What is essential?

Governor Hogan expanded the list of businesses which have to close. The deadline for these additional closures is  this Monday 5pm; a long list for essential businesses that are exempted. This and the general shut down of the international economy begs the question, what is essential?

MTA bus on Tuesday 3/23/20

My neighbor got a new roof on his house this Sunday right when everybody was asked to stay at home. The grocery stores are open. The Construction site next to my office is humming with backhoes and earth-movers, a steady line of trucks is hauling the spoils away. Amazon and UPS vans ply the neighborhoods, ambulances race through city streets, police cruisers patrol the streets and respond to shootings that never seems to end. On trash day the truck shows up like clock-work, and recycling is picked up as well. The mail is delivered every day, an army of food delivery gig workers has joined the army of Uber and Lyft drivers, and the print edition of the daily paper still arrives as well. Parking lots are full in front of Panera bread because people now pick up their sandwiches, lines form at drive through restaurant windows. Many planes still ply the skies.

In an effort to mitigate the spread of COVID-19, PLEASE USE TRANSIT FOR ESSENTIAL TRAVEL ONLY. Essential travel means taking trips to work, hospitals, health care providers, pharmacies, grocery stores, banks, food distribution centers, schools, to provide care for family members, and other similar destinations. By reducing unnecessary travel, transit becomes safer for those who depend on it, especially essential healthcare workers, and for those who operate it. MDOT MTA encourages all employers to consider telework options where possible (MTA Website)

In short, no, the world hasn't shut down. Instead, the US, Australia and Europe have divided society neatly into three factions:

• Those who are essential workers and who keep on working, often harder than before. Certainly doctors, nurses, nursing home care workers, police, fire and grocery clerks come to mind.
• Those who can't afford not to work. They keep working until their supplies will run out, their companies shut down or their tools break and can't be fixed or replaced. Construction workers, home repair trades and fast food come to mind. This group is especially large in the US where there is no guaranteed sick leave and people can be fired at will and on short notice. Of course some of those workers have been forced out of work by now.  
• Those who can afford to work from home or shelter in place because the first two groups keep doing what they are doing. This is mostly the large group of office workers, some doing essential work, others less so. (Banking, insurances, teachers, and some government work comes to mind)

The late response, the lack of tracking and testing and the large second group will make the medical need curve here quite steep. 

Additionally, a set up like the the three groups above can only work for a few weeks, but not very long.

Essential and non-essential is a matter of definition, and over a longer period a lot of work that looks non-essential will become essential. If a roof starts to leak above the shelter-in-place family, a roofer becomes quickly essential. When the delivery truck breaks down and needs repair auto-parts become essential. More so if the vehicle is an ambulance. 

To be clear, before one can address the long term supply problems, the current supply disaster in the front line medical sector needs to be resolved. What happens when supplies run dry and the the tension between needs and supplies becomes too big is already on full display. 

• Those masks, gowns, shields and ventilators are missing because they were primarily made in China and the industrial center of that country has been largely shut down for months. 
• Domestic production of medications and medical equipment seems to be weak. The notion that car companies can begin to make ventilators or masks sounds very heroic and nice, but that transformation is likely quite difficult in a highly specialized economy 
• In a demand and supply driven market economy, there is no structure in place to direct where products should go if need and not highest price is the new criterion. The recent competition between the federal and state governments over existing supplies is telling. A New York doctor, desperate for supplies, found a box of the urgently needed masks at Target. He was shocked.

Online photos on a Baltimore NextDoor post show what happens when those supply lines break: Volunteer community members making protective gears in a large warehouse with plexiglass and glue guns, reportedly for Johns Hopkins (An online sign-up on signupgenius.com seems to confirm this).  A furniture company is already making N95 masks and put the method online. Possibly some things can be made with 3-D printers and production codes be shared to rural or non industrialized ares. These are promising quick responses. It remains to be seen if they are sufficient. 

All this shows that the line of products that are deemed essential will quickly grow larger and larger. In a modern economy everything is connected with everything and only a few sectors can be safely shut down without others being negatively affected over time. (Casinos come to mind). 

While architects, for example, can mostly work from home-offices and still be productive, their chain of production ends in construction which cannot be done remotely at all. It is obvious, that in the end the final link in this chain will bring the entire chain down. At the latest, when construction runs out of supplies or, earlier, when job sites can't get the necessary inspections and permits because government workers issuing those do not show up in the field.

To keep the currently non essential supply lines flowing, the medical supply lines need to be seriously ramped up. Only if a society tests and protects on a broad scale can it keep supplies coming for the items that are needed to keep even sheltered people safe. Any discussion to relax the stay home orders for all who who are not essential is irresponsible as long as the medical supplies are not working. There is no way to neatly divide populations that quarantine and those who don't. 

The second huge quagmire is the ability of people to survive without a paycheck, affecting all those working in the sectors that have shut down or where gig work has dried up. An economy can only be geared up again, if companies still have their workers. That is what Congress is debating and what Maryland started to address as well. Governor Hogan announced a roughly $175 million to assist small businesses and workers affected by the COVID-19 pandemic. More information and resources about these programs is available here.
The problem of aiding the economy is greatly increased by the fact that we are a country that lives hand-to mouth with vast amounts of private and public debt and no rainy day funds to speak of. Under those circumstance it is entirely reasonable that Congress wouldn't simply rubber-stamp a $2 trillion relief package, especially if it contains many openings for corporate bail outs.

While it is true that employees need employers to be employed, the Republican argument that, therefore, employers need to be bailed out, seems logical but is faulty, nevertheless. Given the experiences of the financial crash, where corporate bail out resulted in a further tilt in the already lopsided income distribution, another push towards inequity cannot be afforded. There is much to be said for trying a different approach this time. 

Germany came through the financial crash fairly strong by protecting their workers from being laid off through "Kurzarbeit", i.e. part-time employment below the regular 40 hr workweek. They also used the boom years to pay down public debt and the private savings rate remained high in spite of the zero interest rates. 

Imagine a system where larger employers cover their ongoing cost obligations by borrowing money at the current incredibly low rates and take advantage of the unprecedented steps the Fed is taking  while employees cover their obligations by augmenting reduced income with a federal guaranteed basic income. That seems like a promising approach in this crisis.

The guaranteed basic income has been discussed for years. It is time to employ it now. Whoever doesn't like the name can call it unemployment payments, it doesn't matter. But these payments have to come, and they have to come fast. They are an investment into the economy of this summer. 

While we are still a couple of weeks away from the peak in the medical crisis, it is now high time to plan ahead and address the supply crisis and the disruptions from a crashing economy that will come next. 

The experiences of the financial crash of 2008 should not be the blueprint this time without the necessary corrections. Regardless which path economists and politicians ultimately take, it should be clear that this current crisis presents an opportunity to correct past mistakes and existing systemic flaws. 

Once this medical crisis subsides and the economy sputters back to life, society should have set the switches in such a manner that we are better equipped to stare down the huge income disparities, the climate crisis and the next wave of whatever pandemic, which may very well be another wave of COVID19.

1.5 trillion dollars can't be spent repeatedly. It is important to get it right the first time around. 

Klaus Philipsen, FAIA

updated 3/23/20