Life after the epidemic: Back to the future

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Americans take great pride in being rugged individualists, and it takes something big to get them to give up their daily ritual of morning coffee or to not sing “Take Me Out to the Ballgame” during the seventh inning stretch at the ballpark. But now we are neither going to work nor enjoying a ballgame.

The COVID-19 pandemic ranks with the 9/11 attacks, the Arab oil embargo, the launch of Sputnik, and Pearl Harbor as events that prompted change of American norms and customs. How much of the change that we are currently experiencing will have a lasting effect? For those who contract COVID-19, it could be life-threatening; for everyone else, it will be life-altering.

When we emerge from stay at home orders, we will find a different economic landscape.

Predictions vary, but the economy most certainly will be in a recession. Goldman Sachs predicts the second-quarter decline will be 24 percent, which would dwarf the 4 percent quarterly declines of 2009 and compares to numbers not seen since the Great Depression.

There will be widespread unemployment — probably in the double digits — the record low unemployment rates of 2019 will be a distant memory. Initial unemployment claims during the four weeks of March were 10.4 million — literally off the chart. By contrast, there were 856,000 initial claims filed in the previous four weeks, which was near a fifty-year low.

Rent payments will be late; loans and mortgages will be in default; investment portfolios will be damaged; and many businesses (particularly small businesses) will fail. The $2.2 trillion stimulus package will help in the short run, but the long-run impact of the pandemic will be lasting.

When we emerge from stay at home orders, our psyche and mindset will also be different.

The 9/11 attack is, of course, the most recent and stark example of an event causing change. One can no longer arrive curbside at the airport at 7:30 a.m. for an 8:00 o’clock flight. Security checks are much more thorough, and enhanced security extends well beyond airports to sporting venues, amusement parks, rock concerts — virtually anywhere there is a large crowd.

The change is not only the increased security but, more subtlety, the acquiescence by Americans that surveillance and additional security — sometimes viewed as overly intrusive — are to be expected. The grumbling in airport security lines in 2001 about the waiting and invasion of privacy has dissipated, if not totally vanished. It is now accepted that bags are to be examined and delays expected.

A Pew survey in late 2018 found that, of professional groups, Americans trusted elected officials the least, while scientists were the most trusted. Many fear politicians’ actions are not based on public welfare but on optics and ideology.

In times of crisis, the public looks to its leaders.

Initially, we received mixed messages from federal and local officials regarding the severity of the situation. Nevertheless, because of the pandemic, Americans’ healthy skepticism and circumspect view of government may change.

Many viewed the stay at home order as a proxy for an unanticipated vacation. People ignored social distancing and went to the beach, parks, and nightclubs — until those venues were either closed or access limited. Consequently, the infection curve was not as flat as health officials had hoped it would be.

When the figures are compiled, it will become clear that we should have taken the admonitions of government officials more seriously and spent more time in isolation. The effectiveness of staying at home, which may have mitigated the damage, will make Americans reassess their trust in government and their view that government officials too often politicize and over- or under-react in a crisis.

Post-pandemic, telecommuting will be more accepted by employers and employees, and remote learning will be more accepted by teachers, parents, and students. With powerful laptops, fast internet connections, and cloud computing, the increased productivity of working from home makes it less of an accommodation by management. As employees become used to the rhythm and routine of telecommuting, they are likely to become more comfortable and more productive. However, this may exacerbate the class distinction between those who can work from home and those who must physically be on the job — further highlighting the difference in society between knowledge workers and service workers.

Might the pandemic be the propellant to get us to change behaviors that we should have been re-evaluating but had not? Certainly, rugged individualism has no meaning if we don’t take personal responsibility for our actions. This is old, not new, wisdom.

People should be more conservative in financial matters and reconsider the composition of their investment portfolios. Some 27 percent of families have zero savings, and the median savings for American families is a bit more than $12,000. Average monthly expenditures by household in 2018 were $5,100 — the buffer is small. Americans must increase their abysmally low saving rate.

Financial experts’ advice varies, but the range of how much retirees should hold in cash accounts is between one- and three-years’ worth of expected annual expenditures. The eleven-year bull run of stock market growth enticed many retirees to overinvest in stocks, making them vulnerable to a crash and to the market volatility seen in the last month. For many retirees, a reevaluation of their investment portfolios is in order.

We should remember the warnings of our parents: Wash your hands; cover your mouth when you sneeze or cough; stay in bed when you’re sick; keep your hands off the other kids. Reverting back to our childhoods will provide the improved personal hygiene that is one of the first lines of defense against spreading a novel coronavirus. And epidemiologists say COVID-19 is not the last.

Finally, we must be cautious. Liberty is the cornerstone of the American ethos, but it is also fragile. There is a fine line between security and individual freedom. Specific moments of pain and sacrifice in the nation’s history, including war, economic meltdowns, terrorist attacks, and pandemics, have led us — for the common good — to accede to laws, rules, and regulations that compromise some of the individual liberties we hold so dear. We seem to appreciate liberty only when confronted with its loss.

Maybe the path to a better future is simply to remember the basic lessons of the past.

Bowman Heiden is a visiting fellow at the Hoover Institution at Stanford University. He also serves as co-director of the Center for Intellectual Property (CIP), which is a joint center for knowledge-based business development between University of Gothenburg (Sweden), Chalmers University of Technology (Sweden), and the Norwegian University for Science and Technology.

Richard Sousa is a research fellow at the Hoover Institution at Stanford University where he specializes in K–12 education, labor economics, discrimination issues and intellectual property.

Tags Consumer debt Coronavirus coronavirus pandemic coronavirus stimulus package COVID-19 Retirement savings Telecommuting trust in government Unemployment Working time

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