Industry certifications can stimulate demand needed to reopen economy
The United States is experiencing the financial version of post traumatic stress. Not unlike a loved one dying in a car accident after you kiss them goodbye, the economy went from nearly 7 million unfilled job positions to more than 26 million workers filing for unemployment insurance in a little more than a month. The country is already in a recession, so if we do not reopen the economy soon, then it will turn into a depression.
Fortunately, the coronavirus curve appears to be flattening now, as state governments across the country are making plans to ease their shutdown restrictions. Georgia will reopen select businesses this week, while Texas and South Carolina, among others, are in the process of allowing certain companies to reopen. Last week, the White House announced a phased timeline to reopen the economy that is dependent on local case counts, public health facilities, and coronavirus testing capabilities.
But just because businesses are open does not mean that customers will show up. A successful recovery must stimulate demand by making people confident that getting back to their daily routines is safe. While the supply side reforms like tax cuts and deregulation can help those consumers and businesses on the margin, they are just not enough to get the traumatized population widely spending again. In the challenging environment today, the Laffer curve takes a backseat to the coronavirus curve.
Only by reassuring Americans that their chances of catching this disease are slim can policymakers and businesses stimulate the demand needed to bring back the economy. Each industry, not the government, must take the lead on developing protocols and standard operating procedures that will prevent their customers from getting infected and provide them much needed peace of mind. Specific industry solutions from the bottom up to safely reopen the economy are far more effective than requirements from the top down by the likely out of touch government officials.
Not only do businesses have significant incentive to keep their customers safe, but they have unmatched knowledge with their industries. They can develop the nimble solutions that can thread the needle between keeping customers safe and keeping themselves profitable. The government may permit restaurants to reopen if they cut table numbers by 50 percent. Yet these owners, who know every inch of their floor plans, may know how to reposition their tables to protect diners from each other. Such a solution can allow restaurants to maintain more tables, protect patrons, and stay profitable, as government solutions may not accomplish this.
These efforts should start with the restaurant, retail, and hotel industries, which not only have been hit hardest by the coronavirus shutdowns, but also make up the majority of consumer spending in the economy. If these industries can keep their diverse group of customers safe, then blue collar and white collar professions, which do not face the same challenges with human interaction, should have no problems safely reopening.
The industry requirements and certifications for reopening the economy empower the private sector rather than further subject it to government control. Allowing the government to dictate the terms and conditions for business activity by industry is a step toward the centralization of federal power that should make entrepreneurs fearful. The government can help the private sector in these efforts by indemnifying businesses that follow the industry protocols from lawsuits if their customers get sick.
Americans can quickly identify those successful industry certifications by the degree to which they can prevent the transmission of the coronavirus. These certifications will offer businesses a powerful signaling tool, akin to a Good Housekeeping seal of approval or a Zagat restaurant badge, that will stimulate customer demand to get the economy back again.
Baseline health protocols can be developed by industry executives from companies of all different sizes that can smartly balance customer safety and business revenues. These standards can evolve based on additional best practices identified by entrepreneurs as more information about the transmission of the coronavirus is identified. Businesses that violate the established protocols would lose their coveted safety distinctions.
How to reopen the economy is one of the biggest challenges the country has ever faced. If we reopen too broadly and too quickly, then cases may skyrocket and the pain over the last month will be for naught. However, if we wait too long or move too slowly, then the crushing consequences will only get worse. Solving this dilemma needs to be a task that is taken up by all those brilliant and innovative Americans who run businesses.
Alfredo Ortiz is president and chief executive of the Job Creators Network.
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