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0 pointsvsareto5y ago0 comments

>I love the idea that the entire global economy is fake, artificial and zombie-like, because it doesn't operate the way you think it should. A reasonable person would take a step back and question their premises and understanding.

The new part is the expectation that governments will prop up companies during bad economies.

This is bewildering to anyone with a naive view that believes America is a purely capitalistic economy. Surely if a company prepares enough for the storms, it's worthy of surviving them. Running thin savings is now more risky, but it means more profit. That's fair.

From another perspective, it's economic innovation where unpredictable disasters don't kill huge companies or industries. This can be a good thing, but it's not really capitalism any more.

So the person taking a step back will ask, "How far will the government go to protect large companies? How large do you have to be to get this protection? How does all of this work?" This is what we can't answer.

This is where people (rationally) start to believe things are fake, because the country's leadership gets to decide what happens to companies during these times.

Now this company knows the government is likely to bail them out, what reason do they have to plan for the worst any more? This gets even more uncomfortable when they get bailouts for causing the disaster themselves.

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mrep5y ago

The only companies the government is propping up are the airlines and small businesses by mainly paying for their payroll to keep people employed through the CARES act [0]. In what way is the government protecting large companies?

[0]: https://en.wikipedia.org/wiki/CARES_Act

vsaretoOP5y ago

Exactly, it's protecting large airlines from going under. This means there's less risk here than if the government had not intervened. Any future pandemic will likely result in a similar response, therefore, airline stocks have reduced risk of becoming worthless.

At a basic level, if you removed all demand for airlines, you'd say "well, airlines don't look like a great investment". But now the demand matters less during disasters because demand isn't actually keeping the company alive as in most businesses.

jungletime5y ago

This brings to mind Elon Musk and his many failed rockets. Normally a rocket failure is so expensive it has the potential to bankrupt even a rich company. In a pure capitalistic system investors would not risk suck long term goals as going to Mars, when it involves many rocket failures, and no profits. But its in the national interest to push such research forward for the sake of humanity. So if state provides some welfare, or a cushion, to hedge such risky thing as building rockets, don't we all benefit. In a similar way to the way government grants pay for research at universities. Its obviously a balance.

I live in Canada, a huge country. Its not profitable for any company to provide power to remote places with only a few inhabitants. Its only possible because the government mandates it, and the rest of us subsided it.

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