Editor’s note: This commentary is by Tom Evslin, the former chair and co-founder of NG Advantage, who is also an entrepreneur, author and former Douglas administration official. He is on the board of the Vermont Journalism Trust, the parent organization of VTDigger. This post first appeared on his blog, Fractals of Change.
The novel coronavirus didn’t kill J.Crew, Neiman Marcus, or J. C. Penney; it only gave them a little shove. Their business models were broken and failing before Covid-19 came out of the bat cave. Neither recovery energy nor recovery money should be aimed at resurrecting them as zombies or protecting others like them who will likely fail soon. Their demise makes room for new businesses and new business models just as winter clears the deadwood to make room for spring growth.
Four colleges closed last year in Vermont before anyone here even knew where Wuhan was; they were done in by a lethal combination of demographics, overpricing and overbuilding spurred on by government loan programs, and their failure to prepare their graduates for even the best job market in decades. The virus will probably give other colleges the final push into oblivion, but it won’t deserve the blame for their demise. Higher education (in fact all education) badly needs to be reinvented in the U.S. That reinvention will be retarded by any attempt to go back to the old normal. We may have learned some of the ways education can change from our forced response to the virus.
Supply chains over-optimized to bring the very cheapest goods and components to the U.S. were a bad idea. The virus didn’t only break them; it demonstrated how fragile they were. If we subsidize the companies that relied on these broken supply chains back into business, they are much more likely to continue their bad old ways than new companies which reinvent a balanced supply chain that combines local and global sourcing, diversity of supply, shared inventory, and just-in-time manufacturing of critical components.
The virus didn’t force us to overleverage; blame for that belongs with the Federal Reserve which could never bring itself to allow the wealthiest to suffer losses from the 2008 recession. Now the virus has brought the danger of all that overleveraging home. What is the Fed doing? Doubling down on its last mistake and practicing the wealthfare it has become so good at. Cheap credit for corporate dinosaurs and no credit for startups and small businesses prolonged the last recession. I fear it will do even worse when disguised as pandemic relief.
On a much more human level, the virus is getting credit for even more deaths than it has caused. This disease has been a ruthless killer of the vulnerable; but underlying diabetes, emphysema, hypertension, and obesity as well as simple old age were as responsible for many of these deaths as the virus which was the last straw. I’m 77 and hypertensive; if Covid-19 doesn’t get me, something else will relatively soon.
If we incorrectly give coronavirus full “credit” for all these deaths, we are making the implicit decision that almost all health spending should go to fighting this particular disease. That would be a mistake. There’s a huge amount we must do to reduce diabetes, emphysema, hypertension, and obesity (we can’t do much about old age) so that the next pathogen doesn’t have as much vulnerable tinder.
The novel coronavirus ruthlessly mowed down the most vulnerable people and institutions. Even in the short-term we cannot make it our Moby Dick and focus on it alone. Our recovery efforts should be towards a new and more anti-fragile normal; the old normal was broken in too many ways before the virus struck; now it is Humpty Dumpty and we need to move the eggshell out of the way.