Help those who need help, address weaknesses, and expect more trouble.
First:
Don’t send Jeff Bezos money. Amazon shares are taking a beating, but Bezos (pbuh) is, I am confident, going to be fine.
So are Bill Gates and Mark Zuckerberg. And moving just a few rungs down the income ladder, so am I and other people like me. Congress’s plan to send everybody a check for $1,000 as a stimulus measure may have some merit as a one-time thing, and as a simple measure it appeals to the simple people who govern us. But if we are looking at months of economic disruption — and it is likely that we are — then we are going to have to prioritize, and the first thing we should do is send lower-income people money.
Lower-income people are less likely to have savings or additional resources to help tide them over when they are out of work, as many of them already are. Businesses that can afford to keep paying furloughed workers for a time should do so, and Congress should help those businesses in turn, perhaps by allowing them to treat wages paid to furloughed workers during this crisis like a tax loss that can be carried forward.
About 25 million Americans make $11 an hour or less. By redirecting something on the order of 8 percent of federal spending, we could, if necessary, fund all of their paychecks, indefinitely. That’s a big chunk of money, but it would not be impossible to do. But the fact is, we don’t need to cover them all: Lots of those hourly workers are going to stay employed as companies ranging from grocers and distributors to manufacturers of medical devices ramp up production. We might not need to do this at all, but we need to act now to get the facility in place to do it.
A one-time check is just a check. A commitment to help throughout the episode is something else.
However this crisis shakes out, there is no scenario in which having millions of people who can’t pay their rent or buy food makes it easier to manage. I’ll be the first one saying “Get a job!” when the epidemic has abated. Until then, write those checks.
Second:
Start looking for weaknesses in the supply chain now, especially where food, pharmaceuticals, and basic consumer goods are concerned. (As Claire Berlinski reports, France is in the middle of this right now.) From the farms to the food-processing centers to the distribution centers to the retailer warehouses to the store shelves, much can go wrong.
The toilet-paper shortage is a good joke. Persistently empty shelves in the grocery stores will cause civic disorder. We already have store-imposed rationing at grocery stores on canned goods and certain other items. The perception of shortages encourages panic buying, which can make those perceptions a reality. State and local governments and corporate managements should be war-gaming out worst-case scenarios right now. (Some of them already are.) We should be looking at what happens if 10 percent or 15 percent of the workforce either does not or cannot show up for work.
It does not matter that there is “plenty of food in the country.” It matters where it is and whether people can get to it.
Third:
Get ready for non-coronavirus trouble: Crises beget crises.
For example, we are not that far away from the beginning of hurricane season. The disruption caused by this epidemic could make an ordinary pre-storm evacuation in Florida or Louisiana a much more complicated affair. Hurricane Harvey inundated Houston — but it also left gasoline pumps empty in North Texas and points beyond. The usual minor emergencies that are an ordinary part of life are not going to stop because there’s an epidemic under way.
Stocking up on food is usually the first thing on people’s minds during a situation like this, but water, electricity, fuel, transportation, communication, banking — all of these have vulnerabilities that may be heightened or aggravated by the social and economic disruption that already is under way with more to come.
Steven Mnuchin, the Treasury secretary, says this is not the time to worry about the deficit. “Correct,” replied Rory Cooper. “The time to worry about it was when times were good. But nobody did that, either.” Cooper is, of course, correct. It would be better if we were going into this crisis with a better fiscal position. And that, too, is a weakness that this epidemic could leave painfully exposed.
We are going to learn some lessons. Let us hope that the learning is not too painful.