Comment by 100ideas | Hacker News Reader

Comment by 100ideas | Hacker News Reader

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On the eve of passing the first $2 trillion stimulus package, final deliberations in the US Congress about the "best" way to use the funds devolve into partisan deadlock:

One side insists that the only rational policy is for approximately 100% of the funds to be used to prevent business failures, arguing that "1) citizens need businesses to employ them so they can earn the monies they need to avoid starvation and homelessness with enough leftover (or at least a line of credit) for consumer consumption to collectively drive 70% of the economy; 2) the economy is literally made out of businesses and if too many die, then by definition so will economy; and 3) failed businesses take longer and are more costly (in capital investments) to repair/replace than are the jobs/homes/lives of the employees that must be sacrificed to save the company.

"On the contrary!", says the almost-equally-sized other half of the legislature, "Approx 100% of the funds to be distributed directly to citizens, $6000 each, thus 'cutting out the the middleman employers' and maximizing the number of citizens saved from homelessness and starvation due to unemployment. THIS is the optimal policy, both economically AND morally!"

To break the deadlock, Congress selects YOU as stimulus policy czar: your job is to decide and justify how best to distribute the stimulus funds - primarily distributed to businesses, primarily distributed directly to citizens, or some compromise between?

It's strange that nuclear devastation for small businesses was never been a consideration during previous recessions.

Then the narrative was always "Cyclical recessions happen - deal with it." Followed by "And how about some tax cuts?"

Beyond that, your question is a solved problem. The answer is called Keynesianism, also known as the New Deal.

Handing out money for nothing is clearly madness. But there is a lot of work that needs to be done, and isn't being done - including affordable health care, infrastructure repair and expansion, more diverse food supplies and farming, education at all levels, and so on.

None of this will happen with the current incumbent, but countries that don't make the leap from a greed economy to a need economy are very likely to end up as failed states within ten years at the outside, economically and politically.

> The answer is called Keynesianism, also known as the New Deal.

Because that worked out so well. Aren't there more and more economists saying that the New Deal made the Great Depression longer?

No, Hoover’s austerity policies are viewed as having elongated the GD. Without the ND the Hoover dam wouldn’t exist. LV, NV wouldn’t exist - pretty sure the US would be much less developed all around and thus poorer. I’d posit the US losing WWII without the ND.

Well, here's a few examples of people saying that the New Deal either had no major effect on the Great Depression or even extended it:

https://www.wsj.com/articles/SB123353276749137485

https://fee.org/articles/fdrs-folly-how-roosevelt-and-his-ne...

https://www.nas.org/blogs/article/ask_a_scholar_did_the_new_...

(I basically googled "did the new deal extend the great depression" to find these)

Now, you could say that these are all "conservative" sources, and thus invalid. (Of course, you'd then have to throw out support for the New Deal from "progressive" sources, which might also be painful) But either way, it does show that "The New Deal didn't help" is a position held by people.

"Although the central causes of the depression are still hotly con- tested, there is a consensus that the "passage of the Smoot-Hawley Tariff exacerbated the Great Depression."34 Vice President Albert Gore's assertion (in his NAFTA debate with H. Ross Perot) of our consensus on this issue, has been corroborated. On top of the profession's lack of agreement about the genesis of the Great Depression, there is a disagreement about the effect of the New Deal. In fact, the economists in the sample are almost evenly divided on the question of whether or not when taken "as a whole, government policies of the New Deal served to lengthen and deepen the Great Depression." The consensus among historians is that the new Deal did not lengthen and deepen the depression."

Whaples, Robert (March 1995). "Where Is There Consensus Among American Economic Historians? The Results of a Survey on Forty Propositions" (PDF). The Journal of Economic History. Cambridge University Press. 55 (1): 142–151. CiteSeerX 10.1.1.482.4975. doi:10.1017/S0022050700040602. JSTOR 2123771.

Widely described as authoritative on the GD: https://en.m.wikipedia.org/wiki/The_Great_Crash,_1929

I’m going to take an extreme position in the hopes it “stimulates” conversation: the best course is $6k direct citizen payments. Business that fail create new niches some of the gritty but solvent ex-employed can try to exploit with new startups.

Also, if the stimulus in the scenario was $4 trillion total, each citizen could be given/loaned ~$12000; by pooling their stimuli payments, tens of individuals and/or large families could potentially have enough capital to take a risky shot on a startup / small biz.

It’s bizarre that this is an extreme position. It underscores how far and extreme US politics has become that supporting people is viewed so negatively while bailing out multinational corporations goes without saying. Being too big to fail is a sign that a company should be busted up into smaller companies, but I digress...

I highly doubt startups would form around families just due to people getting one time large payments like 12k. If you have a family of 10 you’re going through 120k plenty quickly with just food, shelter, and other necessities. So much so that the money would have a huge multiplier effect at sustaining local demand for essential goods and services.

Option 3: put a moratorium all loan payments, interest, rent, and real estate taxes denominated in USD. Loan principal stays the same, everything else is zeroed. Stop feeding the debt black hole.

When times are back to normal, actually raise interest rates so we aren't so pathetically overleveraged. And if need be, change the customary decimal separator to a comma and add a digit for mills to make the finance bros happy.

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