Do You Feel $9,000 Richer?

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Riddick
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Do You Feel $9,000 Richer?

Post by Riddick » 05-28-2020 10:53 PM

As Congress squabbles over the next multitrillion-dollar phase of coronavirus relief, it's worth asking the question: Do you feel $9,000 richer since March?

Unless you were an early investor in the vaccine-chasing Moderna Therapeutics, the answer is likely "no." And yet the estimated $3 trillion price tag on the first four batches of COVID-19 stimulus, divided by 330 million increasingly underemployed U.S. residents, equals $9,000 per capita, which has ended up where government payouts usually go: to entities with better connections than you.

You would think that politicians and other elites would have learned from their never-popular response to the 2008-2009 financial crisis. Back then, the bailout/stimulus combo averaged out to a little less than $7,000 per U.S. resident, not that normies saw much of it. With few exceptions, the money went toward propping up banks, socializing the losses of private capitalists, and backfilling the fiduciary irresponsibility of states.

Why does this happen every time? As economists like to say, incentives matter. Sure, Congress could have just mailed us each a $9,000 check—or maybe $7,000, spending the rest on medical system capacity. But then the two major parties wouldn't have been able to go back to their favored and most supportive constituencies and brag about their special treatment.

Governments, unlike businesses, have guaranteed (if fluctuating) revenue streams, in the form of taxes. The federal government has the added leeway of borrowing, apparently without limits. The more of GDP that gets soaked up and spit out by this process, the more that economic and political activity will be about directing and capturing the flow to line the pockets of bankers, corporate executives, and union bosses.

We can no longer build fancy bridges or even new subway stops, but we sure as heck can pad the pensions of transit employees and make sure the Lakers get a loan.

So what does Congress do for an encore? House Speaker Rep. Nancy Pelosi (D–Calif.) wants to double down on another $3 trillion. No, we'll need $10 trillion to stave off another great depression, they tell us in The Atlantic.

Maybe by the time they reach eleventy trillion, we might see more than a $1,200 check. But I wouldn't bet on it.

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