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0 pointsjkhdigital6y ago0 comments

> healthy and well run businesses following reasonable best practices

A business with zero debt financing would not go bankrupt during this crisis, but they would still have to lay off employees in the meantime, and those employees might "starve" without another source of income.

I really, really don't understand the need to bail out companies here. If the problem is a loss of income for the employees, then strengthen unemployment insurance. If the underlying business was sound, then it will start back up again when the crisis is over. If the owners of the business were leveraged and cannot sustain debt payments during the crisis, then they can go into bankruptcy protection and emerge with new ownership.

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helen___keller6y ago

> A business with zero debt financing would not go bankrupt during this crisis

There are fixed obligations that can exist outside of debt financing. Rent, for example, is one that everybody is familiar with.

Anyways, I generally agree that helping the employees is more important than saving the businesses. If a business does die, it hurts some current investor or proprietor and benefits some future investor or proprietor after the crisis is over, with some efficiency lost in between as assets are sold off and eventually bought back up (and probably you get a better off company in the long run as a personal opinion).

I'm just saying, it's not necessarily some moral fault that a business doesn't have the structure to survive the a pandemic. This is outside of normal recession-preparation.

toufka6y ago

I think the current argument is that the fastest, easiest, simplest way to help employees, is to make sure they don't get fired. And the easiest way to do that is to make sure the businesses don't feel the need to fire them (to either cover those fixed obligations, or to plain shut down). Give the businesses 8% more cash (by removing payroll tax), you might allow the business to survive a month-long slump, and not fire anyone.

This would seem a good strategy if the issue was simply a month of lost productivity, with an otherwise healthy business. And where the game theory would lend itself towards the business owners knowing this, and so choosing to not fire anyone. And where the 'lost efficiency' of shuffling around ownership would be significantly greater than the short term loss. If those are not true, and the business then fires its employees anyway, it really was just a gift to the business owners, and would be a failure.

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