On the economy, ice caps and COVID-19

Justin Daab Business Strategy

The asymmetry of loss

A few weeks back, I was listening to an episode of the podcast “The Skeptics Guide to the Universe,” and the host, Steven Novella, was discussing the asymmetrical time frames of destruction and restoration when considering the fate of the polar ice caps. If we do nothing about climate change, the models show a significant decline in the ice caps over the next 100 years and a total disappearance within a thousand years. The next point, however, was the one that struck me as most serious. Even if we reverse all of our carbon dioxide levels and cool the climate to pre-industrial levels, once those ice caps are gone, it would take millions of years for them to build back up.

That type of asymmetry is what concerns me about our current COVID-19-driven economic crisis. There are businesses, organizations and cultural institutions that, as a result of these economic pressures, could disappear in a very short time frame. And should that happen, they might never return, regardless of how quickly the general economy begins to bounce back.

The melting away of industries, experience and institutional memory

Some of the industries that will be affected most by any long-term closures are obvious. Bars. Restaurants. Hotels. Theaters and live-performance venues. But what might be less obvious is the fact that those employees left to fend for themselves will be forced to find other forms of employment, assuming those even exist. And inevitably, should that occur, having experienced the economic vulnerability of those professions firsthand, some percentage of them will never return. It’s sound logic, really. But what will we lose as a society if we shelter idly by and let that happen? We could lose a generation of great chefs, hoteliers, actors, artists, musicians and comedians.

Stimulus starts with innovation

The impacts of shelter-in-place and social distancing orders on bars and restaurants, theaters and cultural institutions are massive. Most of these establishments don’t have large cash reserves to cover rent, let alone payroll, for months of lost revenue. Of course, we hear news about government stimulus packages becoming available to stem the suffering of small businesses. But those are meant to help businesses whose livelihoods are impacted, not decimated. And help is not arriving anytime soon. So, these communities and institutions have begun to innovate.

Shedd Aquarium
Source: https://www.instagram.com/shedd_aquarium/

In Chicago, we’ve seen Michelin-starred restaurants begin to provide previously unthinkable drive-up service or delivery. Theaters are livestreaming performances. Zoos and aquariums are embracing social media. These are amazing, creative solutions, to be sure. But even the most successful of these service design pivots represent a revenue loss of 80–90% for most of these businesses and institutions. As a society, to prevent the loss of our culture, we will need to do more.

But brute force solutions are needed, right now

As I write this, Congress is fighting amongst itself over how and to whom to deliver the benefits of a two- to four-trillion dollar stimulus package. This money needs to get into local economies quickly and pervasively if we are going to protect the small businesses and cultural institutions that actually make America great.

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