I am not an economic guy.
Oh, I have a general understanding of "how things work". And I completely get that the global economy is simply that: global, incredibly complex, and incredibly reliant on all its parts working perfectly together to make the world run. Autarky is simply not possible (perhaps it never is, in a complex technological society).
I am not an economic guy. But of all my worries of the modern plague upon us, the economic worries are the ones that far outstrip my concerns about my own physical safety.
My concern is twofold. The first one is the fact that much of our economy runs on "tourism". Some countries figure it as a critical part of their income (Italy, for example, or Iceland). Over time, their economies have been remade to support this. So what happens if - or maybe when - the tourists stop coming?
(There is not really an if here. We are seeing this play out in real time).
The other concern is the fact that as a global economy, everyone relies on everyone else to produce pieces and parts to make things go: Foxconn stops producing chips and Apple has no I-Things to sell, Auto parts makers ex-US stop making parts and US plants can no longer assemble autos. And the damage is worse, of course, because those Apple employees and auto maker employees ate, shopped, entertained themselves at other businesses, which are then impacted by the lack of income of their customers (again, not an if - we are seeing this in places where The Plague is ongoing).
It is not that I fear widespread death. What I do fear is widespread economic destruction, which leads to all kinds of bad things.
Add to this the fact that panic has become the disease. It doesn't matter if COVID-19 is lethal or not. If your local jurisdiction decides to lock down a town, it's locked down; nothing in, and nothing out. The "governor" of New York is already putting up the cowboy hat on a stick with New Rochelle, to see what kind of pushback he gets. I can assume lockdowns will follow.
ReplyDeleteAnd what about panic-buying? Have you tried to buy toilet paper lately? It's basically unobtainium. The severity of COVID-19 means nothing. Panic is panic, and empty shelves are empty shelves. Imagine what will happen when these same people get around to thinking about food! This kind of thing snowballs. You're forced to panic-buy because if you don't you're "doing the paperwork" with newspaper. ...By the way; how are you fixed for food?...
Funny; I read an article at the "Scientific American" website which claims that "preppers" hoard. No; we prepare. Many haven't. here's the result... Check the Woodpile Report for the link to the article... Thanks, Remus...
Pete, the great killer will be the panic at this point. As I write this, I see that travel to and from Europe is banned for 30 days. The economy is collapsing at this point, no doubt about it.
DeleteOur local store had TP yesterday (I Checked). We are stocked up, but maybe I should go by one more time. Ya know, just because....
Hey man, respectfully.... there will probably be a recession and some contraction but it will NOT collapse. I’m sorry, and I don’t like to come on to another person's blog and “correct” someone like this, but I feel that in these situations using the correct wording is very important.
DeleteSeriously I don’t mean to be offensive here. I generally like your blog and I lurk a lot and try to keep my head down most of the time. I’m personally waiting for the bottom to be called on Wall Street so that I can make some money when things recover and I have great faith they will. Economically we will do okay after a probably brief interruption.
Matt
Hi Matt! First of all, thanks so much for lurking and even more for taking the time to comment! Writers write to be read, so I could not be more flattered!
DeleteTo be clear for the context of the discussion (and I just did have to go recheck myself), I did not use the word "Collapse" here (although to be fair, I do use it in my fiction). I used the word "economic destruction", which I would argue is a different thing.
I can give you an example from my local experience: due to cancellations of public events in our locality, we have lost an estimated $440 million in the space of two weeks. Now to be fair, this will not impact most companies that one sees on the stockmarket. What it will impact is the local businesses and small businesses, who (just as often as not) operate on a thin margin. At a minimum this will be very difficult for them - at worst, some of them will experience an economic collapse in the fact that their businesses will fail. They themselves are not spending income, paying taxes, etc.
I think tourist thing might be a reasonable example as well. I read today that Spain's tourist economy, for example, is about 12% of their economy. Yes, eventually it will probably come back - but in the mean time local businesses will be hard pressed to stay in business. See the sad chain above for what happens.
A gentleman I commuted with for a while always made the comment that all economies are local. In one sense he was correct: if my local economy is doing well, I think the economy is doing well. On the other hand, it is wrong to think of economies as being only local: they are influenced by events and tides far beyond their local shores.
Again, thank you for reading and for commenting!
- Your Obedient Servant, TB
There is no putting the corona virus genie back in the bottle. We're going to be dealing with this every year, just like the "normal" flu. It's the new normal.
ReplyDeleteI do agree with you that, this year especially, we will be dealing with an economic impact that we will (likely?) not in subsequent years.
Diane
Diane, I suspect you are quite right and it will become just another sort of virus we have to deal with. I wonder about the implications on how we live - we are changing social patterns for this; will they ever come back?
DeleteMy fear on the economic impact is that it will last for years.
All we can do is pray and hope small businesses can pick up some of the slack.
ReplyDeleteOr retool production.
Hubby has purchased oil and fuel filters for vehicles and tractors. If the worst does not happen, we will always need them.
Linda, one can hope - but retooling is something that takes time and resources. I wonder if we have either.
DeleteWhere there is a will, there is a way?
DeleteIndeed Linda. And hunger will drive folks to do many things they did not imagine they could.
Delete