For at least few weeks we have all been living with some type of economic shut down. The lists of what is an essential industry vary from state to state and how some industries ended up on the list is puzzling. We might expect all medical service and non-retail service providers to be essential, but lists include all sorts of industries.
While the effort to segment industries into essential or non-essential might be well-intentioned, our interconnected world makes nearly all industries essential. Our modern society has made giant strides against poverty and a growing global middle-class enjoys the luxuries afforded by a high degree of specialization of labor. By having so many individuals specialize and become experts in their field, we can then all trade with each other and the world ends up with more of pretty much everything.
When we start shutting down particular industries, however, we end up with supply chains that will crumble in unexpected ways. The world is interconnected in ways not easily seen. In an indirect way, nearly all industries are essential and no one industry can operate for long without many others.
Let’s look at two industries that every government in the world have deemed essential: Medical and Grocery.
It takes much more that just allowing the grocery and the dairy farm to remain open in order for there to be milk on the shelf.
It might seem that by allowing medical and grocery industries to remain open we would be assured of receiving medical service and groceries and only need to abstain from other types of services. But that isn’t how modern supply chains work. For a limited time while reserve inventories are drawn upon it might seem that the medical and grocery industries can work independent of all of the others, but once their inventories are depleted, they will struggle to function properly.
The medical industry consumes a large amount of latex. And if latex is sourced from industries that aren’t deemed essential then supplies will become difficult to find. Even if we keep the latex factory open because it produces essential supplies to an essential industry, that factory will need regular maintenance parts from other industries. And we could follow the inputs to those industries that supply the maintenance parts, utilities, cleaning, sanitation, etc. and discover a whole additional layer of critical industries that need to keep running - just to make sure latex gloves keep showing up at medical centers across the world.
If we keep digging deeper, we find beautiful examples of human cooperation and interconnectivity as almost every industry somewhere in the supply chain becomes linked with almost every other.
We are all going through an incredibly difficult time right now and it certainly makes sense for some businesses to close their doors for a while in order to curb the spread of infection. But we should keep looking for creative ways to allow as many businesses as possible in as many industries as possible to remain open while protecting our safety. Depending on where we live many of us have had an economic shutdown now for between two and three weeks. In many industries that is about all of the reserve inventory they carry. We could be in for increased shortages of critical supplies over the next few weeks if we don’t find ways to safely open more businesses.
It takes much more that just allowing the grocery and the dairy farm to remain open in order for there to be milk on the shelf.