Economic lessons learned at halftime of this pandemic
A look at insights gained up to this point in the COVID-19 pandemic
I try not to write about the same topic in this column and, given my professional role as a professor and applied economist, I am committed to presenting in a non-partisan manner.
With this column I am breaking both rules by discussing some lessons learned or insights gained to this point in the COVID-19 pandemic.
Unfortunately, the experience is not over as we move into the vaccine phase with the virus on a renewed rampage. It’s only halftime.
According to Google’s mobility trends, visitation to parks increased as much as 60% during the summer compared to prior periods. This desire for the outdoors was certainly noticeable in Colorado’s mountain communities last summer. The biggest decreases were travel to transit stations and workplaces–down 40%. This insight, combined with other research I’ve done in recent years, suggest parks, greenways, trails and open space are growing in importance to our perceived wellbeing.
The development of approved vaccines around the world in less than 10 months is phenomenal. Just like in war times, governments, working with the private sector and scientists, were able to impressively marshal and focus resources in order to innovate and problem-solve in the face of grave threats.
When the pandemic is over, the rate of death will be much lower than in 1918, although the total number may be comparable or greater in the U.S. This should remind us how much can be achieved in shortened time frames if we collectively have the will. Now we just need to diligently perform our individual duty to one another and get vaccinated.
As the new year began we were surpassing 80% of ICU bed capacity nationally, and 20% of hospitals were at more than 95% of capacity. I’m surprised it took so long to hit capacity during this once-in-a-century emergency. These numbers suggest there is a lot of capacity for crisis management in the system.
Based upon Colorado Gov. Jared Polis suggesting the need to possibly triple the number of ICU beds in Colorado after Thanksgiving and the scenes from around the world of temporary facilities being constructed in weeks, it’s apparent the biggest constraint to our health-care system is staffing. This triggers two thoughts.
First, as I’ve stated before, we need a medical staffing reserve similar to our military reserves. Second, if ICU space is that flexible, do we really need to spend well in excess of $1 million per new hospital bed during normal times to expand capacity?
Where are all the small business failures? This story has not been followed since the first COVID-19 wave. Anecdotally we know small businesses, especially in the restaurant and travel sectors, are hurting badly from substantial declines in tourism and workers not going to offices. But finding ongoing metrics like we see with unemployment statistics is difficult.
The number of small businesses closed (temporarily or permanently) improved before the second wave (from 44% to 29%) according to Economic Insights at Harvard University.
However, going into the pandemic, the average small business had cash less than one month’s worth of expenses, and one would assume they could not hold on this long. It will take a couple of years to know for sure, but if high-end “guestimates” by some national economists are close to accurate at a 20% permanent closure rate, 33,000 Colorado small businesses employing 207,000 people (6% of total private sector employment in the state) will be gone. Recovery could take three to five years.
The most important insight or lesson learned was about true leadership. Good leaders empathize, but do not pander to those they lead. Being revered is not leadership. They pursue important visions with clarity and motivate followers to move in the same direction. Good leaders remain open minded to minimize making poor decisions–humbly remembering that if they are the smartest person in the room then they are in the wrong room. When times are tough, they lead by example and console the anxiety we face while imploring us to be strong and move forward.
Ex-President Trump had many ardent supporters in his hand. Had he taken COVID-19 seriously, then he would have donned a mask and encouraged his loyalists to overcome their vanity for the sake of humanity. He would have demanded social distancing and not forced 50 governors to compete for critical supplies and equipment. In short, he would have established national purpose and both inspired and commanded compliance. Had he effectively led during our most trying time, I submit he would still be president despite his serious personality flaws.
Let’s see how we do under new leadership in the second half. Unfortunately, President Biden will not have the support of the least compliant.