Yes, Wells Fargo didn't even open proper application until the same day the SBA said they were out of money. Here's hoping I'll be part of another class action against them.
I'm not sure I understand this. Can you not continue writing code while moving to another bank? Did itnfor a no profit last year. Wasn't as difficult as I thought it would be.
Unless they were contractually obligated to you to have the application open by a certain date, I'm not sure what they did wrong. Sorting out the logistics of a new type of loan is bound to take some time, and it's only been three weeks since the CARES Act was passed. Honestly, that's a fast turn around on their end. Take up the CARES Act being underfunded with your representatives.
I think the anger here is justified, but part of me is also thinking: does this really surprise anyone? All of these companies are doing everything they can to stay afloat, including some really distasteful things like this.
Do we really expect companies to start acting morally when the economy is tanking? They exist to make money, which isn’t inherently immoral, don’t get me wrong.
But if you’re hitting $100M annual revenue, chances are that you’ve done something at some point that exists in an ethical gray area, because the end goal is making money, not being morally responsible.
Reminds me of that piece on Gresham’s law from earlier today.
Larger companies tend to attract different advisors. Like that friendly tax advisor who has a great idea for funneling a bit more cash tax-free into your own pockets.
If it's a legal loophole for paying less tax, that's fair game. Everyone does it. There's no one out there giving their extra cash to the U.S. treasury. Not that it's needed because they can just print unlimited amounts (within limits of what system can tolerate).
> If it's a legal loophole for paying less tax, that's fair game.
Legal != ethical.
And even the legality is questionable, but it's hard to investigate those optimization strategies when top officials have extremely-well-paying side-gigs at tax consultancies (which is the German situation) and those benefiting from the loopholes are also donating large amounts to buy favors from those in power (which is the US situation).
There's an implicit notion around (mostly) progressive circles that big companies are inherently bad. Some are, some are good, lots are in the middle, and the same goes for small companies.
With unemployment pushing 20%, this impacts all businesses, and there's no reason to assume the number of employees has that big of an impact on their ability to keep paying workers. This really isn't the time to pick and choose which companies are the "most deserving."
You could fill a library about all the volumes that have been written about managing organizational culture but the gist of it is that once the group is too large for everyone to feel as thought actions of other parts of the organization reflect on them personally it takes a lot of constant "cultural maintenance" to prevent an organization from becoming a self serving sociopath at the expense of it's long term mission. This isn't limited to companies or organizations with a profit motive. You see this behavior with nonprofits, special interest groups, unions, religions, government departments, militaries, etc, etc.
Simple question: do you consider tax evasion unethical?
I’m not arguing that every mid to large size company is guilty either, but we can’t ignore how common certain activities are in the market, things like share buybacks, the legal cases around corporate personhood, offshore tax havens, etc.
Name a top tech company that doesn’t have an office in Ireland for taxation purposes. Joe’s tire shop down the street probably doesn’t, but I’d be willing to bet that a pretty significant percentage of the Fortune 500 do. Facebook, Apple, Google, Dell, Amazon, and many others do. They’ve created business structures that allow them to funnel money around the globe and avoid paying taxes on it. Is that illegal? Obviously not. Is it the right thing to do, especially as we live in a time where millions are out of work and starting to go hungry? Corporations that have expatriated billions in earnings on work done in the US are now asking for billions in bailouts, is that ethical? Again, mom and pop shops don’t have the influence to do this, but the Fortune 500 do.
I didn't downvote, but I'd wager that the downvoters just disliked what you said and couldn't refute your statement, or were too lazy to do it, or were afraid to risk karma. Or perhaps, they were afraid to do it because they work for a big corporation and could have their comment traced back to them and experience negative repercussions.
But, I'd still wager they didn't like your statement and misused the downvote function.
It's survivorship bias. Unethical companies end up growing faster because they do things ethical companies would not, and make more money for it. For example treating their full-time employees as contractors, not paying them a fair wage, skirting local laws, etc.
Every successful business isn't evil, but most of them are, because it's much easier to be successful when you're evil. To compound that, in America we worship success more than we penalize evil, so you end up with a lot more successful evil companies.
While I am not in any way approving such unethical behavior, I think he probably meant that you just can't expect this from most of the CEOs. At least the market does not incentivize such behavior in the short term (I means before you company goes bust :)). Shouldn't the ethics be on the government side in such cases?
> Shouldn't the ethics be on the government side in such cases?
Everyone should aim to act ethically especially during a crisis.
I think we are generally far too lenient with corporations regarding their behaviours. Both stockholders and executives should be held accountable. By always viewing corporations as faceless entities, abstract monsters lead only by profits, we give these people a free pass.
We're far too lenient with everyone. If, as a society, we were to suddenly start holding people to most basic ethical standards, half of the small businesses would have to close.
I'm not saying this to defend corporations - just pointing out that the market discourages ethical behavior all across the board. If one can't see it, then one hasn't seen restaurants, fast food or grocery stores up close.
Could you go into more detail on this? Lime specific examples? Not trying to be disingenuous; just apparently terribly unimaginative apparently. As far as I was aware the major driver of the absolute level of unethical behavior in the market tends to be your least ethical actor who lowers the bar for everyone. That I understand. Like Grocery stores that hire lots of part timers and only them, and limiting total hours to avoid paying benefits will tend to push out those that don't do that.
Though I wasn't. at all under the impression that the problem encompassed as large a swath of businesses as you are asserting.
Most of what I know can be considered anecdotal; it's something I've seen myself, or heard about first- or second-hand. The amount of such stories, plus basic understanding of labor law history and dynamics of market forces, makes me conclude these stories are very much representative.
Random examples I've seen and mentioned here in the past:
- The franchised grocery store close to me would wash stale meat with detergent to stop it from smelling, then sell it as fresh. I only learned that because I was very friendly with the staff, and some of them started discretely warning me not to buy meat today. I understand it to be common practice.
- Most of the small stores and cafes I know will not pay their employees for the time spent getting ready to man their station, cleaning up after work and closing down the place. Which means they get paid for 8 hours a day, but are expected to work 9. I think a related legal term is "donning and doffing". I learned that from being friends with people working in the service sector.
- A very common theme that's especially important in the times of pandemic is that in low-end services jobs, like grocery store clerks, food preparers in restaurants, etc. sick leave does not exist in practice. It may on paper, but if you take it, you can kiss your pay - or sometimes even job - goodbye. Since people working there are on the low end of the wealth spectrum, it means they all just eat their painkillers and show up to work sick.
- I've read some other horror stories about the back ends of restaurants. One I remember vividly is learning that your food may not be what it looks like. For instance, I've heard of places that do grilled chicken breasts by heating them up in the microwave and then dropping for a minute on a hot-dog bum iron, in order to give it the marks of grilling.
- Don't get me started on e-commerce. Problems are brought up in every thread about Amazon or eBay (which I think is more often than weekly here). One spectacular failure is that of comments and rating systems. In my family circles I've had people working e-commerce; in each such place the boss would order their workers to create fake accounts and make fake orders (legitimately looking orders with self-pickup and payment on pickup, that never get sent or paid for), and then rate them positively. Meanwhile, if an actual customer leaves a negative comment, they'll get begged and bribed with discounts or free merchandise to take it down. As a result, the rating system is completely bogus. Notably, this is a problem created by the e-commerce platforms themselves, in the same way Uber made their ratings bullshit; if you're a seller and you drop below ~99% of customer satisfaction rate, you lose special privileges; go below ~97%, and you get suspended.
Etc. etc.
The common themes here are, 1) everyone does it because everyone else does it too, so those who don't can't compete, and 2) the players involved are too small for the legal system to go after them even if they break actual laws. I.e. market competition in the long tail.
I know a sole proprietorship locally that re-dates grocery goods when they expire so they can continue to resell until they look 'unappealing'. It's also common knowledge they do this. The health dept has been called multiple times, with no real punishment.
I also worked at Starbucks for 5 years. I worked (made drinks, got foodstuffs prepped, and handed stuff to/from customers) while sick with the flu. I know I gave it to customers and fellow employees. I was threatened that I'd either be fired or "get a 4 hour shift for the week" if I dared call in. The store manager also demanded that shift managers tell employees who call in sick to do the work of managers and call for their replacements.
I also worked at walmart. I was a 3rd shift stocker... The pallet jacks they had were in various states of disrepair. Many had sharpies written on them "BROKE". 1 malfunctioned and cut into my foot. I was later fired for 'reasons' that included on my paperwork "got injured and cost the company money"... Literally.
I also worked at Subway... And their chicken is some of the weirdest stuff Ive ever seen (as in, chicken in name only). And recent DNA analysis with a NPR expose showed that their "chicken" was 50% chicken and 50% soy. If I were to do that, I'd be charged with fraud and stuff. But it's cool a big co can do this.. Its "just business". https://www.npr.org/sections/thetwo-way/2017/03/01/517920680...
I think the general direction here is that if unethical behavior leads to positive stimuli and there aren't some negative stimuli as a counterweight you simply end up with general demoralization of society and even more unethical behavior.
Examples of positive stimuli that may drive unethical behavior:
- short term profit
- gaining market position
- getting to next VC round / not getting fired
Examples of possible negative stimuli to be used as a counterweight:
- quick and effective legal consequences/process for
- same rules for everyone (no matter corp size, political connections, race etc)
- social rejection (also from future business partners)
IMO a very big problem is the continuing devaluation of "truth" and the increased accent on sensation/emotions that I see in the media and corporate/social circles.
If you start holding them accountable for questionable ethics then you can expect to be lied to even more by them. They would constantly put out even more PR about how they are perfect angels and how their competitors are the worst people who have ever lived. Owning a newspaper suddenly becomes good for business.
This sort of thinking is what gets us into this mess
You can't expect businesses to act morally. You must design policy with the incentives in mind which allow you to model how they will behave. "If they don't exploit us because morals, this policy is good" is bad policy
A business is not a special construct. It consists of human beings and is part of the fabric of society. The more human beings have to be 'incentivized' to do the right thing (rather than voluntarily), the less civilized a society is. We cannot construct a society based on policies meant for sociopaths.
How many of these companies even report the bulk of their revenue in the US?
Future bailouts should include specific provisions disallowing applications by companies that have less than (say) 2/3rds of their global (including subsidiaries) profit in the US (or whichever country they apply for aid from). Denmark, etc have this correct - you don't get to ask for government support from countries you avoid paying taxes to.
So ive got a few questions about this legislation now that its in effect...
>Businesses rushed to apply for the loans, which the government said would be forgiven...
Forgiven? Then its not a loan anymore is it? Its a bailout. Was the intention to give a handout of cash to small businesses free of charge?
>Democrats have since called for rules that would ensure smaller, community banks, particularly those that service minority and underbanked populations, have a leg up in the lending process.
I mean, the program ran out of money a week ago. What exactly are we legislating? these are businesses that are likely already shuttered after waiting five weeks to be told they either dont qualify or the money sacks empty.
This isnt something you get a do-over on. Rubio doesnt seem to care that Hilton is a nine billion dollar multinational corporation that could afford to keep the lights on in every hotel they franchise for the next year, easily, without federal aid. They could give away old hotels as makeshift hospitals. Hilton is the thirty-sixth largest company in the USA and the fact that they qualified for something called a small business relief fund can only be attributed to a completely detached legislature if you're being amicable and giving the current legislation a fair chance to be anything but corrupt but frankly thats hard to do when the presidents friends are getting kickbacks from this program.
What Rubio has basically managed to do is wipe out coffee houses, machine shops, shoe repair businesses, daycares and nail salons in every north american city. Its pretty transparent that this funding was never intended to make it to taco trucks and barbers.
> Forgiven? Then its not a loan anymore is it? Its a bailout. Was the intention to give a handout of cash to small businesses free of charge?
Yes, it's handing out free money to some and not others based on basically nothing. What's worse, the banks are collecting a cool 1% whether someone pays back the loan or not. 300B in loans is 3B to the banks, 0 risk.
> Its pretty transparent that this funding was never intended to make it to taco trucks and barbers.
Sadly, I don't think the congress people are that smart. They probably actually thought this program would work in some useful capacity.
Even if we assume this bill was passed entirely as an attempt to curry favor with voters, it should be clear that such an attempt would be doomed if it tried to favor big companies while claiming to be aimed at little ones.
Congresspeople try hard to avoid obvious lies, especially about things all voters care about, and most especially during an election year.
To expand on this, legislators aren't exactly known for their higher order conflict resolution strategies when lawmaking, and the "politician's fallacy" is called what it is for a reason. I was highly skeptical of their proposal from the get go simply because there wasn't anything preventing "large" players from attaining leverage other than their own sensibilities. Something which sadly is a bit fraught in the historical sense.
Of course the banks are collecting money. Someone has to administer the loans, and there are costs to doing this. It is basically impossible to create a new organization overnight to do this, so existing channels were used.
"Yes, it's handing out free money to some and not others based on basically nothing."
It's not based on "basically nothing" - at least from the banks perspective as originators in this case - it's based on which corporate accounts are deemed to be of greatest financial value to them. They can, will, did pick and choose loan beneficiaries in their portfolio based on how it will benefit them - nothing less. This means that business customers with big debts to the bank were a priority. It's absolutely a bailout of the banks in a difference scheme, albeit a bit more blatantly nepotistic than we're used to seeing so far.
And yes, they get a point in services for treating themselves too...
All that said, your gist is correct in that it's basically free money benefiting some at the expense of others which is why personally, morally, I am not in favor of corporate welfare under any circumstances - impossible to do so "fairly".
Great points about bank favoritism. I assumed (possibly wrongly) that the loans were being handed out on a first-come, first-served basis, but as you indicate, banks are most likely fast-tracking applications that benefit their largest debtors the most.
It seems all bailouts are bank bailouts, and all bank bailouts are CDO bailouts.
> Rubio doesnt seem to care that Hilton is a nine billion dollar multinational corporation that could afford to keep the lights on in every hotel they franchise for the next year, easily, without federal aid.
Hilton would wait for the hotel owners (who are sometimes what you imagine a family-owned business might be like) to go bust and then would buy the hotel from under them at a firesale price. If they lacked the cash, they would partner with a hedge fund to do it.
As much as it seem that franchisees are part of the larger corporation, they often really aren't. Rather, they are the faceless independent contractors of the hotel business, except ones which have a bit more capital than your lunch delivery driver.
Blocking them from small business funds makes as much sense as stiffing your Uber driver on the tip to protest their corporate culture. Sure, both actions will hurt the parent corporation by reducing the number of people working for them, but it hurts the little guy more.
Are you comparing a Hilton franchisee to an Uber driver, because it sounds like it.
I haven't checked on the qualifications to independently own/operate a Hilton hotel, but something tells me one must have at least a million in assets while Uber drivers on the other hand, probably hover around zero assets on average at any given point in time.
> but something tells me one must have at least a million in assets
" Rather, they are the faceless independent contractors of the hotel business, except ones which have a bit more capital than your lunch delivery driver."
I acknowledge that. I don't deny that the Hilton owner/operator has larger numbers on his balance sheet. I am just saying that the dynamic is similar between a Hilton operator and Hilton and an Uber driver and Uber.
> probably hover around zero assets on average at any given point in time.
No. They have a $10,000 (around that to get approved for Uber) car instead of a million dollar hotel. Or more likely in both cases, they have a million dollar car loan rather than a $10,000 car loan.
The difference, of course, is that the hotel owner likely has a car (or three) as well, and even if you don't drive for Uber you'll still need the car to get to/from your new job.
Most Uber drivers own a car before starting to drive for Uber. I haven't met a hotel operator who just had a hotel laying around before they decided to start operating it, though.
I believe it's being called a loan because there are provisions in which it will not be forgiven. Such as if you lay off employees or furlow before a certain date. I don't have first hand knowledge though, only from someone who went through the process.
Yes, it is a bailout... If used in a certain way, otherwise it is a loan. Considering the government ordered the businesses to close, bailing them out seems the right thing to do. It isn't like last time when banks were mismanaged and got a huge bailout
It's absolutely insane to me that people think that every business, apparently, needs to bake in a half-year long government ordered shutdown of their operations and sit on cash like a dragon so they can keep paying their rents and employees.
There are definitely some businesses - owners, shareholders, directors - who have not spent every dollar made and conserved their capital in some form or another so that in the event of a catastrophic situation they would be prepared. It's not insane...instead it's prudent to save and invest (not saying it's cash on hand/books).
They are not asking for a bailout from anyone, in fact, they are well-positioned to capitalize on the changes and opportunities in their respective markets. Such opportunities would actually be greater if the government did not intervene, so in a way it's kind of perverse that those who sacrificed and saved are being penalized.
Every business has a choice and while more popular pathway in modern America may be to live on the edge, it's not unanimous.
> >Businesses rushed to apply for the loans, which the government said would be forgiven...
> Forgiven? Then its not a loan anymore is it? Its a bailout. Was the intention to give a handout of cash to small businesses free of charge?
The intent was indeed to just hand out the cash. The weird mechanism was to try to do it quickly through infrastructure that already exists (SBA program implemented through banks already working with small businesses) with a little bit of control on how spent (if you don’t spend 75% of it on payroll or a few other things like rent then it remains a loan). The people writing the law knew it was a kludge but wanted to get the money flowing quickly,
I don’t want to defend the implementation nor especially a scumbag like Rubio, but he didn’t kill those businesses as much as fail to rescue them. Those megacorps got their lawyers to start working on angles while the legislation was being written; the small shops only started honking about it once the law came into effect.
Killing and failing to rescue are kind of the same thing here. Those big corporations should have been prevented first- and then let them sue later. Now it's the other way around.
And you should definitely blame scumbags like Rubio. There's a reason reputation is a thing.
Selectively choosing who to rescue I think is much more of a grey area. Despite the cruise industry being healthy business that would not have failed any time soon outside of something crazy like a global pandemic people are trying to play political games with the recuse money because they don't like certain businesses.
This isn't really about what's right or what people deserve, it's that when we come out of this we don't want to have whole industries wiped out arbitrarily and we certainly don't want to punish the companies that are paying their workers though this despite them not actually being able to work.
If you’re on a boat and someone falls overboard have you killed them if:
1) You don’t have a life preserver to throw them? No
2) You don’t have a life preserver to throw them and you don’t look for one? Regrettable, but still probably not.
3) You have a life preserver and don’t throw it to them? Yeah, that’s kinda bad.
4) You have a life preserver but you throw it to your rich friend who is still on deck because he paid for your stateroom and he collects life preservers? Yeah - you’re a schmuck and a murderer. So is your rich friend.
You took a friend out on a boat without any safety gear? Yes, you’re a murderer.
Failing to plan is planning to fail. We could’ve had the infrastructure in place to rapidly mitigate the economic impact of the pandemic; we made the choice not to. This was a conscious decision.
The stimulus is also technically a loan against your 2020 tax refund. As someone who's overseas and pays no US tax right now, the stimulus looks like a liability in my account, rather than a help.
It's an advance (loan) against a credit that will be applied to your 2020 taxes. So if you could somehow decline the stimulus check, you could then apply the credit to your 2020 tax bill next April.
But there is no path by which you'd repay it as a loan received.
- If you were getting a $0 tax bill, you'll still have a $0 tax bill
- If you owed $1500, you'd still owe $1500.
- If you overpaid 1500, you'd still get a $1500 refund.
> Forgiven? Then its not a loan anymore is it? Its a bailout. Was the intention to give a handout of cash to small businesses free of charge?
The intention was to hand out cash for a specific purpose over a period of time. Companies that fulfill the intended purpose will have it forgiven, those who don't have to pay it back. It will or will not be a loan depending on how small businesses actually use the money.
We have the same discussion here in the Netherlands now, one of the poster childs of the (entirely rightful) public anger being Booking.com.
Companies like this have been raking in billions of revenue and profit until very, very recently, but instead of using even a tiny proportion of it for contingency planning they decided to take on more debt and buy back their own shares to boost their stock price instead, to 'reward' their shareholders. And at the same time they used every loophole imaginable to evade taxes, effectively contributing next to nothing to tax revenue to be used for the public cause.
Now things went sour and within 1 month they are already out of money and cannot continue paying their employees, so they are begging to be bailed out with money that was intended to save small businesses that were forced to close by the government. They made $15 billion of profit last year alone, which would be enough to pay their ~17.5K employees for years to come, but decided to throw it at all their shareholders. The hotels and BnB's that use their platform will go down because the government aid is limited, but Booking.com needs to be saved...
Privatize the profits, socialize the losses, always the same thing. It's frankly quite disgusting and I have no sympathy for these companies at all.
this opinion piece on the NY times mentions Booking, and sums up the situation quite well.
Its conclusion if you don't have time to read it entirely:
> The economy needs help, and fast. Yet it is hard to escape the conclusion that the $2 trillion aid package validates and indeed further rewards the questionable practices of the last decade. In a normal bankruptcy proceeding, equity holders and shareholders would incur significant losses based on the taking of risks that were not unknown. It is true that the $2 trillion aid package has a condition that would, going forward, temporarily bar further stock buybacks for companies that receive taxpayer loans. But viewed in context, the relief package still amounts to a bailout of private capital and the endorsement of a decade of self-enriching practices.
FWIW, a really good (in my opinion) reason to return profits to the owners via dividends or buybacks is that management can often not be trusted to act responsibly when they have access to a huge pile of unused cash. And I think it's worth keeping in mind that many of the owners are normal people and/or normal people's pension programs.
Why do you invest in a company if you do not trust it to manage itself?
Otherwise, it is not investing, but speculation that stock value will rise to sell for a profit.
Investing in a 401k does not make you a hedge fund manager. Passive investors don't make decisions and do not vote, and thus have no impact on the choices execs make. Most people just tick a box when they start a new job and never take action on their retirement accounts.
The ones who benefit from stock buyback programs are board members and executives who hold large amounts of stock. When they initiate stock buyback programs, their assets spike in price and their wealth grows. It's nefarious to ignore this and point the finger at the people getting screwed over the most by these tactics (the general public).
> The ones who benefit from stock buyback programs are board members and executives
This is incorrect. Every single owner of the company benefits in direct proportion to their share of ownership. I think stock buybacks can be a pretty great use of cash. If you like a company that you own, then there's a pretty good chance that you're better off using cash to double down on that bet by concentrating your ownership rather than using cash to acquire another company that you may not be interested in owning.
Using cash for acquisitions is the real evil that is being avoided, in my opinion. Acquisitions are where the interests of management most diverge from the interests of the owners. Managers want to be in charge of a larger pie, since it helps them make the case that they should be paid more. Having cash sitting around idle is a continuous temptation to management to give themselves a promotion by using it to buy another company.
This is also incorrect. Every single owner who intends to sell, but not yet benefits from stock buybacks. Everyone else long on the stock in the belief the company is actually serving a purpose other than as a vehicle for speculation only gets a momentary bump in share price (which is useless to them) and the heap of new debt/reduced cash reserve as a result of their company having just bought out everyone who wants to jump ship. This creates a company less prepared to weather hard times. Remember, a company represents an organized solution to some sort of societal ill or want.
Saying "everyone benefits" skews the optics more than looking through a septuple-Klein bottle filled with a heterogeneous mixture of fluids with wildly different refractory indices.
Which is to say, a lot.
P.S. It may not be simple to visualize, but multiple different implementations should fit the bill. You can imagine seven nested Klein bottles all interleaved with each other, or seven layered Klein bottles all clearly distinct and separated, but never the less disrupting the path of light at every medium interface.
I'm not arguing corps should use the cash for acquisitions instead. They should reserve the cash for hard times, or use it to reward performant employees that they want to retain. Basically anything to increase the long term value of the company, instead of just cashing out for a quick buck at the cost of long-term stability and growth.
Instead, most companies use buybacks to spike the price so they (execs and board members) can offload shares and get rich quick. That's unethical and should be punished. At the very least corps that engage in this behavior should not be bailed out when hard times hit.
This is a convenient sideshow. PPP is a pittance compared to the >$4B the Fed will be distributing to favored wealthy cronies. No one believes in "capitalism" anymore. In a system of free enterprise, we'd be happy to see businesses fail while the state supported humans in need. Instead, we have the opposite: humans are forced to suffer while corporations are bailed out with their money.
that's the issue - politicians keep saying that USA is free market, capitalist country but it's not. it is socialist capitalism with inversed relationship as you mentioned. it's time to start naming things as they are in reality
Odd that more aren't discussing the incentives for banks to secure the funding for their clients who have debt on the books with the banks.
e.g. take two companies who both applied at the same time and each is doing $1M in revenue. However, company A has $250k in debt with the bank whereas company B does not.
Now all of a sudden the banks give the cash to the company with the debt because they know if they fail they will have to eat that on their balance sheet. They are incentivized to distribute the $ in a priority that fits them not on a 'first come first serve' basis which is the fair approach.
This would also explain why Bank of America initially required an existing credit account. It makes sense that they would want to bail out their own bad debt with PPP money.
The whole system is rigged. It always has been. And I don't mean the last twenty years. Want to invade Germania? You better know a great banker. Want to be the first on the block to buy a couple of these new things called printing presses? Better know a well-connected banker.
This always confuses me when people are mad at the businesses. You are mad that a company, a legal entity which exists for the sole purpose of making money, which has a legal obligation to its shareholders to try to produce returns, is taking an opportunity to get free money?
I mean, be mad I guess, but surely don't be surprised. This is the least surprising, most rational behavior ever.
Maybe we should get mad at the politicians who are creating the legislation that hands it to them.
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[ 3.9 ms ] story [ 184 ms ] threadDo we really expect companies to start acting morally when the economy is tanking? They exist to make money, which isn’t inherently immoral, don’t get me wrong.
But if you’re hitting $100M annual revenue, chances are that you’ve done something at some point that exists in an ethical gray area, because the end goal is making money, not being morally responsible.
Reminds me of that piece on Gresham’s law from earlier today.
Legal != ethical.
And even the legality is questionable, but it's hard to investigate those optimization strategies when top officials have extremely-well-paying side-gigs at tax consultancies (which is the German situation) and those benefiting from the loopholes are also donating large amounts to buy favors from those in power (which is the US situation).
With unemployment pushing 20%, this impacts all businesses, and there's no reason to assume the number of employees has that big of an impact on their ability to keep paying workers. This really isn't the time to pick and choose which companies are the "most deserving."
I’m not arguing that every mid to large size company is guilty either, but we can’t ignore how common certain activities are in the market, things like share buybacks, the legal cases around corporate personhood, offshore tax havens, etc.
Name a top tech company that doesn’t have an office in Ireland for taxation purposes. Joe’s tire shop down the street probably doesn’t, but I’d be willing to bet that a pretty significant percentage of the Fortune 500 do. Facebook, Apple, Google, Dell, Amazon, and many others do. They’ve created business structures that allow them to funnel money around the globe and avoid paying taxes on it. Is that illegal? Obviously not. Is it the right thing to do, especially as we live in a time where millions are out of work and starting to go hungry? Corporations that have expatriated billions in earnings on work done in the US are now asking for billions in bailouts, is that ethical? Again, mom and pop shops don’t have the influence to do this, but the Fortune 500 do.
But, I'd still wager they didn't like your statement and misused the downvote function.
Every successful business isn't evil, but most of them are, because it's much easier to be successful when you're evil. To compound that, in America we worship success more than we penalize evil, so you end up with a lot more successful evil companies.
Yes. It's better to hold people to the proper ethical standard and have it be violated, than just give up on ethics altogether.
Everyone should aim to act ethically especially during a crisis.
I think we are generally far too lenient with corporations regarding their behaviours. Both stockholders and executives should be held accountable. By always viewing corporations as faceless entities, abstract monsters lead only by profits, we give these people a free pass.
I don't think we should.
I'm not saying this to defend corporations - just pointing out that the market discourages ethical behavior all across the board. If one can't see it, then one hasn't seen restaurants, fast food or grocery stores up close.
Though I wasn't. at all under the impression that the problem encompassed as large a swath of businesses as you are asserting.
Random examples I've seen and mentioned here in the past:
- The franchised grocery store close to me would wash stale meat with detergent to stop it from smelling, then sell it as fresh. I only learned that because I was very friendly with the staff, and some of them started discretely warning me not to buy meat today. I understand it to be common practice.
- Most of the small stores and cafes I know will not pay their employees for the time spent getting ready to man their station, cleaning up after work and closing down the place. Which means they get paid for 8 hours a day, but are expected to work 9. I think a related legal term is "donning and doffing". I learned that from being friends with people working in the service sector.
- A very common theme that's especially important in the times of pandemic is that in low-end services jobs, like grocery store clerks, food preparers in restaurants, etc. sick leave does not exist in practice. It may on paper, but if you take it, you can kiss your pay - or sometimes even job - goodbye. Since people working there are on the low end of the wealth spectrum, it means they all just eat their painkillers and show up to work sick.
- I've read some other horror stories about the back ends of restaurants. One I remember vividly is learning that your food may not be what it looks like. For instance, I've heard of places that do grilled chicken breasts by heating them up in the microwave and then dropping for a minute on a hot-dog bum iron, in order to give it the marks of grilling.
- Don't get me started on e-commerce. Problems are brought up in every thread about Amazon or eBay (which I think is more often than weekly here). One spectacular failure is that of comments and rating systems. In my family circles I've had people working e-commerce; in each such place the boss would order their workers to create fake accounts and make fake orders (legitimately looking orders with self-pickup and payment on pickup, that never get sent or paid for), and then rate them positively. Meanwhile, if an actual customer leaves a negative comment, they'll get begged and bribed with discounts or free merchandise to take it down. As a result, the rating system is completely bogus. Notably, this is a problem created by the e-commerce platforms themselves, in the same way Uber made their ratings bullshit; if you're a seller and you drop below ~99% of customer satisfaction rate, you lose special privileges; go below ~97%, and you get suspended.
Etc. etc.
The common themes here are, 1) everyone does it because everyone else does it too, so those who don't can't compete, and 2) the players involved are too small for the legal system to go after them even if they break actual laws. I.e. market competition in the long tail.
I know a sole proprietorship locally that re-dates grocery goods when they expire so they can continue to resell until they look 'unappealing'. It's also common knowledge they do this. The health dept has been called multiple times, with no real punishment.
I also worked at Starbucks for 5 years. I worked (made drinks, got foodstuffs prepped, and handed stuff to/from customers) while sick with the flu. I know I gave it to customers and fellow employees. I was threatened that I'd either be fired or "get a 4 hour shift for the week" if I dared call in. The store manager also demanded that shift managers tell employees who call in sick to do the work of managers and call for their replacements.
I also worked at walmart. I was a 3rd shift stocker... The pallet jacks they had were in various states of disrepair. Many had sharpies written on them "BROKE". 1 malfunctioned and cut into my foot. I was later fired for 'reasons' that included on my paperwork "got injured and cost the company money"... Literally.
I also worked at Subway... And their chicken is some of the weirdest stuff Ive ever seen (as in, chicken in name only). And recent DNA analysis with a NPR expose showed that their "chicken" was 50% chicken and 50% soy. If I were to do that, I'd be charged with fraud and stuff. But it's cool a big co can do this.. Its "just business". https://www.npr.org/sections/thetwo-way/2017/03/01/517920680...
You got that in writing? Doesn't sound legal..
I also had $500 to my name and a car that was falling apart. And it was against Walmart.
I talked to 2 attorneys. They said effectively that even though I had a very good case, they were too big for a probono small attorney to deal with.
It's only illegal if you can enforce it. And that costs money. Which I didn't have.
Examples of positive stimuli that may drive unethical behavior: - short term profit - gaining market position - getting to next VC round / not getting fired
Examples of possible negative stimuli to be used as a counterweight: - quick and effective legal consequences/process for - same rules for everyone (no matter corp size, political connections, race etc) - social rejection (also from future business partners)
IMO a very big problem is the continuing devaluation of "truth" and the increased accent on sensation/emotions that I see in the media and corporate/social circles.
Just my two cents.
You can't expect businesses to act morally. You must design policy with the incentives in mind which allow you to model how they will behave. "If they don't exploit us because morals, this policy is good" is bad policy
Morality IS an incentive system, an old one.
Future bailouts should include specific provisions disallowing applications by companies that have less than (say) 2/3rds of their global (including subsidiaries) profit in the US (or whichever country they apply for aid from). Denmark, etc have this correct - you don't get to ask for government support from countries you avoid paying taxes to.
>Businesses rushed to apply for the loans, which the government said would be forgiven...
Forgiven? Then its not a loan anymore is it? Its a bailout. Was the intention to give a handout of cash to small businesses free of charge?
>Democrats have since called for rules that would ensure smaller, community banks, particularly those that service minority and underbanked populations, have a leg up in the lending process.
I mean, the program ran out of money a week ago. What exactly are we legislating? these are businesses that are likely already shuttered after waiting five weeks to be told they either dont qualify or the money sacks empty.
This isnt something you get a do-over on. Rubio doesnt seem to care that Hilton is a nine billion dollar multinational corporation that could afford to keep the lights on in every hotel they franchise for the next year, easily, without federal aid. They could give away old hotels as makeshift hospitals. Hilton is the thirty-sixth largest company in the USA and the fact that they qualified for something called a small business relief fund can only be attributed to a completely detached legislature if you're being amicable and giving the current legislation a fair chance to be anything but corrupt but frankly thats hard to do when the presidents friends are getting kickbacks from this program.
https://www.npr.org/2020/04/20/839455480/company-with-ties-t...
What Rubio has basically managed to do is wipe out coffee houses, machine shops, shoe repair businesses, daycares and nail salons in every north american city. Its pretty transparent that this funding was never intended to make it to taco trucks and barbers.
Yes, it's handing out free money to some and not others based on basically nothing. What's worse, the banks are collecting a cool 1% whether someone pays back the loan or not. 300B in loans is 3B to the banks, 0 risk.
> Its pretty transparent that this funding was never intended to make it to taco trucks and barbers.
Sadly, I don't think the congress people are that smart. They probably actually thought this program would work in some useful capacity.
At some point, being charitable and choosing incompetence over intention as the explanation for behavior does become willful naivete, doesn't it?
Even if we assume this bill was passed entirely as an attempt to curry favor with voters, it should be clear that such an attempt would be doomed if it tried to favor big companies while claiming to be aimed at little ones.
Congresspeople try hard to avoid obvious lies, especially about things all voters care about, and most especially during an election year.
It's not based on "basically nothing" - at least from the banks perspective as originators in this case - it's based on which corporate accounts are deemed to be of greatest financial value to them. They can, will, did pick and choose loan beneficiaries in their portfolio based on how it will benefit them - nothing less. This means that business customers with big debts to the bank were a priority. It's absolutely a bailout of the banks in a difference scheme, albeit a bit more blatantly nepotistic than we're used to seeing so far.
And yes, they get a point in services for treating themselves too...
All that said, your gist is correct in that it's basically free money benefiting some at the expense of others which is why personally, morally, I am not in favor of corporate welfare under any circumstances - impossible to do so "fairly".
It seems all bailouts are bank bailouts, and all bank bailouts are CDO bailouts.
Hilton would wait for the hotel owners (who are sometimes what you imagine a family-owned business might be like) to go bust and then would buy the hotel from under them at a firesale price. If they lacked the cash, they would partner with a hedge fund to do it.
As much as it seem that franchisees are part of the larger corporation, they often really aren't. Rather, they are the faceless independent contractors of the hotel business, except ones which have a bit more capital than your lunch delivery driver.
Blocking them from small business funds makes as much sense as stiffing your Uber driver on the tip to protest their corporate culture. Sure, both actions will hurt the parent corporation by reducing the number of people working for them, but it hurts the little guy more.
I haven't checked on the qualifications to independently own/operate a Hilton hotel, but something tells me one must have at least a million in assets while Uber drivers on the other hand, probably hover around zero assets on average at any given point in time.
> but something tells me one must have at least a million in assets
" Rather, they are the faceless independent contractors of the hotel business, except ones which have a bit more capital than your lunch delivery driver."
I acknowledge that. I don't deny that the Hilton owner/operator has larger numbers on his balance sheet. I am just saying that the dynamic is similar between a Hilton operator and Hilton and an Uber driver and Uber.
> probably hover around zero assets on average at any given point in time.
No. They have a $10,000 (around that to get approved for Uber) car instead of a million dollar hotel. Or more likely in both cases, they have a million dollar car loan rather than a $10,000 car loan.
Most Uber drivers own a car before starting to drive for Uber. I haven't met a hotel operator who just had a hotel laying around before they decided to start operating it, though.
They are not asking for a bailout from anyone, in fact, they are well-positioned to capitalize on the changes and opportunities in their respective markets. Such opportunities would actually be greater if the government did not intervene, so in a way it's kind of perverse that those who sacrificed and saved are being penalized.
Every business has a choice and while more popular pathway in modern America may be to live on the edge, it's not unanimous.
> Forgiven? Then its not a loan anymore is it? Its a bailout. Was the intention to give a handout of cash to small businesses free of charge?
The intent was indeed to just hand out the cash. The weird mechanism was to try to do it quickly through infrastructure that already exists (SBA program implemented through banks already working with small businesses) with a little bit of control on how spent (if you don’t spend 75% of it on payroll or a few other things like rent then it remains a loan). The people writing the law knew it was a kludge but wanted to get the money flowing quickly,
I don’t want to defend the implementation nor especially a scumbag like Rubio, but he didn’t kill those businesses as much as fail to rescue them. Those megacorps got their lawyers to start working on angles while the legislation was being written; the small shops only started honking about it once the law came into effect.
And you should definitely blame scumbags like Rubio. There's a reason reputation is a thing.
This isn't really about what's right or what people deserve, it's that when we come out of this we don't want to have whole industries wiped out arbitrarily and we certainly don't want to punish the companies that are paying their workers though this despite them not actually being able to work.
1) You don’t have a life preserver to throw them? No
2) You don’t have a life preserver to throw them and you don’t look for one? Regrettable, but still probably not.
3) You have a life preserver and don’t throw it to them? Yeah, that’s kinda bad.
4) You have a life preserver but you throw it to your rich friend who is still on deck because he paid for your stateroom and he collects life preservers? Yeah - you’re a schmuck and a murderer. So is your rich friend.
Failing to plan is planning to fail. We could’ve had the infrastructure in place to rapidly mitigate the economic impact of the pandemic; we made the choice not to. This was a conscious decision.
It's an advance (loan) against a credit that will be applied to your 2020 taxes. So if you could somehow decline the stimulus check, you could then apply the credit to your 2020 tax bill next April.
But there is no path by which you'd repay it as a loan received.
- If you were getting a $0 tax bill, you'll still have a $0 tax bill
- If you owed $1500, you'd still owe $1500.
- If you overpaid 1500, you'd still get a $1500 refund.
The intention was to hand out cash for a specific purpose over a period of time. Companies that fulfill the intended purpose will have it forgiven, those who don't have to pay it back. It will or will not be a loan depending on how small businesses actually use the money.
No wonder the money ran out.
[1] https://home.treasury.gov/system/files/136/PPP--Fact-Sheet.p...
Companies like this have been raking in billions of revenue and profit until very, very recently, but instead of using even a tiny proportion of it for contingency planning they decided to take on more debt and buy back their own shares to boost their stock price instead, to 'reward' their shareholders. And at the same time they used every loophole imaginable to evade taxes, effectively contributing next to nothing to tax revenue to be used for the public cause.
Now things went sour and within 1 month they are already out of money and cannot continue paying their employees, so they are begging to be bailed out with money that was intended to save small businesses that were forced to close by the government. They made $15 billion of profit last year alone, which would be enough to pay their ~17.5K employees for years to come, but decided to throw it at all their shareholders. The hotels and BnB's that use their platform will go down because the government aid is limited, but Booking.com needs to be saved...
Privatize the profits, socialize the losses, always the same thing. It's frankly quite disgusting and I have no sympathy for these companies at all.
Its conclusion if you don't have time to read it entirely:
> The economy needs help, and fast. Yet it is hard to escape the conclusion that the $2 trillion aid package validates and indeed further rewards the questionable practices of the last decade. In a normal bankruptcy proceeding, equity holders and shareholders would incur significant losses based on the taking of risks that were not unknown. It is true that the $2 trillion aid package has a condition that would, going forward, temporarily bar further stock buybacks for companies that receive taxpayer loans. But viewed in context, the relief package still amounts to a bailout of private capital and the endorsement of a decade of self-enriching practices.
Thank you for targeting precisely the guilty parties driving the buybacks and 'dividend pumping'... We have met the enemy and they are us...
I swear the only way to curb the greed that screws ourselves over is to make every corporation into a non-profit.
The ones who benefit from stock buyback programs are board members and executives who hold large amounts of stock. When they initiate stock buyback programs, their assets spike in price and their wealth grows. It's nefarious to ignore this and point the finger at the people getting screwed over the most by these tactics (the general public).
This is incorrect. Every single owner of the company benefits in direct proportion to their share of ownership. I think stock buybacks can be a pretty great use of cash. If you like a company that you own, then there's a pretty good chance that you're better off using cash to double down on that bet by concentrating your ownership rather than using cash to acquire another company that you may not be interested in owning.
Using cash for acquisitions is the real evil that is being avoided, in my opinion. Acquisitions are where the interests of management most diverge from the interests of the owners. Managers want to be in charge of a larger pie, since it helps them make the case that they should be paid more. Having cash sitting around idle is a continuous temptation to management to give themselves a promotion by using it to buy another company.
Saying "everyone benefits" skews the optics more than looking through a septuple-Klein bottle filled with a heterogeneous mixture of fluids with wildly different refractory indices.
Which is to say, a lot.
P.S. It may not be simple to visualize, but multiple different implementations should fit the bill. You can imagine seven nested Klein bottles all interleaved with each other, or seven layered Klein bottles all clearly distinct and separated, but never the less disrupting the path of light at every medium interface.
Instead, most companies use buybacks to spike the price so they (execs and board members) can offload shares and get rich quick. That's unethical and should be punished. At the very least corps that engage in this behavior should not be bailed out when hard times hit.
Booking Holdings owns booking.com, kayak, priceline, agoda, cheapflights, opentable, and a few more.
Create crisis through destroying government by a thousand cuts.
Resort to greasy palms Pork Barrel Politics under the umbrella of "hey, at least I'm doing something in this crisis".
When called out say "see, I told you government doesn't work"
e.g. take two companies who both applied at the same time and each is doing $1M in revenue. However, company A has $250k in debt with the bank whereas company B does not.
Now all of a sudden the banks give the cash to the company with the debt because they know if they fail they will have to eat that on their balance sheet. They are incentivized to distribute the $ in a priority that fits them not on a 'first come first serve' basis which is the fair approach.
Existing customers already fullfill these so they can be served while the others are processed. And ofcourse the whole system is completely swamped.
That being said i don't doubt that banks would have acted like this anyway.
I mean, be mad I guess, but surely don't be surprised. This is the least surprising, most rational behavior ever.
Maybe we should get mad at the politicians who are creating the legislation that hands it to them.