A Solution to the Pandemic Economic Problem

(Minor updates 3/22/2020 11:00 AM CET)

I’ve been thinking about the economic problems we are going to face as a country, and it scares me. What we are doing now will save people’s lives, but is going to have a huge impact on how we live our lives for the next few years.

All the big solutions which seem to get press during this pandemic are government based. But I think, especially in the USA, that the real power has to come from the people. Not the city government, not the state government, not the federal government. From me and from you.

The America I know is generous. We are willing to help our neighbors. We share what we have with the world. Now we need to share what we have with others.

The Federal Government is talking about giving $1200 to everyone in the country in need.  Do the math, this is 300 Million people times $1200, resulting in a $360 Billion outlay.  But this won’t do it. Maybe somewhere in the country, $1200 can support an individual for a month in food and housing.  But not in California and I’m willing to bet not for many people in most of the USA.

And the government providing zero interest SBA loans to small companies is a non-starter. From personal experience, non-working debt puts a huge drag on your business for years. Right now, small companies just need help with operating expenses – rent and payroll.

We had a solid economy before this virus. We had near full employment. The stock market was at an all time high. Then the virus hit and many industries slammed on the breaks.

There was nothing wrong with the engine of the country.

We have companies that are fully viable. We have people that want to and for the most part enjoy productively working. We have an optimism that we can make things better.

But we cannot do this with half of the people in the country unable to earn money. We cannot do this with the entrepeneurial engine of the country getting hit with unrecoverable costs.

Thinking of smaller companies in industries like restaurants, travel, fitness, retail, events, Uber/Lyft/taxis, etc. Without income:

  • Most cannot pay 3 months wages for their employees.
  • Some cannot even handle the burden of paying rent.

If companies cannot pay their employees, they will have to lay them off. Most of these employees will have a hard time managing 3 months without income. The government tries to solve this by providing unemployment, but nothing kills incentive in my opinion more than paying people to do nothing. Better to put these companies and people in a position to restart immediately.

Before the pandemic locked down the country, there was nothing structurally wrong with our country. Our industries are viable, competitive, and productive.

The problem is, after 3 months, no one is going to have money to cycle back into the country. Or they won’t think that they do, so they will hold onto it, which will put a hard stop on all of these industries recovering at any speed whatsoever.

Having their financial lives sucked dry, people

  • Won’t be eating out.
  • Won’t be travelling.
  • Won’t buy that cute toy at the store on the corner.
  • Won’t buy flowers to make their yard look nicer.

You get the picture.

The government alone cannot do this.  It is just too big.

The Solution – a Massive Challenge to Everyone (Updated thoughts here)

I’m not one to start a movement, or really put myself out on a public stage.  I enjoy being an entrepeneur, solving interesting technical problems.  But I’m feeling that this might be the only way to save us from a HUGE recession – and I believe I have to share this thought.

What I think we have to do is freeze things where they were.

Imagine this:

  1. We stop mortgage payments on properties across the board for three months – no additional interest.
  2. Rents on these properties are stopped as well.
  3. Stop payments and interest on loans.
  4. Entrepeneurs who are in need of capital to just maintain, share their needs.
  5. People who are in a place to share (money, housing, resources) give freely.

What do people really need now to survive a 3 month lockdown?

Food. Housing. Support.

Let’s help our neighbors, our friends, our local businesses, those who owe us money. I’m not sure how the technicals of 1 or 3 might work. But we, as the people of our country, could support those around us. WE THE PEOPLE not the goverment. The government will do its part too, but it will be rife with inefficiency. But assisting 20 airlines will be far more efficient than helping a million small businesses.

We all have people we can materially help. Help pay their rent. Help buy food. Help make sure that their businesses, their lives, and the lives of those they help can restart as smoothly as possible.

There are a lot of people who will continue to pull down their salaries during this time. You know who you are. Maybe you work for the government. Maybe for a large corporation with enough financial resources. Maybe you produce toilet paper and have an unusually high demand for your product. If you are drawing a steady salary, we need you to help as much as you can.

Reach out to your local small businesses and let them know you want to help. It is difficult for entrepeneurs who are self reliant to ask for assistance.

If you are a small business and think you can cover your employees during this time, more power to you. Also, if you as an employee can afford it, and your employer is willing, think about reducing your pay, so untaxed money can be given to help others. Money given straight from your employer will be worth 50% more than the same money given by you.

If we all share in the hardship now, perhaps in 3 months or whenever this is fixed, we will have a real country to come back to. With our favorite restaurants still around and the salon that cuts our hair just right. Oh yeah, and that cute little ice cream shop, Dixie Pops, that was around the block back in San Diego when we left.

Or we can each play the game where everyone looks out for themselves and hope what the government does will be enough to save us.

I dislike the phrase, “It takes a village,” because it takes away personal responsibility. In this case, I think it takes brave individuals. People who are willing to put their trust in others, without knowing if others will respond. Families who are willing to support other families. Businesses who are willing to support other businesses.

If we can do this, we’ll come out of this pandemic a better people, a better country, and proud of our efforts.

I’ll write tomorrow further about how this might be structurally supported. There are good technical ways for people to let others know where help is needed and for those who are willing to help to reach out and connect and say, “I would like to help you, in my small way.” But until then each of you likely knows people you can personally help.

Right now, I just wanted to see if I could get a conversation started and perhaps get better minds than mine working to see how we as a people of a great country might do this.

Please share this. If we all work together, I know we can move this mountain.

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1 Response to A Solution to the Pandemic Economic Problem

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