Baby steps to restarting the economy
The Great Suppression is both a lived experience and an experiment like few others in human history. There have been 3 worldwide pandemics in the 20thcentury — 1918 (Spanish flu), 1957 (Asian flu) and 1968 (Hong Kong flu)[1]— and many more earlier in time.[2] The unique characteristic of the one now underway, COVID-19, is the speed of its spread — of the virus, but also the cascading global economic shutdowns. And in an era of dense urban living, widespread global social and economic interconnectedness, and a relentless 24 hour news cycle, the whole situation is testing our resolve and approach.
The lockdowns around the world cannot continue indefinitely. Restarting economies is critical. “It is no use saying, ‘we are doing our best.’ You have got to succeed in doing what is necessary.” (Winston Churchill). Some nations are now taking steps to reopen, others have bucked the trend. Austria and Denmark were the first to selectively restart. Germany is restarting the week of April 20. Others are pondering and planning their “how to” approaches, including France, Italy, and Spain. In the U.S., the President is keen to get back to business, but most state governors — who have primary jurisdiction — are hesitant. Sweden has followed a slightly different path.
Looking ahead, whether there are roll backs on future reopenings or a more protracted economic shuttering depends on virus infection and re-infection rates, with the latter already rising in several east Asian countries that have eased up on earlier restrictions.
Here is a quick summary of where various countries are at:
Austria: Small shops (<400 square meters), hardware stores, and garden centres started to reopen on April 14. All retail establishments can resume activity on May 1. As of early April, the government determined that restaurants, hotels, and schools may reopen in mid-May; a final decision on full reopening will be made at the end of April. Austria has strict rules about wearing masks, social distancing, and the number of people allowed into a store at any time — face masks are mandatory in all shops as well as on public transport. There are hints that larger events may restart by July.
Denmark:[3]The focus of the country’s initial restart is on childcare and primary schools. All activities and businesses that are reopening have a ban on gatherings of more than 10 people (in place until at least May 10). Reconsideration of larger events will happen later; for now, they are to remain “closed” until August. Small businesses can begin reopening as of April 20 but are not required to do so and can continue to receive Denmark’s generous wage subsidy if they choose to stay shuttered.
Germany: Small shops can open the week of April 20, once they have “plans to maintain hygiene" in place. Car dealers and bookstores of any size can also reopen on April 20, followed by beauty salons on May 4. German schools will reopen “very slowly,” also starting on May 4, and must have a variety of precautions in place. Restaurants and bars do not have a green light, yet. The target date for religious services and large events is the end of August.
France is targeting mid-May to begin a progressive reopening of businesses and other institutions, beginning with schools. But restaurants will stay closed and large events will not be permitted to take place until at least the middle of the summer.
Even Italy, one of the hardest hit countries, is reopening some stores, including bookshops and clothes stores for young children.
Some Spanish factory and construction workers are back at work, but much of the rest of the country’s economy — including most retail outlets — remains closed.
Then there is Sweden. Unlike most other advanced economies, it chose to avoid a near-total lockdown. It did not shutter elementary schools but did close secondary and post-secondary institutions. Restaurants and bars remained open, albeit with restrictions. Gatherings of more than 50 people are not allowed, citizens have changed their physical distancing norms, and many people are working from home. While certainly not business as usual, Sweden’s public policy response to the virus appears more nuanced — they pumped rather then slammed on the brakes.
In British Columbia, entering a second month of lockdown, the balance sheets of many businesses are under enormous pressure. Continuation of the shutdown beyond another few weeks will have enormous economic consequences. Bankruptcies, commercial and personal, are set to skyrocket, absent an imminent easing of social restrictions and the reopening of currently shuttered businesses. Fortunately, B.C. can use the staged reopenings of Austria, Denmark, and Germany as reasonable templates — assuming the virus doesn’t come back strongly in those countries once restrictions are relaxed. We might also want to consider integrating some of Sweden’s playbook.
Finally, it is worth noting that the business and institutional closures mandated in B.C. were not as extensive as in some other jurisdictions — most of construction and manufacturing has continued to operate, for example. This means that compared to some European countries, B.C. has allowed more establishments, including in retail, to operate during the current quasi-quarantine period.[4]
[1]https://wwwnc.cdc.gov/eid/article/12/1/05-1254_article.
[2]https://www.livescience.com/worst-epidemics-and-pandemics-in-history.html.
[3]https://politi.dk/en/coronavirus-in-denmark/covid19-first-step-of-controlled-reopening-of-the-danish-society.
[4]https://www2.gov.bc.ca/gov/content/safety/emergency-preparedness-response-recovery/covid-19-provincial-support/essential-services-covid-19.