[2006alum]

I just wish we'd focus on what happens going forward: what do you think proactive steps should be? How do we manage the risk when we don't even know whether those who have antibodies can have the virus reactivated in them? How do we encourage folks to start participating in the economy who are worried about SARS-COV-2? How do we put a testing, tracing, and isolation system into place like the successful ones in Taiwan and South Korea. What industries, like cruise lines and amusement parks, are unlikely to re-open in the same way any time soon? Do we have to rethink our assumptions about international travel and international trade? Dependency on global supply chains and "just in time" delivery patterns? Etc.

The thing is, while companies dependent on global supply chains and just in time delivery will be hurt (and some companies, who operated on thin marginss, or returned most of their earnings to shareholders, will be hurt badly and possibly irrevocably), the folks most hurt by this are the small businesses with only a handful of employees, who necessarily operate on very thin margins, and will struggle to make payroll/pay rent.  A lot of those small businesses are in the service sector and won't survive.  And ideas like supply chains and "just in time" delivery are more or less alien to them.

My brother is about three years removed from being a bar owner in Santa Barbara.  He would have been crushed by this.  He had expensive rent on State Street to pay, and aside from not being able to support himself for however long this went, he would have had to lay off/furlough all his employees.  As it is, he works as a salesman for a liquor distributor, and basically his commissions for March/April are going to be zero, so while his company isn't laying anyone off (it's still making money from selling to supermarkets and grocery stores), he's taken a very large hit to his income.

BC

BC, I think you and I are talking about two slightly different issues. 

In terms of short-term effects, I totally agree with you about the first dominoes to fall. Small business based services like bars, restaurants, etc., will be crushed by this. But I don't think in 12-18 months that bars and restaurants will be a questionable long-term business proposition. I don't think, in the era of an ongoing global pandemic, that we should be asking whether bars and restaurants should cease to exist as a sector of the economy.

However, in terms of medium to longer-term effects, I do think this global pandemic should call into question just how dependent we want to be on substantial international travel and trade. Should we ever be reliant on foreign governments for access to essential medicines and PPE? If the feds are telling the states that they are responsible for themselves, should states like CA start to develop their own state-operated command-and-control manufacturing of essential components? If so, should the state be able to block the feds from taking them, as seems to be happening?

And this also speaks to certain sectors of the economy more generally. If there will likely be more rounds of border closings and intermittent limitations on foreign travel, how can industries that depend on open borders for trade and high volumes of international travel survive? I can see a universe where bars re-open in 6 weeks in a reformulated capacity; I can't see the major airlines or cruise lines returning to even a fractional version of normal operations any time in the next year. Etc.

And just to illustrate this, look at what China is now doing almost 3 months after locking down Wuhan:
[tweet]https://twitter.com/business/status/1249591660872380416?s=20[/tweet]

Cross-border risks of infection are going to be a very serious impediment to "re-opening" the economy, which means we need to start thinking seriously about sectors of the economy that rely on quasi-open borders.

[2006alum]

I just wish we'd focus on what happens going forward: what do you think proactive steps should be? How do we manage the risk when we don't even know whether those who have antibodies can have the virus reactivated in them? How do we encourage folks to start participating in the economy who are worried about SARS-COV-2? How do we put a testing, tracing, and isolation system into place like the successful ones in Taiwan and South Korea. What industries, like cruise lines and amusement parks, are unlikely to re-open in the same way any time soon? Do we have to rethink our assumptions about international travel and international trade? Dependency on global supply chains and "just in time" delivery patterns? Etc.

The thing is, while companies dependent on global supply chains and just in time delivery will be hurt (and some companies, who operated on thin marginss, or returned most of their earnings to shareholders, will be hurt badly and possibly irrevocably), the folks most hurt by this are the small businesses with only a handful of employees, who necessarily operate on very thin margins, and will struggle to make payroll/pay rent.  A lot of those small businesses are in the service sector and won't survive.  And ideas like supply chains and "just in time" delivery are more or less alien to them.

My brother is about three years removed from being a bar owner in Santa Barbara.  He would have been crushed by this.  He had expensive rent on State Street to pay, and aside from not being able to support himself for however long this went, he would have had to lay off/furlough all his employees.  As it is, he works as a salesman for a liquor distributor, and basically his commissions for March/April are going to be zero, so while his company isn't laying anyone off (it's still making money from selling to supermarkets and grocery stores), he's taken a very large hit to his income.

BC

BC, I think you and I are talking about two slightly different issues. 

In terms of short-term effects, I totally agree with you about the first dominoes to fall. Small business based services like bars, restaurants, etc., will be crushed by this. But I don't think in 12-18 months that bars and restaurants will be a questionable long-term business proposition. I don't think, in the era of an ongoing global pandemic, that we should be asking whether bars and restaurants should cease to exist as a sector of the economy.

However, in terms of medium to longer-term effects, I do think this global pandemic should call into question just how dependent we want to be on substantial international travel and trade. Should we ever be reliant on foreign governments for access to essential medicines and PPE? If the feds are telling the states that they are responsible for themselves, should states like CA start to develop their own state-operated command-and-control manufacturing of essential components? If so, should the state be able to block the feds from taking them, as seems to be happening?

And this also speaks to certain sectors of the economy more generally. If there will likely be more rounds of border closings and intermittent limitations on foreign travel, how can industries that depend on open borders for trade and high volumes of international travel survive? I can see a universe where bars re-open in 6 weeks in a reformulated capacity; I can't see the major airlines or cruise lines returning to even a fractional version of normal operations any time in the next year. Etc.

And just to illustrate this, look at what China is now doing almost 3 months after locking down Wuhan:
[tweet]https://twitter.com/business/status/1249591660872380416?s=20[/tweet]

Cross-border risks of infection are going to be a very serious impediment to "re-opening" the economy, which means we need to start thinking seriously about sectors of the economy that rely on quasi-open borders.