a difference. Throwing "money" at this economy at best would work as temporary patch, at worse might do nothing else than devalue the currency and/or add to the country's debt.
I don't think the public at large is just going to grab those $1200 and buy shit. Sure, there is probably a nut head that just lost his/her Wendy's job but takes that money to buy a limited edition skateboard or something equally silly but by en large that money is just going to go-to essentials and/or save because of fear.

I'd argue, that the most successful plans would have mechanic synergistic effects. Plans that encourage resumption of economic activity.
Now, I am not going to go into timing of when the economic activity needs to be opened and/or optimal sequence. That is something being discussed at nauseam everywhere else. My goal here is to discuss the benefits/cons of plans that include deliberate intervention by the government to potentiate economic activity without just giving money directly.

I'd argue that actions that encourage young people surge of economic activity (young because for the foreseeable future, probably even years we will have this virus going around and it would be safer and more efficient if the younger population stepped in).
Likewise, I'd argue that encouraging earlier retirement (with financial/health security) would phase out some of our more at-risk populations.
Also, the initiation of large projects around the country could restart the air-traffic and indirectly bail out the airlines and keeping all those people working.

For instance, given the current situation, our "arrangement" of production mainly in China can certainly be challenged and politically speaking it would be a win/win for both parties if some of that moved into the US. Especially anything that is not purely entertainment/luxury/lifestyle and that could in one way, or another, be seen as "essential". Construction of urban/semi-urban hubs in lesser populated states could both favor economic activity in those areas of the country that are in grim situation while at the same time relieving some over-population in the major cities.
This could be an opportunity to imagine what the world would be in 50years and start working towards it and become the first nation to reach it.
For instance, greener technologies and automation. Yes, I know automation is not popular, we will lose workers in the future. The reality is that this will come whether we like it or not, we literally have no choice. The question is whether we are the leaders who create, manage/distribute it or whether some other country takes advantage and do it their way... We will gain other types of workers (more specialized that pay more for less "tedious" work that is more "cerebral" -such as telecommunications, IT, robotics, engineering, etc).
Revamping the US airports, train/metro stations and upgrading our roads. Cleaner, more sophisticated/modern airports could lead to increased security that is less obstructive, also cleaner airports could go a long way to re-assure passengers that the likelihood of contracting infections is a bit lower. Same deal with train/trans-stations and other public transportation.
Encouraging greener products could be a real winner as well. For instance, why instead of giving 20billion dollars to Ford just to keep a few hundred people twiddling their thumbs why not give consumers large incentives to buy newer greener cars. It is a win/win, the corporation gets money, the costumer gets heavy discounts and the planet gets a bit less dirty.

How could we phase out our "riskier" population out of the workforce and why would we?.
First the why...
1.- Create more opportunities for the younger population
2.- Decrease a bit the risk of contagion in the foreseeable future. This is a "decrease/mitigate" not eliminate as I do not foresee that retired people are just going to go home and sit/watch TV all day long :lol: . However, having the option to not be exposed during peak times (winter season?), stay at home during LOCAL outbreaks, etc, might be helpful.
How? Provitionally lowering the limits to qualify for medicare/social security, maybe even increase a bit the benefits. Allowing tapping into 401k earlier without penalties, eliminating time required for access to pension funds (ofcourse some of it is private, in such case the goverment could take the loss rather than the private company). This could also lead to lowering the average age (and thus cost) of the workforce which should translate into cheaper healthcare insurance cost for the employer and the reminder employees.
The baby boomers are in the 56-76 years, there are 80million of them (not all of them employed :lol: ) so this is a not a small change, even if only a small percentage of people actually choose to take the early retirement rather than to stay.

Encourage younger/healthier people to participate in and strengthen the economy. Why? well because we are going to need a strong crank of the economy or this could literally take a decade or two to be fixed.
I don't know how the government can encourage older people to go out to malls, in the middle of winter for the holiday season to spend big on black Friday amid a pandemic which might be much worse in that season and in combination with the flu with an already shitty economy.
However, targeting younger people could be relatively safer and more feasible.
Things that could promote this:
Well, all of the above indirectly feeds into this, if younger people have more jobs (either because of oportunities open because of the older generation retiring and/or government-sponsored projects).
In addition, discharging of student debt could certainly help and incentives for purchasing of a first home might also help.
Home purchase incentives might have a huge impact since it could lead to the purchase of other goods (furniture, decorations, electronics, dogs :lol: , etc). The rates are already low but incentives could come in the way of income and/or property tax reductions.
Taking care of outstanding medical debt might also help. Millions of Americans have medical debt, debt that in many cases will go to collection and will either never be paid or some collection agency will get pennies on the dollar anyways so the Government could very well get a reasonable deal to pay pennies on the dollar, relieve people from this debt.

Now, the ideas are crude and ambitious but I don't really think that just pumping money to companies and/or individuals will do shit. I think the we will end up paying a humongous price for this, the question is whether we can make lemonade with the lemons we were given.
Congress already spent like 3T USD, Fed is buying assets like crazy and injected trillions as well and congress is taunting further Trillions more. By the time dust is settled... we would be down 10T or more. It would be nice if we end up with something to show off at the end.
To put things into perspective... the totality of all US student debt is 1.5T... with the $$ that was already approved all student loans could have been forgiven, twice.
Obamacare was less than 1T for 10 years... so this could have paid for 3 Obamacares
The cost of Medicare for the year 2018 was ~600billions so almost 5times...
The infrastructure "proposal" that he wanted was 1T...
Call me crazy but this is bad whatever you cut it, the question is if we can learn about our previous mistakes (automakers bailout, bush stimulus checks, etc).

And again, I am not touching the topic of whether the economy is ready or not or how it should proceed or anything regarding timing.
What do you think?
#15091504
Loans, subsidies, furlough schemes, or Corona cheques are simply systems to allow people to keep up with payments and living costs whilst staying home and not working. They are not a solution for kick starting the economy because as you have pointed out they only increase the national debt further and at some point increased taxation is required to pay for this and they do nothing for production.

The only way you can prevent "economy collapse" as you put it, it to build confidence and get the entire populous spending again and your solution for younger people to spend more simply won't work as they are the group who financially are going to be worse off, have little or no assets, more debt overall and are soon to lose their jobs. And I suspect we are passed being able to built consumer confidence anyways now so we are all going to have to deal with a recession (more likely a depression) and significant job losses regardless what we do. But that is why it is important on what global governments do next after lockdown. FDR got America out of the Depression by getting America working again. And that is the answer today.

PPE shortages and lack of production facilities along with reliance from international markets for our Cornonavirus responses have shown why production needs to return home and nationalised production for key areas such as PPE and manufacturing is one of many areas the government should invest in to get people back to work especially if the WHO is correct and we may have to live and work around this virus forever. Also Capitalism doesn't work in a crisis. Socialism - or I should say socialism policies do.
#15091556
Well, rather than the specific my point was that I don't think pumping money is going to do much. An economic spark, if it is to be ignited by the government, would have to come with projects to create new jobs, yes "artificially" (in the sense that it was not organic, slow growth of the economy. the jobs would be real, however :lol: ) as well as a framework of protections for the vulnerable (boost confidence) and incentives.

As it stands... the government has spent (and will continue to spend) trillions of dollars and it seems that the main "benefit" for the regular people would be to delay (not cancel!) rent/mortgage payments a bit and to have a bit of money in the pocket which is not really that much, in exchange the whole country gets further indebted which is something that will eventually come back to bite the taxpayer in the butt.

I do think spending will have to occur or we could face a decade-long crawl that will cost far more. But I think if we are going to spend, it should be smart and the people should benefit from that expenditure. Rather than just give a "paint job" to the stock market and give cash to airlines.

Those are my thoughts anyway.
#15091561
XogGyux wrote:Well, rather than the specific my point was that I don't think pumping money is going to do much.


Well I agree, but you must understand that the reason for the government spending at the moment has absolutely nothing to do with economic recovery but to prevent bankruptcy and to also give people credit for not being able to work - along with their covid19 responses of course. And If you are going to tell people to stay at home, you have to pay for that somehow. And the economic damage you are seeing or will see is due to cash flow ceasing, consumer confidence reducing and production stopping. And people out of work makes all those things even worse. So an economic recovery can only be achieved with a New Deal and won't be a quick fix. You can write as many master plans on a forum website as you like, but as you said before the economy isn't as easy to start up as it will be to close and ultimately whilst people are fearful of Covid19 they aren't going to be spending big. And unless you can fix that kind of mentality - which you can't, people are just going to have to accept that there is nothing governments can do to stop economic hardship, and that includes as you say, government handouts.

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