I'm trying to decide where the line between sound economic advice and scaremongering sits. I think it may be around "You’re going to start having food riots soon enough."
At least I hope that's scaremongering. Given that everyone is doing their best to return to normal, I feel like running out of unemployment may not be as big of an issue as stated.
Wait what? Unemployment payments are the only things that are preventing a full scale depression and hardship for millions. These people have lost their jobs, have no savings or assets, nothing. How are they going to get food? Pay rent?
The quick action by Congress in boosting unemployment payments has been the only thing keeping the economy from going belly up. If that stops, we’re in for a lot of hurt.
He argues that that's going to happen in July. I just can't see the States letting that happening. Here in Canada they are continually expanding out benefits, and I think the States will have to follow that as well. I can't see the tap being just turned off.
There are enough people completely divorced from reality in congress and in and around the presidency that it will potentially get incredibly hairy. I can absolutely see it getting to the absolute brink before they suddenly realize "oh shit this is bad" and pass an emergency "freedom payment" which again will be a one time thing and not be completely enough.
My pessimism says we're also going to be dancing from one stimulus to another without addressing the long term
I would agree, but in an election year maybe they won't play it that way. The party in power has more incentive to keep voters mollified than they do in preserving their ideological purity.
> we're also going to be dancing from one stimulus to another without addressing the long term
100% agree. This is the classical American response, we have mastered the art of kicking the can down the road.
what happens when the states run out of money though, that is ultimately the problem. how long are the states going to be able to keep up without federal intervention?
They are having this argument in congress right now. Republicans want to shrink unemployment because its bad for people, they don't want to give money to states because (that only helps blue states, red state budget deficits are different?), they want to shrink the size of unemployment because its higher than minimum wage in some places.
Right, even our federal shutdowns eventually come to an end with both parties reaching a budget agreement. The consequences of neglecting this unemployment crisis would be worse than a prolonged shutdown.
You're thinking of a government that has rational people in charge. We have an extended family running one branch and a party holding on to power by its fingernails in the Senate. Look at the latest developments in the Inspector General purge. Trump is firing his 5th (6th? I lost count) IG, and illegally installing the replacement before the last one has been officially processed out. The new one is still an employee of the department, which not only compromises the whole idea, but exposes whistleblower complaints to management. The Senate hasn't even called a hearing about it.
I don't mean to argue over any details, just pointing out that our federal government has had an axe taken to it for the last few years and it might not be able to do very obvious things right now.
Right but will the States actually let this happen? If there are food riots, it’s the locals who suffer.
Will Florida really wait for the federal government when Jacksonville is full of rioters, or will they setup food banks far in advance of that situation?
I predict the later. Especially since States can do debt financing for their operations.
Maybe. But states can also call out the National Guard. Florida's police departments have been heavily militarized, even more so since the Orlando nightclub shooting in 2016. And that means that people will expect to be met with real force, so they will wait until they're in some serious deprivation before large riots even start.
You're totally right - the state of Denmark is thoroughly rotten, but even under this administration the debt ceiling crises were able to be resolved. The government shut down for a good long while, but it resumed function. Maybe it's past the point of no return, but sanity does seem to shine through at the last second when it must.
I do not want to downplay the severity of such an outcome, but it is worth recalling that this type of event ( and worse ) has occurred to multiple developed nations within recent memory. Ultimately the economy will recover and normalize, even if the availability of certain items is limited for a period of time.
The fall of the soviet union saw unemployment at 40% and widespread food rationing/limitations. I don't believe there is historic precedent for unemployment growing beyond 20-25% without widespread economic and societal restructuring, the great depression in the US saw the change from a government spending .3% of the economy to >30%.
Past recovery is not a guarantee for future. I am very surprised at how much faith people seem to have in the stability of advanced economies. What we face today is not simply an economic recession; it’s a pandemic which is actively preventing people from engaging in the system, and the reality is that we might face more such natural disasters in the future. We have seen civilizations get undone quite dramatically in the past; it’s not guaranteed that it won’t happen again.
In the case of the US: the economy was hollowed out by the 08 recession and Republicans prevented economic stimulus packages that would help in speedy recovery from passing. All the gains of the past 10 years were wiped out in a few months. At some point you have to ask how much pain people are willing to accept before casting aside a system which does not work.
Nobody in history is immune from disaster. The world goes on. One can remember to be humble, that us humans are but a small part of nature and subject to her whims.
There is no perfect system to avoid catastrophe. Not yours, not mine. Humanity progresses. It will continue to do so.
Sometimes the best way to fix something is to riot in the streets. I hope it doesn't come to that, but often it does.
Every couple hundred years or so a fraction of humanity dies due to disaster and/or strife, and we collectively continue to thrive and improve. This has been the pattern for all of recorded history. Why do you think it will be any different now?
> Nobody in history is immune from disaster. The world goes on. One can remember to be humble, that us humans are but a small part of nature and subject to her whims.
It's a nice sentiment to have when you aren't the one counting your formula stock and worrying how you'll take care of your 1 y.o. if shit hits the fan and there's no longer food to be found in the foreseeable future.
Taking things from perspective isn't as fun if there's a real possibility you'll end in the middle of it. Catastrophes and collapses are part of humanity's growth, but that's not going to be a consolation if your society starts disintegrating about you. Some people will survive such an event. Neither you nor me will likely be among those.
My point in the quoted text was that nature is not sentimental. Sentiment doesn't matter. Disasters happen.
You can stockpile against the next disaster to the best of your ability, if you want. Collectively we can prepare for disasters, to the extant we agree on how to do so. And the world keeps going on, some are lucky, some are not, kind of like every other creature in nature. We are no different.
The "anti-rich" topic has been going on for so long without a real conclusion, I definitely would not discredit the possibility of riots in certain US cities.
And I think that hits the core issue. There's a lot of "eat the rich" on reddit and imgur and undoubtedly other platforms, but that's like #kony2012: clicktivism and online LARPing as revolutionaries.
Riots are always a possibility, a sports event can be the cause, and so may be severe economic issues, but I doubt that they will be widespread and large. If they happen, I expect swift and violent suppression, and since they won't be bi-partisan, that suppression will find a lot of support in the population.
I imagine that the distributed nature of the internet is actually what hurts it in this case - you riot over sports because your team won and the energy is palpable when you go out into the streets to join the crowd. There's less physical ___location to share this unrest, so it's largely just spent harmlessly online.
That's my impression as well, and online excitement is a bad predictor of offline activity. It's one thing to comment "smash the system" below a picture of a guillotine, it's quite another to go out to tango with the riot police or national guard. One of can have very real consequences, and that'll filter out the large majority.
Now, what happens when that expands to 1/10 of citizens due to lack of food, people getting evicted, no work, and more? Covid-19 is only accelerating the road we're currently on, in a very quick fashion.
And there's a reason why police departments were buying military surplus. They view us citizens as the enemy. There's nary a reason why you need APCs with 50cal's mounted for the local police force, or armed with a variety of grenades, or microwave cannons, or acoustic weapons.
Whatever it is that's forming and coming to a head, it doesn't look peaceful. At. All.
Part of me thinks that this is exaggerations as there’s no way all food banks have lines that are miles long, as stated in the article. I did notice that there are security guards outside my Whole Foods and Trader Joe’s now though.
> Given that everyone is doing their best to return to normal, I feel like running out of unemployment may not be as big of an issue as stated.
The bigger test may be once the PPP funds are exhausted in about a month.
Most high income nations have been overproduce food via subsidies for decades. For most countries, food security is part of national security. The obesity crisis is a side effect of that:
I think there's enough slack in the system we won't see food shortage. The lines at food banks are a different problem entirely. That's because people don't have jobs, and are afraid to spend what they do have in savings and unemployment.
There doesn't have to be a shortage for people to be hungry - just a breakdown in distribution, and we are already seeing that.
And....no, people aren't lining up at food banks because they are "afraid to spend what they have". They mostly don't have anything to spend. Free food means they can afford the electricity bill, not that they can leave savings untouched.
Not every necessity is deferred. Also, getting food from the food bank may mean saving money that you'll need to buy food on a day when you can't get to the food bank.
Having been through the experience of "large" financial loss (though not to the point of going hungry), I can attest that it changes the way you think about the world, your role in society, who you trust, etc. I wouldn't necessarily discount the idea of dramatic change of behavior if a lot of people get desperate enough.
What I've been reminded of this year is that panicking is not useful. Shit can happen at anytime, and being prepared to weather a downturn of any type is always in fashion. Have a 3 to 6 month emergency fund is a good idea, improving your skills for unexpected job loss is a good idea, regular disciplined investing if a good idea, yada yada. So I'm just doing my best to ensure my butt is covered for if/when the defecation hits the ventilation.
I agree with a lot of what you're saying - assuming it's possible for someone to do it - low wages make much of that difficult.
> improving your skills for unexpected job loss is a good idea
This is the one I struggle with when I see it - if your industry collapses what skills are the ones you should have been working on? Software is our own special beast, but I don't know what skills in a lesser paid profession should work on that will keep them employable. I suppose they could dabble in something like code, but that's not relevant to their current profession and if the economy goes all topsy turvy it'll be hard to get a job with little skill and no experience in your plan b.
I don't think anything can prepare you for an entire, sudden collapse. If the world software biz goes full quantum programming, qubits and all, in the span of a few days, I'm screwed. But if I get canned from my job as a dev, that work I put into learning a few algorithms, scaling on AWS, and some marketable programming language will give me a fighting chance. If I were a MUMPS programmer who had never used version control in my 20 year run in some job and I'd never learned JavaScript, losing my job would be traumatic.
I also doubt we'll see widespread food riots in the rich world. Our issues are mostly specific food scarcity due to supply chain issues and increases in food prices that likely won't be too painful for people who are still employed.
That said, I would say it's a near certainty in parts of the developing world, where a food supplies are more tight and food costs a much more significant part of the average person's budget.
At least I hope that's scaremongering. Given that everyone is doing their best to return to normal, I feel like running out of unemployment may not be as big of an issue as stated.