Three New Insights from the Covid-19 pandemic shutdown.
- Oil/gas basis for inflation.
- Big business vs under 50 employees and productivity.
- Accomplishments in the new digital world and digital communication.
1.
The president of the United States with one stroke of a pen, in the White House, caused a severe inflation for the entire planet that will last eight years or more.
At the same time the act revealed that economic theory is stuck in the 19th Century. The prime builder of commerce before the year 1850 was manual labor supplemented by animal power. That shaped economic theory. After 1830 coal and wood heated water to generate steam which added new power to the commercial world. By 1900 the addition of oil and gas added geometric levels of power to commerce. In the 20th Century oil/gas became so important that it was the substrate of all commerce. Economic theory never noticed.
By 1973 a Coalition of oil producing nations led to an oil embargo which in turn disrupted all forms of commerce. This connection was incorrectly understood by economic theorists.
2.
A mild virus caused a pandemic in 2020 that infected the world. In the U.S. and other major commercial nations a large swath of retail business and services were closed for many months to a year. The GDP of the U.S. continued to grow while businesses with 50 employees or less were disproportionately closed.
This shows that economies of scale are the major, primary and possibly the only real source of economic growth.
3.
The same pandemic led many employees to carry on their work at a distance away from the administrative core of the business.
This shows the extremely well developed level of communication made possible by (a) the recent digital and communications revolutions and the (b) insignificance of physical interaction between employees of modern commerce.
In a place like San Francisco, at the upper end of digital productivity, nearly 70% of office space was and is unoccupied. It turns out that face to face physical contact is not necessary for the conduct of most business. The primary need for in-person contact is for promotion within the hierarchy of the administration, little else.
One is an astounding discovery about the centrality of American oil and gas to world commerce. Two are more astounding pieces of new understanding of commerce that was provided by a global pandemic.