Too Much Wisdom
In December I attended an elite holiday party where local insiders mingle. An aging legal eagle whose name might be familiar was crowing about his sense that the president was a shoo-in for reelection. Others in conversation expressed annoyance and incredulity; he shot back, “Did you not enjoy your tax cut, are your investments not at all-time highs?”
As I write this on March 31, my answer would be, “Sadly, no.”
The dust may or may not be starting to settle as you read this. We as a business community and as a nation have been through two months like no other. If Gov. Tim Walz’s projections have come to pass, our economy should be starting to emerge from its forced hibernation, and you’re looking at multiple revisions of the year’s business plan and wondering what you can count on.
We’ve all spent the last six weeks listening to experts tell us what was going to happen in our economy and our industries. The common denominator: “Things will never be the same again blah, blah, blah.”
I’d urge you to take such advice with great skepticism.
One of the industries I follow for TCB is the travel business. It has been devastated by Covid-19. From many of the industry insiders and pundits we’re hearing about permanent restructuring. Business travel is over because everyone is proficient in virtual meetings. The public will not travel until there is a vaccine. No airline will ever be able to use a middle seat again.
I’m old enough to remember 9/11. Our aviation system was used as instruments of terror in ways too horrific to imagine. The aviation system was itself shut down for weeks. Our country was home to “sleeper cells” of more terrorists. And we were told travel was over. But in rather short order we were back to traveling in larger numbers than ever. We returned to hotels and never gave anthrax a second thought.
Most of the major airlines put themselves through bankruptcy to reduce their cost base, there was a wave of consolidation, and the last decade was the most lucrative in the history of the industry. American Airlines CEO Doug Parker notoriously predicted airlines would never lose money again. So much for Doug.
Now we’re being told the pandemic will incent companies to abandon offices in favor of working from home, that people will stop buying cars, and commuting is over. Except that most workers have discovered they hate working from home.
While it may be that some of us return to our offices rather slowly, my guess is once the pandemic risks are past, we will repopulate to the environments and workplaces that suit us because memories are short, and people’s capacity to sacrifice is short as well.
Where I suspect we will see the most change is in fields that were already under stress. Another industry I follow for TCB is restaurants and hospitality. Restaurants, always a low-margin business, were laboring under relentless pressure to raise wages and faced spiraling rents. Next to the airlines, restaurants may have the longest road back and could labor under restrictions to prevent viral spread long after we are out of our homes. I don’t think you’re on thin ice to say this is an industry that may face structural change.
I’m not sure I buy the pundits’ cries that two-thirds of them will not return from Covid-19, but the casualty list will surely be outsized. Restaurants may get smaller. They may offer less service or none at all. And many that were merely break-even propositions last winter will not return. But they will be back in some form, because people like to gather and eat and drink. Our virtual happy hours and alley-side cocktails with neighbors 6 feet away are poor substitutes.
The restaurant biz can only hope there are as many people waiting for them as there were families willing to crowd into Walt Disney World a week after most states began social distancing, or as many gambling in crowded Minnesota casinos.
The postmortem on Covid-19 will be fascinating. We willingly shut down our economy on the basis of a poorly understood threat, made worse by our national failure to prepare for it. Maybe next time, we will think differently about the relative efficiencies of a just-in-time health care economy, or the value of a national security stockpile of hospital equipment, of overbuilding private-sector hospital capacity, or of a national reserve of disease testing capacity.
Or perhaps we will forget—about the trillions in national wealth that was lost in March and April; the millions of Americans thrown into constant anxiety and economic insecurity; the businesses that went from prosperous to desperate in a week. What would two months of preparation have wrought if it hadn’t relied on the whim of a single individual in Washington, D.C.?
And when holiday season rolls around, I’m sure my mind will wander back to that party high above the city, where a greedy old man asked if I liked my tax cut. If I only had the foresight to tell him that tax cut should have gone to pandemic preparedness.
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I wonder how he and his investments fared as the virus cut its way across America.
Adam Platt is TCB’s executive editor.