Bounceback & backlogs

We must not forget when throwing money at workers and businesses where we want to end up when the virus crisis is past. Before we spend every pound we must turn it over twice, as my mother used to say. This is not a demand shock – the nation did not want to stop spending. But we must realise that Covid-19 will change everything, and when it is over our spending patterns will undoubtedly have changed. We must not waste money on businesses and activities that have no future. The virus is a system shock that will accelerate changes that are happening anyway – but how do we decide what to fund, how to fund it and on what terms? 

Airlines
The case for LHR’s extra runway has become much weaker. I can’t see demand for global travel ever recovering to the point it was at in November 2019, and that means airlines, which are anyway on the cusp of profitability, going bust and allowing it to happen. What do we save? Well, we’re back to national carriers all over the world, so we must fund BA. And easyjet is our national budget carrier, so deserving of support. Let the others fall, including Branson’s Virgin.

The High Street
The slow decline of the high street has seen chain stores struggle to survive in the face of crippling rent and rates. The government’s last budget offered some relief, but after a period of enforced close down will the High Street post-Covid ever return to what it was? The streetscape of our towns and cities is relatively recent, dating largely from the mid 19th century, so it’s not an immutable part of our heritage.

Bounceback
When it is possible to lift restrictions – and suggestions are that this might be stop-start – demand will return and we must do everything we can to ensure the effects of bounceback leave us where we want to be. For some businesses, there will be a permanent loss of income. If you normally go to the barbers every month, after four month’s absence you won’t have four haircuts – all that income is lost. Offering loans to such businesses is pointless – imposing a burden they are unlikely to recoup in increased trade. Backlogs in contrast will see a huge burst of spending as at the end of rationing when buyers create four months of sales in a month; loans to such businesses to keep them ticking over make eminent sense. Computers, DIY goods, home improvements may be such.

AI
We saw the end of the trade of Tube driver last week. The pics that hit the press and social media of dangerously crowded tubes because drivers were self-isolating in large numbers, when not a single DLR formation was cancelled, means the end of public opposition to driverless tube trains – meaning more of them, travelling more closely to eachother, more safely and less crowded, is only now a matter of time. Similarly across the economy.

The environment
I think across the entire world the effect of the standstill is striking billions of people as to the effects on both our world and ourselves of human activity. Choking clouds of SO2 and smog lifted from cities, bird song audible in London. We won’t quite see dolphins in the Regents’s canal, but the effect will be salutary – and not going back will become a politically saleable option.

The B Ark
We’re finding out today who doesn’t want their children at home. The most extraordinary melange of B-Ark passengers are claiming ‘key worker’ status, from nail painters, personal trainers and hashish purveyors to Uber drivers and artisan avocado-mashers. I reckon about 80% of these folk could easily be re-employed out in the fields. We need to subsidise only those activities that create the greatest total benefit for society and nation

It’s going to be very interesting.