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The New Feudalism: More Than The Risk of Shutdown If Your Industry Is Not “Essential”

May 18, 2020


The New Feudalism: More Than The Risk of Shutdown If Your Industry Is Not “Essential”

Words have meanings and this is an alarming trend. A business which depends on the approval of a government to operate is, by its nature, a highly regulated business no matter the length of the regulations. When that approval can be rescinded, on little or no notice and upon subjective criteria determined by a government from which appeals may not be available and over which no oversight can be had, such a business then exists at the whim of the government. Such a business cannot be depended upon to generate income for its owners, nor for any of its workers. Every aspect of its operations, indeed of its entire existence, carries huge risk and yet there may be no commensurate reward available to compensate for the risk — a tremendous disincentive to remain in business or for new companies to enter that industry. This is the prime danger of a newly emboldened, aggressive activist, state-interventionist attitude that the government runs business and, for all intents and purposes, owns the business. 

Under such conditions, business owners are not merely subject to the government’s regulations and whims; they now have become — they are — subjects of the government. This is not only a reformulation of the relationship between citizen and state; it abolishes the prior relationship and establishes a new relationship between ruler and subject. 
While businesses are created out of risk, the new “shutdown climate” and widespread adoption of the “permissioned economy” produces real economic conditions commensurate with heavy government control over the economy. Such risks are so heavy as to drive out private enterprise, bankrupt owners and leave remaining physical assets available for repurchase, at sharply reduced prices, by perhaps the only prospective buyers of last resort: the state, and its nominally private-sector allies in a ruling elite. This could lead to the de facto nationalization of industries and confiscation of assets (and failing that, the devaluation of both). 

Now that governments across the world have seized on the pandemic to declare what is not “essential” and to order the offices, retail stores and warehouses of entire non-essential industries shut down adds a huge risk factor — think ALLCAPS “RISK” — to these businesses. With uncertainty looming over infection data trends — and increasing doubts about the validity of reported data — it is not an exaggeration to fear that absent both the development of a cure, vaccine or dependable treatment for coronavirus and governments’ willingness to surrender their newfound control over much of the private economy, a non-essential industry cannot ever be assured of being open tomorrow. These newly disfavored industries would perpetually operate under a Damocles’ sword of an immediate “stop work” order imposed without warning or advance notice. The result is a level of suffocating uncertainty over every aspect of those industries, but also by extension, all businesses which service the workers in those industries. How can companies plan ahead? How can companies hold sales and roll out products? And what commercial landlords would rent to companies at such risk of imminent and indefinite shutdowns, for they make high risk tenants?

What is alarming is the prospect that these impossible conditions are not a bug, but a feature of the “new normal” we are told to accept.