Let barristas burn


Barristas are burning:

Hospitality businesses are failing at nearly twice the rate of a decade earlier, as industry players warn that soaring food and energy ­prices are pushing an increasing number of cafes and restaurants to the brink of collapse.

Independent Food Distributors Australia chief executive Richard Forbes said restaurant suppliers had typically experienced a 30 per cent increase in average food costs over the past three years, even as rents and insurance costs had ­doubled.

Mr Forbes said these surging energy bills and food ­prices were making many retail clients “inviable” as restaurants and cafes struggled to pass on higher costs to increasingly thrifty customers.

Alas for Australian youth. But if we need to make room in the economy for more productive activities, then this is a great place to start.

All Australian cities are massively over-cafed and it is destructive in more ways than one.

First, it absorbs entry-level labour when it could and should be better trained to aim higher.


Second, it suppresses aspiration. If opening a cafe is the height of ambition in your entrepreneurial class, as it is in Hellbourne, then you are stuffed before you start. There is no advancement of living standards built into the model.

Which brings me to the third and real problem. Cafe’s are the epicentre of bullshit economics in which labour is absorbed by feeble capital investment to produce nothing.

It is the literal digging of holes and filling them in the economy that is unable to generate endogenous wealth.


See the perpetual decline of contemporary Hellbourne living standards.

To build something new, the old must burn.

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.