Baristapocalypse detonates in Melbourne

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Via News:

One of Melbourne’s most successful restaurateurs has issued a powerful message on national television this morning, saying Daniel Andrews has lost all compassion and that it’s now “too late” to save the city’s hospitality industry.

Chris Lucas, who owns some of Australia’s best-known fine diners, warned of a mental health crisis as hundreds of thousands of young people, employed by the hospitality industry, are unable to work.

He told the Today show that even if Victoria heads back to stage 2 restrictions by Christmas, it won’t be enough to save Melbourne’s bars, restaurants and pubs.

“It’s already too late,” he said. “There are 20,000 small cafes and restaurants in this state. And as an aggregate we employ about 300,000 mostly young Victorians.

“It’s already too late for a lot of them. There’s talk that at least 20 per cent to 30 per cent, maybe even higher will not reopen their doors. This is a catastrophic moment.”

You can’t blame the virus for this. It’s Victoria’s horrible economic structure that is imploding. It always going to happen when the cycle ended, no matter how.

For years we have warned and mocked it for being little more than a mass immigration Ponzi scheme which has driven up input costs and the Australian dollar such that anything other than the population-fed fluff economy could not compete. Manufacturing has flown out the door (to China) while the return “export” of education added no value. Literally nothing to its percentage of growth. What did take market share of GDP was banking, construction, health and professionals (think massage parlours) that have surged, beautifully illustrating all that matters to the mass immigration model. Warm bodies not to teach but leach off:

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This left ordinary Victorians running desperately on the spot as their standards of living were crush-loaded through a lost decade:

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Recall my post of several years ago, passing through the anus of the services economy:

It struck me as I sat there that it was wonderfully convenient to have a Thai massage joint just around the corner, especially given my local shops are not very large. I briefly surveyed the other shops and realised swiftly that what I was looking at was the lion’s share of the Australian services economy supply chain. Nearly all of it was directed not at the production of anything, nor the supply of anything, nor the inputs to some factory, but at servicing my person. Specifically, it was mostly targeted at various components of my body. There was an inordinately expensive organic grocer for my stomach. A retro barber for my head. A manicurist for my nails. A tatooist for my ink. A specialist wine purveyor for my tongue. A gift store for my birthday. A shop front personal trainer for my flab. An Asian tailor and presser for my clothes. Any number of cafes of course. And a real estate agent on every corner.

I realised that it was I that was the factory. My body, or more to the point, my mind, my intellectual property, was being supported my an extensive supply chain of services that plumped, fattened, thinned, preened, pressed, fluffed, trimmed and massaged me into the ongoing production of ideas.

There was one thing more that was obvious. These various services were not just the slapdash Aussies of yesteryear. There were no lackadaisical loafers working for the man and hanging for a smoko. Each of the services on display was a finely crafted specialist, an artisan in his and her craft, immensely serious with extraordinary attention to detail. The massage offered a limitless array of options right down to your chosen incense and its specific impact upon your chakras. The barber wore a perfect replica suit from the 1920s and sported enormous mustaches to match. The personal trainer rippled in the window. The grocer glowed with ruddy peasant health and one could almost smell the fresh loam on her fingers. The cafe’s were a rival for Tate Modern in their timberwork and ceramics, and one could literally choose a vintage decolletage in which to hang as if riding in a time machine.

The amount of effort and innovation going into finding a competitive edge for the privilege of servicing my sagging flesh was spectacular.

And that’s the thing. All of these local shops are a hive entrepreneurial beavering. But all of them are directed inwards in an endlessly dividing paradox of insignificance. None of them is tradable, as services mostly are not, so none has the chance to flower much beyond the local shops, let alone nationally or internationally. That poses a problem for the economy because if all you ever do is service one another in more elaborately infinitesimal detail then there is no actual wealth generation going on. There was no organic capital generation, no capital deepening nor breakthrough’s in efficiency. The capital that drives this machine by definition comes from outside of it in the form of a visitor, a new buyer of a local asset or someone that has borrowed to invest.

And so, here VIC is today, destiny complete, as the external capital driver is disrupted and bullshit services businesses and jobs in a rain of fire the moment JobKeeper lifts.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.