I was originally going to call this post “Why Stocks are Fine” before I realized I neither had the answer nor did I know if it was actually true.
When I cashed out my stock portfolio that fateful Monday in mid-March, a few things were clear: the virus was among us in North America, it was going to be very bad for people and businesses, and emergency measures would be required. Trump’s history of incompetence and inability to execute was concerning, and we were already behind. It seemed that day many other people were thinking the same thing, and we hammered the “Sell” button like we were playing Diablo. The Exit sign was bright, and the doorway was wide enough to accommodate all of us, for a fee. Stocks crashed.
In the following weeks, American congress passed a historic $2 trillion worth of stimulus, and the stock market wobbled upwards and hasn’t yet looked back. 5-6 million Americans lost their jobs every week, enough to repopulate Toronto twice over. Stocks rallied. Thousands of Americans died every day, while I quietly worked from home. Stocks rallied.
I had forgotten that the stock market is not a reflection of the general economy, or the well-being of the people. It is the stock market. Averages are not equally weighted; your pain only matters as much as you do. I bought back in a few weeks later and have been recouping my losses ever since.
The coronavirus is an accelerant of inequality, the thick and growing wall that separates the ‘haves’ from the ‘have-nots’. That the virus does it’s work along the same border is the deep, cruel irony of this entire situation. The less your livelihood depends on physically having to be somewhere, the more likely you are a knowledge worker that can keep working in near complete safety, in addition to already being relatively well-off financially. Everybody else in industries that rely on physicality are facing health risks if they are lucky enough to still be working, or unemployment if they are not.
There are few worse things than a non-expert opinion, so here’s mine: the aggregate economic impact of the millions of lost jobs in relatively lower paying industries doesn’t compare to all the better-paid knowledge workers that are still doing fine, let alone the rich who still have all their wealth: socially isolated, watching Netflix in concrete bunkers, next to stacks of N-95 masks and empty take out boxes.
As an assessment of economic impact, this is mostly wrong and ignores the many things that I am not capable of discussing. Oil is now basically free, and I don’t understand what that might mean to the world supply chain; I just know there is now a storage problem and my shed can barely fit my lawnmower so even here I’m of no use. This is just to say the headlines on the record unemployment don’t tell the full story until you know what those jobs were and what their economic contribution was. The ‘Have-Nots’ are now hurting from disease in addition to not-having. The ‘Haves’ are still fine, with equity and employment; anxious but healthy, and working from home.
The coronavirus is also an accelerant of digital adoption. The world’s largest tech companies double as America’s largest companies, and own the handful of top slots on the S&P 500. They are already extremely advantaged, with largely unregulated ownership of the world’s data, as well as the scale to make use of it effectively. That tech companies see a smaller impact relative to non-tech companies is already a distinct advantage; they are large and successful, insulated with towering piles of cash, and they have a workforce of knowledge workers that can easily self isolate and still be productive. The fact that they also see a potentially permanent increase in the use of their digital products with everybody at home is really just unfair. You have not only the naturally fastest runner, but one that also got a really good night’s sleep while everybody else just tripped on their shoelaces.
Big tech will emerge fine, or better. Others will not be so lucky. The at-risk companies also serve or employ the same at-risk people, the people that faced a choice between employment or physical well being and had the choice made for them. The companies may get financial assistance, hopefully doled out equitably to those that need it. The individuals may get a busy signal or a 404 error.
The coronavirus seems to enjoy benefiting those that are already ahead. Inequality creates divergent worlds, and the virus has exacerbated the difference between them. It is an added disadvantage to the already disadvantaged, letting the winners win by an even greater margin. It is maddening that the virus happens to follow the same rules established by income inequality, but it is also difficult to think of a scenario that would disproportionately impact only the rich.
ian is blogging 