During our drive to Baltimore on March 7 (to visit the grandkids one last time before the lockdown came—and we knew it would), we talked, inconclusively, about the likely cascading effects that would come if large parts of the economy shut down. For example, if people weren’t going to theaters and sporting events, or traveling much at all, what would that do to the businesses involved, especially if one looked at all the dependencies between different kinds of businesses? Like, how would restaurants and office businesses not paying rent affect building owners, and the banks to which those businesses owe money?
Now that the shut-down (partial in some categories and places, complete in others) has been here for almost two months, we’re still not hearing much about where this all goes for various economic sectors. Sure, there’s plenty about what experts, politicians and various talking heads say. Also lots of human interest stories, especially of the tragic kind. And lots on bouncing stock prices and all that. But not much on what cascades back through supply chains: effects of effects of effects.
Toward help with that, there’s The economic outlook, on Arnold Kling’s blog (one of the most thoughtful and challenging about this kind of thing). On it is a 2×2 that looks like this:
I added the letters. They mean this:
A — Robust/Essential
B — Robust/Inessential
C — Fragile/Essential
D — Fragile/Inessential
Then I went down a longer list of business categories, assigning each to one of those four (respecting that some are in gray areas along both axes).
Note that this is a heuristic, meant to stimulate thought rather than to pose arguments. Anyway, here goes. More below:
- accounting – A
- agriculture: small and family farms and ranches – C
- agriculture: industrial farms and ranches, logging – A
- airlines – C
- alcohol – B
- automotive – C
- banks and finance – A
- churches – B
- construction: residential – C
- construction: commercial – C
- cooperatives – A
- public education: K-12 schools – A
- public education: colleges and universities – C
- private education: K-12 schools – D
- private education: colleges and universities – D
- offline education: A
- home/self schooling, all levels – B
- engineering: heavy – A
- engineering: light – A
- performing artists – D
- sports events – B
- arts – D
- museums – D
- gambling – B
- oil and gas – A
- mining and quarrying – A
- firearms – B
- freight forwarding (shipping, trucking, transport) – A
- government – A
- hospitals – C
- insurance – A
- legal – A
- manufacturing – A
- marketing and advertising – D
- books – B
- periodicals – C
- free over-the-air commercial radio – D
- free over-the-air commercial TV – D
- free over-the-air non-commercial radio – B
- free over-the-air non-commercial TV – D
- subscription radio (including podcasting) – B
- subscription (non-premium) cable TV – C
- subscription- B
- medical – A
- nonprofits – B
- public transit – A
- real estate: residential – C
- real estate: commercial – C
- real estate: industrial – A
- restaurants: chains – B
- restaurants: non (or small)-chain – D
- small businesses – D
- retail: big chains – B
- retail: small chains – D
- Other: administrative support, agents and agencies, scientific and technical services, outsourced management, professional & specialized services, wholesale everything, rental of many kinds.
What I’m looking for here is a way (better than this) for looking at effects that cascade from any of these to any number of others.
Thoughts?
