Essential Business

One of our greatest challenges as we've tried to restart, but then re-shutter, portions of the economy concerns identifying the firms to restart vs. those to let wait. This leads to a debate over essential businesses, a two-word term I find slightly misleading. Any business to its owner and employees could very well be essential. Perhaps essential services would be a better term. Anywho, we're stumbling over something that should stymie us, because determining something that's an essential for the owners vs. the users is likely to be contradictory. 

Grocery stores are a pretty clearly essential service. Broadway musicals are not. These two services we were able to get correct as a country. Grocery stores stayed open, implemented protocols for safety, and have been carrying out their essential enterprise. Broadway went dark, and will stay there until 2021. But firms in between have struggled to figure out which way to go.

There's a fascinating concept in economics known as the paradox of value. It holds that the value of something (something's worth as determined by the marketplace in terms of price) is inversely related to its utility (something's worth as determined by a user and not in terms of price). This explains why pencils, water, and gasoline are pretty cheap while art supplies, champagne, and pink Cadillacs are expensive. So back to grocery stores and Broadway, one is essential and operates on fairly thin profit margins, one is a beautiful luxury and bloated on overpriced tickets that keep people like me from seeing an awesome musical like Hamilton until we have the chance to see it as long as the server doesn't crash today on Disney+ . . . 

. . . Sorry. Where was I?  

That profit margins point is important, though. Note the rush to reopen bars and casinos in the country. Essential? Hard to say. But profitable? Most definitely. Employer of many. Yes. In the grand scheme of employment and income, one can make the point that such firms are essential. But the services they provide? They wouldn't be so profitable if they were essential. 

It's been months since I've had a good haircut. That type of firm just opened. I'd trade access to barbershops for an open bar or casino any day of the week. But in terms of employment and income, it's a  blip in the aggregate. 

We cannot afford to reshutter the economy again in 2020. But I hope we learn to have the patience to open what is truly essential to users and rely on policymakers using the nation's awesome powers to borrow to cushion the blow with unemployment benefits, stimulus, and other public spending. If we're willing to borrow, we can better navigate the dilemma of what to shut down and what not. If we rely use the metric of essential business, however, to make these determinations, we'll just do more harm.