The New Business Outlook

Tyler Cowen has a good article about the tangled financial structure We now find Ourselves within, and his proscription of a need for a forward-looking economic and financial policy is right on the money. The Banks are indeed trying to raise money and make fewer loans, but what is the primary Cause? They are attempting to generate enough capital to cover the bad loans which they have made in the Past; giving them the ability to continue to make bad loans is not a valuable option, even if Borrowers must come up with better Collateral and more sound business Prospectus. Understand that making it easier for Business Startups in an environment of slipping Consumer Demand may not be a panacea, though it does aid in maintaining high Employment rates. My Proscription for the Economy is the actual opposite of Tyler’s in a real way, thinking that what the Economy needs is the Retirement of the Baby Boomers. The high Wages start to disappear, the disparity between Wages in Occupations begins to disappear, and the greatest Consuming segment of the Population cuts back in Workforce consumption. By the way, Baby Boomers are the most ridiculous segment of the Home-Building sector. Retirement of Us aged dinosaurs will cure many ills.

Here is an article which might explain the necessary focus of any new economic expansion. We need to restore the old framework, instead of expanding into existing Agricultural landscapes with suburban subdivisions which are too expensive, provide excessive Commute to Jobs, and heavy Travel distance to adequate Consumption Retail. I have flirted with the Concept of a Chain of small Storefronts with Home Delivery of Milk and Meat Products alongside of Deli Salads and Sides. The Storefronts would be only Retail outlets, with Finished Products furnished by Truck from centralized Food Processing Centers–hell, I could even offer fresh-baked Pizza from the Storefronts. Many a Homemaker would pay a Dollar/lb extra, if they could have the component Parts of a Meal delivered an hour before Mealtime. It is this type of Consumer service which will pull the Economy out of the doldrums.

Here is where I would advise Business to be cautious. Huge investment in Technology sounds Good, but there is a Question of Bang for the Buck. There are two Reasons for Technology upgrades if you have a functioning Business format: Labor Savings, or keeping current with your Customers’ technology. Ranchers can be Cattle-Poor, Farmers can be plagued with Prime yields, and Businesses can be technologically over-primed. I know of Business structures which lose Customers, who cannot integrate with the new technology. I know Others who could maintain a 14% Operating Profits, but drop down to 2-4% because of Tech Costs. The Days of Continual Churn in Capital outlays to maximize Capital Depletion allowances are about to end, and American Business must learn this hard lesson, or fail. lgl