Words matter and things generally have only one name.
We need to start thinking about how to talk about what’s going on. The news media is going to hammer us endlessly with “The Pandemic.” I’m going to suggest we start talking about what’s happening as “The Shutdown.”
Pandemics are a fact of human life.
Their impact ranges from inconvenient to disruptive and, for those directly effected and their families, tragic.
The news media, which has operated as a Hysteria Generating Machine 24/7/365 , has put out great deal of heat, but very little light. The government has jumped on board the bandwagon.
If either of these institutions really cared about public health, there would be hourly public service announcements (PSAs) on TV offering productive and non-hysterical advice like reminders and tutorials on how to wash hands properly with soap and water and specific details on how to provide protection for family and community members with known risks for a negative outcomes.
But we see almost none of that.
Instead it’s “all fear, all the time.”
Here’s the advice the British pubic health service gave during a particularly nasty flu season in 1949.
“There’s a lot of influenza about at present. If you catch it, don’t spread it to others”
Simple, clear, practical, useful, and actionable. (No doubt the recent memory of being bombed nightly and shot at helped them put things into perspective.)
We need calm advice like this, but we’re got getting much of it.
Instead, we’re getting an endless drumbeat of terror: Video of the worst cases run on an endless loop. Projections of total catastrophe based on data that honest medical scientists admit is poor at best. And, sometimes, outrageous and outright misrepresentation of facts.
The theme is: “The the government and its public health bureaucracy (which pointedly excludes the input of independent experts from places like Stanford and Yale) knows best and we have to wait for a cure or a vaccine before we can make another move”.
Which leads us to “The Shutdown.”
Names are definitions and we generally can only keep one definition in our mind for a thing at a time.
The hysteria brigade wants to talk about “The Pandemic” and indeed it’s doing so.
What they don’t want to talk about – and don’t want you to talk about – is “The Shutdown” and its consequences.
I’m surprised at how many people, even some otherwise very sophisticated financial people, are assuming “The Shutdown” is something we’ll just have to endure for as long as “The Pandemic” dictates and that when it’s finally over – whenever that may be – we’ll all just lick our financial wounds and get back to business.
This is myopic in the extreme.
Let’s look at just one thread of the impact of “The Shutdown.”
The ripple effect of closing the restaurant industry.
10% of all American workers work in the restaurant industry and we’ve just destroyed their employers, some of them forever.
Beyond that huge number, there’s a whole industry that is based on distributing food to restaurants. They’re shut down too.
They’re sitting on tons of inventory, some of it perishable, that they have no established channel to sell through. At some point, after they get rid of what they’re sitting on, they’re going to have to make the decision about re-ordering from their suppliers.
What would you do?
You just got left holding the bag with a mountain of inventory that you now have to write off and you still don’t know when your customers, the restaurants, will be able to re-open. But that’s not all, when they eventually do re-open – and you don’t know when – what their demand will be?
With massive unemployment, which won’t be resolved in a minute, and the general panic created around the pandemic, what do you project the demand for restaurant meals will be?
Answer: No one knows.
Some food distributors are going to act defensively and order less.
Food distributors are not the end of the story.
What about the companies that package and manufacture (can, box, bottle, and bag) food for sale to restaurants?
They have life and death economic decisions to make too.
If their customers, the food distributors, are not ordering at normal levels, does it make sense for them to keep full staffs on the payroll and factories at full operation? Can they even afford to if they want to?
The problem they face is obvious. Can they afford to assume the considerable costs necessary to produce product for customers who may not be in a position to order anything next week, next month, next season?
The ripple effect goes back further.
For many farmers, especially, but not limited to, small independent farmers, the restaurant industry is their prized cash cow. Restaurants provide big orders, steady demand, and streamline their distribution costs.
What do they do if food manufactures and restaurants aren’t buying?
We’ve already seen news stories of farmers pouring tankers of milk into sewers and plowing under thousands of acres of perfectly good crops.
They’re not doing this to be mean. They’re doing it because it costs real money to harvest and transport food – and they’ve lost a big piece of the market they planned to sell it too.
Now, right now this month, farmers have to make the decision: Do they “roll the dice” and spend the money necessary to put in crops this spring for a demand that may not exist come this summer and fall?
Farmers in turn are served by truckers who in turn provide work for tens of thousands driving and maintaining fleets.
And fertilizer companies and farm equipment sellers. Their sales are down. With sales and service down, do they need all the employees they’re carrying?
Then there is this fact of life:
All these people – the restaurant owners, restaurant employees, food suppliers and their employees, food manufacturers and their employees, farmers and their employees, agricultural service company and their employees – have debt. Debt that they expected to be able to service and pay off with normal earnings.
Clearly that’s out the window – and not just for the 20 million people who have lost their jobs, but also for the businesses that are still marginally “open.”
What happens when the banks who have lent to those tens of millions of people and entities stop receiving payments? Those payments are necessary for new credit to be issued. Once loans start defaulting the overall availability of credit diminishes and becomes more expensive.
And that’s just the ripples from the restaurant industry.
We haven’t talked about what it means when retail stores are shut down. That’s another 10% of the workforce and like the impact of restaurant closures, it kicks off its own chain reaction: wholesales, truckers, manufacturers, designers, cotton farmers.
And this is the scenario for the “lucky” countries.
As traumatic as forced unemployment is in the developed world, it is an immediate life threatening catastrophe in the developing world.
In the words of a Guatemalan who explained it to me years ago:
“In the US, I work for a day and I can afford groceries for a whole week. In Guatemala, the same work only earns me food for that day – and not much else.”
One day of no work means immediate hunger in the developing world. That day started several weeks ago.
I’m not presenting this as an exercise in “the sky is falling.”
It’s a cold, hard look at the reality of “The Shutdown.” A reality we are not getting from the news and even some otherwise astute financial people.
We have faced serious pandemics before, a simple fact the news media is obscuring, but no one has ever suggested let alone ordered a prolonged indefinite shutdown of the global economy as a response.
Did you know that in 1957-58, there was a thing called “The Asian Flu?” It killed a million or more globally. It was a pandemic too and killed tens of thousands of Americans.
Did you know that in 1968-70, there was a thing called “The Hong Kong Flu?” It killed a million or more globally as well. Another pandemic that killed tens of thousands of Americans.
Nothing was shut down for that including the Vietnam War.
During the Hong Kong Flu Pandemic, the US had over 500,000 soldiers in Asia, some living under the difficult and less- than-sanitary conditions of combat deployment.
The US government at that time saw no need to panic and applied common sense precautions: hand washing, advising the sick to stay home and rest, treating the serious cases etc.
Yes, there is a pandemic.
Yes, the public needs to apply caution and common sense – something in my experience they are doing very well, despite the news media’s endless hunt for exceptions.
Yes, this pandemic is going to kill some vulnerable people, in this case overwhelmingly people with pre-existing health conditions.
Yes, the medical system will be strained in some places during particular periods.
These things happen periodically. They are inconvenient, disruptive and for the people and their families directly effected, tragic.
I’m not going to say these things are “normal”, but they clearly fall within the spectrum of known human experience.
What is not normal – and I am hard pressed to think of or find another single example in all of human history – is shutting forcibly down at least 50% (but probably much more) of the life-sustaining business activities of humanity for a prolonged and indefinite period of time and thinking “the government” can somehow magically solve it by printing money to plug the gaps.
As I said on this month’s extended System Club call, we’re trying to fill Lake Superior with a fire hose. The amounts being spent may look like a lot – and they are – but they are inadequate for the task.
The idea that government financial manipulation can somehow underwrite the economic health of a shuttered US economy for weeks, let alone months, is a dangerous delusion.
The people smoking this delusion-provoking “crack” are, not so coincidentally, people who draw steady paychecks from the government or the media outlet they read the news for and have no idea how the real world actually works.
For now, at least, these people are in control of the country.
We start taking the country back by taking back our language.
The gravest danger facing us now is not “The Pandemic” real as it may be. It’s “The Shutdown.” The unplanned for, poorly conceived, irrational and indefinite “Shutdown.”
Let’s start calling the period we’re living through right now what it really is.
Call it “The Shutdown” not “The Pandemic”, focus on the big picture, and let’s start getting ourselves and our communities ready to go back to the work of serving people with the things they need.
We’re gong to rebuild this country, not the government. Yes, the news media and people angling for political advantage will tell us we’re wrong every step of the way.
Screw ’em and do the right thing.
P.S. For over 25 years I’ve been sharing the simple but powerful things that matter in business with my clients.
If you’d like direction for your business that will work today, tomorrow and twenty years from now, visit us at the System Club.