Economic Adjustments During Global Pandemic
Economic Adjustments During Global Pandemic
As the World Health Organization (WHO) classified COVID-19 as a global pandemic, and as more and more cases are diagnosed daily in the United States, it is time to rethink how we deal with economic conditions in our country.
To date, several states and cities are issuing “shelter-in-place” orders, forcibly hindering freedom of movement, property rights, and local economies, with some calling these directives “stay-at-home” orders.
As scary as those may be, Americans are still free to shop for groceries, medications, walk their pets, and spend time outdoors. As I told my father this morning when he expressed concern about being able to pick up groceries, “Just use common sense.”
But how much can our economy tolerate? The economic impact of strong measures is unsustainable in the long-term, according to the Wall Street Journal.
People are losing their jobs as commerce and production grind to a halt.
Even cash-rich businesses operate on a thin margin and can bleed through reserves in a month. First they will lay off employees and then out of necessity they will shut down. Another month like this week and the layoffs will be measured in millions of people.
Think about the entrepreneur who has invested his life in his Memphis ribs joint only to see his customers vanish in a week. Or the retail chain of 30 stores that employs hundreds but sees no sales and must shut its doors.
The federal government plans to send you economic stimulus checks – of course at the expense of those who paid their taxes – regardless of whether you paid federal income taxes or not, and 44 percent of Americans in 2018 paid no income tax at all. And although I understand the need to stimulate consumer activity as a short-term strategy, it’s hardly a sustainable economic plan, especially as employers shut down and economic activity declines.
There are smart strategies that can be implemented to ensure that the economic impact is as limited as possible. I’m not saying these strategies are a panacea, but they will certainly help.
First, we need to adjust our thinking about how we view price controls. As despicable as price gouging is, especially during disasters, it is actually an economic control against hoarding and shortages. Most people have an emotional response to those who they perceive exploit economic emergencies, but laws prohibiting price gouging encourage those with little common sense to hoard vital supplies, resulting in shortages of things like… toilet paper!
These laws keep prices low during natural disasters but lead to bare shelves, closed stores, and empty gas stations. This happens because the low mandated prices push consumers to purchase more water, gas, flashlights, and so on. Yet at the same time, sellers aren’t financially motivated to expend any additional effort to supply more of these necessities. Why would they spend their time or money bringing in additional goods during a disaster only to sell them for the same price they’d get under normal circumstances? This imbalance between the interest of buyers and sellers causes shortages, leaving many without anything at all.
Fact is that high prices keep hoarders from hoarding – and in some cases, further exploiting the economic crisis. Remember the jerk and his sibling who took a little road trip, filling a truck with hand sanitizer, wipes, and other supplies deemed necessary to control the outbreak? They cleared out stores – mostly smaller businesses – of critical items and tried to sell them at a profit until Amazon removed the listings and the backlash got to be a bit too much.
Now Matt and Noah Colvin are donating the supplies they bought hoping to exploit the situation. Contrary to popular belief, although Tennessee has laws preventing price-gouging, at the time hand sanitizer was considered an “essential good,” but the market seems to have responded without government intervention. Yes, they are being investigated, and the government is now asking neighbors to rat out other neighbors, so it can get in on the action and pretend it’s doing something, but Amazon removed the excessively priced listings before government intervention, and now I’m thinking the two tools will think twice before trying their little strategy again and losing thousands of dollars.
Second, if we all practiced a bit of common sense, I believe governments at all levels wouldn’t NEED to get involved.
In the age of the coronavirus – and the popularity of being an introvert – grocery and food delivery has become a popular thing. Instead of shutting down, maybe these stores can adjust economic fire, so to speak, by shifting their business models. Instead of sending waiters home, turn them into drivers and have them deliver food. Hire more delivery people for grocery stores and delivery services such as Instacart and GrubHub. Offer an option to leave the purchase at the door, so there’s limited interaction. Hell, I think it’s possible for gas stations to offer a similar service. The online possibilities are limitless and will cut down on human interaction while the plague is making its way around, while allowing for an economic job shift, keeping more people employed.
And finally, we as a society need to adjust our habits and attitudes. A few days ago, I had a delivery of equipment for a home remodel I was doing. The package was very heavy, and the driver was alone, I’m assuming to limit human interaction as much as possible. I could see he was having trouble maneuvering the dolly out of the truck, so I offered to help.
Him: I don’t know, ma’am. It’s pretty heavy.
Me: So what? I was in the Army. I’m pretty sure we can lift this with the two of us. You scared, bro?
In the end, the two of us maneuvered the gigantic, heavy package off the truck and to my house. He was endlessly grateful, because most customers would stay far away and not bother putting in the effort. He told me he was worried that he would be forced to stay home, and he had three kids to feed. Maybe instead of laying off these guys, they could continue working while the rest of us pitched in a little?
And let’s give our business to local restaurants, convenience stores, pharmacies, etc. Yes, Amazon is convenient, and there are just some things we can’t purchase locally. I get it. But as much as possible, let’s pitch in to support our communities. When delivery is unavailable, drop by and pick up what you need. Crowds will be smaller, and you will be supporting your local economy and local workers, keeping them employed and paid.
And when the pandemic subsides, think about how you can support local events that had to be scrapped because of this virus.
Again, I’m not going to pretend that my simple suggestions are the solution to the inevitable economic downturn our communities and our country writ large will experience. But every little bit helps, and maybe our economic adjustments will result in longer-term shifts that will help us with the next unforeseen crisis.
Featured photo courtesy of National Park Service: CDC/Alissa Eckert, MS; Dan Higgins, MAMS