New Mexico Poppies, © Jarrett Scott Gladstone, 2020
While I work on the East Coast, I actually live in New Mexico. I was fortunately at home for spring break when COVID-19, the 2020 coronavirus pandemic was taken seriously by some federal government leadership. Sadly, I have to say "some", since even as I write this post, top leadership accepts the pandemic within the United States only grudgingly, and the United States president insists on making the pandemic a personal attack on his masculinity, and worse, a racial problem.
Time with my family among the poppies the desert southwest gives me time to pause and reflect on the current mayhem in a place called Earth.
Things are going crazy out there. While I lounge in my recliner with this computer in my lap, a good locally roasted Timor coffee by my side, I am scrolling through the news about the pandemic.
It's overwhelming.
Even the suggestions for coping and surviving the pandemic are quite overwhelming.
Things happened very fast. It caught Colorado River rafters by surprise. They entered the river not knowing they were leaving old ways behind. Re-entering into a new world that didn't exist upstream only days previous.
While we are to practice social distancing, many are turning to social connection via social networking. I am joining the fray with this commentary, in which I share my views and opinions about what will come out of this mess. I can write a lot. As a proud progressive, I have political opinions, but my opinions about incompetent leadership are best left for a different social media platform. Although, it will be hard to not mention it here since poor leadership brought us to where we are now.
As a business professor, I have thoughts about the economic fallout of the pandemic. As a business professor specializing in tribal and indigenous people enterprise, I have thoughts in that area. As a business professor who is working to connect Native American philosophy with business education, I have opinions about ethics.
In this post I will share my observations and ideas about one or two economic consequences of this pandemic: virtual workplaces, and UBI. These are simply my thoughts. I am not a trained economist. I am horrible with math, let alone the high-level stuff used for econometrics. So I cannot prognosticate through formulas and equations, I can simply share what I've read about history, and profess from that platform. All are welcome to point out the errs in my way of thinking.
Things are Happening Too Fast
I add the caveat that even as I write this, things are changing. Just as the rafters who entered the Colorado River from one world left the river into a completely strange new world, the river of time constantly flows even as I compose this post. I have no idea what is going to happen only minutes from now. For now, I am going to write based on the moment as I enter into this composition.
Economic Consequences of the Peace
I wear my Keynesian philosophy on my sleeve. I like Keynes because he validates my opinion that capitalism, the private ownership of businesses, can be and do good. Companies like Patagonia are examples of good capitalism. Unfortunately, there are many, many other companies who give capitalism a very bad name. In this era, I agree that on a grand scale, capitalism has been bad for the world.
Keynes believed that government and economies are tightly coupled, and that governments can do better jobs at stabilizing economies than private sectors ever could. At least, that's how I'm summarizing Keynes in this short article.
101 years ago, Keynes wrote The Economics Consequences of the Peace. I admit I have not read it cover-to-cover, but I have poked around it enough to grasp his thesis saying that the Allied Powers should not economically punish Germany for the Great War (WW I), but rather work together to rebuild Europe, including Germany, lest Germany be left in economic ruin that could create even more undesirable consequences later. That is, hate and anger toward Germany motivates the Allies to punish Germany economically, but the consequences of that hate and anger will make things worse for all of Europe. Rather, pursue peace. Europe will see better consequences.
Unfortunately nobody listened to Keynes and Germany was driven to economic ruin. A fascist named Hitler promised to make Germany great again, and his followers took over the country and started WW II in addition to administrating the Holocaust.
Economic Consequences of COVID-19
It's impossible to even find a good place to start with the economic consequences of the pandemic in the United States, let alone the world. The river of this pandemic is a torrential flow.
Economy
It's best to simply summarize the stock market. While some say that using the Dow Jones Index is not an effective economic barometer, is is an accepted indicator about how the nation is doing money-wise. Over the past week the Dow Jones has dropped to the same level that it was when the last presidential term ended.
To flatten the infection rate curve, many businesses have embraced social distancing and closed. Restaurants have closed dining rooms and do only take-out or delivery business. Schools, including my and my children's have closed their campuses and moved classes online. Some state governments are making social distancing mandatory by ordering restaurants and bars closed, and local governments are debating or already enacted mandatory shelter-in-place rules. Some countries have established quarantines. Since people cannot get to work, they cannot produce goods or deliver services. They also cannot consume goods and services.
The economy is basically frozen in place.
The Virtual Workplace
Fortunately we live in the internet era. I don't have to return to Connecticut to teach my classes. I fortunately studied for my PhD at a school with a very strong online teaching program. That is, my school taught me how to teach online, so the change isn't at all traumatic.
My students will have a much different post-spring break experience with me. More for you, later, if you happen to be one of my current students reading this.
COVID-19 is revealing how advanced we are in online communications. How advanced we are in conducting meetings together and coordinating team activities. I foresee a great deal of virtual team literature coming out of this episode. This, perhaps, will be the greatest advance from COVID-19, a deep reflective assessment on workplace dynamics. A measure of how well we can work away from the office. What will be the economic consequences of this forced embrace of virtual workplaces?
Let's find out in a month. Let's see who returns to work, and in what numbers future workplaces encourage more telecommuting.
Economic Possibilities For Our Grandchildren.
Among Keynes's lesser known works is a treatise titled Economic Possibilities For Our Grandchildren. In it he predicted that by now, this current early 21st Century, we'd be working 15 hours per week. While both criticism and clear evidence that his forecast is wrong, none of the criticism I hear has considered virtual workplaces. Now that we have this natural experiment for virtual workplaces, will we be able to back off on how much time many will have to report to the office?
That answer is a ways downstream.
The General Theory of Employment, Interest and Money
Because the pandemic has forced many businesses to close, many waged workers are unable to work. Wage workers are compensated for their hourly time versus salaried workers who are paid over broader pay periods. Wage workers will be hurt most since they cannot get to work.
This is a good time to dust off Keynes's 1936 General Theory of Employment, Interest and Money. In this book, Keynes argues for government spending to build economies. I completely agree with this treatise. Large governments, such as the United States, have a lot of money, although "fiscal conservatives" will deny otherwise (except when it comes to guns in contrast to butter).
An idea being right now being floated by the United States government is giving $1,000 to every adult American. Given our current federal leadership, this plan is only murky. Perhaps more will be known by the time I finish composing this article.
When a government gives away cash to the general populace, that money is called universal basis income (UBI). This is a radical "socialist" idea that is now being seriously considered by conservative politicians. I use "socialist" in quotes simply because conservatives use the word as a slur. I wonder what they will call the distribution when they enact it.
Will UBI work? In theory, it should. UBI is practiced at many levels: farm and airport subsidies are two examples. A subsidy is nothing more than a federal cash gift, no questions asked. I actually support a UBI at this time. Unlike the 2001 G.W. Bush tax rebate that was used to garner political support, a UBI at this time is needed for people who are unable to work. Additionally, simple Keynesian economics predicts that a UBI will be reinjected into the economy much better than would tax breaks grounded on a trickle-down fallacy.
What Next
H.G. Wells wrote that it was the smallest thing that brought down the mighty.
A little virus is forcing the United States to reassess its might.
We are experiencing interesting times. Unfortunately the United States is led by Nero, a Nero chasing windmills he perceives are mussing his most perfect hair. We have an unstable government. One made deliberately unstable by people elected to make it unstable. A government elected by people who don't understand government's very important role for stability and emergency response. Sure, some parts are over-reaching, but anarchy does nobody any good, as we are now seeing in this natural experiment. Hopefully this natural experiment is a good civics lesson for small government types.
It will be interesting to see how we will weather this storm. I hope when things clear, people will have a better understanding about how important it is to have a strong government capable of rallying together and supporting the resources we need to live together in good health.
