Lemons to Lemonade
Mark Cohen - Lemons into Lemonade - The Robin Report

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It\’s increasingly clear even to those with their heads in the sand (or somewhere else where their vision is impaired) that this pandemic is the most globally disruptive occurrence that anyone still alive today has ever experienced. Unlike other natural disasters that have befallen us, this one is still running its course aggressively and no one has any accurate way to predict the path it will take. At present, there is no way to fully define the damage that will be left in its wake. Like Boeing, which will eventually resume the manufacturing of airplanes for the commercial airline companies which will eventually fly those planes filled with passengers, the retailing industry will resume at some point. But the retail landscape will be very, very different on the other side of this crisis.

Natural Selection

Powerful retailers who were doing well before COVID-19, particularly those who remain viable during these troubled times, will come out stronger than ever before. Ecommerce, especially in grocery, will continue to grow at a vastly accelerated pace. The stores that were struggling, along with the venues in which they did business — such as lesser malls, power centers and strip centers — will have enormous difficulty resuming operations: They will continue on their slow and inevitable downward spiral.

[callout]The Federal Government should nationalize the nearly 1000 B and C enclosed malls as emergency hospitals and long-term Civil Defense Depots. If acute care tents are in place in Central Park in New York and portable units fill convention centers, why not in the atriums of empty malls?[/callout]

So, how can a vast landscape of rotting lemons be turned into a bountiful future supply of lemonade? It may be counterintuitive to those who know me, but some goodwill can emerge, as noted in COVID-19: Short-Term Opportunity, Long-Term Problem and Retail Love in The Time of Coronavirus.

Past as Prelude

The world has survived an ongoing onslaught of deadly disease outbreaks like HIV, SARS, MERS, Bird Flu and Swine Flu because these maladies have been able to be contained, and in many cases, treated. COVID -19 has no remedy, at least not yet. The crisis continues as the virus spreads and has created a massive healthcare emergency. We know now that there are simply not enough beds, supplies and equipment to treat the enormous surges of critically ill people everywhere in this country.

The Failure of Free Market Capitalism

How is it that the richest and most productive country on Earth can run out of ICU beds, masks, ventilators and other personal protective equipment? The answer is pretty simple – despite decades-old warnings of experts about potential pandemic outbreaks, we treat healthcare like a commercial business. Investment in assets has been calibrated against forecasted returns. Inventory has been allocated based upon \”normal\” forecastable demand. But this pandemic is certainly not normal and can\’t easily be written off on a P&L as a Single Non-Recurring Item (SNRI) without putting untold numbers of people at risk of dying.

Maybe as part of what will inevitably become ongoing government intervention and remediation, the Federal Government should nationalize the nearly 1000 B and C enclosed malls as emergency hospitals and long-term repositories of emergency supplies and equipment.

The Fed could put the struggling landlords and retailers (and their beleaguered shareholders) who still own and reside in those malls out of their misery and create a geographically dispersed repository of ready to deploy emergency hospitals alongside large volumes of emergency supplies and equipment. Let\’s face it, pre-pandemic, most of these malls and many of the stores that occupied them as tenants were exhibiting various degrees of failure. Post-pandemic, these malls and many of their tenants, aren\’t likely to emerge as viable businesses. As we begin to contemplate a post COVID -19 world, with every indication that more of these deadly illnesses could be upon us in the future, it\’s time to step up and become truly prepared. A truly radical threat warrants truly radical solutions.

Fallout Shelter Nostalgia

In the 1950s and 1960s when we felt threatened by the Russian \”Red Menace,\” the Office of Civil Defense built fallout shelters in untold numbers in buildings throughout the United States. There were hundreds of thousands of these designated spaces which were replete with supplies, dependent on the capacity of each shelter. I remember as a kid prowling through the creepy shelter in the basement of my apartment building scrutinizing the scary military spec markings on those sealed olive drab barrels. And then there were the shelters buried in our neighbors\’ backyards.

There was apparently an ample supply of toilet paper, but no surgical masks, gloves or other medical supplies over and above rudimentary first aid kits. The content of those barrels also included one quart of water and 700 calories per day per shelter occupant for two weeks. I would imagine that 1 quart of water per day per person would suffice but I\’m not sure how viable 700 calories per day would have been.

I suppose the rugged survivalists and uber-wealthy landowners who have been preparing for a disaster like this by building their own shelters are feeling somewhat justified in their view but have any of them outfitted those shelters with ventilators?

If the U.S. Military can maintain and manage a worldwide network of fully staffed hospitals and supply depots filled with fuel, materiel, weapons and ammunition then surely the U.S. government, whether military or civilian, can be empowered to set up and maintain facilities, supplies and equipment that can be rapidly deployed when and if a next catastrophic event occurs. Just keep this program out of the hands of politicians.

I would even go a step further. I would provide industries that manufacture or otherwise procure key strategic products and supplies that would be called upon in a crisis like this with a mandate (with suitable incentives) to maintain sufficient stockpiles in their own right.

Shame on us for allowing this crisis to take hold the way it has. Shame on us for allowing ourselves to be so woefully unprepared. It is not enough to just get everyone back to work. That is vital but insufficient. It\’s vital that we learn from this and have the will to take steps to protect ourselves more appropriately in the future.

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