Covid-19 pandemic handouts

The UK government is taking unprecedented measures to tackle the economic impact of this pandemic. This includes both corporate and individual welfare.

I already ranted about corporate welfare in my last post. Now it’s time to hate on the government some more.

I’m not exactly in favour of handouts. Full stop. It doesn’t matter whether these are to a business or to individuals who have made poor decisions. Both people and businesses should take responsibility for their actions or lack thereof.

In my opinion, giving out handouts increases reliance on the government and reduces a society’s capacity to look after itself. Big business has learned that they can continue to take big risks because the government will be there if the shit hits the fan. Same for the little guy, who feels he will always be taken care of by Mr Government – from cradle to grave. Nobody needs to work on improving themselves, inventing new services/goods etc – what’s the point? You will be OK. Right?

It’s a slippery slope. Many handout programs also make it difficult to get off handouts as your income would then reduce, rather than go up. Why go to work for £1,000 p.m. net if you get to lazy around at home and collect £600 without any travel or work expenses? (full disclosure I don’t know what the actual numbers for benefits are, but the point remains valid)

Having said that, I feel that bailing out the little guy seems more palatable to me. Companies with big pockets should be able to plan for contingencies, but the average Joe is clearly more vulnerable and may not have the resources or capacity to even consider this. This is a societal failure. This is a government failure.

We should all be taught to save for a rainy day, invest wisely – not just in the stock market, but in yourself – your education and your skills. Basic financial education needs to be a core part of the curriculum.

Almost 10 million UK households had no savings whatsoever in 2017. Wow! What a sad state of affairs! Even the smallest emergency would cause massive hardship for these guys. It’s so easy to end up in debt and before you know it you’re bankrupt. As a wealthy nation, the UK should do better.

The government is now paying salaries for people who can’t work due to Covid-19. This is 80% of salaries up to £2,500 per month with loads of terms and conditions, which are complicated to understand. This is another failure of the government – they look like the good guy trying to help out their people. But they make it difficult to navigate the benefits system (probably on purpose) so that fewer people apply for it. It’s quite genius when you think about it – politicians and bureaucrats will later say they helped everybody get back on their feet when trying to get re-elected. Never mind they made it difficult to access these benefits.

It is what it is. I hope things improve and that people learn from this crisis. Stay safe!

Private profits and socialised losses

The global stock markets look pretty bad with Covid-19 doing its thing. My portfolio has taken a massive hit and I must admit it feels very uncomfortable to have losses greater than my annual before-tax income.

There’s loads of news about industries begging for bailouts from their governments. It’s outrageous that for-profit companies could get bailed out by the taxpayer. These crappy companies should all go bust and make room for people who can manage their business in a more prudent way.

I was against the bank bailouts in the financial crisis in 2008 and am against it again. Let them fall. Let them falter away. Every business knows that it can go bust if it doesn’t manage itself properly. We should encourage the failure of crappy companies to build an overall stronger economy. This is how things should be. The bad apples should get tossed into the rubbish where they belong.

There was an article which said that the majority of airlines will go bust within months if they don’t get bailed out. Let them!

Instead of saving for a rainy day many companies opted to buy back their own shares on the stock market. Actions have consequences. Let them fail!

Why should some bureaucrat get to decide which company or industry gets to survive whilst everybody else suffers? The entire bailouts thing reeks of corruption. Industry officials bribe lobby some politician and voila, free money from the taxpayer granted. It’s disgusting. Let them fall.

But the economy will turn to shit if you don’t bail them out“, you might say. Bollocks! The economy will always find a way to recover. New businesses and industries will emerge as they always have and things will improve. They will restructure, learn from their mistakes and build better businesses. Have a bit of faith in humanity.