alt Hacker NewsNot fully sure this is that, but it reminds me of something an American friend explained about their business under the Trump regime (as a rant about how laypeople were deeply under-reacting to the tourism decline):
If it takes 100 tourists to pay his bills, taxes, staffing, and other expenses for the day, the next 5 tourists represent the profit. A tourism decline of 10% doesn’t mean 10% less profit, it means the catastrophic inviability of the whole business as it’s currently structured.
That 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.