No Treason

I see there are a few other definitions of Sunshine Capitalism on the ‘net, but I can’t think of a better use for the term.

I define Sunshine Capitalism as the human side of malinvestment in the Austrian Business Cycle Theory.

Sunshine Capitalism is

1. When boom time capitalists become bust socialists.
2. When people take cheap and easy credit, and pretend to be entrepreneurs, starting businesses without a market, or the skills to conduct that business profitably.
3. When would-be boom period capitalist geniuses are exposed in the bust times by run down capital goods and diminished or non-existent capital reserves.

1. Bust Socialism

We all know the type.  These are the guys who cry for government intervention in the market place.  The ones quick to sign up for cartelization, rationalizing bailouts, and praying for political miracles.  The sort of gutless character that would rather see his competitor bailed out, if it means he can get bailed out as well, rather than duke it out in the open market he paid lip service to during the boom phase.

2. Wannabe Entrepreneurs

The Wannabe Entrepreneur is a businessman because somehow he’s been extended credit for an enterprise, that in more rational and frugal times would not be financed, or if it was, it would not be a project a relative unknown and incompetent such as himself would be allowed to manage.

A recent example, was a person who approached me about starting an internet forum.  He had no experience, no vision, no potential members, no business model, no support, no friends etc.  What he did have was money for advertising.  When you think you can advertise your business into a successful direction, you’re recklessly wasting capital.

3. Capital Consumers

And lastly, we have the Capital Consumers.  These entrepreneurs can be found at various drinking establishments on a Friday early in the afternoon.  With so much cheap and easy credit, capital goods are replaced on deferred payments, existing capital goods are never maintained.  The goal here is not ownership, but revolving credit, and when the liquidation eventually comes, complete and total bankruptcy as capital is never accumulated prior to taking on new work or long term projects.  Capital Consumers look smart as long as their bank manager returns their calls.

These are some of the stereotypical businessmen I have met and interacted with over the last 10 years.  Now that I see the bust, their panicked attempts to compensate show their success to be a mirage, not an oasis.