The Real Effect Of The Coronavirus On The Economy Is Positive

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From our Swindon Correspondent:

Precautions are being taken in a variety of ways, including the cancellation of heavily attended events. This includes the annual technology, film, and music conference South by Southwest, which brings millions of dollars and thousands of people into the city of Austin, Texas. It was scheduled from March 13 to 22, but the organizers said Austin canceled the dates, and SXSW would “faithfully follow the City’s directions.”
 
At least nine technology events have been called off because of the coronavirus, which Recode reports has an economic cost surpassing $1 billion.
The American Enterprise Institute’s World Forum, which is an annual meeting of business leaders, government officials, and conservative intellectuals in Sea Island, Georgia, has also been canceled.
 
Businesses are starting to encourage employees not to come into work, including major tech companies such as Apple, Alphabet Inc., and Microsoft Corp. Even Congress is devising a plan to have staff telework “in light of the unique and unusual circumstances presented by the coronavirus.”
 
 
In-person classes at Stanford University are canceled starting next week, becoming the second major university to do so. The University of Washington was the first, moving classes online.
These are all bad for the hosts of the film conferences, technology events and senior management things, but could this all be good for the economy?
Film conferences were once very important. Cannes might have glitz and glamour but it’s really a place for deals. Film producers showing their film to distributors and cutting a deal. But why do they need to be in the same room today? Why not set up a video stream for them and get them to watch the film from wherever they are in the world? Wouldn’t that be cheaper than getting on an aircraft and spending two days flying to Texas?
One notable thing about tech events is that they tend to be in interesting places like Amsterdam and Barcelona, and you don’t get many self-employed attending. Because someone self-employed loses days of paid hours, has to pay for the flights and the tickets. And they can get the same stuff from YouTube or various learning sites like Lynda.com. Tech events are mostly a jolly for employees in bloated companies. You get 3 days out of the office, have some fun and the boss picks up the tab. Losing this will probably improve the bottom line. And “business conferences” are mostly the same.
For people working more from home, that’s a good thing. Reduced travel costs (time and petrol), less tiredness. This is gradually happening anyway, but Coronavirus has given it a boost.
And maybe everyone realises that a system of education inherited from the time before Gutenberg, when books were a scarce resource, is perhaps in need of reform. OK, you probably need to be at a university for cutting up cadavers in medicine, but for history or computer science you can probably do most of it from your parent’s spare room.
One thing about the way people work is that they often fall into habits. Change often comes from startups and small businesses because they don’t have habits. Sometimes, they’re even anti-habit. Someone in a large company sees something as wasteful and scraps it in the new company. Microsoft let their people wear what they wanted for work, rather than suits. And gradually, those new businesses replace the old. But there’s also sometimes crises that break habits. Someone is forced to do something and gets their eyes opened. They perhaps realise that the alternative works fine, or maybe better.
There’s certainly things that are going to take a hit. The delayed release of a Bond film is bad for the company making it, and for the people who like Bond films. Cancellation of music festivals are likewise a bad thing. We can’t do everything virtually, but there may be large long-term gains in terms of shifting habits.

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Boganboy
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Boganboy

I’m thinking of the classic claim that the Black Death resulted in a considerable rise in productivity. Perhaps this was caused by the scrapping of old customs as well as marginal lands dropping out of production.

I’ll be interested to see if that turns out to be the case this time. After all, even though I have white hair, I’m probably a bit too young for the virus to finish me off just yet.

Bongo
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Bongo

Interesting thoughts. Any disruption forces businesses who want to survive to try out new things, so the Coronavirus could have net +ve outcomes as long as we allow that natural order of things and that tolerable administration of justice to exist so the alternative ideas get tried.
If you have a care home system that rewards the care providers who keep their customers alive, then groovy. No incentive, then not groovy. Baby, yeah.

John B
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John B

Incentives. France. Over 50% of health provision is private, payment is part State -up to 70%, balance from top-up private insurance or personal resources. Whether private or public, payment is for work done, ie consultations, tests done, nursing attendance, etc. In other words no patients no money. Old people are like ATMs because they present more frequently with ailments that need tests to be done, treatments and care to be given. It is in health providers’ best interests to keep the old folk going for as long as possible – and they do! The French system favours elder care at… Read more »

Spike
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Spike

That the coronavirus could be a prod toward innovation is a silver lining. The dark cloud, though, is that activities are being curtailed, and on the basis of avoiding liability, not of measurement.

And once the weather warms up, the disease runs its course, and the economy bounces back, no one takes two vacations or schedules two conferences to “make up” for the one cancelled. So the virus may have positive effects but is not a net positive, any more than the famous window-breaker.

Bloke on M4
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Bloke on M4

Disclaimer: Timmy wrote the headline and I’m not exactly sure of the numbers. It’s really just a general observation that permanent shifts from one technology to another can be accelerated by a crisis. The shift towards more people doing more days at home is happening anyway. A crisis can get people to put in the investment and changes to working practices sooner. This also happened with tube strikes. A lot of organisations realised that they were vulnerable, and made the transition. This isn’t a call for government intervention (which is the Bastiat thing), and in fact, government is intervening the… Read more »

Nick Luke
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Nick Luke

I see the Times ( https://www.thetimes.co.uk/article/coronavirus-has-a-silver-lining-cz8wpc6xj) is celebrating the virus as it will kill all the old fogies, those that are climate sceptics in particular. Such lovely, caring people the climate activists. They have never before come out and acknowleged that some 3.5 billion people will have to be eliminated before their idea of a post-industial utopia can be realised. Now they have an agent to do it for them.

Bloke on M4
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Bloke on M4

I don’t know, but I think most old people probably have as much of a clue about the reality of climate change as someone with an MA in English. The science around (most of) climate change is so opaque to the lay man that you’re basically trusting the scientists.

My interest in reducing resources by engineering (like working from home, using internet technology) is that it’s already loaded with incentives beyond gaia. People get a lie in and they get to save money.

Snarkus
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Snarkus

I’ll take climate change, whatever that is, seriously when the public tit leachers insist of remote conferences. While they continue to fly off around the world for another business bashing confab all I see is fraud and hypocrisy.

Chester Draws
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Chester Draws

People will start going to lectures again after the virus though, because e-learning is boring.

If you are doing e-learning, why bother with lecturers at all? Make one set of videos and that will suffice.