No, it's zombie companies kept alive by stimulus cheques, and management who get to stick around and failing companies that should have gone under 20 years ago.

a better solution is raising minimum worker benefits & protections, pigovian taxes as well where necessary, etc. If a company cannot earn enough money while meeting some basic minimum requirements to society then it should fail quickly.

In the scenario you're asking for - the zombie companies just layoff employees, cut wages/benefits, landlords evict, etc. The zombie lives on just fine until the market corrects while everyone else fails.

You're correct that failing companies need to fail but your "just let the free market handle it" approach is a fairy tale.

Hm, maybe that's how the statement should be interpreted, but I was interpreting it in light of the "too big to fail" mantra after the 2008 recession. Lots of banks and auto companies were bailed out to keep them afloat. So I interpret it as "let companies go bankrupt".

Yes. It's the sort of take by people who have made zero effort to study history or economics.

"Keep the budgets tight" was the mantra in the early 30s in response to the depression. It took a World War that killed millions of people (and was -- surprise! -- a major artificial government stimulus) to get out of it.

Yes, providing monetary liquidity and fiscal stimulus during times of extreme stress is not purely good. It can have an effect of keeping some companies alive that perhaps should not be. That is bad and we should try to minimize it in the context of a recovery effort. But the fact that it's not perfect is not a reason to claim that burning everything down and creating a decades-long horrible depression in which many die of starvation, and that cripples the country, is a preferable alternative.

They think that if you let everything burn down then green shoots will pop up and everything will be happy and folks will rebuild and it'll be better and the government oughta get its snout out of our business and just let pure capitalism run its course and...

> It took a World War that killed millions of people (and was -- surprise! -- a major artificial government stimulus) to get out of it.

You are describing the broken window fallacy here. War and destruction doesn't help the economy. What happens in war is that useful resources in the economy are diverted from productive use and mutual beneficial trade to death and destruction.

You're right that the broken window fallacy is a fallacy when the economy is not in a depression, but it can be a bit more situational and complex than that.

When aggregate demand is "stuck" at a depressed level (high unemployment causes low demand, resulting in more low unemployment), the stimulus of war can actually help pull the economy out of its stuck position, even if the war is destructive. Of course, once it's no longer stuck, the continued destructive stimulus is just destructive.

There are better fiscal ways to pull the economy out of a depression than war, because most wars don't pay much in the way of dividends, unlike large scale public works. But even if the stimulus isn't a great ROI in "normal" times, it can have a high ROI in "depressed" times due to its ability to get demand unstuck.