John M. Cunningham

Columnist

Obviously, New Hampshire business owners must devote themselves primarily to managing their day-to-day operations.  However, if they are wise, they will also devote a reasonable amount of time to planning for future operations.  This should include not only short-term planning, covering perhaps just the next few months, but also long-term planning.  

As a practical matter, Coronavirus long-term planning means planning for the era—which I’ll refer to here as the Post-Coronavirus Era—that will begin on the date when a safe and effective Coronavirus vaccine becomes widely available and will continue for at least a year or two thereafter.  

However, just as key financial means of survival for many New Hampshire businesses today include federal benefits—e.g., the Paycheck Protection Program, the Employee Retention Credit Program and the Mortgage Payment deferral program under the federal CARES Act—the most important means of survival and growth affecting New Hampshire businesses during the Post-Coronavirus Era will also undoubtedly include benefits available from the federal government under federal legislation and federal programs in effect during that era.  

Thus, planning for the Post-Coronavirus Era means, first and foremost, accurately forecasting the chief features of that legislation and those programs.

Such a forecast may at first seem doomed to pure speculation.  However, as shown below, it’s not.  You can make it with substantial certainty.

First of all, it is very likely—although also very tragic—that when the Post-Coronavirus Era begins, many tens of millions of individuals, including hundreds of thousands of individuals in New Hampshire, will still be out of work and thus unable to provide themselves and their families with food, clothing, housing, the education of their children, health care and other basic needs.  At least at the beginning of the Post-Coronavirus Era, there will be only one possible source of desperately needed cash for these individuals—namely, the federal government.  State governments will be wholly unable to meet this need.  To provide this cash, the federal government will have no choice but to borrow many trillions of dollars beyond those it will already have borrowed during the Coronavirus Pandemic itself and to transfer this cash to these individuals in what may best be described as survival distributions.  

Will the federal government be able to do this massive additional borrowing without triggering disastrous inflation, such as that experienced in Weimar Germany after the First World War?  

The issue is much debated.  However, two leading schools of economics—namely, traditional Keynesian economics and a relatively new but widely respected school known as Modern Monetary Theory (MMT)—argue that this federal borrowing, if properly done, will be entirely feasible and safe.  For economists in these schools, the idea that the federal government should maintain its budget the way families do is a myth—referred to by prominent MMT economists as “the federal debt myth,” since, in essence, we will be borrowing “from ourselves for ourselves.”  

Furthermore, it may be argued that if the federal government does not do this borrowing, the result will be massive poverty, homelessness and starvation for millions of Americans—in short, an economic and human catastrophe with no remotely similar precedent in American history except, perhaps, the Great Depression.

But the above trillions of dollars of survival distributions will have an obvious enormous benefit for millions of American businesses, including many in New Hampshire.  During the Coronavirus Pandemic, many of these businesses will have to struggle mightily to survive.  The above survival distributions will enable the above individuals during the Post-Coronavirus Era to pay these businesses—for example, landlords, supermarkets and health care providers—for the basic products and services they and their families desperately require.

Furthermore, as discussed in the next two columns in this series, thanks to the above federal borrowing, at least nine major types of businesses, including many in New Hampshire, will not only survive but prosper.

These articles are being shared with partners in The Granite State News Collaborative. For more information visit collaborativenh.org.