Government and cost of haircut

This post is in continuation to the last post named “Fear and Corrections” but reading the previous post is not mandatory.
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In today’s scenario, central banks with support from the government are the ones who are busiest entities across the globe. More and more creative stuff is coming out from governments in form of newer packages and changes to the existing packages. In macro economy, the most difficult thing is to predict outcome of the action. Humans are very unpredictable and they may react to the stimulus differently. And it takes long time to get the results of the packages. There are more than 100 different leading and lagging indicators of economy, and no two economists would agree on methodology or on their view of the economy.

The complexity increases with global integrated economy where action by one government impacts other government. The only good thing is that these governments are forced and also willing to work together.

I have chosen haircut to compare, as impact of correction is seen in service industry the least. And services like haircut seldom see any correction. However bad the correction, everyone needs to have a haircut and haircut being a mundane task, also attracts no price hikes when economy is doing good.

Wait a sec, if haircut is an essential service, why do 5 star hotels charge 10-20 times more for a haircut? This could be explained by way of perceived value creation. I have been to many hair saloons where people visit only to get information about local politics even gossips on what is happening in their neighbours homes!!! Or if one brands himself as a lifestyle quotient, people with money tend to pay more for all these. But in difficult times, these are the people who get out of job the first.

In current scenario though, the situation is more grim. Even the small time saloons are talking about risk of loosing business as middle class people have started doing the job themselves to save these seemingly small amounts.

And that I believe is the measure of the depth of correction much more realistic on the ground data than any of those economic indicators who take 6-12 months to formally declare a recession (I still call it correction)

Right now, in Davos, industry leaders are working out together ways in which they can bring the economy back on track. But majority of them are not comfortable of governments hand as they believe, governments dont understand business as well as them and they are wary about time by which governments will give back control to them.

But as far as I am concerned, there is no industry or industrialist who is knowledgeable or experienced enough nor have enough resources to take us back on path of growth.