The stock market is crashing, while restaurants, movie theatres, airlines and hotels are hemorrhaging cash. Small businesses of all kinds are being painfully reminded of the old saying that cash is king. But nobody could or should have planned for a cash crunch like the one we are seeing now. This is truly a once in a lifetime, or once in two lifetimes event.
Most of us would agree that businesses suffering in an economy “sheltered in place” during a pandemic are different than mortgage bankers suffering from a few too many “liars loans” and the total mispricing of risk that caused the financial panic of 2007 and 2008 and the ensuing “Great Recession.” Yep, we all seem to be in agreement that aid from the federal government is appropriate. To help those suffering from the devastation wrought by a pandemic is unlikely to lead to excess risk taking in the future, or to reward those like the bad actors of previous financial crises. There is very little moral hazard here.
We even seem to be largely in agreement that it is better to err on the side of too much rather than not enough, whether that be the public health steps we take to protect those most vulnerable to infection, or the financial aid package that will be necessary to restore the economy. As columnist Jonah Goldberg points out, the decision to tank the economy in order to protect the most vulnerable among us is a choice, one that involves a great deal of moral courage and sacrifice for the good of us all.
But some of us, or at least some of our elected leaders, are under the impression that a day or two delay in putting together an aid package is a price well worth paying to reorganize society in a manner more to their liking. I’m of the opinion that almost all of us will look back on the society we had in late December and find much to admire, but that’s not clear to many members of Congress.
It is evident that no stories of distress amongst the populace will sway those who insist on more windmills and less carbon. One thing is for sure. We will end the year with the lowest carbon emissions we’ve had in years. Little solace to those of us who lose our jobs or our businesses, but some of our leaders seem to find that a price worth paying.
We can’t grasp, or at least I can’t, what this will mean to the economy at large. The last estimate that I saw forecast a 24% drop in economic activity for the second quarter of this year. I can’t even guess what this will be like. Will there be a single airline left, or hotel chain, or even a local bar? A disaster on this level is beyond our ability to reckon with. We lack the imagination to understand a disaster like that.
I'll tell you what I can think about. I can worry about a future in which our local hospital closes. And without some action from Washington, that is very likely to happen. We don’t have much of a local economy. The hospital is the biggest employer in our county, by far. It pays the best wages. It’s a source of pride, and employment, and oh by the way, on the cusp of the greatest health threat we’ve seen around here since 1918, it takes care of sick people as well.
Fear of infection has meant that the main source of cash flow for the hospital, outpatient services, has virtually ended. You can’t blame our mostly elderly populace for staying away when they are told to stay home, to self-quarantine, to protect themselves and others by social distancing. It is likely that they are making the correct decision for their health, and for everyone else’s as well. But hospitals depend on those visits for the majority of their cash flow, and that steady source of business has disappeared overnight. At least 7 other rural hospitals in our area are in the same dire straits. We need help, and we need it now.
It costs thousands for the anesthetic to intubate a victim of Covid 19 who needs a ventilator. Hospitals are being advised to stock personal protective equipment at ten times their normal par levels. Those are costs they didn’t expect in December, inventory that they have never had to have on hand before. What’s the right number of doses to have on hand? How many masks, gowns and respirators will they need? The correct answer, whatever it might be, is costly. I’m sure people in our town expect them not only to be there to treat people who contract the virus, but to have adequate medical supplies.
I’m sure that we’ll be a better society with limits on executive bonuses, with more diverse boards, with more renewable energy and fewer stock buybacks. But if my 85-year old parents start to have trouble breathing, and need immediate and nearby medical care, I’m really not going to care what executives in some far away place make, or how Boeing spends their cash. We need help, and we need it now.
About the author: Blake Hurst is a third-generation farmer and president of the Missouri Farm Bureau board of directors.