Welcome to the Government’s Depression

Welcome to the Government’s Depression, by Philip Barton.

Even if businesses are allowed to re-open next week, is it already too late?

With few exceptions, small business has been operating on the margins for years in Australia. Why re-open when one can go on welfare and probably make as much money? That is literally true for many small businesses operators.

Join the queue at the Government’s welfare office?

Our restaurant was one of few still making modestly good profit when we were closed. If possible, we will re-open. I believe that some sort of ‘force majeure’ deal will emerge with regard to the rent.

But my belief is that an unknown, but significant percentage, will never re-open their doors. Ditto for shops; I think that even fewer shops will re-open than restaurants/cafes. …

The economy is a business momentum that builds up over generations. Beginning from scratch again will be like trying to push-start a heavy car that has broken down. Obtaining that first motion takes a lot of huff and puff, especially when there are rental and wage hills on the road. … What products will be needed and wanted, and what price will people be able to pay? No one can answer that.

I have been in business since 1958, I had never seen tougher conditions than at the point when we were closed. All we can know is that conditions are going to be considerably worse when, or if, businesses re-open.

UPDATE: The Smart Ones, by Philip Barton.

The only thing that has kept our business alive over the last few decades of ever-greater regulatory hardship has been an insistence on paying cash for what we have. We have stoically remained debt free. That we were not burdened by the need to service a debt is part of what saved us from the shuttered-up state of many others.

We are in the third week of a government enforced shut-down. Now they are asking that we take on debt in order to continue paying our staff. If we are willing to do that, then they will back-pay us for some of the money that we are spending — in five weeks — maybe. Or maybe not if the situation changes, as it has been doing every time they make an announcement — every 48 hours on average.

The problem is not Wuhan Virus. The problem is government and debt. Our business will not be taking on debt in order to bail out the government from its own bad decisions. …

The shut-down (hibernation!) is the result of electing people to parliament who have never opened and run a business. They don’t understand risk, they don’t understand debt, they don’t understand business and, they certainly do not understand an economy.

Read them all. Also his analysis of his costs, which is a revealing look at how — in normal times — some restaurant staff are retained but others let go because they cannot meet the efficiency thresholds implicitly imposed by regulation.

It cannot be that only the very best and brightest and most efficient are entitled to a job and that everyone else has to go on the dole. …

Award wages are elitist. Everyone has value, but under the Award Wage system, very few of them are employable.

We have heard very little if anything in the media that is first hand from small business. Instead, all the policy makers and nearly all the commentators are on salaries. (Btw, we’re not on salaries. Please consider hitting the Donate button.)