AMERICA IS ON THE VERGE OF A MAJOR, UNASKED FOR CHANGE

…This picture of a closure from the Great Recession is being repeated today

Businesses revenue today is in many cases, zero

I hope everyone understands that this country will look very different after we get through today's Covid-19 pandemic.

The reality is that many of our older retailers were already struggling, long before the novel coronavirus appeared in China and then decided to tour the world.  Macy’s, J.C. Penney, Kohl’s and the Gap, among others, all recently announced that they will be furloughing the majority of their workers without pay.

JC Penney may just barely have the ability to weather the pandemic, that is according to its chief executive in a news release.  But if that’s actually true, they are about one of the only ones.  Burdened by debt and struggling with declining foot traffic due to on-line purchasing, many of the nation’s retailers were already vulnerable to a killing blow like this pandemic. And now that the growing recession is hitting much harder than even the Great Recession, the revenue is not merely soft; in many cases, it is zero.

Rich countries are also shutting down their economies in a desperate bid to stop Covid-19.  But the disease will continue doing to all businesses what it does to people.  Just like older Americans, it will effect the elderly businesses who already have preexisting conditions, but it will also ravage some of the younger businesses that have previously unidentified vulnerabilities.

A recent analysis by an economist at the Federal Reserve Bank, projected that one-third of Americans could end up unemployed.  One must understand that outside of the groceries and a few basic essential businesses, even today's online sales only made up 11% of the overall sales before the Covid-19 hit.  And the other 89% of businesses have suffered dearly since the quarantines began.

After this pandemic is all over, and that will eventually happen, many Americans may find that the stores they used to frequent will remain shuttered, permanently.  That list of dead storefronts will stretch well beyond retail offerings and will include many of our favorite bars and restaurants, the local movie theater, the gym, and even perhaps the worker's working offices.

Now, in spite of the current US President, the US government could help deal with some of the damage, for example, by giving businesses cheap loans to help pay their bills.  However, many businesses are too indebted to survive a long period without revenue.  And others will discover that a post-pandemic America no longer demands the services they needed before the virus took over. The government probably shouldn’t save those businesses, and moreover, it probably won’t.  Even if the overall output recovers, that will leave a lot of defunct real estate and many displaced workers.

…With today’s closed restaurants, this depression soup lines are being repeated 

Strict social distancing imposes not merely a heavy economic burden but sometimes it's an intolerable one.  Many people have been arguing that, but I think those people are wrong.  The crisis in New York has offers a painful lesson of the costs of doing too little, too late.

The United States is an immensely wealthy nation, one of the richest in all of history.  Yes, we can afford to sacrifice a substantial chunk of our Gross Domestic Product (GDP) to save a substantial number of American lives.  And what better do we have to spend our money on?

When the 1918 pandemic hit, the average American household was only 1/3^rd of what it is today, and that’s with inflation adjusted dollars.  The nation at that time wasn’t wealthy enough to manage the pandemic, as are most other countries, especially the developing ones today.

The reality is that we can realistically, shut down the entire US economy for four months, and still be, collectively, twice as rich as our ancestors who did live through the 1918 pandemic.

The reality is that we wouldn’t actually be shutting down the country completely. We would still be providing lots of health care and we would be making a lot of masks, gloves, gowns and ventilators.  We would also be prioritizing a lot of our scientific research. 

We’re already tossing out old useless regulations that were crippling the innovation in areas such as today’s tele-medicine.  Some of that effort is simply the expense of fighting the  coronavirus.  But some of that effort will result in long-term national gains, just as our fighting World War II actually did.

The real issue is for those Americans who have spent decades of their live building businesses that don’t survive.  It is also for those that have skills that are no longer useful or needed, or those that lose those industry contacts that suddenly become useless.

Just remember, while you’re cheering today’s health-care heroes running to the pandemic’s front lines, you must also save some mental applause for the millions of people who are sitting inside right now, and quietly watching their expectations and their employment evaporate.

So, when this is over, they too will deserve our deepest gratitude.  And we must give them all the help we can for getting them to get back on their feet, and headed to a new and longer lasting career.

We must all understand that this is an inevitable affect of dealing with this unasked for event in our lives.

We will make it through this pandemic.

Copyright G. Ater 2020