An Open Letter to Government Officials - A Small Business COVID-19 Story.

My company has been in operation for over 10 years, providing technical field services to a variety of industries nationwide.  As of February 29, 2020, we had a total of 31 employees, 27 of which live and work in the greater Albuquerque/Rio Rancho, New Mexico region.  The company had grown significantly over the past three years from about $1 million in annual revenue in 2017 to over $3.6 million in 2019.  Early sales estimates for 2020 were projecting another 50% growth. During this period of rapid growth the company had a three-fold increase in the number of employees while maintaining a greater than 20% Net income.

Last year we provided our employees over $800,000 in wages and began providing a health insurance program where the premiums are fully paid for by the company.  Since most of our revenue comes from out of state, the economic multiplier effect of these salaries should be considered to be a significant addition to the local economy.

Beginning March 11, 2020 I began discussions with local lenders regarding a line of credit that would be needed to purchase additional inventory, pay for new offices, furniture and computers as well as help with the larger than expected tax burden from our 2019 success.  At this point, the coronavirus was just beginning to be discussed but there was little understanding as to the scope of economic impact it would bring.  By March 16^th, my research for funding turned towards SBA loans, especially those types of loans focused on disaster relief due to the virus.  Applications were submitted as the changing economic climate worsened.  Traditional loan requests were denied due to a “downturn in business” and the Paycheck Protection Program (PPP) from the CARES Act was being bogged down by a landslide of requests.

As revenues began to drop in March and totally disappeared in April I took steps to lower our monthly costs including laying-off nine employees and reducing hours for the remaining team members to a 4-day work week.  With these reductions and other cost-saving implementations, my cash flow modeling tool indicated I had the ability to keep the doors of the company open until mid-May. With the hope of a PPP lifeline of funding it appeared we could add an additional eight weeks to that projection taking us into July when, hopefully, revenues would be on the increase.

However, as time goes by, the likelihood of receiving the PPP loan is becoming less certain. Even if I do receive this invaluable funding, it seems that thousands of small businesses will be left out. 

Beyond our personal story, the point I want to make clear is the value small business brings to our economy. Each week the new unemployment claims are reaching new highs. These unemployed workers are the result of small businesses downsizing and closing. The small business economic stimulus that our economy relies on is disappearing and along with it the health benefits of thousands of workers.  When the stay-at-home restrictions are lifted there will not be a sudden resurgence of the economy because this missing sector will not be around to contribute and the workers will have no place in which to return for work. In this sense, there is no such thing as a non-essential business… all businesses are essential to the economy on which we all depend.

If we are to avoid a deep, long lasting depression, small businesses need immediate, life-sustaining grants to help them keep their valued and skilled employees on staff.  The CARES Act has not gone far enough in this regard. It is limited in size and scope.  The economic support must also be designed to sustain all companies as long as restrictions remain in place in order to fight the virus.

Second, everyone’s health is of the utmost importance and I fully support New Mexico’s Governor Michelle Lujan Grisham and the steps she has taken to insure our safety.  I am sure she is fully aware of the impact the stay-at-home, essential-services-only policy has on the economy of our state.  That being said, she and her cabinet now need to use their creative juices that were so necessary during the initial outbreak, to focus on steps that can be taken to safely reopen businesses as soon as possible.  As I mentioned earlier, all businesses are essential so if she were to change the mindset of there being essential and non-essential businesses to “every business is essential”, then methodology for insuring the safety of workers in each situation should be easily developed.  A blanket approach with all businesses being treated the same will not work and a priority given to large stores over small is simply wrong.  Deciding which company will survive should not be the role of government.  Instead, the role of government is to provide equal opportunity and support to all businesses.

For my company since most of our work is performed out of state, little can be done to change our effectiveness here in New Mexico.  All but two of our employees work from home and can continue to do so as long as needed.  However, I feel the Governor, through her strong leadership skills that have been evident over the past few weeks in crisis, can set the standard for developing a strong response to bringing business back to work, modeling for the rest of the country on the how-to-do business in our new, virus-filled world.  The virus will not go away quickly and the only way to survive it as a country is to develop and implement safety guidelines that businesses can follow in order to keep their employees safe while returning to the ‘normalization” of business so the economy can recover.  Yes, there is a killer virus still out there but the economic death of our country is at stake as well and steps need to be taken quickly in order to save it.

I know that this letter does do little in providing answers to the challenges that lay ahead.  The goal was to re-impress the importance of small business in our economy and bring it back to the top of the list of priorities of everyone in our state so that we can avoid total economic collapse.

A Broken Economy and a Third World Healthcare System

Is it just a poor leadership response that led to the severity of this crisis or is the underlying economic system and a for -profit health system contributing factors?

Disclaimer:  I fully admit that I am not an expert in the fields of healthcare or economic systems. I also have to say that this has been one of the most difficult articles I’ve tried to write in my 25+ years of doing this.  It is easy to point fingers but it may take articles like this to lay the groundwork for the necessary changes we must face as a nation in the coming months and years.  I do feel, after listening to weeks of depressing news on the extent of spread of the COVID-19 virus throughout the world, that a discussion of this type has merit.  It probably is best to allow the focus at this time to be on limiting the devastation, both to our health and our economy, but at some point when the dust is cleared, there will be a need for scrutiny beyond compare as to what went wrong and what we can do to be better prepared next time, for there will be a next time.

I can’t get this nagging question out of my mind: “Would we as a nation have been better able to respond to this crisis if we had implemented a government-managed, single-payer health system during the Obama administration?”  There is evidence that indicates that much of what we have faced in the lack of supplies and equipment (beds, ventilators, etc.) was caused by a for-profit health system that is designed to provide for only those needs that are typical, frequent and profitable to process. In this article published by The Guardian entitled: "Coronavirus is revealing how broken America’s economy really is" it demonstrates in very clear terms how severely restricted the US health system is in its ability to respond to a pandemic of any kind.  Category after category of statistical data shows that we have one of the worst healthcare systems in the world, from the number of hospital beds and doctors per capita to maternal deaths, life expectancy, and income inequality.  In nearly every case, the U.S. is ranked in third-world like territory.  In addition, the cost in healthcare in 2018 in the U.S. was the most expensive in the world, representing 17.15% of our GDP ($3.6 trillion  - source www.CMS.gov).  Switzerland is second at 12.25%

We have the most expensive healthcare system in the world and are the least capable of handling a crisis.

“The facts are as exhaustive as they are exhausting. There’s one simple conclusion from all of this. We’ve been tricked. We’ve been told that America, like most other majority-white countries, deserves the title “developed economy”. It does not... You cannot constantly operate hospitals at close to capacity in order to maximize profits. The pursuit of private money in systems built for public good has not worked ethically or practically.”  (The Guardian)

A simple comparison of this healthcare model to the restaurant and hospitality industries will show you that empty hotel beds and empty tables at a restaurant are not a good thing for profits.  Everything possible is done in those industries to minimize these “empty” factors.  The same is true in a healthcare-for-profit industry.  A for-profit hospital cannot not maintain a large inventory of extra, unused equipment and supplies on hand and maintain profitability at the same time.  Maintaining a full capacity with a just-in-time supply chain leaves us a system that will never be able to respond to a national epidemic suchmas the one we are now experiencing

The main criticisms have been the manner in which we responded to this pandemic and that we did not have sufficient virus testing supplies, Personal Protective Equipment (PPE), ICU beds and ventilators available.  The one consistent comment was: “The supply chain is broken.”  It is a supply chain designed to handle the day-to-day with regularly scheduled, weekly deliveries of supplies that are relatively consistent from week to week.  In addition to not having supplies for this large of a surge of critical patients, there is no central authority managing the orders, prioritizing and guaranteeing prioritization and delivery to where the need was the highest.  Instead, everyone was competing for the same supplies.  John Doe ordering on Amazon was just as able to order the critically needed PPE equipment as was in demand at an ER in New York City.  States were unsuccessfully trying to outbid each other and the Federal government along with every other countries in the world for these supplies.  The only thing this achieved was to drive the prices through the roof so those who held them would profit immensely by having them.

In the meantime, patients and healthcare workers died.

Daily the Federal Government was asked to provide support to the growing crisis.  Regular messages from Trump and the White House said things such as:  “We are not to blame.”  “Relax, it’s going to disappear.” “The Federal Government is not designed to be an ordering system.”  “We won’t need 40,000 or 30,000 ventilators.”  “This is our inventory; it’s not for the States.” 

There was failure in leadership at the State level as well, indicated by the simple fact that at this writing, more than a month into the crisis there are governors who have yet to order Stay-at-Home requirements.  Everyone in the world knows by now that the only way to fight this disease is to keep people isolated from one another.  Countries such as Germany, South Korea and New Zealand are shining examples how separation procedures work.

Failure in leadership cost thousands of lives.  When a disaster strikes, people are completely reliant on the leadership of their community to make the right decisions to mitigate and eliminate unnecessary loss of life.

How does our economic system play a role?  Are the failures in the healthcare system and in leadership the root cause or is there something else at play?

A discussion about the impact of neoliberalism on our ability to respond to a pandemic of this magnitude can take us into an economic debate that is over one hundred years in the making.  Suffice it to say that there is strong evidence that the economy of Milton Friedman which is focused on generating wealth for the elite and depends on market mechanisms to respond to all societies’’ needs under a for-profit focus is clearly another contributing factor to the escalated crisis.  So much so that it can be referred to as The Plague of Liberlism, published by Truthout.org.  After reading this interview, I was inspired to write the following words:

“Economists have understood the failure of neoliberalism to afford succor to anyone but the ultra-elite ever since the Robber baron era. As Ayn Rand's books grew in popularity in the 1960’s I remember having long discussions with my mother, who was a fan. I kept saying it was an elitist philosophy that would leave us (the middle class) out in the cold. Now we see the full impact of the failure of neoliberalism in its inability to respond to worldwide disasters like Climate Change and COVID-19. Perhaps a pertinent question today would be "Who is John Galt and who the hell does he think he is?"

Who is John Galt and can he save us from the plagues of COVID-19, a third-world healthcare system, failed leadership, and from economic neoliberalism?   Can God?

I doubt it.