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It's reasonable for individuals to aim for a few months of emergency funds. It's not reasonable to expect main street businesses to have cash on hand to cover many months of near zero revenue. Most small businesses just don't have the margins for that to be viable. If you expect every individual restaurant to be able to weather a period of months when no one goes to restaurants without any kind of assistance, the only restaurants you'll get will be large chains.

Much like running government 'like a business', the analogy of running a business 'like a household' only takes you so far. They're fundamentally different things.

GP also expects families to have 2 years plus of living expenses saved.

Some did invest their spare $ into liquéfiable assets, at a lower return, just in case they needed to access that cash.

Then there are those that bought chalets to put on Airbnb and rubbed their high returns in everyone’s faces until March.

How did you arrive at your assessment of what is reasonable?

Mine happens to be different from yours. Does that make me unreasonable? I mean, are there more shades to the world than reasonable/unreasonable, black and white?

I think so and I hope we can discuss the various shades of grey.

I think being responsible and saving for a rainy day applies across all spheres of life - be it government, business or a household. What do you think is fundamentally wrong with such a view, other than that it isn't the way things currently are?

It assumes savings are possible in a business that has tons of expenses and can’t just stop paying rent.

You made a bunch of normative statements about what people "need" to do, so I don't think it's out of bounds to make a normative comment about the reasonableness of your demands.

>What do you think is fundamentally wrong with such a view, other than that it isn't the way things currently are?

For one, it dramatically increases the capital requirements for starting a new business. Such capital is likely not going to be available to new restaurants or other service oriented small businesses with no real collateral. Or it would come at such a high cost that it would be unprofitable to run the restaurant. All to optimize for a once in a century event.

I think the world where the government backstops these businesses is just a better world than the one that would arise from what you envision. It has more of what I want and less of what I don't.

> You made a bunch of normative statements about what people "need" to do, so I don't think it's out of bounds to make a normative comment about the reasonableness of your demands.

Did I? There is a single sentence with the word 'need' in it in my entire post. My last sentence expresses my hope for others' behaviour. That's two 'normative' statements that really express the same point - we are living in a consumerist culture. I don't think that's at all a controversial position, it is almost a cliche at this point.

I also haven't made a single demand upon anyone.

I'm not sure what motivates you to misrepresent my position in such crude fashion and I wish you'd refrain from replying to me in this manner in the future.

> it dramatically increases the capital requirements for starting a new business.

Help me understand - you think the approach of being responsible and saving for a rainy day, dramatically increases the capital requirements for starting a new business? How?

How does saving profits relate to upstart requirements? As far as I can tell - the two are unrelated.

OK, so you're saying you don't need to have rainy day funds at the start of a new business, but should build them up over time, right? So, that leads to two potential situations. Let's use the restaurant example.

First possibility is the one most restaurants face. If they're lucky and the business is actually viable, they will have a profit margin of 3-5%. For a single location restaurant, that profit will be enough for the proprietor to make a decent living hopefully, but not a whole lot more. Should be enough for them to save up a few months of personal expenses sure. But saving up enough cash to pay rent, suppliers, and staff, for months, with no income... would take forever with those margins. It's just not possible for most businesses of that sort.

But let's also look at the other possibility. Say you've got a real hit restaurant (or another type of business with larger margins) and your margins aren't 3-5, but 15-20%. Now you're saving real money. So yes, you could sock it away under the proverbial mattress. But if you're that successful, it means people really value the product you're providing. Instead of hoarding your profits in case of a pandemic, you could instead invest those profits into opening a second location, allowing twice as many people to benefit from the service you're providing. In the 99% of years when there isn't a black swan event, that option is better not only for the business owner, but for society as a whole. So even for very successful businesses that could afford to keep a large amount of cash around, we're usually better off if they spend that money to do more of what's making them successful in the first place.

Of course occasionally there will indeed be a pandemic, at which point government can help out to prevent both types of businesses from failing, so that when the event passes they can go back to generating value.

From a societal perspective, it is more efficient for capital to be employed in creating value than stashed away as cash for a rainy day. Rather than every entity—individual, family, business, local government—keeping enough rainy day funds to withstand a black swan event like the most serious pandemic in a century, it is far more efficient to put that money into creating things of value, and to rely on the central government as a backstop in those circumstances.

I think I understand your position.

> it is far more efficient to put that money into creating things of value

From my perspective, having enough food, medicine and stability to withstand a pandemic without putting the entire society on the brink of collapse is the most valuable investment we can make, while balancing that with providing human dignity and freedom to pursue simple pleasures for all people worldwide. Once we've provided human dignity and simple pleasures to every human being and ensured that it stays that way even in the case of a pandemic or other calamity, then we can start building luxury yachts for billionaires and trading in the stock market strictly for the purposes of profit.

That's my understanding of value and maybe I'm naive, but I think most people would see this as a worthy goal for us to share planet-wide. I think having a society that shares this belief, would itself produce an incredible amount of good will, motivation and purpose for many that currently feel alienated and disenfranchised.

Do you have a different view of value and what you'd like to see humanity achieve? I'd genuinely like to know.

FWIW I don't think you should be attracting so many downvotes, because while your point of view is apparently unpopular, you do seem to be arguing it in good faith. (Although for what it's worth, bringing yachts and day trading into it seems a bit of a strawman given the conversation was originally about main street businesses.)

I think my answer to another comment of yours above basically outlines what I mean by creating value. The example of the successful restaurant choosing between building up cash and opening a second location. Basically if a business has sufficient profits that they're able to store up a significant cash buffer, it's because they're making something that people are willing to pay for. (Or they're particularly good at regulatory capture or rent seeking or something, sure, but for the most part there is a correlation between earning money and providing something of worth.) Businesses that make popular products and provide popular services—things that people like and are willing to pay for—make more money than those that don't. And these things that people want and are willing to pay for, by definition, have value. So rather than sitting on cash, when possible we would like these businesses to do more of what they're doing.

As another example, say you start a tractor company. You really understand what makes a good tractor, and your tractors are widely considered to be the best available. The only problem is, you only have one small factory, and can only produce a small number of them. You turn a profit on each one, and you want to be responsible, so you're saving most of that profit in case of a natural disaster or other calamitous event. It takes around 10 years to save up enough that you could keep all your staff on, your equipment in good shape, and your rent paid for a year, but you manage it. Unfortunately in the meantime, most of the farmers in the worth need to make do with shittier tractors, because instead of growing your business you're trying to build up a bunch of cash. Wouldn't it be better if you reinvested as much as possible into the business—borrowing even—to scale up your production as quickly as possible? That way more people get to benefit from your awesome tractors and everyone is better off. If a pandemic happens, the government helps you get through, so once it's over you can go back to making and selling these machines that are making farms more productive. And all the added production from that reinvestment is of course also creating jobs, paying more in taxes, and earning you more income as well.

Now sure, your direct competitors won't love your selling a better tractor, but if we scale the example out to the whole economy, the more successful companies are making and doing successful things, the more actual wealth is created for society. And of course, not all companies make useful things, and the things people spend money on aren't always objectively valuable either. But in aggregate it's pretty clear that value is created. Just look at the quality of life people enjoy now compared to say a century ago. There are serious problems (like climate change) that we need to tackle—I'm not at all arguing for unregulated capitalism as a panacea. But I think it's objectively true that if all companies strove to each build large nest-eggs to weather events like this one, far less wealth (meaning tangible stuff of value) would be created than is otherwise the case.

First of all, I agree with you, but I just don't think it will be feasible ever.

I am called a curmudgeon because I don't believe my government should spend a single cent in arts or any non essential thing while there is a single person without food. Until that point, I am really against over spending.

I also think the main problem of society now a days, not even the rich, is the materialism everyone has. People feel bad for not having the last iPhone or even the last Zara t-shirt, and buying it gives them a dopamine hit, but long term, they enter the hedonistic treadmill.

But the problem is, not everyone thinks like this. Recently talked with an investor saying I would not take investment as I don't believe in the 'startup' path. It goes against my own goals. I was told I was wrong, I was told I was stupid and ignorant. I asked if he would be ok making money with WeWork and Theranos, and he had no problem saying that we would like it, and his words after I asked and how about the ones losing the money at the end, the reply was literally 'Fuck Them! I already have my exit'

While there are people like this (and from small 5 euro situations to billions) no society will achieve that balance as the people attracted to the money/power will find ways to corrupt/control the others.

I am currently battling leaving my job where I am in the top 2-3% of earners in my country and just finding a small house in a fishing village where I can surf and fish all day, grow my own vegetables, and do odd jobs here and there. I am tired of money and materialism and consumption. (Caveat, I know I can have this stand because I have the money/skills to not super worry for the future, I understand someone making 20k a year isn't in the same boat, but they can still make better decisions like not buying the new Xbox and iPhone with 15% interest as I have seen many do around here)

There's plenty of risk we take as a society.

For example, there was a recent article on coronal mass ejections causing issues with the US power grid, bringing the US power grid down for 3-4 months (which is how long it takes to build replacement parts) but two issues came up: the whole world would have the same situation, and it costs about $400M to buy the parts.

Do you think we should invest in this, or just lower taxes so more economic activity can occur?

We should absolutely be investing in that, similar threats like supervolcano eruptions, and, obviously, climate change. Until recently you might put a global pandemic on that list too, actually! Unfortunately both the capitalist and democratic systems are poorly suited to tackling such long-term threats. Climate change is the most immediate and certain of these (outside of pandemic), and even there the response has been pretty poor. But at least there is a response, unlike for these other disasters that will hit someday; we just don't know when.

It makes no sense for governments to save money. With negative interests and good ways to spend the money it will pay itself pack in the future. Of course depending on how it is used.

For example improving schools almost always has a positive return.

Some businesses barely make enough to pay the bills and bring food on the table. You can decide what's reasonable or not with your budget but you can't project that on every single person or business.

> What do you think is fundamentally wrong with such a view

It simply doesn't work in the real world. It's a nice ideal but it's not a thing for most people.

People on HN tend to forget that we're earning more than the average here. I made more money during one of my uni's internship, it was before getting my bachelor so I didn't even have any kind of degrees at the time, than my mom was making at the peak of her career. So yes I can save 50% of my salary and have 2 years of emergency fund without even trying to save. On the other hand my mom never had that and couldn't have that even if she wanted to, it's the exact same thing for businesses.

After all that's why we live in societies, pay taxes, have insurances, &c.

Let's skip small business for now. The economy is structured to leave most of the people with just enough money to buy couple of beers after covering basic expenses. It simply leaves no room for few month worth of savings. And every accident (like a visit to dentist) adds to financial instability.

Not everyone works cushy 6 figures IT job and hangs on HN.

Savings rates tend to be much higher in poorer countries. It's clearly not just about how much people earn.

I'd like to see some stats for that - I just did a quick google search and returned a top 10 list from investopedia[1] which has it evenly split between high and low earning countries.

[1] https://www.investopedia.com/articles/personal-finance/02241...

I general, we WANT businesses without revenue for many months (excluding seasonally business that must explicitly manage this either with savings or loans) to fail, their capital be put to more productive use and moral hazard avoided. The outside risks like fire, hurricane, etc ... are best handled by insurance that allows for recuperated lost capital and restarting. What we are seeing now is basically an insurer of last resort type situation where we have the government taking on the role. Going forward, we should strive for pandemic insurance becoming more common, and maybe government back reinsurance or mandatory insurance pools handling the systematic risk inherent in a global or national emergency.

> "we WANT businesses without revenue for many months... to fail, their capital be put to more productive use and moral hazard avoided"

tell that to every startup that spends many months, sometimes years, without revenue, and certainly with negative income.

more directly, it's difficult to boil down misallocation to simply being out of revenue for some months, although econ 101 might indicate so (actually it's price x quantity at the margins, but we'll go with the simplistic interpretation here).

but more interestingly, inefficiencies are actually a key part of markets and capitalism. it takes many, distributed participants doing very similar things to get pricing right. many companies start and fade away. those are in fact inefficiencies in the ruthless game of survival of the fittest. in a perfectly efficient world, you'd only need 1 try to get it right.

the better analysis is to determine which factors in addition to to revenue to use to determine misallocation. if i had to hazard a guess, we probably want, as a policy matter, businesses to be able to weather up to a year of economic shock, not just a few months, without introducing any concerning moral hazard economy-wide, while providing the necessary resilience and stability.

regarding insurance, you're basically saying the businesses should pay for systemic risks, rather than all of us, but that risk is not idiosyncratic to just those businesses. it's systemic, so the system should bear them, i.e., the government (as representative of society as a whole).

OK, expecting multiple years of savings is just flat-out unrealistic. Even the more hardcore financial advisers only recommend 9 months.

Plus, who owns 2 t-shirts? Are you doing laundry daily? Hate to break it to you, but that isn't exactly great for the environment either. My father grew up poor as hell on a farm, and even he had 6 shirts. To this day he will comment that they were darned to the point of being patchwork, but owning 20 shirts doesn't seem like a huge extravagance. Even with homemade clothing, that isn't a ridiculous wardrobe.

There is definitely a consumerist culture and people buy stuff they don't need, but in the context of this article & the pandemic the people receiving this aid need it. I don't mean to be negative, but there are 0eople making the decision between paying rent and eating; calling out consumerism for this is in poor taste.

I'm glad I have the shirts on my back bro and your comment has inspired me to mend my fraying dress pants.

By the way I think he's being rhetorical, not literal. It's an order of magnitude thing.

i.e. I had o(n) where n < 1000 and now I have o(10n)

> Imagine you have a family and you lose your job. If you have savings for a couple of years, you can take it easy for a while and then go look for a job and find one 6 months later. Was anything other than your ego bruised by the loss of the job? No, not really.

I lost my job in Germany and got one year of unemployment benefits, no savings needed. Min wage workers have no way to build 6 months of emergency fund and keep the "dignity" you're referencing in later post. If on top of that they also have to build their own medical insurance and retirement fund it's game over from day 1.

> Why doesn't this analogy translate to what's happening with covid?

It's the same thing as unemployment benefits, insurances, &c. in the end, money going where it's needed* to avoid people losing everything to events out of their control. (*which hopefully is small/medium sized businesse, not mega corps avoiding paying tax whenever they can but that's another issue)

> people need a reality check and get back to living a simpler life with less shit being bought and sold all the time.

That's for sure, sadly it doesn't look like we're going in that direction. I'm personally appalled at how some people spend their money but it's part of the game

> I lost my job in Germany and got one year of unemployment benefits, no savings needed.

I'm glad you were able to get those benefits. I think in general it is a good system. You say no savings needed. By that you mean you personally did not need to save that money. But somebody did. Unless the German government is printing money they would have to get that money from somewhere. If they don't have it now they would have gone to the bond markets. In which someone will have to save for it in the future. Again this is not a bad thing. I think it is important to point that someone will have to foot the bill. In some cases it will be a future generation (depending on how much the government is having to borrow). This is usually in the form of taxes. Which presumably many would pay. Including those who did not receive any direct benefit during the crisis. You could argue that it is for the greater good. And many would agree. I personally do think there is something to learn from the position taken by GP. After all in the eurozone we regularly see contrasts between the frugal north (Germany, Netherlands, etc) and the spendthrift south (Italy, Greece, etc). Whether as individuals, companies, nations perhaps we could think about how to best to manage our resources to be able to weather the storms that may come our way.

> But somebody did.

Of course, that's why I pay tax. I actually had saved money anyway, but the peace of mind you get from getting unemployment money is priceless. At the end, as I said, it's exactly like a car or health insurance. Almost no one can pay for a cancer treatment or a major car accident with no insurance, but not everyone will have to go through that in their life time so we all chip in and make the world a better place. There will always be people gaming the system, we should obviously take care of that in a way but it shouldn't be the focus.

It's always easy to say "I" save, "I'm" frugal. Yeah ok, we're software engineers, project managers, &c. and make 3-10x the minimum wage regardless of the country we live in. We spend dozens of hours every few months on this site debating about how the new $4k macbook keyboard suck while most people wouldn't be able to afford one if they saved for a year... I don't think most of us are equipped for this discussion.

I'm not sure about "the frugal north" vs "the spendthrift south", maybe system wise, but having lived in france, germany, california and greece I can say people as individual mostly live the same life and want the same things.

tbf I think the GP has a point about senseless consumption &c. but the whole "if you saved money you wouldn't need help" is bs on every level. Even I and my, so far, privileged life can see that as an individual things can quickly turn bad and spin out of your control.

> What it's really doing is subsidizing everybody that works in or is tied to non-essential face-to-face service industry, by everyone else.

Not, not really. Canadas bond rates are 0.5% it seems. The country just has to lend a few billions, wait a few decades, and the debt is essentially gone due to inflation alone.

Any analogy between personal finance and macroeconomics is doomed from the start. If I printed money in my basement and I could spend myself out off a slump, then it might be comparable. But I can't.

The problem isn't over consumption [0]. We have the capacity to produce; and unless you are suggesting that society should be hoarding warehouses of miscellaneous goods, production must equal consumption. When some external stress hit, our capacity to produce (and, in this case, consume) goes down for non economic reasons. Fortunately, we have such an overcapacity of productive capabilities that outside of a few goods that saw a sudden demand spike, this loss of productive capacity is nothing more than an inconvenience. If our productive capacity was only that which was essential, not only would we be sacrificing goods and services during the good years; but we would also not have so much slack that we could weather such a drop in capacity without without serious supply shortages. Indeed, there are still parts of the world that do not have are level of "unnecessary" production that are now facing famine.

The problem we in the wealthy world are facing is one of distribution. When we made the policy decision of shutting down non critical production, we also broke a critical component of our resource distribution system (namely, giving people tokens that can be exchanged for resources). Since we don't have a centrally planned economy, no one is really in the position to make this kind of policy decision, so we are left with the option of mainting something like the previous system just giving people those tokens by central fiat.

[0] Unless you want to blame the pandemic on environmental changes and travel consumption. This isn't completely unreasonable, but even in the "natural" state, pandemics happen.

>people need a reality check and get back to living a simpler life with less shit being bought and sold all the time

Who sold them that stuff? Who convinced people that they need to upgrade their phones every single year? Nothing will change until we destroy the marketing/advertising industries that profit off manipulating the most vulnerable people...

> If you have savings for a couple of years, you can take it easy for a while and then go look for a job and find one 6 months later. Was anything other than your ego bruised by the loss of the job? No, not really.

> Why doesn't this analogy translate to what's happening with covid?

Because, as a share of population, approximately no one in the workingn class that makes up the bull of the population has “savings for a couple of years”, and that's not just a transitory situation but a fact that capitalism structurally guarantees.

> why is non-essential services taking a vacation for a few months at the expense of everyone else supposed to be a major event with long-lasting consequences?

That government response is there to help slow the spread of COVID-19 which then results in the saving of many tens of thousand of lives.

If the government didn't step in to help, people are then forced to go to out to work which then helps to spread the virus.

Sounds like something I would write, kudos. Bro it's not about getting more t-shirts. One day you may wear collared shirts.

>> I find it difficult to be sympathetic - people need a reality check

I think these are the two key points. And sorry if it gets personal, but the first point one is obvious, and the second one is true - yes, yes you do.

There are people in the world who lack empathy. They don't understand those who are unlucky or in hardship. I mean, intellectually they say they do, but believe there's always a personal failure that's to fault, rather than any impact of environment or circumstances. They also believe their own situation is only due to their good work and thinking, and not due to any external circumstance, and they'd have been that successful in any set of circumstances.

That single mom working 12 hour shifts at Amazon warehouse - well it's her fault that she got pregnant / that father left / that she doesn't have savings. That Ontario auto worker with five kids who lost their job last year due to car industry moving on, and has been using their savings to retrain while looking for another job, it's their fault for running out of runway or not seeing the industry direction earlier. Etc Etc Etc

It's just sociopathic inability to see outside of one's own context and history and internal narrative. To imagine a series of unfortunate events. Sure you own 20 t-shirts. Doesn't mean all people do and/or have "tens of millions of gambling debt". I mean, honestly, the wording in that post is beyond cruelly clueless, it just feels like a troll. Nobody could ACTUALLY be that blind to their own personal privilege.

As I said, this could get a little personal.

CERB is not MEANT for people who gambled or have too many t-shirts. It's for people who work hard and now cannot, and are dis-proportionally impacted. I have a high salary and can obtain it from home - great. It's my luck and blessing and life choices and privilege.

The 21 year old at beginning of their career and no savings and who can NOT work now... is ORDERED to not work... the family running out of food... that's who it's for.

Canadians have overall made a decision (repeatedly) we'd rather help the innocents, at the risk we get a little abused. It's our stereotype. And the reason I live here.

The notion that we'll pay for it, that we're making up numbers, that it's unsustainable - those are all valid points. But the notion that these are all some over-privileged clueless people who are getting free money for no good reason... Jeebus. Somebody is wrong on the internets!