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Which businesses cannot fail? Services, sure, you need a water supply (say). But if the water business fails then someone will snap up the assets, maybe the st

Which businesses cannot fail? Services, sure, you need a water supply (say). But if the water business fails then someone will snap up the assets, maybe the state, and the service won't fail. So? Pension companies and banks that the C-suite stole from??

MattGaiser 7y ago
If you let the airlines fail, the reincarnations are going all be like SouthWest. Say goodbye to air service to smaller cities. Those routes can only exist at reasonable prices because of the large networks of existing airlines. If you let a manufacturing company fail, someone will buy the contracts from them. Will they buy the plant with its union workers and environmental liabilities? Probably not. So a lot of it is less that they cannot fail, but there are major societal downsides to letting it happen.
- burrows 7y ago
  > If you let a manufacturing company fail, someone will buy the contracts from them. Will they buy the plant with its union workers and environmental liabilities? Probably not. So we're just subsidizing loser industries forever?
GeneralTspoon 7y ago
> But if the water business fails then someone will snap up the assets The time & handover issues involved with that would probably cause a lot of issues and service interruptions for people. You probably don't want that - as that will cause knock on effects like unrest, reduced santiary conditions, etc. And specifically during this pandemic, if your water fails, that means more trips to the store to buy bottled water. Which means more chance for spreading the virus.
- pbhjpbhj 7y ago
  From a UK perspective phone companies, water companies, train companies, banks, internet service providers, electricity companies, ..., all get bought without interruption in service. Sometimes they've been bought by the government, and sold off to private owners later too. Sure you need established systems but most developed countries should have such systems in place.
chadash 7y ago
Let's just imagine that you are a water supply company for a medium sized city with $1,000,000/month in revenue. Let's further imagine that all of your "business demand", which is normally 50% of your business, has dried up while you residential demand has gone up 50%, so you are running at 75%. And let's pretend that you have fixed costs and previously had a 10% profit margin. Whereas before you were making $100,000/month profit, now you are losing $150,000/month. Now, let's say you run out of money to pay your employees and can't raise more. If you shut down, the city can't have water. If you stay open, your costs and employees can't get paid. If you close down and your creditors take over you, they'll have the same issue. So what do you do? I'd argue a government bailout in this case is necessary. There's a whole other question of how punitive the bailout should be. Does the government lend you money, take partial ownership or take full ownership outright? But I think most people agree that something needs to get done.

MattGaiser 7y ago

If you let the airlines fail, the reincarnations are going all be like SouthWest. Say goodbye to air service to smaller cities. Those routes can only exist at reasonable prices because of the large networks of existing airlines. If you let a manufacturing company fail, someone will buy the contracts from them. Will they buy the plant with its union workers and environmental liabilities? Probably not. So a lot of it is less that they cannot fail, but there are major societal downsides to letting it happen.

burrows 7y ago
> If you let a manufacturing company fail, someone will buy the contracts from them. Will they buy the plant with its union workers and environmental liabilities? Probably not. So we're just subsidizing loser industries forever?

GeneralTspoon 7y ago

> But if the water business fails then someone will snap up the assets The time & handover issues involved with that would probably cause a lot of issues and service interruptions for people. You probably don't want that - as that will cause knock on effects like unrest, reduced santiary conditions, etc. And specifically during this pandemic, if your water fails, that means more trips to the store to buy bottled water. Which means more chance for spreading the virus.

pbhjpbhj 7y ago
From a UK perspective phone companies, water companies, train companies, banks, internet service providers, electricity companies, ..., all get bought without interruption in service. Sometimes they've been bought by the government, and sold off to private owners later too. Sure you need established systems but most developed countries should have such systems in place.

chadash 7y ago

Let's just imagine that you are a water supply company for a medium sized city with $1,000,000/month in revenue. Let's further imagine that all of your "business demand", which is normally 50% of your business, has dried up while you residential demand has gone up 50%, so you are running at 75%. And let's pretend that you have fixed costs and previously had a 10% profit margin. Whereas before you were making $100,000/month profit, now you are losing $150,000/month. Now, let's say you run out of money to pay your employees and can't raise more. If you shut down, the city can't have water. If you stay open, your costs and employees can't get paid. If you close down and your creditors take over you, they'll have the same issue. So what do you do? I'd argue a government bailout in this case is necessary. There's a whole other question of how punitive the bailout should be. Does the government lend you money, take partial ownership or take full ownership outright? But I think most people agree that something needs to get done.