Austerity Whether We Want It or Not

And so it begins.

Since the Occupier of the White House has extended his stay, business owners everywhere are taking measures to protect their life’s work and preserve what few profits they will be allowed to keep once ObamaCare and the rest of the “tax the rich” schemes kick in. It seems that several companies are laying off workers with no plans to hire and others are simply cutting hours of their current employees to a level below which they will be required to offer health benefits or pay a fine. Twitchy, on Monday, November 12, featured scores of tweets from frustrated workers who suddenly have considerably less income. Most of these people are hourly employees, according to their tweets, and seem to be part of industries that are “extras” themselves or the very indulgences that austerity will destroy more or less because no one will be able to afford them.

The most talked about company cutting back is Olive Garden, part of the Darden Restaurant group that owns Red Lobster and LoneStar Steakhouse. This is a national company with thousands of employees which has a responsibility to its INVESTORS (stockholders) to assure a return on the money that they loaned the company before anything else. Anyone who owns property and expects it to increase in value or assessment should be able to understand this. No one puts money down in exchange for capital assets, be it physical items, houses, land, buildings or stock without expecting to earn a profit. That’s just the way business works. In order to keep a balance sheet in the black, upper management has to be sure that expenses are kept to a reasonable minimum. With the tax laws written the way they are and massive tax increases due to kick in shortly, the cost of keeping all those people employed full time is going to wipe out any sort of profit. When profit disappears, business dies and companies go bankrupt putting people completely out of work, not just limited to part time. At this point, workers are still needed, but the work will be spread out among more people in order for the business to keep going. Yes, the jobs will be part time and not at living wage levels, but at least it’s some income.

So the people who’s hours have been cut have some decisions to make when it comes to spending priorities before they go looking for a second part-time job for additional income. After rent, food, basic utilities, debt payments and clean, decent clothing, what to do with what little money is left. Manicure? That’s $15 dollars or more that just will get destroyed. Eat out? Hmmm, $25 for a meal that could be made at home for less than half that without all the bizarre spices. New tattoo? No idea what this costs. New, cute boots for clubbing? $120 bucks and nothing left to pay the cover charge at the club. Need to take silk blouse that got ice cream on it to the dry cleaner…maybe wash and wear clothes only for a while. Oh, and when at the hairdresser, only a cut, no blow dry and forget the foil highlights. Also on the chopping block: cable, at-home milk delivery and any sort of newspaper subscription (which might, in the end, be a good thing).

Who suffers when austerity, real austerity, kicks in? The workers in personal service, restaurants, retail and all the other “extras” that regular working people can no longer afford because their discretionary income is going down the rathole known as “government”. Those workers suffer just as badly or worse during times of austerity. It’s not just the coal miners or the auto workers because people are turning down the thermostat or driving their cars until they literally stop running. Electronics producers will see a drop in sales as the latest gadgets will just not be affordable and we of the online pajama army will nurse our notebook and netbook computers with dying keyboards and mice for as long as we possibly can. Vacations will most likely either be cut back or cut altogether. That affects the curbside luggage handlers (where they exist anymore), cabbies, porters, etc. Why? Because Americans will no longer have the ready cash to actually afford all this stuff or to tip.

As the Greatest Generation dies off, their life lessons learned, not just during World War II, but having lived through the Great Depression and enduring the hardships of not having extra cash (or any cash) seems to be dying with them. We, the America of today, are about to learn those same lessons because we refused to listen or pay attention when cleaning out a depression survivor’s house. It became “old fashioned” or “not modern” to hoard linens, foodstuffs, cash, etc. Well, cash never goes out of style, to be honest. When the public does not have it to spend, it does not circulate and trickle down, if you will, to the waiters, busboys, cooks, dishwashers, manicurists, hair stylists, dry cleaners, tattoo artists, car dealers, club owners, cabbies, porters – name it. That these very people actually voted for the austerity that they are starting to complain about should tell us something. They don’t get it.

Austerity is coming our way. Some of us have learned to live with it already and, really, we don’t want to hear the complaints from the people who voted for it. It’s not fun.

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Categories: Culture, Economics

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6 replies

  1. Your points in this post are well-taken and exactly correct. The “little person” who voted for the euphoria of another four years of Obamanomics will be the first to suffer.

    However, the following statement should be amended: “This is a national company with thousands of employees which has a responsibility to its INVESTORS (stockholders) to assure a return on the money that they loaned the company before anything else.”

    Technically, bondholders “lend” money – shareholders “own” the corporation.

    I’m sure that both of us strive to be as accurate as possible – unlike our friends on the left who specialize in fuzzy thinking.

    Thank you for an insightful post.

  2. C.L speak with straight tongue. A fair warning…and it’s worth noting the unemployment levels accompanying Europe’s austerity. They’ll be here, too.

    Another aspect presaged by Europe: ‘Austerity’ just means, spending only what you actually have, right? And the Eurofolk in Spain and Portugal (to be followed shortly by France, betcha!) are now rioting destructively in their streets against austerity. Funny thing: They never mention where the extra money will be found to give them what they demand…the minimum voting age over there must be about 4.

    Any bets we don’t see the same here?

    • I was thinking we’d be like Europe in another way – having more than one part time job as a regular thing. That’s how they do it in Italy. My landlady in Tuscany’s husband was the caretaker for the town theater, but also worked in the vineyards. He was partially paid in wine. I have a feeling that’s coming, too.

  3. Wonderful post, CL. I was actually thinking along the lines of being paid in products and returning to more of a barter system, not as a necessity, but rather, to keep government from taking its over-sized share of any proceeds.
    Your second to last paragraph was bleak but true. It seems by ignoring history, we’re about to live its recurrence. “Everything old is new again.”

    • When one of my mother’s aunts died and her house was cleaned out, over $500 in cash total was found in various places, including some frozen in the bottom of an ice tray. We also found 40 pounds of sugar in the attic, enough quilts for five households, her sock darning basket with pieces of sock in it to darn…it was unreal. People think I”m nuts when I buy sheets on severe clearance, but even one of my grandmothers had a whole shelf bought the same way in the 60’s when we cleaned out her house.

      Yep, we’re going to learn it all again the hard way.

      • I think it was Stormin’ Norman Schwarzkopf who said, “If you prepare for the worst, you’ll be prepared for anything.” That seems very appropriate.

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