5 ms·

Conspiracy theory time! I don't really believe either of these with any non-trivial degree of probability, but I figure at worst I'd get downvoted, and maybe I'

by sershe 6y ago

Conspiracy theory time! I don't really believe either of these with any non-trivial degree of probability, but I figure at worst I'd get downvoted, and maybe I'd get some insightful takes. There was an opinion expressed after '08 that the crisis was used by "elites" to conveniently get rid of (as in fire, mostly) a bunch of people that were, to them, superfluous. Like, that was long overdue and there was a good excuse to fire and not rehire a lot of people, decimating small towns, etc. So, here comes COVID. Seems like a convenient excuse to get rid of the pesky "main street" businesses. Hence, the corner store is going out of business, but people still need stuff. Yes, the pie might get smaller, but more importantly it gets redistributed much more towards Amazons and Walmarts of the world (don't get me wrong, personally I am fine with Amazon and don't care about corner stores). Amazons and Walmarts are the ones being traded as stocks. Hence, stocks go up!

awillen 6y ago
My issue with this (and largely with the arguments that the market is up because money is cycling into bigger businesses) is that the collapse of small businesses is going to create substantial economic pain that's going to really hurt the large businesses - maybe not in the very long run, but certainly in the medium term. People are going to lose jobs, only some of which will be replaced by big companies (since they're inherently better at scaling people's work as well as automating jobs), so we're going to be stuck with a bunch of unemployment. Unemployment and the economic uncertainty that comes with it will cause a substantial drop in consumer discretionary spending, which I believe makes up like 70% of spending in the economy. If you're Amazon, maybe that's fine because to your point, if the pie shrinks significantly but their share of it goes up enormously, they may still benefit even in the short term. But what about Apple, which is hitting new highs? People need to buy stuff, and since Amazon has everything, even if the type of stuff they're buying changes, they'll still go there. But they can (and I suspect very much will) put off buying new high end luxury devices like iPhones/iPads/Macs. Similarly, businesses that would be buying those devices will probably lengthen their upgrade cycles as well. Same story with Facebook - stock is doing great, but small businesses represent a significant portion of their income. Plus a huge amount of the advertising is for consumer discretionary stuff, and it's a very easy kind of advertising to dial back quickly when marketing dollars go down.
B4CKlash 6y ago
I have a bolt on to this conspiracy theory. How many business have reduced wages and implemented hiring freezes? It's difficult to manipulate a salary worker into shouldering more responsibility if they have choice and alternatives. Perhaps what we're watching isn't necessarily the 'winner take all' world playing out. Perhaps we're watching capital reorganize labor. The first nail in the technical revolution. The businesses that survive this crisis will be leaner and, in a likelihood, more profitable (higher margins). Also justifying higher stock prices. Hell, even a combination of both theories make sense. The real tell will be 10/1/2020 an on-wards. That's when a lot of the governmental layoff-freezes disappear. We'll get a real sense of what industries have been seriously propped up.
themacguffinman 6y ago
Obviously the "elite conspiracy" angle is silly, but either way, I think framing it as a "convenient excuse" to fire and not rehire a lot of people is a little odd to me. Individual businesses are full of inefficiencies that are easy to tolerate when times are good. In many cases, it's often a net waste of time to plug most of them, you usually have higher ROI activities to attend to. But when a crisis hits and the economy slows down, the equation has changed, many higher ROI activities (eg. marketing or sales activities) are no longer higher ROI, and plugging your many inefficiencies remains one of the few lucrative activities you can choose from. So the organization focuses inwards and starts looking for cost inefficiencies. Put another way, you wouldn't tell someone who just lost their job that they're just using their loss of income as a convenient excuse to cancel their Hulu subscription that they rarely use.

by sershe 6y ago

awillen 6y ago

My issue with this (and largely with the arguments that the market is up because money is cycling into bigger businesses) is that the collapse of small businesses is going to create substantial economic pain that's going to really hurt the large businesses - maybe not in the very long run, but certainly in the medium term. People are going to lose jobs, only some of which will be replaced by big companies (since they're inherently better at scaling people's work as well as automating jobs), so we're going to be stuck with a bunch of unemployment. Unemployment and the economic uncertainty that comes with it will cause a substantial drop in consumer discretionary spending, which I believe makes up like 70% of spending in the economy. If you're Amazon, maybe that's fine because to your point, if the pie shrinks significantly but their share of it goes up enormously, they may still benefit even in the short term. But what about Apple, which is hitting new highs? People need to buy stuff, and since Amazon has everything, even if the type of stuff they're buying changes, they'll still go there. But they can (and I suspect very much will) put off buying new high end luxury devices like iPhones/iPads/Macs. Similarly, businesses that would be buying those devices will probably lengthen their upgrade cycles as well. Same story with Facebook - stock is doing great, but small businesses represent a significant portion of their income. Plus a huge amount of the advertising is for consumer discretionary stuff, and it's a very easy kind of advertising to dial back quickly when marketing dollars go down.

B4CKlash 6y ago

I have a bolt on to this conspiracy theory. How many business have reduced wages and implemented hiring freezes? It's difficult to manipulate a salary worker into shouldering more responsibility if they have choice and alternatives. Perhaps what we're watching isn't necessarily the 'winner take all' world playing out. Perhaps we're watching capital reorganize labor. The first nail in the technical revolution. The businesses that survive this crisis will be leaner and, in a likelihood, more profitable (higher margins). Also justifying higher stock prices. Hell, even a combination of both theories make sense. The real tell will be 10/1/2020 an on-wards. That's when a lot of the governmental layoff-freezes disappear. We'll get a real sense of what industries have been seriously propped up.

themacguffinman 6y ago

Obviously the "elite conspiracy" angle is silly, but either way, I think framing it as a "convenient excuse" to fire and not rehire a lot of people is a little odd to me. Individual businesses are full of inefficiencies that are easy to tolerate when times are good. In many cases, it's often a net waste of time to plug most of them, you usually have higher ROI activities to attend to. But when a crisis hits and the economy slows down, the equation has changed, many higher ROI activities (eg. marketing or sales activities) are no longer higher ROI, and plugging your many inefficiencies remains one of the few lucrative activities you can choose from. So the organization focuses inwards and starts looking for cost inefficiencies. Put another way, you wouldn't tell someone who just lost their job that they're just using their loss of income as a convenient excuse to cancel their Hulu subscription that they rarely use.