Category Archives: jobs

Economic Recovery Post-Wuhan Virus

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Paul Hannon and Saabira Chaudhuri wonder, in their Wall Street Journal piece, whether we’ll have the V-shaped recovery that President Donald Trump confidently predicts, or whether we’ll have a swoosh-shaped recovery a la the Panic of 2008 recovery. They don’t, though, seem to recognize key differences between the two situations, beginning with the underlying causes of the two dislocations.

The Panic was driven by economics: a credit crunch. The present situation is created by a Government-mandated closure of our economy in response to the rapid spread of the Wuhan Virus and its perceived danger; economics has nothing to do with it.

Recoveries from these also will be driven by entirely differing responses, as well.

The Panic of 2008 had a swoosh-shaped recovery because Obama’s regulatory environment inhibited recovery with its excessive and excessively micromanaging regulations, which produced the slowest post-recession recovery since WWII.

Whether the recovery from the Wuhan Virus situation and its associated government-mandated turnoff of our economy will be V-shaped or swoosh-shaped is yet to be seen, and its shape will be heavily dependent on how timid employees and employers are about reopening and consumers are about going out and…consuming.

The present recovery also will be heavily influenced by Progressive-Democrat governors standing in the way of reopening and recovery with their excessive and excessively long lockdown diktats.

Economic Reopening, Resistance, and Perspective

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As States reopen for business, and as increasing numbers of businesses reopen and customers patronize them against State government encouragements or outright diktats to the contrary, Progressive-Democratic Party Presidential candidate Joe Biden is nattering on that President Donald Trump’s policies are undermining the core pillars of our economic strength. In the meantime, the NLMSM is focusing ghoulishly on body counts and not mentioning any other relevant information.

The following table looks at some data for three States mentioned in one Wall Street Journal article, another State mentioned in a different WSJ article, and two States mentioned by Fox News.

State Wuhan Virus Deaths Wuhan Virus Recoveries Ratio of Wuhan Virus Recoveries to Deaths
Illinois 3,406 Not Reported
California 2,719 Not Reported
New York 26,682 58,006 2.17
Georgia 1,441 Not Reported
Michigan 4,555 22,686 4.98
Texas 1,095 21,022 19.20

Wuhan Virus data are from Johns Hopkins University’s CSSE Dashboard and were current as of 11 May.

Carefully ignored by Biden in his meandering and by the NLMSM in their panic-mongering are those recovery rates and ratios. Check the CSSE data—all of the States reporting recovery rates are reporting recovery-to-death ratios of at least 2:1, and generally much larger.

Progressive-Democrats in charge of their States, despite these favorable trends though, want to keep their States locked down and having no economic activity—all in the claimed name of safety. Of course the longer States stay shut down, the deeper will be the economic recession we’re facing at the end of summer and into the November elections.

Note, though, that wanting a recession explicitly as a means of defeating President Donald Trump in this election has been a key part of the Progressive-Democrats’ playbook for two years.

Be very heads up this November.

New Jersey Wants Federal Dollars

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But it’s not a bailout, Governor Phil Murphy (D) insists.

“I wouldn’t call it a bailout. I would just say this is a war, we’re at the front lines,” Murphy said, stressing that his state does not want federal help at this time for “legacy” budget issues that predate the pandemic.
“We know what we got to do with the old legacy stuff, we need help with the here and now: educators, police, fire, EMS, the front-line stuff.”

Of course…. To the extent that any Federal dollars should go to States, New Jersey for instance, those dollars should go directly to the educators, police, fire, EMS, the front-line stuff; they should not pass through the State government on the way.

And: to mitigate the fungibility of money, those Federal dollars should be matched by State dollars. A State government should not be able simply to reallocate the funds it would already have been sending to “the front-line stuff” to other purposes on the premise that Uncle Sugar is picking up the front-line tab.

…if we do not get significant direct and flexible financial support from the federal government, we will be forced to make many difficult decisions about programs we all rely upon and which we will lean on in the months ahead.

What decisions to make vis-à-vis excessive public pension commitments and payouts, for instance. Regarding excessive and overwrought regulations that cost tremendous amounts to enforce and tremendous amounts for businesses and individuals to satisfy, and so that divert monies from their more efficient allocations and thereby restrain economic activity and reduce revenues to the State’s government.

Difficult decisions, indeed.

Sunset Clauses

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Here’s another example of their utility. To help out the furloughed and fired during the current Wuhan Virus situation, the Federal government enhanced existing unemployment insurance payouts with an extra $600 per week. The plus-up doesn’t expire until the end of July, more than three months hence.

Many businesses, especially the small and mom-and-pops that are at the heart of our employment environment, are starting to re-open as they figure out ways to operate at least partially or as State-level restrictions start to ease.

However.

Employees say they’ll take the unemployment check for as long as they can make more money by not working. One internal Trump Administration analysis estimates that this work disincentive applies to millions of Americans.

That’s not laziness, as the Wall Street Journal‘s editorial correctly emphasizes. That’s workers making economically sound, rational decisions. Especially at the lower end of the economic scale, taking a functional pay cut to go back to work is…suboptimal.

Such a plussing up of unemployment payouts could have been made marginally acceptable—this particular jobless spike came about due to Government fiat rather than business decisions or economic cycles—had the addenda been accompanied with a hard milestone rather than an arbitrary date. A milestone like, oh say, an employer being ready to hire back and offering to do so, or a more blanket State-level easing of restrictions that would allow ranges of businesses to start re-expanding their operations or re-opening altogether—and so hiring or re-hiring.

It’s possible this oversight can be fixed in the next round of Wuhan Virus situation responses, but I’m not holding my breath.

GIGO

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Garbage in, garbage out. That doesn’t only apply to modeling or to the utility of software functions.

Deutsche Welle had an article earlier discussing the potential of the present Wuhan Virus situation and the emphasis on working from home to drive increasing digitization of the work being done.

[M]any firms and a considerable proportion of workflows in administration and the education system are still paper-based, using postal letters and fax machines. However, the coronavirus crisis has been a wake-up call for many of them.
Smaller firms are now hoping to jump on the bandwagon, [Bitkom Head of Digital Business Processes Nils] Britze notes. “By using cloud technology, every company can quickly find a digital solution to processing documents or setting up video conferences.” Direct investment in IT infrastructure complete with servers would have been too costly for many, but cloud-based services have proven a real game changer.

However, and this is key, Britze also pointed out that

just using digital tools to improve workflows isn’t enough. Work processes have to be enhanced across the board to use the full potential of digitization. “If you just digitize an inefficient analog process, you end up with an inefficient digital process[.]”

Even work processes optimized for digitization and a work-from-home environment, though, are insufficient. That home environment must be optimized for the work, too: there is a large reduction in direct oversight, and there are myriad distractions in the home environment that need to be handled, also. Folks aren’t fundamentally lazy, but routinely working from home presents a business work culture change that wants handling that’s as carefully done as the digitization itself.

Digitization, after all, is like most things in the human endeavor: it’s is a tool, not an end, and the utility of any tool is in the efficiency of the use of it, not in its mere existence.