We need to be making it possible for people to earn a living safely. We need to be focused on creating new work opportunities that work in the current climate.
This "waiting for things to return to normal" looks pretty dumb to me. I think the stimulus checks and other relief funds are smarter than just throwing a third of Americans out into the street, but it's not really a long term solution. A long term solution is the economy needs to adapt and we need to create work opportunities and reshape work with more of an eye towards germ control.
I've been trying to write down some of my thoughts about how we move forward in a sensible way. For example:
Earlier this year I wrote about a work opportunity I know of and about my opinion that this model should be borrowed for other kinds of work. That piece is here:
I'm very frustrated at the kinds of things I see other people saying. We need to stop framing this as an either/or thing: Either we protect ourselves from the virus or we go back to work.
We need to do both. We need to figure that out. We aren't even trying. This assumption that we need to choose one or the other is part of the problem. It's not true.
I get what you're saying here, and I respect the fact that you were able to pull yourself up by your bootstraps, literally.
Depending upon where you get your numbers there are 18-31 million unemployed right now. Some of that will be solved by brains -- people who can find niches and what not. But with a 1/3 of the renters who won't be able to make the August check, that's just a bunch of people who can't afford to spend money at all.
So demand is purely in the trash right now.
So the question is, if you could get 18-31 million people in gig positions, what would happen?
Well for one thing the pay would be low, because the supply for labor (unemployed people) would be more then plentiful to meet current demand.
E.g. How many uber drivers do we really need right now? And if you doubled or tripled the amount of uber drivers what happens to the income for one uber driver? That would drop by basically by 1/3, as more uber drivers compete for the same amount of rides. And more and more uber drivers are willing to take less money for the same effort.
The result is you have an uber driver making less income and less willing to spend money. And that starts a vicious cycle. More and more people not willing to spend, more and more companies laying off individuals.
That continues until we hit a bottom, which we may or may not have seen yet, given the massive amounts of evictions coming as of today.
I don't doubt that it will happen regardless, but what is the point of evicting people if no-one is waiting to rent the property? If the bottom falls out of the economy and regular people can't rent then landlords are screwed aren't they? Rent-seeking is the section of the economy which has to change, I think.
Well, I would expect that the supply of rental units to flood the market. So those that can afford to pay rent will pit landlord against landlord seeking the best price. This will drop prices of rental units as landlords will have to accept a drop in rent to fill their units. That's good in the long run, but not good in the short term.
So for the people who can't afford to pay rent, well, a lot of them will end up on the street. No job, no home, no health insurance.
Keep in mind that in this economy the supply of money is not flowing anymore to the middle class, many of who were already living paycheck to paycheck. It's all being hoarded by those who have it seeking wealth preservation above all else first.
Look, I promote gig work in part because it's what I know. If you can come up with full time work that is germ free and make it available to people, cool.
I'm not a fan of Uber. I'm not interested in promoting that, honestly. I would like to see more walkable neighborhoods and better public transit and so forth. There are a lot of things I don't like about these trends towards paying a pittance to people who already drive to play the underpaid taxi driver role or the underpaid food delivery guy (Uber Eats, etc).
Me being for creating work that is safe is not the same as me being for having more Uber drivers and I find it aggravating that this is a routine thing people do, though I do understand why people make that inference. It's really not something I'm trying to promote and I don't know how to shed that interpretation elegantly. I feel like getting into my (negative) opinions of car culture and gig work layered on top of car culture is probably not going to go over well with most people.
I've lived without a car for a lot of years and people seem to feel okay with me being me in that regard if they can chalk it up to "She's just poverty-stricken and can't afford a car" or "She's just seriously medically handicapped and can no longer drive and is muddling through as best she can" and they get real, real uncomfortable if I start talking about not driving as a choice because I'm an environmental studies major and I wanted to be an urban planner and things like that.
I don't think America currently works all that well and I've spent a lot of years studying things like housing policy and I think I have some good ideas, but I'm a woman and poor and blah blah blah. There is always some excuse why I can't be taken seriously and those excuses were always there. I wasn't taken seriously in my youth either. It's not actually "because I was homeless for years."
We did this once before. We currently have unemployment levels similar to The Great Depression and that was resolved with going to war and they were surprised that they were able to come up with the resources to create both more "butter" and more "guns." In other words, more civilian production and more military production.
That was true because so many people were not working.
We have to get people working and being productive. That's the real issue here. And how we do that and make it safe is a question we need to address.
I don't think germ control is going to stop being an issue. I think the pandemic is rooted in the fact that we have nearly 8 billion people on the planet.
We didn't need this level of germ control historically because most people lived in little villages and the like. So we just didn't interact with that many people.
I think the pandemic is the universe trying to give the human race a hint that "You can't keep interacting with this many people cavalierly like germs don't matter. You can't run around shaking hands with a zillion people and expect that to not cause problems."
I think it is a huge mistake to act like Covid-19 is some anomaly and we need to just wait for it to pass.
I think we need to start making cultural changes and the front line of defense will be how we work.
Demand is down in part because people aren't working. It's a chicken and egg thing and we need to work on getting people working somehow.
And I keep imagining I will blog about it instead of leaving forum comments and stop aggravating people who don't want to hear it, but I'm failing to do that. Conversation provides a feedback loop that's hard to create when you blog, which is mostly me howling into the void and no own replies.
I don't know how to get taken seriously, but I'm clear on a few things. I'm just not clear how to communicate about those things in an effective manner that will get traction and it's making me crazy because the world clearly needs solutions and I don't quite understand why it is actively turning down solutions from someone who has spent nearly twenty years figuring out how to live with a high degree of germ control and many people know that.
They just used Uber as an example. Do you think demand for writing is higher now than a year ago?
Lots of restaurants started no contact delivery and low contact pickup. Do most people avoiding restaurants care if a pizza portal would be a little safer? Or are they trying to save money and lose the weight they've put on?
I agree with your sentiment, but the problem is that there is no "we", there are only a variety of different people with different interests and incentives, all muddled by a series of government actions intended to help.
My opinion is that there are a number of business models which are simply untenable in the current pandemic and taxation climate, like water-front bars. Many people are 'sticking' to these troubled businesses, with hopes of improvement; the reality is that their tax obligations, facility costs (including rent/mortgage), and general cost structure will not allow them to survive.
As a commercial landlord, I've seen all sorts of assistance offered, but no local government I know of is offering property tax deferrals. I have a $60,000 property tax bill due, and tenants who can't pay their rent (I've discounted them 75% to help them out.)
There's a distinction between assistance to renters vs assistance to landlords: assistance to renters prevents them from becoming homeless, whereas landlords are usually not at risk of becoming homeless.
Mass homelessness would be hellish for everyone. While we are all naturally focused on our individual situations it's good to not lose sight of the big picture.
IIRC, states and cities can’t really run up year-to-year deficits the way the federal government does. They can really only cut services, issue bonds, raise taxes, or use emergency funds to cover increased expenses. That’s why federal bailouts of states keeps coming up.
I’m budgeting for up to a 10% aggregate tax increase now, but I have no idea if that’s too high or low.
State governments are totally MIA here. There’s not even a hint they’ll defer state or local taxes, let alone forgive. In fact in some states they’re proposing the highest income tax hikes in their history.
Many states are facing insolvency, because expected revenue has declined by as much as 30% [1]. States have "rainy day funds" to cover unforeseen events, but most have between 5-10% of general fund expenditures set aside [2].
States cannot create new money and they cannot declare bankruptcy. Most states also have balanced budget requirements [3].
If you want government support, the federal government is the only entity uniformly capable of creating money and running deficits.
Many state governments aren't constitutionally allowed to borrow money or run a deficit. The people who supported these features are largely the ones who will be impacted by the results.
I completely understand a tax hike. But California is only proposing it on "millionaires". I say, lets raise everyone's taxes 1% to take care of this special situation. It seems immoral to vote to raise taxes on "someone else." We're all in this together.
The highest-earners pay a lower effective tax rate than the median earner.
Most humans agree that progressive taxation is moral and just, but today "raising taxes on the wealthy" merely means "raising taxes on the wealthy to match the average person".
That's simply not true, especially in California because of the elimination of SALT deductions. High salaried earners pay a disproportionate amount of taxes in the Unites States -- more than the percentage of money that they earn. While I'm sure there are a few wealthy people that have odd business arrangements that allow them to legally beat taxes, that's not the case for the overwhelming majority of people.
I just like fairness. I think they should raise taxes to pay for the COVID bailouts. But on EVERYONE. Not just on someone else. On me and on you. Because I'm not a spiteful jealous person.
Well Congress needs to get reasonable with the boost per week for unemployment rather than the $600 a week boost; a number likely chosen for that 600/40 magic number. The $600 isn't sustainable let alone on top of the $1200 per house hold plus $500 per dependent.
Worse is the stuffing of the bills with defense appropriations and more items not related to COVID19. Worse is the attempt to feed the state governments between five hundred to a trillion dollars to shore up budgets of states that are not even trying to clip their expenditures, most of this is routed towards shoring up their pension systems and again, not COVID19 related.
The real pandemic is the debt bomb that Congress is foisting on the American public, remember, no serious crisis can be allowed to go to waste. It is time for the money to flow to friends and family.
> Worse is the attempt to feed the state governments between five hundred to a trillion dollars to shore up budgets of states that are not even trying to clip their expenditures,
States shouldn't be trying to clip overall service expenditures during a massive economic and public health emergency that creates novel challenges for education delivery (health, economic safety net, and education cover much of the big ticket state spending items, and this situation creates additional demands on all of them.)
And, unlike the feds, states can't as a practical (and usually constitutional) matter meet temporary emergency need with deficit spending for operations, because most have Constitutional balanced operating budget requirements but, more importantly (because it's a constraint that applies whatever the state chooses), they have a much higher cost of borrowing because they aren’t currency issuers whose debt is in their own currency.
For that reason, it's normal for the federal government to backstop the states on major emergencies specifically so they aren't forced to make temporary economic emergencies worse by taking more money out through spending cuts or saddle taxpayers with greater debts than if the feds were paying by borrowing at the state level.
Indeed, such support used to be seen as routine: Republicans dumped a massive amount of stimulus into the economy during the 2008 crisis. It really says a lot about how much the basic functioning of our political system has decayed that this is no longer happening this time around.
Like, even if they care not a whit about the people involved (they don't), it is republicans' own self interest that they do not go into the 2020 elections having crashed the economy at an absolutely unprecedented rate. They should be doing whatever it takes to avert it.
Numbers like "33% annualized decline in the economy" should be striking fear into everyone's heart. We are speedrunning the great depression, the great depression took five years to hit bottom, we are going to do it in a year or so unless something drastic is done.
Some states like Illinois are struggling because of their spending during the last economic expansion. Bad behavior needs to lead to negative results or you'll just get more of it.
Punishing a group of people indiscriminately because a partially overlapping group of people engaged in bad behavior in the past is, itself, widely recognized as bad behavior.
> it's normal for the federal government to backstop the states on major emergencies...
That's the problem here. The states are using the emergency to bail out their pension and other over spending that was a problem even without the pandemic. For years now, they've been warned that the promises they made could not be kept. The math doesn't lie.
They didn't care. They figured they'd worry about it when the time came, always passing the buck to the next politicians. Well, the pandemic and lack of tax revenue has now brought that point forward.
The rest of us - especially those of us in red states who've been listening to raging blue states scream at us for being 'subsidized by them' for the last decade - are paying attention to this backhanded bailout for fiscal problems not directly related to covid.
The $600 a week number was chosen because the average American makes $900 a week, and the average unemployment amount is $300. $900 - $300 = $600 to make up the shortfall and get everyone to the average.
This is obviously flawed, and the initial idea was income replacement so your income remained the same, but the state of the IT infrastructure in unemployment offices across the US is so dismal there was no way they could cope with that requirement.
I'm not sure this is the time to be debt fear mongering. Such fear-mongering was nowhere to be seen when the Fed hit the markets with 2+ Trillion dollars. That money-grab went off without a peep, only when the money is going to run-of the mill Americans do we want to close our purse strings.
The $600 per week is definitely sustainable as are all the other payments that are going directly to people. If we can afford all the unrelated stuff you mention and a ton you didn't, we can afford to help people directly, which is the absolute number one priority.
The real pandemic is people dying and being disabled, not debt. Saying it's debt is callous and cruel as people are dying and becoming disabled all around us. How is it possible to have no empathy at all like this?
It's possible to have empathy for people who can't make ends meet, too. The death toll is terrible, clearly. As of today we're at almost 165K dead in the US, but that's out of a population of 330M, so about 1 in 2000. The economic fallout is orders of magnitude greater than that[1] certainly at least tens of millions of people impacted (but not dead, at least).
You're the only one saying 10,000 percent inflation. Maybe its "only" being saddled with such high taxes to service debt our country is crippled. How would it be to have taxes comparable to Norway + nonexistent government services?
The phrase “debt bomb” fees hyperbolic because it suggests our national spending is about to have some kind unpredictable/explosive problem. We have had persistently low inflation despite significant money creation since 2008. Inflation is typically the reason we avoid creating money to fund national level spending. If someone who knows better wants to breaks down the scenario for me, please do - but as is, calling short term emergency spending a debt bomb seems overblown.
> Worse is the attempt to feed the state governments between five hundred to a trillion dollars to shore up budgets of states that are not even trying to clip their expenditures
This is so frustrating to me. States pretend like their budgets are sacrosanct and refuse to take any action to prepare themselves. They’ll milk every last drop from their constituents before they start cutting fat.
> States pretend like their budgets are sacrosanct and refuse to take any action to prepare themselves
Very many states going into this had substantial rainy day funds, and many states have done what they can't to cut expense:service ratios while boosting services (sometimes under preprogrammed, federally-governed formulas, as for many state-federal confunded entitlements) such as employee pay cuts (like the furloughs in California). The idea that states have done nothing to prepare or that states aren't taking steps on their own is preposterous. States are structurally more limited than the feds in how they can financially respond to an urgent crises, and for that reason have always relied on the feds being part of that response, but they are not generally failing to do their part as far as financial steps; some are falling down on the public health parts, but mostly that's a result of pressure directed from the federal executive branch, not independent state intransigence or nonfeasance.
How about salaries and pensions? California spends more on their sweet-heart pension package than they do on education.
Also any service that is temporarily furloughed because of shelter-at-home should have their employees furloughed as well. In other words they should experience the pain the same way as the rest of us.
Links like these that show the absurd salaries, pensions, etc. that public sector employees are making in junk-bond states like Illinois, NJ, NY, and California are a dime a dozen if you search Google News:
Could someone knowledgeable in this topic maybe tell us which international financial institutions will be mostly impacted by this kind of defaults (short or long term). Any CDS-like turmoil possible?
Turmoil, yes, but internalized to the corporations impacted. One of the major impacts of the financial crisis a decade ago was the massive increase in private equity ownership of real estate. Groups like Blackstone (BX), the largest residential landlord in the US, may take a hit. Not covered in the article (but referenced elsewhere on HN lately), you're seeing even worse trends in retail-focused commercial mortage backed security portfolios. REITS like Simon (SPG, a mall operator) have been cut in half since pre-COVID.
Your question, though, is presumably around whether we'd expect problems with systemically important banks. Highly unlikely, for two reasons:
First, regulatory changes to their capital structures largely prevent them from holding things like CMBS on their balance sheet unless they reserve significant amounts of capital against it. This is what facilitate the rise of private equity landlordship: banks exited the business.
Second (and this has, largely, already happened) the Fed and other central banks learned their lessons well, and were swift and comprehensive about backstopping the financial markets.
Third, Dodd-Frank domestically and Basel III rules internationally make banks hold far more safe capital on their books precisely to cushion against a shock like this. Turns out those rules work.
Here’s the question I’m trying to answer:
Do current stress tests contemplate a scenario of the same magnitude as 1/3 of US renters simultaneously missing payments?
The stress tests are designed by the Fed and specify what happens to 28 variables such as unemployment and GDP. The description of the scenarios can be found in [1] page 14. Rent delinquency rate is not one of them, but there are 2 real estate indices, House Price Index and Commercial Real Estate Index. The House Price Index under the Fed's severely adverse scenario is supposed to take an instantaneous hit from 280 to 200 and then to keep sliding down from there for 2 more years and reach a minimum of about 150 (I'm rounding all the numbers a little). What happened is the HPI was flat during the Covid19 crisis [2] page 7. Something similar happened for the Commercial Real Estate Index too: the Fed prescribed shock was very large and the actual index barely moved.
The housing market is delusional in the US but it's even crazier here in Canada. We never had the 2008 correction that the US had, and things just continued to climb. In southern Ontario housing prices are so out of wack of what earning potential is that it just boggles the mind.
I thought the COVID crisis would blow this all up, but it hasn't. In fact rural land values keep climbing because of wealthy Torontonians now seeking to have cottages and the like outside of the city.
I don't even know what to say about it at this point. Admittedly the economic situation isn't as dire here because the gov't has spent freely to help keep people afloat, but it just seems so irrational to me that housing prices continue to go up at almost 10% a year when the economic fundamentals are so messed up.
Canada confuses me. I feel like the income disparity there is huge. Everything costs way more than it does here in the US and yet incomes seem far lower. I’m speaking based on my experience dating someone in Toronto and also the job offers I turned down from Toronto based tech companies.
A salary will be like 25% less but cars are 25% more expensive? Yet I see some really fly automobiles flying around the TO.
> Everything costs way more than it does here in the US
Except the big one of health care. Daycare, tuition, infrastructure, etc. are also mostly covered depending on where you are. So a lot more is paid for by taxes.
> job offers I turned down from Toronto based tech companies.
Tech salaries are much lower here to be sure, but we just have satellite offices of large tech firms beyond Shopify.
The brain drain south is a well known issue up here. If it were not for the healthcare nonsense in the USA, I probably would have gone too.
1. Canada's immigration system is merit-based. Firms in Canada import skilled immigrants to fill tech vacancies in a way that US-based companies cannot. In Canada, it can take as little as a few weeks to get a temporary work permit for a foreign tech worker. Once they are in the country, they can apply for permanent residency through a provincial program and have PR status (this is like a green card) within a year.
2. Canadian tech firms are generally smaller. It is well known that smaller firms pay less across the board, in all industries, let alone tech.
What came first, the chicken or the egg? Is brain drain causing the atrophy of salaries or are shit salaries pushing common sense individuals elsewhere?
I don't think the brain drain causes the salary atrophy on its own. I think it's a lot to do with lower investment rates, and high skilled immigration to Canada. I'd love to see an analysis though.
Base salaries for our industry look like they've been improving lately in the GTA. But not so much for other industries.
Housing is reflecting growth in the money supply. All that QE is causing inflation, but the inflation is not uniform. It shows up in assets like real estate, gold and other precious metals, the stock market, and of course speculative bubbles like cryptocurrency.
I have to say too that a large part of the reason greater Toronto area and Vancouver area real estate has climbed so high is that it started out relatively low after the early-90s crash and was undervalued for a long time. And those cities have grown like gangbusters and are now huge metropolitan mega-areas and so their economics start to look like other large North American metropolitcan areas. Toronto especially is now the 3rd or 4th largest city in the US/Canada combined, depending on how you count it, so it's not a surprise that its prices would start to reach up into NY/Chicago/LA type ranges.
Canada is a politically stable economically stable and fairly wealthy place (in the major cities) with fairly high immigration rates, and the immigration is merit based and fairly prosperous. So growth has been steady.
That growth kinda snuck up on us, though, even for those of us living here it seems crazy that these cities are "worth" so much now.
No, it wasn't mostly foreign investments, although that added fuel to the fire.
You can see the Canada housing bubble represented in that Canadian households are among the most indebted on the planet (it's heavy with mortgage debt).
Here's a chart showing the prominent split with the US, where they go different directions after 2007-2008 (Canada's bubble and debt accumulation kept going and the US began deleveraging and improving its household fiscal condition and debt to equity ratio in housing):
Not sure if a disposable-income denominator is fair when there are such large discrepancies in taxation and public provision of big-ticket expenses.
If you get taxed harder in Canada but then don't have to pay for healthcare or education privately than in the US, then it makes no sense to just say 'look disposable income in Canada is lower, thus debt:disposable income is higher, thus Canada is worse off'. You'd first have to correct for the fact disposable income is lower because taxes are higher, because healthcare and education are publicly financed and therefore individuals require less disposable income and could be just as well off.
Second, just look at mortgage delinquency rates between the US and Canada for an impression on affordability.[0]
Third, debt doesn't matter much, not all debt is made equal. A 15% creditcard loan for $10k is much worse than a $20k 3% loan, in terms of bankruptcy risk, even if the debt to income ratio is worse on the latter loan. You can't just look at debt to income, and again, especially not disposable income between countries which very different systems without correcting for it.
Absolute debt doesn't say much, debt servicing does, and in particular servicing of interest rates. That's actually at historic lows for Canada [1], which is totally different from the US[2]. Canada's debt servicing ratios are much lower than in the US. And that's why, in part, the delinquency rates are much, much lower, and why it's not quite so simple to conclude that Canada is in a RE bubble compared to the US.
Its long overdue, and I hope it happens (even though I am a home owner). It seems to me all the stimulus money ends up in the realty market. It looks great for home owners (but money printing isn't good for anyone). It really hurts the people just getting started in the economy.
> It really hurts the people just getting started in the economy.
Yes!
A dollar is a good just like any other. If there is more of it, it is worth less. If you print more money, the dollars that people hold and have are worth less.
That said, the US has gotten away with printing dollars for a very long time with very little inflation in basic consumer goods. It seems to mostly end up in real estate, stocks, etc. where most are happy to see prices shoot up. Except, of course, those who are just getting started and can't afford to get in on the inflated prices.
Also, because most of the currencies in the world are backed by dollars, we are inflating everyone else's currencies. So the US is able to offload it's inflation on the rest of the world. I doubt the world will take that much longer.
Issue is there is not really an alternative. What can they use except dollars? The euro? The yuan? I doubt they are going to go back to the gold standard.
It happens, but rarely. We should really ease pressure by putting in laws to keep prices lower. In three cities I've lived, every 'good deal' is snatched in cash by landlords or flippers. Why not regulate the amount or at least the velocity of how many homes a person can own? My current landlord has 16 houses, that's ridiculous.
Yes, but only because the landlords would sell or default, which would drive the homes back into the bank's hands. The banks would then let most of the homes rot rather than sell them, so they can milk the build&mortgage finance&insurance teat and leave the citizen taxpayer on the hook for overpriced housing & through literal artificial scarcity. This is exactly what occurred during the last housing bust, and it's genuinely sickening that it isn't discussed more in the media: more perverse incentives.
We need to go after these people hard because they are collapsing our civilization. There need to be punitive actions that correct the market and drive it back to something that actually produces people living in homes for a low price and development moving in a resilient, frankly boring manner. This in turn produces a populace with more free time, a requirement for training & education, something that will have to be done with increasing frequency as time goes on. This drives wages up naturally, as more people can choose to work less or not work. This shrinks sustenance & panic borrowing, which is another reason FIRE likes keeping us on their hook. This stops much property crime, which shrinks the need for police forces, jails, & the circus of pornographically perverse incentives that surround our criminal justice system.
In no uncertain terms let me say this: if we tanked the price of housing, tanked the rental market, and got humans into houses instead of some wealth-dreaming deluded landlord or scummy bank that wants to reap what they never sow, we could easily transition into the future we desire. The loss people fear with this action isn't actually a fear of the loss of wealth, it is the fear of losing the ease-of-mind and projected future peace associated with ownership of the asset. We would do well to begin considering how to provide that for one another without harming one another.
Hello stagnation! Seriously that is the implicit arrogance that they will have all of the property ever needed or wanted and nobody else could do better. Not to mention the lack of improvements or investments. To be frank we have that approach in areas without strong property rights and the result is a shithole because nobody makes nice things if they just wind up taken.
> Why not regulate the amount or at least the velocity of how many homes a person can own?
That is something that could be done, to a degree.
You can increase transfer taxes and offer a partial refund over the course of some number of years, provided that the home has the homeowner exemption in place.
Increase the property tax rate while also increasing the homeowner exemption so that the total tax paid is the same as it was before.
Many renters rent because they can't afford to buy. So landlords or flippers eliminating the bottom x percent of the market forces many into renting, at which point the landlords can determine the price. It's a self perpetuating system.
If tomorrow a law came about that said 'you can own no more than one home, full stop', watch how many renters buy their first home on firesale.
Why don't we just encourage more housing builds instead of stifling supply and contriving reckless policies to force people into doing this or that? (like forcing people to sell property at a loss?)
This would require some fundamental changes to contract law. For example, you would need to make it illegal for limited liability companies to own property. Or to have buyers present themselves at a government office and sign a document saying that they are the ultimate owners of the property, with ID verification and pictures taken of their face. Then you would need to centralize this data into a national database.
I don't think so. If I had a million dollars in free cash, I can just sit and buy 6 houses at 150k. And because I'm paying cash, those plebs with their home loan don't stand a chance in beating me. Better yet, I can buy foreclosed homes or short sales, which borrowers can't. This ultimately either pushes some down into renting, or some up into a higher priced house, both of which increase their respective prices.
If you limited home purchases to say, one per year or two, it would open back up the lower cost market. Not every house needs to be flipped.
Housing prices will drop, rich individuals and companies flush with profits from the federally propped up stock market will swoop in and buy them at a discount. Stocks will drop as cash leaves it for housing, negatively affecting retirement accounts and lower net worth individuals. The new landlords will rent them out, housing prices will rise again.
The current system works perfectly for what it was designed to do.
The cycle repeats endlessly funneling money from the lower class upwards.
It would seem obvious that housing prices should drop in the near term (and I hope they do), but I can't totally square that with falling mortgage rates and rising asset inflation. If the Fed rate stays at 0% then I've been told to expect 30-year fixed mortgage rates should eventually drop to between 1.5-2%. Rates that low increase buying power and could be a powerful form of stimulus for the housing market. Beyond that, rental real estate is not immune to the current inflationary multiple expansion seen in financial assets. The lower the yield on something like $SPY falls, the more attractive the yield/rent from real estate becomes by comparison.
30 year is already down to like 2.8%. More stimulus to the housing market means prices go up as well. Incomes are the limit here. If mortgages to to 1.5% prices will go up as well, but incomes aren't rising nearly as fast.
Well, yes and no. Thus far, dollars have not decreased substantially in value, except in the equity market. Consumer prices have been steady for many years[1], with a small (under 2%) annual increase.
What's happening instead is that money is funneled almost directly from Federal Reserve accounts into equities markets, making only a brief appearance in the hands of consumers. There, it mostly seems to prevent deflation -- which keeps people buying stuff and avoids massive unemployment (and causing even more deflation).
At some point the market will correct, and the outflow will go... somewhere. A lot of that money will simply vanish, leaving us with massive debts owed by the government to the banks and large bond buyers. That will be a whole different kind of crash.
I think that's an accurate statement. The transfer would be the delta between what the Fed buys that debt/equity for and what it sells it for later.
At the same time, it could also be accurate to assert that without some organization propping up the economy, short term losses, and possibly long term harm, would greatly exceed whatever the delta ends up being on the Fed's purchases/sales.
It's funny, I've been hearing since at least 2011 that a stock market correction is going to happen any time now. For the past few years I've heard the same thing about housing. But there is so much money out there looking for a return, and so few good places to allocate it, that it is hard to see what the catalyst could be for causing a correction. Obviously things can't go on this way forever though.
To be fair, the correction was happening in March, and then the government stepped in and basically signaled it would write as many blank checks as needed to prop it back up. 100% agree that there's a stupid amount of money looking for returns with very few places to get them, though.
Sure and the catalyst for that was people couldn't afford their mortgages, but current property and stock values are pumped up by an excess monetary supply caused by quantitative easing and a lack of real innovation which would offer actual good investments.
Since there is so much cash floating around and no good places to put it, when people have to exit the market new money floods in, keeping asset prices up. In January PE firms had 1.5T cash ready to invest. I'm sure that will get deployed as bankruptcies start to happen.
There seem to be perverse incentives at play in several states, pushing them to re-open even as cases and weekly deaths rise, seemingly with the primary purpose to getting people off state unemployment rolls.
Not sure it's the right term to use for people, since as you say, the jobs aren't there. But for state governments, for sure.
I think a lot of people envision workers being given a choice to go back to work or stay on unemployment, but that is seldom a choice. You can't legally turn down your old job and stay on unemployment (at least in every state of which I'm aware, but every state's unemployment system is slightly different). Certainly there will be some people who do it, but you would basically have to commit fraud to do it.
This causes the states' perverse incentives that you mentioned. Many people believe a big push to reopen has been motivated by states trying to get people off unemployment as they know some workers would rather stay safe at home and lose unemployment benefits than return to work in an unsafe environment.
Really the "avoiding work" is fundamentally a motivated lie because they don't want to pay period but especially not during the retail and tourist apocalypse that is covid-19. It is as usual incredibly short sighted and stupid as the impatient reopeners think if they ignore the fire it will just fizzle out and people will continue shopping like normal.
I know a ton of employees who have declined employment because of unemployment paying better. If Employers rat out these employees, then they come back angry. its a nasty spot to be in.
>Certainly there will be some people who do it, but you would basically have to commit fraud to do it.
Also the extra unemployment benefits expired so anyone still doing this is not making more than they would at their job. Their only incentive to continue this fraud is for their own personal safety. You can't call a preference for one's own personal safety "perverse".
While it wasn't my statement, I think its perverse as the "free money" distorted those employees from making "normal decisions". For those employees, its a perfectly reasonable (short term) decision to prefer the larger payout. I'd argue its a bad long term decision.
The money isn't "free" if you have to commit fraud to get it. I get that the temporary boost in benefits skewed the incentives a little bit more towards committing unemployment fraud and that might have been enough to sway some people who wouldn't do it under "normal" circumstances, but unemployment fraud is not a new option and this incentive to commit fraud has always existed.
what would it say about employers? They don't want to jeopardize relations, but they need employees back...
I personally know small mom/pop restaurants, a small private security (rent-a-cop) firm, and a large casino that can't get people to come back because the $600/week bonus.
These aren't 6 figure engineering jobs. these are low skill jobs where the most important skill is showing up on time consistently.
the $600/month is already gone and businesses still can't get employees. It's not the boogeyman you're looking for, you need to take a deeper look at why that might be.
two of your three examples are plague-pit jobs that will involve the employee interfacing with the public and getting sick, probably bankrupting themselves with medical bills. that's the real problem.
it's a free market, and if you can't retain employees that's because you're not offering enough. Offer someone $1m a year to work in your casino, they'll take it (even during a pandemic) and you know it. Now we're just negotiating over the price.
Start offering $60k, maybe $70k, and full health coverage to balance out, you know, risking your life and long term financial health so Karen can get her gyro, and people will take it.
The real underlying problem is that a lot of these businesses are essentially bankrupt already, they are the walking dead, their business model will no longer work due to the pandemic (they relied on not paying for their employees' health care and that's no longer a viable scheme with the pandemic on) and they're demanding what amount to subsidies (artificial reductions on the cost of labor, for which the clearing price has risen due to increased personal risk) in order to stay afloat.
taking away unemployment benefits isn't going to bring customers back to your subway, it's over for a significant number of businesses and the owners are pleading to delay the inevitable. This is the economic impact that people wanted to pretend didn't exist, there is no reason the stock market should be bouncing against an all-time high when our economy dived 33% annualized rate this quarter and the pandemic is spreading faster than ever.
Anecdote. Where I live a lot of the school bus drivers were doing it just for supplemental income not for their livelihood. Many quit. My wife was a bus driver and we decided for her not to go back to work. They could have paid her double or triple and the answer would be no.
the $600/month just ran out, and now they are returning. But its been months.
plague pit? risking your life? that's pretty dramatic. They're not mid 90s LA inner city police officers. They're not 1900s sky scraper metal workers. The drive to work is about as risky as the work itself.
Many of these businesses will die (if they haven't already), and these people will have no jobs to go back to...
The unemployment boost isn't going to fix the economy. Unemployment only distorts the economy by competing for labor if we're at full economic output, which we're not. The economy is collapsing at a 33% annualized rate, the fastest in recorded economic history.
You're looking at a crashing economy and suggesting that the real problem is the only brace still propping it up, and suggesting that we knock it out.
Many of these businesses are going to die regardless, because of the failed pandemic response, the failure to enact a sufficient degree of stimulus, and because these businesses are no longer viable with an ongoing pandemic.
And yes, I said plague pit. How in the world do you think it's reasonable for an employee that is not provided with any health insurance (or a bronze plan or whatever) to risk an infection that can stick you with a $1.1m bill, for $7.50 an hour? Employees are, shall we say, not going to respond to that economic incentive, that's not a reasonable trade from any perspective.
Instead, they will stay at home, and 33% of renters are going to miss their payment this month, just as the article says. As they said in 2008: if you don't pay your mortgage this month, you have a problem. If 33% of people don't pay their mortgage this month... the bank has a problem.
The reality is that businesses that require interfacing with the public are going to see a downturn in customers no matter what, and are going to have to start paying for their employees' health care, no matter what. You can't expect people to take on a near-certainty of an extraordinarily expensive hospital stay for $7.50 per hour. People won't do that, and customers aren't coming into the business at the same rate they used to anyway. Those businesses are walking dead and forcing employees to accept sub-market wages to get them back to work won't help that.
I agree the boost isn't going to fix the economy and that it distorts it. I also agree that the crashing economy has real problems well beyond this boost.
I agree these businesses will die. I agree the response was wrong. I think the stimulus was the wrong way to go.
The drive to work can get you a $500k doctor bill, and at similar risks for Covid $500k doctor bill. Both of which these demographics will not pay at all. They will either just leave it in collections or use bankruptcy to eliminate it.
Your argument is "people tolerate some risk, therefore they will tolerate a hugely increased amount of risk at the same clearance price". That's not how the market works.
It's how business owners paying minimum wage want the market to work, but it's not how it does. Shit, a lot of businesses aren't even trying to mitigate the risks, not providing PPE, etc - they just expect minimum-wage workers to absorb all that risk and cost if they don't want to die.
That's not my argument at all. I agree with you that some businesses are trying to "do as they did" and that may not work in the new workplace. However, they aren't competing in a marketplace when the alternative is "not work and get paid".
1. The drive to work is a known risk. Much is still unknown about Covid-19 plus it is novel and (legitimately) scary.
2. It's not just you, you could infect your friends and family and children.
3. If someone actually compared the actual odds (i.e. real numbers) of getting in a card accident with getting Covid-19 working in one of these public-facing jobs we are discussing, under current conditions, then we'd be able to tell if the comparison you're proposing is reasonable or not.
Everyone is talking about the employees not wanting to go back to work, but as far as I can tell, I don't think the customers want to go to the businesses either.
of the employers I know -
Restaurants - low levels of demand, but not zero.
private security - still high demand for services.
casino - regular gamblers + all of the people with new money ($600/wk).
Interesting. My feelings are, restaurants just don't have the demand anyways, and if private security and casinos do, why can't they raise their wages?
I still personally think the crux is lack of demand. I don't think the customers exist anymore that would be willing to pay enough to account for the extra cost of the business given Covid. And one of those cost include safety precautions to their employees.
As an example, Amazon was able to hire 175000 additional workers through the pandemic, even though they were getting unemployment checks.
So I think it's naive to think that removing unemployment is what will save those business. But I'm not a zealot on this, that's just my current rationale. I'm welcoming counter points.
I don't think removing unemployment will save these particular businesses. I just acknowledge the moral hazard of paying such high unemployment.
I also think many (if not most) people would rather work. I also know personally many people (but not most) who would rather sit on the butts than work.
I recall (long time ago) that Germany's unemployment included a list that employers could use to find workers. If an unemployed person was offered a job, they were cut from unemployment. Our current system has people claiming unemployment, getting more money that working. This created a situation that employer could complain to the government, but then the employee feels "cheated" and brings those negative feelings back to work... not exactly a good situation.
The current system has all sorts of moral hazard and unintended consequences. I could provide a policy recommendation, but that's really out of scope for a small discussion forum.
Well, cry me a river for the casino, which could afford to pay a living / more competitive wage, but I see your point about the other ones.
Maybe then it says more about our current economic system as a whole.
But my point was it seems like if $600 / week is enough for folks to choose not to work, that says more about the work not being meaningful or the employer being unable to (or choosing not to) pay the worker well.
while I can't speak for other casinos. This particular one paid them full wages for the 6 weeks they were originally shut down. it wasn't $600/wk. It was $600/wk plus UI.
If $600/wk is enough not to work, then it can also speak to the quality of the worker and their lack of skills. Spending time complaining about how hard life is, rather than doing something about it. Not everyone is like that, and not no-one is like that either.
Not your point but I think there is a definite issue here with perceptions around workplace safety.
The US has a very good level of testing/mask usage. And, to be blunt, just wear a mask and wash your hands...you will be okay. I understand why some groups of people are very worried: if you are obese, if you are over 60, if you work in a hospital/care home...but if you work in an office, it isn't a "Hunger Games" situation.
I don't think furlough/unemployment schemes necessarily created that incentive though. People in some places are clearly being very cautious (I am in the UK, people aren't wearing masks and not being cautious at all...I have seen larger crowds at pubs than ever...no masks) anyway.
So I think the solution to the unemployment problem is a change in message from govt. If you take precautions, you will be okay (again, where I am the message was very urgent and serious...this worked at first but some people are ignoring totally and others are staying at home terrified of their own shadow...so who knows? But I think it would have success generally).
That's not true. I know several people that work in the restaurant industry who have gotten COVID-19 while wearing PPE, probably because of how many people refuse to wear masks, or don't wear them properly. And it isn't just about getting infected yourself. How would you feel if you got infected and ended up accidentally infecting someone you love who ends up dying? There needs to be a national mandate and actual enforcement of mask wearing to stop the spread.
> There needs to be a national mandate and actual enforcement of mask wearing to stop the spread.
That assumes that the masks are as effective as claimed, that mass enforcement is even feasible, and that the Federal govt. has the right to create such a mandate. I don't believe we have enough data to know the efficacy of masks, especially handmade masks out in the field. Mass enforcement of mask wearing, even if it was somehow cost affordable to task law enforcement with, would likely be met with heavy protest or open revolt in the United States by various civil rights groups.
There's nothing wrong with being concerned about safety, especially these days. However, it's not so simple as 'pass a mask law', and if you really think about it ... there's a silver lining there. Do you want to be ruled by a government who can tell you what to wear, when to wear it, how to wear it — even if you dissent? Once there is a precedent for a national mask law, the Federal government can use that to push for further loss of freedoms for individuals and states. I'm not saying the mask law concept is intentionally being pushed to erode freedoms, rather, that it has the potential to do so.
Businesses can already refuse service for any reason not protected by Federal/State law. That's plenty of grounds to kick out a non mask wearer. I don't see the need for additional laws, enforcement, or government spending. Let businesses and employees decide the level of risk they are willing to take.
There are about 50 countries with cases over 50k, 40 of which are missing from that chart. Being 8/50 is I think indicative of being worse. I think the statistic that shows just how bad the US is doing is that they account for 23% of the world's total Covid deaths but only 3% of the world total population. How can a country doing a good job have those kinds of numbers?
But as you said in your other reply, we understand Covid to be a regional disease that comes in waves, washing over a region and then subsiding. For smaller, denser countries in Europe, it is easier for this disease to reach all regions. America is vast with a much lower population density, and the virus is taking its time finding its way around.
However, if you break the US down into regions you can see how bad it is. NY state has a comparable population density to Italy (162 vs 200 for Italy), and both were hard hit at the beginning of this thing. New York state suffered 1,687 deaths per million, while Italy only suffered 582 deaths per million so far. This I think provides a more nuanced picture rather than just looking at deaths per million by country. Population density is really a factor here.
Totals are misleading due to each countries varied handling of the initial pandemic. Our peers are not still struggling with this the way we continue to struggle. I did some quick math based off the numbers here as an example[1][2]. The UK has had 3.0 COVID-19 deaths over the last three days per million people. The US has had nearly four times that many deaths with 11.8 per million people in that same 3 day time frame.
>Sure, that might tell you how it’s going right now, but in the end you just care about the total impacted.
The problem is we aren't at the end yet. Any time frame you use is therefore going to give you an incomplete picture. I used the last three days because it shows that the US is clearly in a worse current position. That means we will continue creeping up that initial per capita list you linked. Maybe the UK, Spain, France, or Italy experience a second wave at some point down the line, but at least they have gotten past the first wave that the US still hasn't been able to stop.
moreover, many office workers, those with seats roughly 6 feet apart or with a partition of some sort, don't even need the mask. the people who need masks are front-line workers of all sorts, from grocery clerks to medical workers, who interact with strangers for extended periods of time, not people sitting at computers for most of the day. sure, when you have a meeting, wear a mask, but an LED screen won't give you covid.
If everyone in the office is clean, sure, but what about the HVAC technician you had to call in? The UPS driver who interacted with the mail room employees? What if your cube neighbor is exposed by a family member who is asymptomatic and ends up spreading it to half the row before they get their results back? Unless you want to test your employees every day and hope the test is accurate, you need masks.
What my company has said (when the office is currently slated to reopen in September) is that you need to wear a mask while walking around the office or talking to people, but not when you're sitting at your desk/computer. Our seating arrangements will be laid out such that everyone's desk has at least six feet of space.
I'm... not sure... whether the science on this holds up, but it struck me as a good compromise. People expressed concern that wearing a mask for nine hours straight, without any breaks, would become very uncomfortable.
no, none of those potential exposures are significant enough to warrant anything more than some distance. the virus falls to the ground and dies (even in the air) in droves all by itself. these aren't hardy viruses.
you'd need to take an unnecessary risk like eating lunch in a group to create a significant exposure in that environment.
I think the perverse incentive they are talking about is that all benefits are cut once someone gets a job, even if the job doesn't make as much as the benefits gave.
If the benefits were instead given to everyone, then you wouldn't lose money by getting a job.
Yes, but that only matters when the worker in question is faced with the choice of whether to work or not. Right now unemployment is through the roof because effectively all the service jobs have evaporated. There are no jobs. No one is sitting home savoring their cushy $600 benefits bonus instead of working, because there is nowhere to work anyway.
The argument against generous "unemployment insurance" vs. "UBI" is valid enough. But it's based on an assumption of near-full employment that doesn't hold right now.
Basically: this is not the time to have that argument.
I hear from multiple of my small business owner friends, that they are unable to get people to come back to work due to this. It's hard to know what the overall distortion is, but it's definitely a good illustration of the welfare trap where most jobs offer negative marginal utility.
$600/week unemployment, even when including state benefits, is well under minimum wage in almost all urban areas. I don't know which small businesses your friends own, nor where they are, but jobs that pay that low aren't representative of a significant fraction of the real economy (and, let's be honest: the ones that really sit in this realm tend to be staffed by undocumented workers anyway who wouldn't qualify for these benefits).
Broadly: I think this is mostly spin, and would want to see a real study instead of anecdotes from friends.
It plays into the argument that people will be lazy and refuse to do any kind of work if they have an alternate source of income, when the market doesn’t actually see as much of that. People like to have multiple sources of income (hello, passive income.)
The perverse incentive is that people are forced to choose between the benefit and going back go a job that might not pay much more, thus distorting the supply curve for labor. If the benefit were unconditional like UBI, the supply curve would remain smoothly continuous.
I know six people that lost their jobs and were not looking for new ones because they were making more money on unemployment than employed. That is a perverse incentive.
There are some people who don't want to go back to work even when their jobs are returning. There might legit safety concerns in places like meat packing plants, but they can be addresses by those places spending the money on PPE and small modifications the plants. Musk has done it with his own companies.
Politicians like Ocasio-Cortez actively told people they shouldn't go back to work even as places open back up. This is problematic because if enough people believe that, there is a risk of shortages for things like food. We over produce quite a bit in America, farms are heavily subsidized, and it's mostly school/restaurant food chain products that are being dumped right now (and many Americans are realizing for the first time we get totally different qualities of products than restaurants do), so it's not affecting us too badly yet.
Hopefully it won't, but there needs to be a balance between any proposal for UBI or continued unemployment and restarting production systems that produce domestic goods we need to survive.
The only way that UBI can work is if you have a very strong labour market with high levels of flexibility.
This is one of the tricky things about economic policy. If you are proposing UBI, you are likely to be the worst person possible to implement it. All the proponents see are upsides without the deep understanding of the downsides.
A country which manages this well is Denmark. They have high levels of union membership, they have a true contributory unemployment insurance scheme that functions like UBI but they are also very savvy about capitalism/markets, and have one of the most flexible labour markets in the world (one of the few places on par with the US, maybe even ahead of). They understand that capitalism is the way you pay for all this stuff, it is the solution, not the problem. Very few political systems can make this leap.
The same applies to the discussion around restarting. Lots of countries went hard on the lockdown rhetoric...and now, it is pretty hard to roll back.
It is very concerning though. I don't think this is going to be some huge decade long disaster, things will get better. But there is a real possibility that a lot of supply gets destroyed in the meantime as the middle-class cocoons themselves at home out of fear.
A financial collapse on top of a demand shock wouldn't have helped. This is speculation but Wells Fargo and Deutsche Bank were probably at risk of collapsing, thereby tanking the market for CLOs and sparking a wave of corporate bankruptcies and bank failures. In order to prevent this and restore confidence, the fed went all out. There's always waste involved but I'm hesitant to call the whole thing a waste without knowing what the Fed knows.
Do agree on unemployment though. The overhead of administering the program is nonsensical. Florida purposefully designed its systems to deny as many claims as possible. The idea of designing government systems as terribly as possible so that people hate the government is holding us back in times of crisis.
They're both real problems. Most of growth in the last decade has been from leveraging. A lot of people have BS jobs as a result of leveraging. Giving people money to avoid starvation (which is good), isn't going to change your leverage problem when it comes to businesses and banks.
Why is it that whenever the government does something, it takes me about ten minutes to come up with a better plan? I've considered that I could be wrong that my plan is actually better, or that I'm missing something (I surely am) but I don't find that compelling.
I'm starting to think that the outcome of our political systems in the West produces suboptimal compromises engineered by politicians who are quite frankly ignorant, incompetent, corrupt, and really just not good specimens of the species. It's like the system is designed to be mediocre.
Have you ever worked at a company where they bring in a brand-new CTO or Lead Architect and they decide after a week or so that the entire dev org has been Doing it Wrong and it's only them, with their clear outsider's view, that can see the true way forward.
I certainly have. It usually leads to 3-4 wasted years of dev time on the brand new architecture that will never match all the features of the old stack, and during that time the old stack has fewer and fewer resources and the tech debt piles up.
It is absurdly easy to come up with a better plan in 10 minutes if you have absolutely no idea how it really works or how complicated it really is.
Yes, I agree that the fair default assumption is I just don't understand the true complexity of the problem. And this is certainly true.
However, I don't accept this answer. I think most of the time the government's plan is so bad, so glaringly flawed, that even from my position of ignorance, I'm confident I can beat it without hardly trying.
The plans Congress comes up with look like shit from your perspective because to you, a good plan is one that solves problems for regular Americans. Congress does not work for regular Americans. The plans they come up with are great plans for the people they work for. They are highly effective and channeling money to the rich and their corporations. Just look at the trend lines of the past 40 years - consistently increasing inequality between rich and poor. That kind of consistent performance is by design. As always, the purpose of a system is is what it does.
The point of "hidden complexity" is that it's hidden. Talking to an expert in public policy in the specific area in question might well reveal the "glaring flaw" is actually a known thing, with a good but counter-intuitive reason behind it.
I've seen precisely that in software; big precautionary comments in code that say "this seems weird, but here's why it exists; you can try and fix it, but you'll just increment the 'leave this code alone' counter again".
I understand that well, and it surely applies in some cases. In others, I think the government did such a bad job that it is not only possible, but quite way to come up with better alternatives, that are actually better considering the full complexity of the problem.
Well, assuming you are competent, the answer is obvious. Unless your outcome preference vector and mine are the same, any decision for policy made by both of us will be less optimal for one of us than a decision made by that person.
Simply put, you can make better decisions because you don't have to negotiate.
> I'm starting to think that the outcome of our political systems in the West produces suboptimal compromises engineered by politicians who are quite frankly ignorant, incompetent, corrupt, and really just not good specimens of the species. It's like the system is designed to be mediocre.
the problem is that one of the political parties has it as an ideological point that government doesn't and can't work, and sets out to sabotage everything to prove that they're right. Like how florida deliberately makes it impossible to get your unemployment.
There is, unfortunately, not a good fix for this, as similar parties exist worldwide. But banning Murdoch media and de-consolidating media control in general (returning local stations to local management, etc) would be a good start.
If you went to work for a company that you didn't like and you sandbagged all your work you would be fired. Somehow this is considered acceptable when your employer is the taxpayer.
A large part of the problem of "why doesn't government produce good outcomes" is exactly this - people who have a vested personal interest in producing bad outcomes, because that's what they run on.
How do you fix it? Not easy obviously, but certain propaganda networks are a large chunk of the problem. Murdoch's networks specifically, and Sinclair's network controlling local broadcasting.
‘Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.…’
>I'm starting to think that the outcome of our political systems in the West produces suboptimal compromises engineered by politicians who are quite frankly ignorant, incompetent, corrupt, and really just not good specimens of the species. It's like the system is designed to be mediocre.
I've heard it said that a benevolent dictatorship is a better government than democracy for that reason (e.g. Singapore) until it stood being benevolent because the leadership changed or the leader grew corrupt. There's some truth there. That's not an argument in favor of authoritarianism, of course.
> it takes me about ten minutes to come up with a better plan?
Because your plan doesn't please campaign funds, interest groups, and voters in a bicameral legislature and a long electoral college selected President .... and skate past 200 years of federal and state laws.
There's a reason why Caesar, Napoleon, Hitler, Stalin were able to achieve things quickly.
To a first approximation, I'm inclined to agree with this reasoning. The main point of minimum wage (in the US) was to back-stop a buyer's market for labor from leading to mass deprivation among American workers. If UBI can guarantee a dignified minimum standard of living, minimum wage becomes redundant.
Hell, in a world of UBI, I'd anticipate volunteer organizations to flourish.
Next would be, are they up for removal of all subsidies / free programs (e.g., SNAP / food stamps)?
How can health care costs be addressed with fixed UBI?
I can see UBI succeeding or at least not failing in countries like Canada since healthcare costs are zero for individuals, no matter how poor or moneyless they are.
Without having a similar Healthcare system, how can UBI be even implemented?
Ps: I’m neither strongly for/against UBI yet, but curious to see how it can solve the problem. I just have a lot of unanswered questions when asking them to UBI supporters.
Social safety nets were designed to keep society from unraveling when desperate people take to the streets in the endless boom-bust cycle of capitalism.
Many of the wealthiest countries in the world have found it economically more desirable than the alternative even when you ignore the ethics
You can't pay for UBI without taxing wages (well everyone's taxes 'cause how you going to pay for it?), so actually the best scenario would be a higher minimum wage than now, plus UBI. Removing minimum wage but just providing UBI would be particularly crippling to the poor who already now have little hope on moving up financially.
I could get behind that. Again, though, UBI is sort of a fantasy legislation for neoliberal wonks to argue about. It's not relevant to the current situation, really, at all. There's no way to make that kind of bureaucratic change on the kind of schedule we're forced into at all. It only seems simple to software geeks in HN threads.
You know people said the same thing about social security, and on a more recent note... desegregation and the end of Jim Crow.
Change always seems fast and overwhelming until it’s done, then we realize that support for it had been growing bit by bit, and all that was left was that final leap.
Even if the UBI is impossible to attain tomorrow, we should still lobby for it so it will be attainable someday.
Have you thought about the psychological impact of what you’re describing? Why would someone work 40 hours a week to earn $2680 a month when they can earn $2600 a month sitting on their couch and playing video games?
Right now there is an incredible power imbalance between employers and employees, where for the employer it's an inconvenience if they lose the employee, while for the employee it's loss of access to food, shelter and medicine if they lose their employer.
This means that the employer can squeeze the employee, allowing them to pile on with abusive working conditions, bad pay, and poor compensation. Lots of workplaces outright steal out of the paychecks for the employees in plain daylight and get away with it because the employee knows that if they raise a fuss they might get fired.
Nobody would work for 1 dollar an hour, as you say. So companies will have to offer more to attract workers. And the workers have the option of saying "no" if what they offer just isn't good enough. So they would be two equal parties, bargaining over what the labor is worth, without neither having a gun pushed against their head if they say "no".
Weirdly, a lot of people seem to think things are as they should be. People should starve and be homeless if they aren't willing to work under unsafe condition, or being blackmailed into working for bottom wages just to have food to eat tomorrow. I'm not a fan of that sort of Social Darwinism though.
Yes! With a robust, livable UBI, even without a minimum wage, you wouldn't see $2/hr jobs. Can you think of a job you'd personally take for an extra $2/hr if your needs were already being met by UBI? Wages would have to be set to a level that incentivize working. Shitty jobs would actually have to pay more than fun or easy jobs, because "not taking the job" is always a realistic option.
> Can you think of a job you'd personally take for an extra $2/hr if your needs were already being met by UBI?
Yes, if it prepared you for better jobs. Low wage dead-end jobs might not exist (then again, they might, different people have different utility functions), but low-wage on-ramp jobs that cannot exist now certainly would.
They wouldn't. They might work 40 hours a week because they believe in the cause; I know people who are independently wealthy or otherwise not in need of paid employment who put that time in for volunteer projects.
People are downvoting this, but I think you point to a real problem.
Yes, people are generally good and want to do meaningful things and contribute to society. But we're also lazy, selfish, and good at convincing ourselves to make short-term choices with poor long-term consequences.
I think with UBI, there would be a whole lot of couch potatoes. I don't think that's necessarily morally a bad thing, but if the ratio of couch potatoes to people producing economic activity that pays into the UBI fund is bad enough, it can make UBI simply economically unsustainable whether you think it's a moral good or not.
So there is a balance between:
A. Keeping UBI low enough to incentivize people to produce labor such that UBI is financial self-sustaining.
B. Keeping UBI high enough that people who do not work are not destitute.
I think fans of UBI have a tacit assumption that A is well above B, but I am not so certain.
Your figures are wrong. If they worked (and received UBI, because that's what UBI means), their monthly income would be $5280 vs. $2600 for playing video games.
Agreed, but is this really the right time? A discussion about the benefits of UBI seems like an excellent discussion to have after making sure all the folks who will be in serious trouble once the $600 payments stop get some help from their government ...
I think it is the right time. The problem I have with the $600 weekly unemployment bump is that while it helped some people, a ridiculous amount of people slipped through the cracks. We look at it and think "17M unemployed, we are helping 17M people!" but that is just not true. Even if it was, that is overall a very small portion of the population who (likely) needs assistance.
A big argument _against_ UBI is that "people wont work, and won't do productive things". This unemployment is actually worse than that; the fact that it "all goes away" when you exceed your state weekly income cap means that people can't do safe, productive "work", even if they want to. If your passion is selling art, and you sell a painting for $200, you most likely just excluded yourself from ~800$ in unemployment that week.
This isn't even touching on the difference in social-economic situation impacting ones ability to even apply/qualify for unemployment benefits in the first place, and fact that many state unemployment systems are designed to prevent people from actually being able to collect.
The way that the $600/week is talked about it completely ignores everyone (a substantial amount) of people who fell through the cracks. The unemployment system is not designed for distributing catastrophe-relief, and it's a disservice to literally everyone involve by pretending it is.
> The way that the $600/week is talked about it completely ignores everyone (a substantial amount) of people who fell through the cracks. The unemployment system is not designed for distributing catastrophe-relief, and it's a disservice to literally everyone involve by pretending it is.
I see. On that I agree with you. Replacing the $600/week with something better - yes!
That sounds like a great idea until UBI is treated like a driver's license...something that can be taken away...if you, for example, are seen at a "riot", or "interfere" with law enforcement, or stay out past 10pm.
But then people would have no incentive to work anymore so people would abuse the system. This is why the government has to give the money to corporations, they will spend that money wisely to keep good jobs around and not abuse this money. There's way too much accountability in corporations for it to ever get abused unlike regular people collecting Ubi forever.
I feel like that depends on the UBI amount. Unless you're currently living well below your means, it's likely you couldn't support your current life style on just a UBI.
I'm an advocate for a UBI, and I'd use it to shift from working 5 days/week to 4 or 3 days/week. A move that many argue wouldn't effect the economy's output much at all, considering other countries economies do fine with less average working hours.
Additionally, a UBI would let more people participate in the economy and increase purchasing power of the less wealthy, which would help the economy.
I'd do it on the spot. My monthly spendings are already less than the min wage in my country. If everything else stays equal I'd gladly give up work for 75% of the min wage.
Is your confusion around the verb tense in the headline? I.e. "renters did expect to miss" (past) vs. "renters are expected to miss" (present)?
In either case it doesn't make much difference. It was a survey done in July for August rent. One-third of renters DID EXPECT to miss August rent; and now, August rent being past due, we EXPECT that one-third of August rent was missed (lacking actual data around August rent payments made).
You tried to add in a bit of non sequitur / additional unsubstantiated info in your interpretation which was about the "scraping together" - there's nothing about that in the data
You tried to add in a bit of non sequitur / additional unsubstantiated info in your interpretation which was about the "scraping together" - there's nothing about that in the data
That kind of thing's usually added by people as just a bit of color for storytelling purposes.
This isn't real surprising. On a good day, a ridiculous percentage of people don't pay their rent when it's due. This doesn't mean they don't pay their rent. They just pay it late. Chronically.
Exactly. While things are closed, there's a reason for restaurants to demand support from the government. Everyone suffers, but homogeneously and less.
If we open up, support from the government zeroes out and bars and restaurants will find themselves in two circumstances: they will be partially full because people are scared to be in public (and will struggle to make ends meet and maybe fail), or they will be plenty full until someone brings in COVID-19, a bunch of folks get sick, contact-tracing tracks it back to the bar or restaurant, word gets around, and business at that place crashes because it's a plague vector. Some businesses will win in this circumstance. Most will lose.
> they will be plenty full until someone brings in COVID-19
Someone will bring covid 19, sure, that is fully expected, we know that since the virus spread easily, but we also know majority of them will be not get stick or only have some mild symptom. no need contact tracing, no need to get panic.
Seems a little pedantic or legalistic to argue that kids aren’t functionally immune to covid. Less than 2% of cases in the US have been kids under the age of 18. Of the ones that tested positive, less than 10% had symptoms.
Three total children have died in the US from complications relating to covid. It’s more dangerous to drive your kid to the park than it is to let your kid play in the park.
The kids themselves probably won't die from the infection, but they certainly are a near-ideal vector to spread it to other people.
One might hypothesize that kids have done pretty well because, you know, schools have been near-uniformly closed, so their "places of employment" have been near-100% remote. I bet the COVID numbers look pretty good for work-from-home tech workers too, that doesn't mean tech workers are "nearly immune" to COVID.
It's just a numbers game and if COVID starts to pick up big time then it'll surge through schools. You're spending 8 hours a day in close contact with 8 different sets of 30 students who rotate every hour, plus crowded halls and busses and all that stuff. Then you go home to Grandma and she gets it.
> Although kids are less likely to get severe coronavirus cases, mounting evidence suggests they can spread the virus. Most children have the same amount of virus in their upper respiratory tracts as adults do, according to a research letter published in the journal JAMA Pediatrics, and children under 5 may have between 10 and 100 times more virus than adults (though this doesn't necessarily mean they spread the virus more efficiently).
That link doesn't really contradict that. It contradicts actually immune, since kids can obviously catch it. However most, particularly young children, don't show symptoms. And most of those that do show symptoms only have mild symptoms.
So yes, basically immune. Kids don't have much to fear themselves, the concern is that they'll infect adults who actually do have something to fear.
I see what you mean. I wouldn't classify that as "basically immune;" "less susceptible to deadly symptoms" maybe. Immunity should include a lack of ability to communicate the disease, which is not demonstrated at all.
... and I still wouldn't put money on children being immune enough to, say, safely open schools even if we discard the child->adult transmission risk. Over half the youngest demographic in the Georgia camp were infected, and children are dying from this disease, even if at a lower rate than adults (how much lower is a really important question).
The curve continues from there, peaking at 45,845 for 85 years or older. So yes, some kids do die, or at least they had covid when they died. But if this were all covid was, we certainly wouldn't have closed schools for the kids' sake over this. Clearly schools are closed due to the threat posed to teachers.
What does that look like relative to the infection count? That's the numbers I can't get easy access to; it may be the case we've simply successfully kept the disease away from places children frequent.
I'm hoping that's not the dominant factor in the numbers, because school re-opening will be real ugly if it is.
The Dutch CDC (locally known as RIVM) concluded that risk to young children is very low, and Dutch schools have been open since early May based on this understanding.
AFAICT if you just try to synthesize the existing research without prejudice, you'd have to conclude that the risk of young children dying from COVID-19 is very low.
Whether there is much risk of children -> adult transmission is more difficult to answer.
The risk to young children is low. But not having symptoms or being low death rate doesn't mean shit.
Kids require adults to take care of them. That means those kids who may have the infection could VERY easily spread it to higher risk people.
They aren't immune, they still get the virus, they can still spread it. That is not immune. They just don't show symptoms like older people. That's not an immunity.
On top of that we don't know the long term effects of this thing. While kids may not show symptoms what long term effects might this have on kids? There's still a huge risk there.
> it may be the case we've simply successfully kept the disease away from places children frequent.
That might be true to a degree, however the discrepancy is so huge, 2-3 orders of magnitude, that it should be pretty clear kids really do have much less to fear. I think some Olympic-level contortionism is needed to come to any other conclusion.
And it's across the body that the 'rona does long lasting damage, this is pretty rare in any form of sickness. And it's going to bite economies in the butt for many, many decades to come. The only way to prevent this is to prevent people from getting infected.
Most don't; COVID-19 isn't "any disease." It's got both an R0 and a fatality (and, we've come to learn, long-term-injury) rate that are way too high to refrain from taking it seriously.
fatality rate less than 1% is very low. In regards for long term injury, given enough spread any disease could cause long term damage in some of its population. Flu cause long term damage.
If I told you that every day you lived your normal life, you had a 1 in 100 chance of dying, would you take it?
How about a 1 in 1,000 chance? That's an expected payoff of about three years before you die, Worth it?
The breakeven point is different for different people, but I think even 0.1% chance of death is too high for most.
Or flipping the numbers: if 100% of Americans become infected, a disease with a 0.1% fatality rate is about 350,000. That's more people than we lost in World War II.
Everything has opened back up in my city but it's been four months since the first lockdown and now my behavior has changed. I no longer want those old experiences again, at least not as frequently.
I think everyone is underestimating the behavioral changes two months of lockdown can bring about. 60 days is exactly the number of days you need to cement a habit. We've had more than that.
If even 10% of the people end up changing their behavioral patterns, businesses that depend on these customers have 10% lower business. That's huge, especially when you borrowed debt expect +10% growth, not -10%
Economic activity is not the be-all, end-all purpose of human life. But even if it was...
Every business opening tomorrow as if there was no pandemic does not mean the economy will magically return to Nov 2019.
People who do not feel safe do not spend money freely. People without financial security tend to not spend on frivolous things. People with crushing medical debt do not contribute to the economy the same way that they used to.
It's OK to want a return to normalcy, but it will only happen through a careful process (which is already not happening). Getting frustrated and saying to hell with caution has no chance of success now, or ever.
I'd take that bet, even though it's not a reasonable comparison.
COVID-19 deaths are over and above expected deaths, which is why "excess deaths" is much higher so far this year, and the spikes and dips in excess deaths match COVID-19 spikes and dips pretty well.
I'm not even sure whether overall suicide deaths in 2020 will be higher than suicide deaths in 2019, let alone 150k higher and counting. Even the link you provide relies primarily on one person's assertion about high schoolers at a given point in time, without supporting information. Yes, many high schoolers commit suicide. Not enough, I think, to exceed COVID-19 deaths in 2020. Not even close.
Suicide is normally then 10th-highest cause of death in the US[0]. Currently in Texas, where I live, COVID-19 is 3rd, behind only heart disease and cancers[1], and it seems like it will be easily in the top 5 nationwide.
How many of these suicides are due to economic despair? The economy is not coming back until we get Covid under control. The fact that we just ignore this is mind boggling to me. Most western nations have this under control now, its just us looking for every reason under the sun to essentially say "Its too hard, we give up, now die for the dow."
"Where Redfield obtained his data is unknown, although a doctor at John Muir Medical Center in Walnut Creek, CA claimed the facility has “seen a year’s worth of suicide attempts in the last four weeks.” He did not say how many deaths occurred, or whether the statement was exaggerated for emphasis."
I am willing to have the debate but only with real numbers, this article from a biased news site is not that.
No, we need to help individuals and people who are struggling with economic assistance. Economic assistance isn't sacrificing people onto the alter of capitalism.
Government need to reasonable, still have the lockdown while we know the virus is not that dangerous ? paying people extra unemployment money to not working ?
> still have the lockdown while we know the virus is not that dangerous ?
Does the graph presented of those most likely to have issues with rent match with those states that locked down the hardest?
> paying people extra unemployment money to not working ?
I'm confused - are you implying that by giving some people money (for some more than they would earn while employed), that prevented them paying rent? If any, it would seem like a failure in the dispersal of said money.
This "waiting for things to return to normal" looks pretty dumb to me. I think the stimulus checks and other relief funds are smarter than just throwing a third of Americans out into the street, but it's not really a long term solution. A long term solution is the economy needs to adapt and we need to create work opportunities and reshape work with more of an eye towards germ control.
I've been trying to write down some of my thoughts about how we move forward in a sensible way. For example:
Earlier this year I wrote about a work opportunity I know of and about my opinion that this model should be borrowed for other kinds of work. That piece is here:
http://writepay.blogspot.com/2020/03/the-textbroker-solution...
I also wrote about my thought that more eateries need a contactless takeout option similar to Little Caesar's pizza portal:
https://projectsro.blogspot.com/2020/07/pizza-portal.html
I'm very frustrated at the kinds of things I see other people saying. We need to stop framing this as an either/or thing: Either we protect ourselves from the virus or we go back to work.
We need to do both. We need to figure that out. We aren't even trying. This assumption that we need to choose one or the other is part of the problem. It's not true.