Re-opening the economy is a lot trickier than many people think, due to the nature of COvid-19. This isn’t flu and it has the ability to force companies to shut down operations at random intervals as workers get sick. Companies have to re-design supply chains and distribution systems — that’s a lot more complicated than just telling people to go back to work. At the same time, work-from-home (WFH) has the ability to undermine commercial real estate prices, putting developers and financial backers (banks and REITs) into a hole. This isn’t going to be pretty.
What we know:
- Covid-19 can be caught even if one wears a mask.
- Most people with the virus don’t know then have it.
- The virus can sicken so many workers that companies cannot operate whether they are allowed to open or not. Example: Smithfield plant in Iowa which only closed when employee attendance dropped to a small portion of the normal staff. (I’ve seen reports of 2/3 of workers calling off due to illness, but haven’t confirmed that number from a source I deem credible.) While there were calls to close the plant, it wasn’t shut down until the available workforce fell below what was required for profitable operation.
- People who are “cured” of the virus can still have it. Whether this is due to re-infection or to the virus (like Lyme Disease) retreating to a part of the body in which it is invisible to current tests and to medication is NOT known. Lyme does that if it is the body for more than 14 days, making it a permanent infection that like Shingles can rear its ugly head at random intervals. Does Covid-19 work the same way?
What we don’t know:
- Are long-term carriers of the disease always infectious? Covid hasn’t been around long enough to be able to speak credibly about long term effects.
What this means:
- If you open the economy and try to conduct business the way it has been done, you will be subject to random shutdowns of your own company, your customers and your suppliers. Managing supply chains is going to turn into a game of Wack-A-Mole. Just-in-Time inventory management becomes nightmarish when you can’t fully trust your suppliers to be able to deliver on schedule. Companies like Wal-Mart and Ford that have relied on J-i-T to minimize inventory costs and increase profits are going to have problems until they figure out a workaround. If there is one.
- Random shutdowns will apply to schools and other public institutions.
- Medical facilities will continue to be stressed long-term. As some analysts are beginning to realize, this doesn’t have an end. Like Lyme Disease, it may become a permanent part of the landscape.
- People of all ages are going to die. Between 1 and 50, we’ll see spontaneous blood clotting/strokes, some of which will create a new class of disabled while some will kill. Over 50, pneumonia may be fatal or lead to permanent brain, heart and/or lung damage. And newborns can get this from their mothers if the mother is infected, and it can be fatal.
Life will continue, but it will be different than in the last fifty years. For example;
- What happens to the prices of everything if the population declines? (Hint: mortgage lenders and commercial real estate developers are in serious trouble. So are auto makers. Fewer buyers means lower sales and kills the so-called economies of scale that was the classic justification for mergers over the last 100 years if not longer.)
- We’re going to have fewer elderly people on Medicare and Social Security, but we may have a larger class of permanently partially or fully disabled. Finding an adequate supply of quality care-givers is going to be a major problem. Keeping the care-givers well is part of the problem.
On a better note, if you’ve seen inspirational stories about not taking life for granted, now is a good time to dig them out and re-read them. Don’t take anyone you really love for granted. Dying too early is no longer just for soldiers.