alt Hacker NewsThat 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.
Replies
> 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.
Uh, why do you think the Fed injects funds the way it does?
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.