Subsides where not handed out for the 1918 pandemic and no recession occurred. Hell this was the middle of WWI and society survived just fine.
So, your argument is society has become more brittle over time, but that’s hardly a reason to make companies even more dependent on government handouts. People and companies are over leveraged, based on assumptions that don’t line up with reality. The basic capitalist idea is lot let them benefit or lose their shirt when reality hits them in the face.
Wartime spending was the subsidy. It always kickstarts the economy although it also changes several industries that are retooled for the war effort.
There is no such thing as a completely free market. There are constant regulations and oversight by government to provide a fair and stable environment to conduct business. When that changes, government again steps in to restore the balance. Again, it's there to serve the people. What exactly is the benefit of letting everything fail and plunging the country into another depression?
Wartime economies during the first half of the 1900s were very different than now. The US Military was essentially subsidizing industry through contracts to support the war effort, increasing government spending to unprecedented levels: https://eh.net/encyclopedia/u-s-economy-in-world-war-i/. BTW, they financed this by printing money. A lot of it. They did all this because they recognized that the war was an existential threat to America. It would be interesting to see what the reaction to the flu would have been without WWI going on, but in many ways, the government reaction is not so different — simply targeted at different industries. One benefit of the reaction then as opposed to now is that less of the subsidies went into the hands of finance and more to businesses who actually employ people.
However, I can agree with you in principle. Let’s start with the banks though — who have received so much in subsidies over the last two economic downturns that they’ve actually made money. Oh and can’t forget investors, who have been kept afloat by the Fed pumping money into the economy. If we let them fail in practice, it is likely that large companies/hedge funds/investors would be much more careful. But of course, that would also eliminate much of the wealth held by people in tech. Probably yourself included? Are you ok with that in service of pure capitalism?
I guess this all comes down to what kind of society you want to build. Part of the myth of prosperity after the US turn towards a service economy and away for manufacturing has been the idea that scrappy entrepreneurs can build their own businesses. So much of society and economic policy has been built around that idea. If we remove that, economic inequality would probably be too much for the average person to bear — where will the jobs come from when 74 percent of the employers are gone? The unrest that would appear in our society then would surely make 2020 feel a lot more like 1918 as well.
So, your argument is society has become more brittle over time, but that’s hardly a reason to make companies even more dependent on government handouts. People and companies are over leveraged, based on assumptions that don’t line up with reality. The basic capitalist idea is lot let them benefit or lose their shirt when reality hits them in the face.