No event has been as devastating to the credibility of so-called “experts” as the COVID-19 pandemic and the policies and hypocrisy it produced.
No one in charge actually seemed to believe that they were pushing. Top U.K. scientist Neil Ferguson, whose coronavirus death projections were largely responsible for their strict lockdowns, had to resign after being caught breaking quarantine to see a lover. California Governor Gavin Newsom was photographed dining indoors maskless when it was illegal for the rest of the state to do so – Austin Mayor Steve posted to social media to encourage his city’s residents not to travel, while he was in Cabo – Michigan Governor Gretchen Whitmer traveled out of state while encouraging others not to travel – Dr. Birx visited family on Thanksgiving while telling others to avoid it – Fauci was seen maskless at a baseball game – and the list goes on and on.
The policies they enacted for the rest of us weren’t without cost, and the new book “The War on Small Business” by Carol Roth surveys the damage. It’s one of the few books on the economic consequences of lockdowns, and the most detailed I could find. The book explores how the government picked winners and losers during the pandemic, how the COVID stimulus was a test run for a universal basic income, how small business isn’t just the engine of economic activity but also a roadblock to a political power grab, how state and local governments abused power, and why cronyism is being confused with capitalism.
As Roth documents, by only the middle of 2020, 6.7% of all small businesses with employees (as opposed to a sole proprietorship) were forever shuttered. By November, in heavily locked down states such as New York and New Jersey, one third of small businesses had closed during the year. Nationwide, 15.1 million people were still out of work due to their employer closing temporarily or permanently, and this was at a time when most states had moved beyond “remain at home” lockdowns to allowing businesses open with restricted capacity.
Even with the end of the most severe lockdowns, problems lingered. As Roth notes, an analysis from Alignables December 2020 small business survey found that 48% said they risked failure by the end of December, and only 43% were confident they could survive through June 2021. It’s now June, and the number of U.S. small businesses has declined 40% since lockdowns began – and the most recent polling finds 35% of small businesses say they risk permanently closing by summer. Reopening doesn’t solve the accumulated problems from lockdowns – any rent deferred during that time period still has to be paid.
As Roth points out, much of the economic recovery has been in the form of big business capturing market share previously held by small business. That’s to be expected as small businesses were ordered closed, forcing sales to big box retailers and websites like Amazon that have online businesses to sell from. Most stock market gains in the pandemic-era have been due to a concentrated number of stocks (particularly in tech) seeing outsized gains, while most small companies floundered.
Even during the early stages of the pandemic big business disproportionately benefitted from aid programs. 92% of all PPP loan requests from $5-10 million were approved, compared to only 59% of all loans (in April 2020). Airlines got a $60 billion bailout. 21,000 medical practices got loans, as did 14,310 law firms by July. That the PPP program allowed for businesses with up to 500 employees just goes to show that it was never truly designed to help just small businesses (though it did help many).
The only silver lining is that this doesn’t all apply quite as much to those fortunate enough to have lived in red states during the pandemic.
As I covered previously, there has been an obvious political divide that opened up when it comes to the economic recovery of the states, with more lockdown hesitant states outperforming. Red States have been leading the economic recovery from the pandemic, with the unemployment rate in blue states peaking at 59% higher than their red state counterparts back in October. Of the top 20 states that recovered the fastest from the pandemic (measured in terms of the percentage of jobs recovered that were lost), 17 have Republican governors. Idaho and Utah lead the pack, having recovered more jobs than they lost from the pandemic. They recovered 114.4% and 113.2% of their respective job losses. That Republican-led states also tend to have less regulation and taxes to begin with also boosted their recoveries.
Matt Palumbo is the author of Dumb and Dumber: How Cuomo and de Blasio Ruined New York, Debunk This: Shattering Liberal Lies, and Spygate
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