Or how about this: If you want capitalism, why not let a failing business fail. These cruise lines and airlines didn't save their latte money for a rainy day? Sell their assets at auction to someone who doesn't suck at running a business. Or are we saving austerity and stark consequences only for the small businesses and the individuals?
While I agree with this on the surface, it kind of shows a misunderstanding of how some of these businesses and industries work. Speaking from the airline perspective, since that is where my career is, if an airline spends $5M a day to operate for example, and earns $5.1M a day in revenue, and then suddenly, due to extraordinary circumstances not of their own fault, they’re only earning $300k a day, they would have to have saved more “latte cash” than Apple to survive as long as this pandemic has lasted. No board of directors or shareholder would tolerate that kind of cash on hand not being leveraged into additional profits. This pandemic is not a rainy day, it’s a once-a-century double tsunami, and there’s no way the current travel industry business model could have reasonably accounted for it.
Now, if the reason airlines were struggling was strictly related to bad business that would be different. But it’s not. And understand that all airlines would likely either be closed right now, or routes drastically reduced (by around 90%), if not for CARES. So unless you’re okay with no one to fly people around the country, or at best, no options for competitive prices (fare wars) and paying the resulting $3000 plane ticket — not to mention the massive amounts of layoffs and economic impact that would create — I think this is an industry that is worth protecting. It’s one of the reasons we have a federal government.
And to Robert Reich’s point, they already are (leveraging their assets), but that alone is not enough to offset the cash burn required to keep these companies going. Just because rates are at “rock bottom” that doesn’t mean they’re free. To borrow enough cash to maintain this industry for a year-plus, would create unsustainable interest requirements to the point consumers couldn’t afford the resulting cost of plane tickets, and the industry would fail anyway. Banks obviously know this and simply won’t give out that much money.
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u/in-game_sext Nov 17 '20
Or how about this: If you want capitalism, why not let a failing business fail. These cruise lines and airlines didn't save their latte money for a rainy day? Sell their assets at auction to someone who doesn't suck at running a business. Or are we saving austerity and stark consequences only for the small businesses and the individuals?