Massive Death or Economic Depression? There is a third option to deal with COVID-19
If we adapt to change, our economy will recover faster. Going back to normal is not an option.
The tension between medical experts and economic pundits is growing rapidly. It seems like America is facing a choice between a long-term economic shut-down or massive death due to COVID-19 and an overwhelmed healthcare system. The reality is, while the economy will face an unavoidable downturn, and there will be a struggle to care for those who succumb to the virus, the extreme choice being presented to the American people is nothing more than a lack of imagination. There is a way to avoid both extremes.
The third option is to provide economic stimulus and guidance based on a vision of how our economy can work and adapt to this new reality. People still have the same needs that they did before the COVID-19 outbreak, they just have to use different methods to fill them. Let’s not invest in the hopes of helping businesses “return to normal.” Instead, let’s invest to help businesses adapt to a new normal. This way we can help the economy recover AND follow the guidance of medical experts.
There is NO Going Back
This outbreak will last too long to “go back to normal,” and we probably shouldn’t anyway. Medical experts warn the virus will most likely make a comeback in the Fall, and there will always be the threat of another virus or mutations of COVID-19 itself. I’m not saying that we are doomed to isolating ourselves in our homes, but that we will always need to be able to function with “social distancing” as needed and at will. We should start thinking about new viruses the way we think about seasons, blizzards, or hurricanes. They’re going to happen, and we need to expect them.
Everyone in the West needs to start wearing masks when they are sick, just like they do in Asia (after we get over our shortage of masks, of course). Offices need to be equipped to work remotely at any time. Grocery stores need to rework their shopping experiences so we aren’t all handling the same filthy carts and surfaces. Restaurants need to have robust carry-out and delivery alternatives they can ramp up or down. Employees at retail stores should wear gloves just like food service workers do. Cruise lines are… just terrible, and probably need to die anyway.
Human beings have a “rubber band” effect. If their lives are disrupted for a couple of weeks, they can easily pick up where they left off once normality is restored. However, after a few weeks, people start looking for new ways to do things and start forming new habits. After two months, new habits become automatic and ingrained. If a crisis lasts more than two months, which this will, society experiences some level of permanent change.
Safe Bets on What is Going to Change
While things are going to change is many unpredictable ways, there are some ways we can be pretty sure people will build new habits:
There’s going to be a lot more home chefs. People are going to learn to cook, a lot, during this time. Once things return to normal, there won’t be as many people dependent on eating out as there used to be.
Most organizations will develop or improve remote work cultures. While startups and freelance businesses have embraced “work from home” culture, large organizations have been resisting it. Now, everyone has to learn how to work from home. This won’t be something people will just want to give up later.
Home workout equipment will surge. As people are stuck at home, luxuries like treadmills will start to look like necessities. As people form routines around them, going back to the gym will look less attractive.
Public parks will get a boost. If you want to get out of the house and maintain social distance, public parks are a great option. You can hike around trails and keep plenty of distance from others. People who have never utilized their local parks will start giving it a try.
These are just some ways society is likely to form new long-term habits from this crisis. Yes, we will all be relieved to get out and about again, but the reality is that we will be a different culture once this is over.
How to Build a New Economy
Most money spent trying to save the economy we had before this started is money we are flushing down the toilet. To ensure we don’t dip into a depression, or sacrifice all our susceptible and elderly on the altar of capitalism, we need to start funding the new economy. Here is what that looks like:
- Listen and respond. First and foremost, the best way to deal with economic change is to use data to see who is going up in demand, and who is shrinking. Use that data to identify where the economy can grow and water it, then stop throwing away money to places where it is shrinking other than to help trapped workers make up the loss and move to new jobs.
- Provide subsidies and near-zero interest loans to all businesses currently having to ramp-up to serve consumers during social distancing (delivery, grocery, etc.). Make sure they can hire new people and invest in infrastructure to grow.
- Create clear and helpful guidance for struggling businesses to adapt and change to meet social distancing standards, like retail and restaurants. Make sure SBA loans are only given to those who agree to adapt and use that money, in large part, for that adaptation. I have seen a local butcher and deli redesign his entire store, and he got approval from the Department of Health to stay open. Also, the Sonic Drive-In franchise must be feeling pretty smug right now.
- Create a startup fund for startups and entrepreneurs who propose innovative new ways to serve consumers while preserving social distancing.
- Offer subsidies to companies that produce remote-working tools, like Microsoft Teams, Trello, and Slack, so they can provide them for free or heavily discount for a year or more.
- Work with state and local governments to create new zoning laws that allow rapid conversion of retail space to warehouse-and-pickup storefront models.
- This is a good time to invest in nation-wide 5G internet. Seriously.
- Massive investment in better public transit to make it more people-friendly, and less germ-friendly.
- Identify economically struggling areas and provide huge benefits for building new factories, warehouses, and logistics centers in them.
- Finally, let’s all take a moment and reflect on how much of a mistake focusing all our economic development on massive, super-populated cities have been. Even before this virus, you have high rent prices, hellish traffic, and harmful localized air pollution. We need the spread out, and develop models for moderate urban development and have smaller self-sufficient towns without massive surrounding suburbs. But this is probably an entirely separate article so….
This is not an exhaustive list, for sure. But it’s a hell of a lot better than throwing away billions on cruise lines and retail stores in the hopes they “bounce back.” It IS a great time to invest in our public parks, greenways, and fashionable face-masks. There has never been a global crisis that wasn’t followed by massive social change. The countries that embrace it will recover their economies the fastest, and those who cling to “getting back to normal” will have massive depression.
How Will Your Life Change?
True story, I mentioned Sonic Drive-In earlier because a friend of mine said, “I bet people will get drive-thru and park next to each other just to have some human connection while we are all keeping our distance.” I pointed out she just described Sonic’s entire business model, and she was surprised she never heard about it before. Turns out, drive-in diners are “so out they are in.”
Please share in the comments any new habits, hobbies you’ve discovered, or lifestyle changes you think you will keep even after the threat of this crisis passes. What kind of businesses do you wish existed during this time? How do you think your local stores and shops could change to adapt to this situation. I bet there is a lot of innovation out there for a new economy.