Comment by ravenstine | Hacker News Reader

Comment by ravenstine | Hacker News Reader

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Fragile, because corporations that have millions or billions in cash flow don't have the kind of savings to keep people staffed and make debt payments. No, we little people are supposed to "save for a rainy day" and flood the stock market with our 401ks while big business gets to grow grow grow, make little to nothing in profit, and bolster stock prices with corporate debt.

This isn't just about big business. Small businesses notoriously operate on very thin margins. Though that's not necessarily because of debt, but because what it takes to run a business today takes a considerable amount of overhead.

I know that the idea of saving money seems cliche, like some obsolete thing your grandpa might say, but we're going to have to wake up to the fact that if we want to finance everything with debt then we're going to be penalized every 10 years when there's an adjustment or a catastrophe that forces one.

The catch 22 there is that using less debt also means less growth, and we've all gotten used to unprecedented amounts of growth.

I'd blame the tax code; it makes no sense for corporations to save money. They should aim for zero every year either by investing in growth or paying it out.

With the amount we pay in taxes, the ability to save is sharply limited.

This attitude is another component in why the economy is so fragile. "It makes no sense for corporations to save money" ... as long as you think that "paying the least amount of taxes possible" is a sensible goal for a corporation.

Compared with, say, contributing to the construction of a resilient, humane society in a variety of ways (including paying taxes) and being ready to deal with semi-random catastrophes quite well.

Oh, also: the amount we pay in taxes, as a percentage of personal and corporate income, as well as GDP, is at a (near) historical and cross-country-comparative low.

Doesn’t the personal tax code pretty strongly incentivize saving for individuals? 401ks and IRAs have preferential tax treatment.

One thing I've reflected on a little bit recently ... I don't want to take a TV show as an accurate account of historical reality, but given that "Deadwood" did have quite a bit of research behind it ... when two characters in that story wanted to open a hardware store, they had to buy the land and build the store. How many people who open a retail store these days even thinking about owning the property?

Now, it's true that the commercial (retail) real estate "sector" has created a more flexible and dynamic space for retail to operate in. Sign leases for just a year in case the idea doesn't work out etc. etc.

But it has also meant (1) a more encouraging environment for retail ideas that are even more likely to fail than the average (2) when business drops (e.g. covid-19), there's still the rent to pay.

It is true that in the past, the retail store owner-operator probably didn't own the premises outright, so there's still the mortgage payment when business drops. But that was (then) an arrangement with a bank (often local) who were going to be much more likely to see the mutual benefit of finding a way to not reposess the building.

This is just another small contributing factor to the overall fragility.

The fact that the modern day economy is based on usury (aka interest) seems not to be brought up by either the left or right, even though eliminating it would provide huge value for everyone (except the few at the top). It's a form of slavery, but it does the job for those at the top of the hierarchy, so it remains the way it is. That, coupled with a backward and extremely intrusive tax system which also benefits the same group of people, and you see why there's vested interest in keeping the status quo. This combination forms the basis for the fragility of the present day economic system.

> don't have the kind of savings to keep people staffed

When times are good, corporations are essentially making monthly payments to a bunch of local landlords (or banks) for the service of housing their employees.

I do find it a little strange that we didn't try to stick landlords and lenders with more of the bill. It'd be easier for corporations to keep employees staffed if they could reduce their salaries because their rent / mortgage payments were lower.

> No, we little people are supposed to "save for a rainy day"

We really aren't. Between government pension plans, unemployment insurance, and all the welfare programs, I would challenge whether this is a real expectation at this point.

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