Supporting business through COVID-19
Andrew Blain, Founder
There’s a lot of news about how to respond socially to COVID-19, but not a lot of business advice.
The key thing to note in a situation like this is that normal action logic DOES NOT APPLY. We are not in a situation where experts can make decisions based on today’s data, because the data changes too quickly. You have to project ahead, fitting a curve to the data points you have, and trust that mathematical models.
If you want to read an amazing book on pandemic economics read ‘The Black Swan’ by Taleb who has been banging on about this precise event for 10 years. Taleb gave us the ‘black swan’, which was riffed on by Michele Whuker who coined the term ‘grey rhino’ - a “highly probable, high impact yet neglected threat … grey rhinos are not random surprises, but occur after a series of warnings and visible evidence”.
This is fat tail risk, the correct action logic is to take immediate and drastic action to bring it under control and then slowly release the reins once you understand it.
Act in ways that feel irrationally strong at the start of a pandemic so that you don’t have to act in truly irrational ways at the end of it.
So projecting ahead what can we do?
I’m not going to make comment on what the health system should be doing in any detail but it feels to me like we should be breaking our existing peacetime rules and rapidly adding infrastructure and skills capacity. If China can build a hospital in 8 days we can most certainly do something to prepare, as long as the government allows us to cut some of the usual regulatory corners. More staff skilled in the things that patients will need, and more beds. Just go hard at it.
I’m not going to make comment on what we should be doing in the community, although I think that any action that we are taking at the moment is not enough. The decisions that the government is making SHOULD feel irrational right now. We need to act ahead of the news which is not the way we normally think. Governments should be doing things that seem ridiculously over zealous. Shut things down for a couple of weeks now and then slowly release the tap once we have it under control. Better a couple of weeks of shutdown now than months of shutdown if it gets out of control.
I am going to comment on what we should be doing to support the business community because I do know a bit about that.
- first and foremost we need to ensure that impacted people don’t have to stress about mortgages or rent over the next few months. We are going to have a lot of people out of work imminently as anything in travel, tourism, complex supply chains, etc is going to get absolutely smashed. Other businesses will follow — restaurants, pubs, events, concerts, etc. and people will be out of work. We need to make sure that those people can support themselves and feed themselves. The time for the culture wars on welfare is over, we need to throw money at this problem and quickly.
- secondly we need to rapidly move to remote working. Anyone that can work remotely should be working remotely by the end of the week. Anyone who can’t work remotely should challenge themselves to find a way to work remotely. That leaves a much smaller centralised workforce and lowers risk of spread.
- thirdly we should pump money into telecoms infrastructure to ease the inevitable congestion. We are lucky here, our core and edge network transmission is well built, but we will have challenges on HFC networks, in areas where the last mile is already compromised, and also on regional interconnects. Mobile networks will become congested. The government should dump money into overbuild of networks and cut red tape to get stuff built quickly.
- fourthly we need to support small and medium business. Like many others I am facing into an environment where there is a lot of uncertainty about what things are looking like in three or four months. Government backed loans with low interest rates and no personal asset risk would make it a lot easier for a lot of businesses to forge through without risk to jobs. I’ve been running a business for ten years and we’ve never been in debt, but I can’t get a loan or overdraft without signing away my first-born.
- finally we need to look at employer obligations. I believe that employers are obliged to do everything they can to maintain their existing workforce through this. BUT, that would mean that the government needs to step in and help businesses that are getting their revenue streams smashed. This might mean allowing impacted employers e.g. pubs and restaurants, to collectively bargain with their teams about taking under award rates while we get through this, it might mean dropping payroll tax, etc. Basically do everything you can to make sure that everyone keeps their jobs, even if we are shutting cities down like they’re doing in Spain and Italy.
If we act now and do some things that might appear to be economically irrational, we can likely sail through this situation like a bump in the road.
If we wait now and only put the actions in place after we see the situation unfold we will be facing into economic armageddon. No point talking about recession, we will be talking about a long lasting depression.
