Much of the ‘reopening’ advocacy rests on the idea that after allowing a business to reopen, that business will see an adequate return of customers. While some businesses may see adequate customer demand, it’s almost certain that others will not.
It has never been true that simply opening a business would assure its survival. If that were so, then businesses would never fail. It cannot be repeated enough, as Jonathan V. Last (JVL) ably does yet again:
But this will not be a “reopening” in any sense of the word. People who think that it will be—that it’s just a matter of flipping the switch so that the country can get back to work—think that the problem is just supply: Consumers are desperate to buy and do stuff and all we have to do is unlock the flow of goods and services and everything gets back to normal.
This is a superficial and ultimately mistaken understanding of what comes next. Because what we’re going to face is a demand problem: People are going to change many of their behaviors and live their lives the way they did pre-pandemic.
Here’s an example from over the weekend:
The first of 40 U.S. Bad Axe Throwing venues to reopen since widespread shelter-in-place orders were issued across the country was in Atlanta on Friday. Bad Axe CEO Mario Zelaya expected business to be bad, maybe 10% of the hundreds of customers he would expect to see throw axes and drink beer on a typical weekend. “That was the worst-case scenario, especially with all the marketing we did,” Zelaya said. “The reopening weekend was a disaster. We had two customers all weekend.”
You’re going to see a lot of this sort of thing.What scares me—and should scare you—is that you don’t need a collapse of consumer demand to zero in order to create a catastrophe. There are lots and lots of businesses where even a 20 percent decline will mean unsustainability.
(Emphasis added.)
JVL is describing the myopia of the reopening crowd toward the retail environment, but shallow thinking like this has reigned long before his pandemic. Much of the economic policy in places like Whitewater, Wisconsin has rested on the idea that if you supply something, you’ll generate demand. Indeed, Whitewater’s simplistic approach has been to take a small town with significant public capital expenditures from a state university and pile on additional public capital subsidies in the theory that if you build it, they will come. That approach has been a failure before the pandemic (low income levels and increasing poverty); it will prove a failure now.
Consumers – of goods, services, housing, and employment – often choose based on more than mere availability.
Businesses will not get the reopening they need – let alone the one that they want – until there is a vaccine (or a speedy, effective treatment) for COVID-19. In the meantime, heroic measures at mitigation (e.g., social distancing, wearing of masks, intensive medical care) are essential.
Those not focused on our public health problem will not be able to solve our economic problem.
See also The Reopening Debate Will Turn on Consumer Demand and The Finance 202: American consumers aren’t ready to shop again, even as states reopen.
I just watched the Vos/Fitz v. Evers duel at the WI Supreme Court. It was painful, like watching an hour-and-a-half Chris Matthews interview. No response by the DHS lawyer was left un-interrupted. Bradley let him get one sentence of his opening statement out before jumping him on an irrelevant point. Kelly, who clearly still smarting and having no fks left to give, was relentless about channeling his inner asshole. He’ll not be missed..
It got testy at times. Up until the closing statements, it was an exercise in argle-bargle debating of the fine points of administrative law, completely ignoring the unquestioned pandemic raging outside. The DHS lawyer made the point that there was a wildfire going and a lot of folks could die waiting for the legislature to act.
I think it’s in the bag for Fitz/Vos, although Ziegler and Roggensack were at least sane in their questioning. As you point out above, whatever they decide isn’t going to do anything for the economy until a medical fix is concocted and promulgated. Painful though it is to the economy, no amount of urging of people to mingle freely in a pandemic is going to work.
Finished listening this afternoon (https://wiseye.org/player/?clientID=2789595964&eventID=2020051005). Agree all around: the narrow focus is administrative, the majority’s questions were obvious in their leanings, and it was like a Chris Matthews interview. Across the nation, Wisconsin’s high court has drawn a poor reputation for many years. It’s not merely a matter of ideology; there are deep-red courts elsewhere whose justices would have exceeded today’s questions in insight and delivery. Justice-elect Karofsky will be on this court in August; mid-summer cannot come soon enough.