Elon Musk's plan for more direct payments would be good news for both Wall Street and Main Street alike.
Elon Musk is not a fan of government stimulus packages. The Tesla boss wants more direct payments to consumers, and in this instance, he’s exactly right. Whether you are on Wall Street or Main Street, you should favor Musk’s stance, and here’s why.
Many will say that Elon Musk is merely looking out for himself. After all, the billionaire definitely won’t be getting a bailout.
As he relies on American consumers to buy his cars, he’d prefer they have as much disposable income as possible rather than seeing the travel industry soak up another few trillion. It also wouldn’t hurt him if rival car-makers like Ford and GM went the way of Pontiac.
Throw in the fact that just an hour before this tweet, the billionaire was buttering up President Trump, and you can understand why someone might be deeply skeptical of Musk’s comments.
In reality, direct stimulus payments to consumers have already proven to be a massive success both for households and the stock market.
Forget the stimulus checks. A one-off payment of $1,200 per person wasn’t a massive help to anyone. What the stock market and small business truly loved was the $600 federal unemployment boost.
Unusually, it has been lower-income Americans who have seen their pay increase during the pandemic. This has played a significant role in keeping the mood bright on Wall Street and small retailers above water.
If we listen to Elon’s call to eliminate the lobbyists’ playground of big congressional bills, we could more sustainably provide income support. No-one is pretending that governments can keep spending exponentially more while revenues decline.
This hybrid “free market” could then help the taxpayers avoid bailing out companies that are dying anyway.
Did Tesla rely a tremendous amount on government subsidies to close the gap on conventional automakers? Yes. Does Elon Musk advocate principally in his interest on Twitter? Yes, and he has had a few clangers during the pandemic.
That doesn’t mean he isn’t right on this issue. If you want to let Pelosi and McConnell load up another few trillion of your money for businesses that are dead in the water, go-ahead. I’m sure you love seeing executive bonuses pile up as the layoffs eventually happen anyway once the restrictions expire.
This one’s a no-brainer for policymakers. If you want to keep stock prices high and consumers healthy, you must let retail spending lead the way.
As one of the most significant economic forces in the global economy, Americans should decide their future with their money. Supporting the stock market and 401Ks is just a nice side-effect of this policy.
If you hate the idea of direct payments on ideological grounds, no problem. Just know that if corporations want to be considered individuals, then they can’t have their cake and eat it too.
Hopefully, we can all agree that no one deserves bailout money more simply because they can grease your re-election campaign with a nice lunch and a handshake on Capitol Hill.
Disclaimer: This article represents the author’s opinions and should not be considered investment or trading advice from CCN.com. The author holds no investment position in the above-mentioned securities.
Last modified: September 23, 2020 2:09 PM