In response to a 06 May post by Cam “No, Simon, We Don’t Need a Better Form of Socialism” rantykiwi responded:
A significant proportion of small and medium business was arguably insolvent before the COVID lockdown and had been for some time. All that has really happened is their demise has been hastened. No amount of propping up already unviable businesses with taxpayer money is going to change their long term prognosis.
While Cam’s post is an observation that with each passing day, it becomes more difficult to separate the two main parties and their policies as National offers more of the same (throw tax payer money at it) in different wrapping, Ranty’s post launches a completely different subject, or indeed several, and it got me thinking.
It’s a view I’ve heard expressed many times since this COVID-19 lockdown thing started and I’m not sure how anybody is able to draw such conclusions without accessing each business’s books. It’s a pretty broad statement.
We know that many new businesses fail and I would imagine it’s probably reasonable to assume that at any given time, there will be businesses struggling with varying levels of solvency but let’s be really clear: No business large, medium or small, can remain solvent without cash flow.
If they did it to themselves, fair enough, it’s not the tax payers responsibility to save them.
But this COVID-19 thing was a government decision outside any businesses control and compensation is not only appropriate, but it also is the fair thing to do and it should be done evenhandedly and fairly and probably should be based on turnover or profitability in the same period last year.
And let’s be really clear. In defining a “business” we often forget that it includes lawyers, dentists, physiotherapists, general practitioners, electricians, plumbers, bakers, butchers – everybody except (in the Covid case) the “chosen” ones that the bureaucrats decided were essential services who were effectively given a license to print money. Some were able to continue working from home. They won’t need as much support as those which were completely closed down. Even with the shift to Level 3, the new “chosen” ones are the fast food outlets with queues miles long while the rest were left bleeding in the gutters.
Even if they were heading towards insolvency, how fair is it for the government to push them over the edge then play God and select who is allowed to survive and who isn’t?
We would be better to let them sink and spend (much less) money in helping build new businesses with a viable business model that will have a long term future.
No Ranty No. Government should keep right away from funding business and even further away from playing God and determining which businesses are worthwhile and which are not, regardless of projected long term future.
At the end of the day, business didn’t ask for a 6 week stand down and those cunning insurers specifically exclude pandemics from business interruption cover.
Where government closes business down, government really should compensate.
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