Economy & Business

Fever Dreams

A man wears a mask to prevent exposure to the coronavirus while walking past the New York Stock Exchange in New York City, March 17, 2020. (Lucas Jackson/Reuters)
Where do a nation and world in crisis go from here?

Coronavirus has the world in a kind of limbo. We don’t know how to beat the virus, or when “normal” life will start again. We don’t have a great estimate of when most retail and service businesses can begin operating again, if they don’t simply dissolve in the acid bath of fixed costs imposed by our present lockdowns. And we don’t know how such operations are going to work when they do resume, given the huge supply shocks these lockdowns have imposed.

Will the fundamentals of the economy permanently change going forward? Will the fundamentals of geopolitics? How much economic destruction can happen in lockdown? And what would economic recovery look like?

We certainly have time on our hands to entertain these big-picture questions and come up with ever-loopier answers.

Small businesses are going to be hammered by their fixed costs until these lockdowns end — and maybe beyond then if a substantial number of people are not given an all-clear to live normally. No one can credibly criticize them for being unprepared; there was no economic reason to suspect that businesses thriving in late February were headed for a fall. A rainy day is one thing, but nobody saves for a rainy four months, and they shouldn’t. Business is for putting resources to work.

This isn’t like the financial crisis, when there was a giant housing bubble and credit markets had misdirected the energies and capital of millions of Americans. Corporate and household balance sheets were in much better shape at the start of this crisis then at the start of that one. So Congress has to continue to improve its relief programs, helping as many firms as possible retain as many employees as possible and quickly rehire those they let go once the economy is thawed from its deep freeze.

If businesses are made whole, and recapitalized, for the sacrifices they made for public health, an orderly and certain recovery should be possible. But no one should pretend there won’t be holes in the economy, and a general skittishness about the immediate future, even then. People will pull back on discretionary spending, and some foreign markets will not recover quickly.

This crisis has reminded us that the nation-state and its capacity to act matters more than international conventions and the market transactions they enable. The German and French governments have forbidden medical masks to leave their borders for other hard-hit countries, and in some cases seized these supplies for themselves. Italians are outraged at the lack of help they have received from Europe.

That said, declarations that the era of globalization is over are premature. Insofar as “globalization” was a code word for Sinicization, the mainstreaming of the Chinese labor force into world markets — and of Chinese state power into international institutions — is going to be subject to major inquiry, review, and rethinking. The whole world has been reminded that for all its muscle, China is not transparent or trustworthy. But the mostly free polities that surround China — Taiwan, South Korea, and Singapore — are models of effective governance and global citizenship. For all the desperate scramble among nation states for ventilators and masks, the fact is that doctors and scientists are sharing information gleaned from dealing with this pandemic in a speedy and efficient manor. Suddenly something like the Trans-Pacific Partnership makes a great deal more geopolitical sense.

The regulatory state, meanwhile, needs a giant overhaul. Regulations that prevent health workers from splitting ventilators and hospitals from building new wings are evaporating under the heat of this virus. These regulations, which serve us decently well during normal times, are perverse in a pandemic. Nimbleness and speed are the name of the game. It was notable that the United Kingdom’s NHS was able to erect an extra hospital facility even faster than the vaunted Chinese. FEMA is accomplishing something similar in the Javits Center in New York.

Western governments have resources to throw at a problem such as this one. But eastern governments have speed and knowledge. The United States works according to its inherited traditions, but its people perish from lack of knowledge. The federal government has been terrible at communicating the content of its relief programs to the public. And the people themselves are not well-known by the government. If you moved in the last 18 months, don’t have a bank account, or didn’t file taxes electronically in 2018, can the federal government even find you to give you your check? Probably not.

In the absence of that kind of knowledge, the people of the United States are going to have to get through this by trusting one another to get tested, to stay in touch and share reliable information, to remain indoors as much as possible, and to reinvest in the institutions and businesses we love when the time is right. It won’t always be pretty, but it will be necessary — thousands of lives and our collective future depend on it.


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