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13. Small businesses that need help the most are the least likely to receive it (or to receive it in time to avert disaster). That may be by design: why advance funds to a business that is least likely to survive. I would expect the level of resentment to rise much higher than the level of resentment in the Great Recession, which means a level of social and political instability (not just economic instability) that will surely test our institutions.
First, the PPP loan program has been revised many times by the SBA since its launch. Last Monday, the SBA added a requirement for applications to include the first quarter's Form 941 (employment tax return), a return not required to be filed until April 30. Small businesses that filed applications before last Monday are supposedly exempt from the requirement. Why did the SBA add the requirement? A cynic might conclude it was to slow down the filing of applications.
The CARES small business loan program is an improvement over the SBA small business loan program, the terms for the latter loans (not to mention the time to get the loan) so bad only someone desperate would apply for one. For example, SBA loans typically must have collateral which means the borrower's house, so not only will the borrower lose the business, she will lose her house. A CARES loan does not require a pledge of the house, but will require the pledge of the business assets. The problem is that most businesses including small businesses have bank credit secured by, that's right, a pledge of the business assets.
Again, small businesses that need help the most are the least likely to receive it (or to receive it in time to avert disaster), which may be by design.
1. I've been in favor of free trade for a long time, thinking it would force moribund and ridiculous institutions to reform. That didn't happen; the pressure to reform regulatory structures disappears when those who would apply the pressure move their production somewhere else. Same with internal barriers to trade; Canadian provinces have multiple barriers anywhere from direct prohibition to certifications for workers. It is easier to deal with a country literally on the other side of the earth than across a provincial border. Nothing has changed, if anything it has gotten worse.
Sure we get cheap things, but we are exposed to extreme events; 40% changes in exchange rates over a couple months, pandemics, flood of foreign cash inflating prices.
And the social effect is quite dramatic. Essentially the people who run the country and economy no longer have their allegiance to their fellow citizens. Get your gains from trade quickly and build a fortified mansion.
So on net, the advantages barely overcome the negatives for the population at large.
13. This is a catastrophe. I really don't know what the outcome will be. It is one thing to have a bunch of pissed off college graduates who can barely tie their shoes, let alone build a guillotine. This is a different group who have deep experience proving that they are the object of hatred by every level of government. On a personal level, by the bureaucrats themselves who hate everything that they represent. Maybe this will be the impetus to reform the moribund and counterproductive regulatory system.
There will be two responses at the policy level. One is to see them as a suitable target for pillage to offset the revenue collapses that states, municipalities and federal are experiencing. That is why we hear stories of ridiculous fines. Official Pillage. The other is to take their side and recognize the perfidy of the regulatory structure and keep it in check, recognizing the long term source of revenue will come from a vigorous business sector.