Many pundits are evaluating the long-term effects of the current pandemic. One possibility seems to be the redefinition of the Social Contract. This book title was employed by Rousseau in a work to advocate a then revolutionary shift in power from the divine right of monarchs to the general will of the people.
As the pandemic as disrupted, this health crisis has made heavily leveraged corporate entities likely to receive ample government assistance. This raises the inevitable issue of fairness. Why is it that when an individual experiences a health crisis, that individual is expected to pay all bills or declare "one of those chapters" but corporate entities are allowed to dodge their responsibility?
I have argued that corporate taxation should be lower than individual taxation because the businesses are those which lay the golden eggs while the individuals consume said eggs. But in this situation, the businesses have been leveraging their statements in a serious misallocation of capital. Shouldn't these entities be held to consequences for their behavior? How is it appropriate for CEOs to cry, "it's not my fault!" and receive benefits that he was not likely to provide for employees who have been in a similar situation.
Rumblings about the relationship between leverage and stock repurchasing are surfacing, as well as the connection to extraordinary stock option compensation for the privileged few. Could it be that "one of those chapters" would be the easiest means of a redefined Social Contract?
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