Tag Archives: Small business owners

What’s Yours Is Now Mine: America’s Era of Accelerating Expropriation, by Charles Hugh Smith

The smaller the pie the higher the probability that somebody will resort to theft. That somebody includes the government. From Charles Hugh Smith at oftwominds.com:

The takeaway here is obvious: earn as little money as possible and invest your surplus labor in assets that can’t be expropriated.

Expropriation: dispossessing the populace of property and property rights, via the legal and financial over-reach of monetary and political authorities.

All expropriations are pernicious, but the most destructive is the expropriation of labor’s value while the excessive gains of unproductive speculation accrue to the elite that owns most of the nation’s wealth.

In a nation in which the leadership has finely honed the art and artifice of legalized looting and financial legerdemain, it’s not surprising that the expropriation of labor’s value takes many forms. For the self-employed and small business proprietor, the list is practically endless:

1. Proliferating junk fees for permits, licence renewals, applications, late fees, penalties, fines for violating obscure regulations, etc. (Never mind if you’re losing money; by definition, as a business owner you’re “rich” and deserve petty expropriations. If you’re Amazon, however, we’ll shower you with subsidies and tax breaks.)

2. Sky-high liability insurance, disability insurance and workers compensation insurance, because all the fraud and friction in these systems adds expense and you’re the one who will pay for it all.

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A Surge in Small Business Bankruptcies is Underway, by Mish Shedlock

Long after Covid-19 is but a memory the economic consequences will continue to play out. From Mish Shedlock at thestreet.com:

The new rules make it easier for small businesses to file for chapter 11. And they are.
Small Businesses Walking Away

In 2008, homeowners walked away from mortgages.

Thanks to the Small Business Reorganization Act of 2019 (SBRA), in effect as of February 19, 2020, small businesses have an easier shot at doing the same.

 

For example, the Twisted Root Burger grew quickly, but co-founder now says ‘I’m gonna walk away’ from some locations.

Twisted Root Burger was a Texas success story, expanding from one casual restaurant in 2006 to 24 sites including restaurants, bars, a brewery and a theater. Now, the company is moving fast in another direction—into bankruptcy.

“I’m not gonna open that restaurant at half the revenue,” said co-founder Jason Boso. “I’m gonna walk away from those restaurants. I’m not gonna set myself up for failure.”

More than 500 companies filed for bankruptcy under the small-business bankruptcy rules since February, according to the American Bankruptcy Institute. June was the top month for filings with 131 cases; many were filed in states hit hard by the pandemic like Florida, Texas, California, New York and Illinois.

“It was somewhat prescient,” said Ryan Wagner, a restructuring and bankruptcy attorney with international law firm Greenberg Traurig LLP. “It was passed without the foresight of the pandemic.” The law is the most significant change to the bankruptcy code since 2005.

SBRA Highlights

  • Applies to businesses with $2.7 million in liabilities, raised to $7.5 million under coronavirus stimulus
  • Owners continue operating their business while in court
  • Owners can retain equity after exiting bankruptcy
  • Owners can modify residential mortgages if home was collateral for a business loan
  • Faster turnaround to save time and minimize legal fees
  • Owners generally have three to five years to repay creditors
  • Creditors can be paid based on a business’s projected income

Walking away gets a new lease on life, this time for small businesses.

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Imagine if the Media Had as Much Sympathy for Small Business Owners as it Does for Federal Employees, by Ryan McMaken

There’s precious little sympathy out there for those the government taxes, regulates, and otherwise tortures everyday: small business owners. From Ryan McMaken at mises.org:

During this partial government shutdown, it’s become nearly impossible to avoid news articles, and segments on television and radio outlining the many ways that federal employees are apparently suffering financially as a result of the partial government shutdown.

The stories are very diverse in topic. Some take a “human interest story” angle, simply looking at how the daily lives of some of these employees have been affected. Others look at the apparent injustice of the fact that some workers are “being told to work without pay.” Still other suggest that the lack of federal paychecks will drive down economic growth figures. The number of ways to cover the story is quite large, and editors and journalists are apparently looking to see how many different options they can explore.

In truth, of course, virtually no one is working “without pay” since Congress has already approved a plan to provide nearly all affected workers with back pay. Nor is is mentioned that, on average, federal workers earn 17 percent more than private sector workers of similar education levels. Also not mentioned is the fact that the unemployment rate is at a historically low level — and thus changing careers is easier now than usual.

None of this, of course, is emphasized in the many media stories on the topic. Indeed, the usual slant of the articles is that federal workers somehow suffer more greatly than private sector workers.

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