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That assumes he has a fixed profit per person. In reality most business can do things like cut hours for staff, postpone upgrades or long term maintenance, cut

That assumes he has a fixed profit per person. In reality most business can do things like cut hours for staff, postpone upgrades or long term maintenance, cut amenities, raise prices etc… If most businesses were structured in a way that a small decline in customers immediately puts them out of business, any minor economic downturn would be an unrecoverable positive feedback loop for the economy. I’m not saying a 10% drop won’t put a lot people out of business, but it’s not as much of an existential crisis for the economy as a whole as that story makes it seem.

lazide 2mo ago
Uh, why do you think the Fed injects funds the way it does?
- sarchertech 2mo ago
  Sure that’s one of the argument for why they do it but the money doesn’t directly to most small businesses, we do have small downturns, and they don’t result in the majority of small businesses going out of business.
  - lazide 2mo ago
    have you seen the turnover stats on small businesses? most ‘die’ in a few years anyway. look up the history of why the fed exists and you’ll see why we have ‘small’ downturns.
    - sarchertech 2mo ago
      I’m well aware of the history of the fed. Most small businesses fail because they were never serious businesses to begin with. A business closing down after running for a year with no profit isn’t relevant.
      - lazide 2mo ago
        And how can you tell which is which?
        sarchertech 2mo ago
        You can’t always tell the difference, but you can filter out businesses that lasted less than a year, temporary businesses that were setup for real estate transactions, and business that never made a profit.
II2II 2mo ago
I was going to say that curring hours just offloads the problem onto their employees, but the reality is it does that and creates new problems for the bbusiness.If the employee cannot afford to keep the job, they will be forced to search for a new or additional job. The business is either hiring and training inexperienced people, or dealing with staff who have reduced availability. They also cannot do much about fixed costs; postponing maintenance typically increases long term maintenance costs; postponing upgrades, cutting amenities, and raising prices may deter even more customers (keep in mind, nearly everyone is feeling the pinch these days). That is assuming that the business isn't doing that already.
- sarchertech 2mo ago
  All of those things are true. There are downsides to any of the levels they can adjust. I’d there weren’t, they’d already be doing it. But it’s wrong to model businesses as if they have no ability to increase profit per customer and predict catastrophe from minor reductions in customer traffic. They can and do figure out how to do more with less.
Waterluvian 2mo ago
> If most businesses were structured in a way that a small decline in customers immediately puts them out of business […] No business chooses to be structured this way.
- sarchertech 2mo ago
  That’s not what I was saying. I’m saying that we have small downturns where consumer spending drops yet those drops don’t result in crisis levels of small businesses closing. Which it would if most of them were structured like that.

lazide 2mo ago

Uh, why do you think the Fed injects funds the way it does?

sarchertech 2mo ago
Sure that’s one of the argument for why they do it but the money doesn’t directly to most small businesses, we do have small downturns, and they don’t result in the majority of small businesses going out of business.
- lazide 2mo ago
  have you seen the turnover stats on small businesses? most ‘die’ in a few years anyway. look up the history of why the fed exists and you’ll see why we have ‘small’ downturns.
  - sarchertech 2mo ago
    I’m well aware of the history of the fed. Most small businesses fail because they were never serious businesses to begin with. A business closing down after running for a year with no profit isn’t relevant.
    - lazide 2mo ago
      And how can you tell which is which?
      - sarchertech 2mo ago
        You can’t always tell the difference, but you can filter out businesses that lasted less than a year, temporary businesses that were setup for real estate transactions, and business that never made a profit.

II2II 2mo ago

I was going to say that curring hours just offloads the problem onto their employees, but the reality is it does that and creates new problems for the bbusiness.If the employee cannot afford to keep the job, they will be forced to search for a new or additional job. The business is either hiring and training inexperienced people, or dealing with staff who have reduced availability. They also cannot do much about fixed costs; postponing maintenance typically increases long term maintenance costs; postponing upgrades, cutting amenities, and raising prices may deter even more customers (keep in mind, nearly everyone is feeling the pinch these days). That is assuming that the business isn't doing that already.

sarchertech 2mo ago
All of those things are true. There are downsides to any of the levels they can adjust. I’d there weren’t, they’d already be doing it. But it’s wrong to model businesses as if they have no ability to increase profit per customer and predict catastrophe from minor reductions in customer traffic. They can and do figure out how to do more with less.

Waterluvian 2mo ago

> If most businesses were structured in a way that a small decline in customers immediately puts them out of business […] No business chooses to be structured this way.

sarchertech 2mo ago
That’s not what I was saying. I’m saying that we have small downturns where consumer spending drops yet those drops don’t result in crisis levels of small businesses closing. Which it would if most of them were structured like that.