Now that states are beginning to open back up and only the fearmongering media and the purely timid remain fearful of coronavirus, most are wondering, “What is next?” Certainly the pandemic and ensuing lockdowns will change the way most of us go about our business, socialize, and view life in general.
First is the fear of a second outbreak. In my view, it is a matter of when, not if. Since we have tried isolation as a solution to the epidemic, when people are placed in close proximity again there will be another outbreak. The key is how government and citizens react. We now know much more about the virus and if the media engaged in honest reporting I don’t think there would be so much fear. I don’t think a second outbreak will be as severe and I don’t think the public will stand for another lockdown. If another lockdown is attempted by any state I think any remaining trust in our media and politicians will evaporate.
I expect there to be casualties among small businesses and highly leveraged large ones. Sadly, many small businesses operate week to week and can’t sustain a long-term closure. Since small businesses are a major employment source, this is going to hamper re-employment and slow economic recovery. This is going to have a major effect on the state’s government.
Expect Gov. Steve Sisolak to try to raise taxes. I don’t think he will be able to institute a state income tax. It can’t happen quickly enough to solve this problem. In liberal logic, fees are not taxes. Expect added fees for anything the legislature can put their hands on. Think vehicle registration is expensive now? Just wait. Oh, and I seriously doubt there will be any talk of reducing the state’s employees. Why should they suffer?
Expect the education dynamic to change. Universities have inadvertently exposed just how useless much of their curricula is. Many students will now opt for online degrees rather than four to six years of pretty much idling on campus. Likewise, expect K-12 education to change. A USA Today poll shows one in five teachers may not return to school. Another poll shows six in 10 parents may opt for home schooling or online options. Again, the general ineffectiveness of public education has been exposed.
I expect to see increases in employees working at home. Google is giving many workers an allowance to set up a home office. Other large companies are realizing that it is more cost effective to have employees at home with a stipend for home offices than to maintain a large office presence. Likewise, I suspect people will change their shopping habits. The trend for online ordering and physical delivery or pick up will expand. Offices and retail won’t disappear completely, but I would not want to be heavily invested in commercial real estate right now.
The federal government is attempting to borrow its way out of this economic problem. Government “assistance” in the form of individual $1,200 stimulus checks doesn’t accomplish much. Neither does adding $600 to unemployment benefits. All that does is remove the incentive for people to go back to work, which will further delay recovery from the recession.
This is reminiscent of the Obama era Quantitative Easing ad nauseum programs. It really didn’t work that well then and I don’t see it working long term this time. There is a huge disconnect between the stock market and the economy. Propping up the stock market is a short-sighted solution. Sooner or later the two will come into line with each other. The question is which will revert to which. Economist Milton Freidman once said, “The Federal Reserve doesn’t make the same mistake twice. They just make new mistakes.” This is one time Friedman might be wrong.
Finally, this may be hopeful, but I expect some nationwide political turnover. I suspect that many are tired of the despotic way some governors have managed, or more appropriately mismanaged, the lockdowns in their states. Most Americans do not tolerate despotic actions by their leaders. This is mainly in Democrat run states. Based on Democrat actions in Congress and governorships I think the blinders have been removed from the eyes of many. It is entirely possible to see the House majority shift to Republican, or at least greatly diminish the Democrat majority. One seat in California that went Democrat in 2018 has already flipped again. We can hope, anyway.