31 August 2011

Consequences: Even business owners must live with them.

I have a huge backlog of things I want to post about, or at least link to, that have piled up while I was prepping for and then attending a conference last week.

But before I get to that, I want to bitch about something I heard on the WSJ Radio this morning. They did a short piece on post-Irene flood damage, noting that many people are not insured for the costs.

The reporter mentioned one restaurant owner whose prep kitchen and wine cellar flooded. He could have bought flood insurance, but according to the reporter he decided the money for the premiums was better spent elsewhere.  (It was reported as "He couldn't afford it," but that's just one way of saying "He thought he would derive more benefit from spending that money on other things.")  Now that his place is ruined and his wine and food stocks destroyed he wants the government to bail him out, because he's a "Small Business Owner" and this will bankrupt him.

I love Small Business Owners.  They're fine folks.  And they do a lot of good.  I hope the government supports them.  But to me that means getting out of their way and letting them do their thing, not letting them push a tax-payer funded Do-Over Button whenever things go wrong.

This guy could have bought flood insurance.  He didn't.  He decided to stock up the wine cellar, or buy more expensive ingredients,  or hire more or better paid staff, or pay himself more, or whatever the hell else he did with that money.  Fine.  Now he's got to live with the consequences.

If I had a small business and decided that an extra $1000/month of advertising was too expensive, and my sales dropped and then I had to close up shop I couldn't go crying to the state to let me have another chance.  If I decided I "couldn't afford" new capital equipment to lower my costs, and that kept my margins high, and I got pushed out of the market, everyone would think I was foolish for trying to get the state to let me have another go at the citizens' expense.  But because this guy gambles on flood protection and looses, and a bunch of other people loose at the same time in a big, public, obvious way, some people think it's appropriate to give them all do-over.

I don't think its the state's job to protect people from bad luck.  Especially not bad luck they had the opportunity to hedge themselves against.  But if we're going to do it, justice demands we do it consistently.  If Jim's Random Diner in Dubuque got flooded last month, no one would have thought it appropriate for Washington to give Jim rebuilding funds.  But since dozens of businesses all got hit at once somehow it's our collective responsibility.  Talk about everyone endeavoring to live and everyone else's expense.

When the misfortune is big and public we have to Do Something, and that usually means calling in some stuffed-shirt blowhard like Ken Feinberg to hand out other people's money.  Screw that.  If Lee Boyd Malvo, or some anonymous car jacker, or stone cold bad luck kills your father you're SOL. But if your dad dies in a big National Pants Shitting Moment it's everyone's responsibility to ease your grief with a check? How much sense does that make?

PS I think it grinds my gears all the more that this was reported by the Journal.  They're the closest thing to a free market supporting media outlet I can get my hands on, but they didn't even bother to ask why it's my job to restore this business' wine cellar after the owner chose not to insure it.  Supporting free markets does not mean supporting business.  On the contrary, it requires letting them fail.

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