A common defence I hear about CEOs being paid so much money is that they take risks so they deserve the reward. If that’s so then they should take on the risk and not ask for the taxpayer to bail them out.
I agree with this to an extent, but is it not subjective on a business-to-business basis?
For example, let's say a business was doing well. They had 4,000 employees and they were gaining market share, so they re-geared their assets to raise capital a year before COVID-19. They've bought/leased new equipment and hired 800 more people, and expanded operations to new markets. A year later the crisis hits the world, and nobody could have reasonably foreseen it happening. The business' revenues are slashed by 80%, yet their outgoings are the same. Before COVID-19, their strategy was paying off, and their growth was paying off.
Would it not be better to bail out that business to keep it afloat in the short term, with the assumption that once economies will start opening up, the business will be able to continue to be self sustainable, keeping all of it's employees employed, and with a trajectory to employ more in the future (as opposed to letting it fail "because capitalism", and then having all of those people unemployed in the medium to long-term)?
If this anecdotal company is a major/the main employer in a geographic region, it's fall could destroy entire local economies.
If it's a corporate that's been paying huge dividends and retaining little working capital for a rainy day, or it's a company that's unsustainable anyway, I think it's a different story.
"bailing out" and "borrowing at rock-bottom rates" are essentially the same thing. I think the idea that somehow they don't have to pay back the money is a common misunderstanding. The difference is where you get the money, but in the end, the FED backs all the money either way so the "government" is on the hook.
Not that I'm calling for anyone to be bailed out, but the fact is that it's paid back. You can track and learn about "bailouts" HERE https://projects.propublica.org/bailout/
The interesting thing to me would be the airlines all tanking. It would change a generation of lives when it comes to travel. The days of cross country car trips would come back, but with iPads and hand held video games. Interesting to think about.
And also - do realize that when some large companies go under it will fundamentally change certain parts of people's lives. The adjustment can be rough.
JedCarroll08 on May 11st, 2020 at 15:44 UTC »
A common defence I hear about CEOs being paid so much money is that they take risks so they deserve the reward. If that’s so then they should take on the risk and not ask for the taxpayer to bail them out.
sammywammy53b on May 11st, 2020 at 16:26 UTC »
I agree with this to an extent, but is it not subjective on a business-to-business basis?
For example, let's say a business was doing well. They had 4,000 employees and they were gaining market share, so they re-geared their assets to raise capital a year before COVID-19. They've bought/leased new equipment and hired 800 more people, and expanded operations to new markets. A year later the crisis hits the world, and nobody could have reasonably foreseen it happening. The business' revenues are slashed by 80%, yet their outgoings are the same. Before COVID-19, their strategy was paying off, and their growth was paying off.
Would it not be better to bail out that business to keep it afloat in the short term, with the assumption that once economies will start opening up, the business will be able to continue to be self sustainable, keeping all of it's employees employed, and with a trajectory to employ more in the future (as opposed to letting it fail "because capitalism", and then having all of those people unemployed in the medium to long-term)?
If this anecdotal company is a major/the main employer in a geographic region, it's fall could destroy entire local economies.
If it's a corporate that's been paying huge dividends and retaining little working capital for a rainy day, or it's a company that's unsustainable anyway, I think it's a different story.
DKmann on May 11st, 2020 at 16:51 UTC »
"bailing out" and "borrowing at rock-bottom rates" are essentially the same thing. I think the idea that somehow they don't have to pay back the money is a common misunderstanding. The difference is where you get the money, but in the end, the FED backs all the money either way so the "government" is on the hook.
Not that I'm calling for anyone to be bailed out, but the fact is that it's paid back. You can track and learn about "bailouts" HERE https://projects.propublica.org/bailout/
The interesting thing to me would be the airlines all tanking. It would change a generation of lives when it comes to travel. The days of cross country car trips would come back, but with iPads and hand held video games. Interesting to think about.
And also - do realize that when some large companies go under it will fundamentally change certain parts of people's lives. The adjustment can be rough.