The government has unilateral ability to invent jobs and even invent money if the goal is to help workers keep their jobs and/or remain fed and housed. So I feel that no company should get a bailout. If they fail, they fail, and the government can scoop up the workers and create an agency or just government-staked company that does the same thing, find some work in the country that needs doing and put the workers on it, or stipend the workers until they find a new job.
Of course, that means the failed company's executive board has to also find a way to actually add value...
The government can invent jobs, but it can't invent infinite jobs that accomplish something that people want, and even when it can the task won't generally be accomplished as efficiently as a private company would. It's also very difficult to remove a government agency once one is created. Government has all kinds of incentive problems that private companies don't, so generally (IMO) it's best to only use government to accomplish a task that the private sector does very poorly because of some market failure.
There's also a large cost to having people reallocate from one job to another, and from having businesses go under. There's physical capital that needs to be reallocated and "organizational" capital (not sure the right word, but I mean the way the business is organized) that may be permanently lost.
For historic reasons states have built systems that prevent normal governments from inventing money at scale: Independent Central Banks. It's of course an important ongoing debate in economics whether this is still appropriate, but it's unrealistic to expect governments to so dramatically alter the fundamental structure of monetary policy. That said, of course it's even more unrealistic to expect them to do so absent a massive external shock.
> For historic reasons states have built systems that prevent normal governments from inventing money at scale: Independent Central Banks.
Could you explain this? I think the CB system does not quite prevent money creation, it just makes it less transparent. Inventing a jargon to nice sounding words to hide the creation of money (yes I look at you "quantative easing") also does not help.
If govts wanted to limit their power to create money, they could have made some constitutional law or smth.
I feel the CB system is more an invention by the bank(er)s, than by govts. If you look at the timing and trickery involved in singing the CBs into law all over the world, you will see this is not something done with full governmental/public awareness and consent. To the contrary.
It's about people being able to trust their currency. Let me explain: suppose that your government was creating a huge amount of money out of nothing. It would result in a massive inflation and, with the value of money being completely unstable, people would resort to alternative ways of paying for thing: a more stable foreign currency, gold, crypto currencies, or even barter. You can see it happening in countries with a massive inflation (Zimbabwe, or Argentina in the early 2000's are the examples that are on top of my mind). So, this is a scenario the governments have to avoid at all cost, and in theory they should create just enough money so the inflation matches the growth of the country.
However, the growth of the country is very hard to measure (directly taking the growth of the GDP would not necessarily match it), so there is no consensus on what the inflation should be exactly, which gives the authority in charge of creating money some leeway on exactly how much money to create. If this authority was the government, it would be tempting to have the inflation be slightly higher than the country's growth, in order to "trick" people into believing that they got slightly richer and have them spend more. And this could work for some time, but at some point people would become wary of the government and as a result would spend less, slowing down the economy. So it becomes a game (in the sense of game theory) between the government and the consumers, and the solution is to have an independent entity in charge of money creation, so people can know with more certainty that the "right" amount of money is being created.
I think it's the other way around. CB create money as compared to governments, and they are rather insulated from pressure to create money in normal times. The point being to limit the danger of runaway inflation if governments decide to print money arbitrarily. BUT I am very very far from being an expert or even terribly well read on any of this.
It seems to me it would be a lot more useful if we create money and the government spends it (e.g. on infrastructure, or by distributing it directly to people most likely to spend it), rather than indirectly creating it through QE (which in mechanism, if not in effect seems quite different from printing money), etc.
QE still is recognized as a liability on the balance sheet and funds have to be raised and repaid via treasury bonds. That’s actually quite a long ways away from arbitrary printing.
The government can’t invent jobs that bring in more revenue than they cost though. If everyone does unsustainable jobs with printed money, you’ll have hyperinflation and then collapse.
> If they fail, they fail, and the government can scoop up the workers
This is a government forced failure. That’s a great way to turn every small business owner (a huge part of the middle class) against the pandemic containment efforts and the government in general.
Because a private medical researcher has to actually be funded. In other words, the expected value of the researcher is in excess of the researcher’s cost.
Nobody pays medical researchers without expecting an ROI unless it’s for a charity (in which case it’s funded by other excess value in the economy).
There isn’t really a meaningful difference between the government spending $100 to get $2 of value and spending $100 to get $0 of value. If we’re going down the unsustainable jobs path, it would be much easier to just pay everyone $80k/year to do nothing.
Of course, that means the failed company's executive board has to also find a way to actually add value...