LAST week, while scanning Twitter, I came upon this interesting Tweet by Dan Price:
“Amazon: profit up 100 percent
Walmart: profit up 80 percent
Target: profit up 80 percent
Lowe’s: profit up 74 percent
Microsoft, Facebook, Apple, Google: stock at record high
Small businesses: 21 percent closed; revenue for rest down 30 percent
We’re seeing a monumental wealth transfer from mom & pops to conglomerates.”
Dan Price is an American entrepreneur, and the chief executive officer of Gravity Payments. He is also well-known for successfully raising his company’s minimum wage to $70,000 per employee.
Price is also right in his tweet. The NASDAQ and the SP500 continue to thrive even as small and medium American businesses flounder. The stock market’s growth is a combination of investors seeking safety, the coming 5g revolution and of course, the effects of the coronavirus. Now, whether or not one calls this process a wealth transfer may require further debate, but one thing’s for certain: Micro, small and medium enterprises (MSMEs) are suffering, while large companies seem to be absorbing the economic effects of China virus in stride.
Here in the Philippines the PSEi is hovering between 5,800 to 6,000 points, even as MSMEs continue to hemorrhage revenue. In fact, according to the National Economic and Development Authority (NEDA), more than 60 percent of MSME respondents closed operations because of problems in working arrangements while “almost two-thirds reported zero sales due to temporary closure, particularly of non-essential businesses.”
Now, in defense of large businesses, the PSEi fell from 7,800 points to 4000 points since the start of coronavirus, before finally settling around its current level today. So large companies have suffered as well, but I don’t believe that large brands such as Jollibee, SM or Ayala are going to go away because of the pandemic.
I can’t say the same for local restaurants and shops, like Madge Coffee or Pan ni Paa. These businesses have suffered from Covid, and need the help of the community now more than ever.
The same is true for jeepney drivers, local hotels and the self-employed. Aside from consumers, these are the most vulnerable parts of our economy./PN
