U.S. retailers plan to stop paying rent to offset virus closures

Do you see the problem? You forgot to pause "everyone else". You'll have to add millions of special case laws to pause everything. That guy with his gym membership who can't use it? Pause it! ISP subscription? Pause it! Mom's knitting club membership fee? Pause it! ... million pauses later you're done.

It's like having 1 million bolts each with a different size. You'll need a different wrench for each bolt. Why not just standardize on a single screw head? Sure screws aren't exactly bolts but anyone who wants a screw can get it. If you're handing out bolts and wrenches then you're picking winners. This is known as a bailout for special interests by only pausing certain hand picked industries.

Meanwhile, a loan works for anyone who wants one. It still means that the economic machine is empty but at least it keeps running and doesn't need to be restarted from scratch.

A bank is like a multiplayer game company. Once the company shuts down, the servers are gone as well. If you can't access your bank account then you lost access to the money until it will be restored by the government. This is why we have bank runs at all. People cash out so they have a buffer until their claim is processed, not because they won't get their money bank.

It feels very weird. Why does it matter whether businesses or banks receive the 0% interest loans? It's just a shell game. You didn't solve anything but yet you make your own solution sound better.

Just think about it for a second. The real goal here isn't the eradication of businesses. The idea behind a quarantine is to prevent the spread of a disease. This involves reducing contact with other people and therefore as a side effect businesses that involve a lot of people being in contact have to shut down or at least make their employees work from home. So our goal is clear. We must defeat covid-19 and all sorts of other future diseases.

Now, let us think about what prevents us from deploying an effective quarantine. First of all people need to meet their basic needs like food, drinks and shelter (without it quarantine is impossible). The way we structured our society is that everyone pays for what they need with money. That money is obtained through employment and it is used to make workers perform tasks that ensure we have food, drinks and shelter. For a successful quarantine we need to maintain a working economy before, during and after the quarantine. If we fail to do so then future quarantines may fail. If the economy and businesses collapse because of a disruptive quarantine then we might decide to never have quarantines again in the future. If the economy collapses because of a government intervention, such as a quarantine, then it only makes sense to use a government intervention to prevent the collapse of the economy. We could decide that it's the responsibility of each individual business to weather a government intervention and let them collapse but this would significantly decrease the popularity of quarantines and make them less effective because people will simply break the rules.

Now that we have decided to intervene, what types of intervention are necessary to counteract the effect of quarantines? Well for starters the problem most businesses face is that they are fundamentally working but the quarantine is temporarily preventing them from functioning but they are almost guaranteed to make money in the near future. This can indeed be solved by having an emergency fund but it can also be solved by simply giving the businesses a loan. It is effectively the same principle. Businesses forgo profits to cover emergencies.

Does this type of "bailout" create a moral hazard? Will businesses stop having emergency funds because they can get a 0% interest loan? Fortunately there is no moral hazard. If a business gets the loan it covers the missing 3 months but if it is unprofitable then it will collapse anyway. Any money that wasn't paid back is effectively an unorthodox form of unemployment benefits. Now lets imagine a different type of bailout.

What if we simply let struggling companies let the government pay the wages of their employees? This could be abused by profitable companies that can keep their employees busy but somehow manage to trick the government to cover their expenses. What if we pause rent and mortgages? The banks end up holding the bag. They do have access to cheap loans but putting the banking system at risk will just encourage more bank focused protectionism/bailouts because the bank is now responsible for every collapsed business that didn't repay the loans.

So let me summarize this. The effectiveness of quarantines depends on public acceptance and low disruption. Disruption can be prevented by providing just liquidity to businesses. Bad businesses use the money to pay their workers before they inevitably collapse after the quarantine. Good businesses will keep functioning after the quarantine and pay their loans back but they do not gain unfair benefits compared to companies that have emergency funds.

[0] Yes, Covid-19 will kill a lot of people but it certainly will never kill the _entire_ economy like the every government on the planet is doing right now.