We are facing both a serious problem with coronavirus infections and with a ravaged economy. I have little confidence in our politicians ability to make good choices and hard decisions in this environment. We see at the state level that legislators have basically abandoned their responsibility to be holding hearings, gathering evidence and promulgating laws in regard to the problems. They have allowed governors to rule unilaterally and unchecked. So we need to look to a different sector for leadership. Many in the business community have urged re-evaluation of the economic lockdown, which I agree is important. But the most important thing business leaders can do now is protect the economy and jobs by not over-reacting.
A recession gets worse because fear grips businesses and they react by firing more people, stopping capital expenditures like building new plants and buying new equipment and cutting other operating expenses. These actions mean less revenue for the businesses that would be helping to build the plants and provide the equipment. It means less income for workers which they could spend buying goods and spending at restaurants and for entertainment. It is a very, very vicious cycle.
To keep the drop in demand from getting any more severe, businesses need to truly put people before profits at this time. The biggest priority, because individual humans are all that matter in the end, is to keep as many people employed as possible. We have already experienced massive job loss, especially in sectors like the hospitality and travel industries. Larger enterprises in particular, have the financial resources to continue to pay people for some time, and many have indicated that they will do that. Even if salaries need to be reduced, it is so critical to keep people at work and having some source of income. And don’t stop spending on business expansion and growth. We have to have confidence that we will get past this and recover, and that recovery will be accelerated if businesses keep spending. At the end of the day that is what drives job creation and income growth for individuals.
So I am calling on all business leaders, of firms large and small, to do their part to prevent a complete economic collapse.