A Bat Sneezed and the Economy Collapsed (Intro)

Updated: Oct 5

Idea in Brief

  • Mass Production, Lean Production, and bottom-line financial metrics created unprecedented value to society in the early 20th century but have now reached their limits and create a global systemic risk.

  • The human population footprint has expanded into the former wilderness where viruses thrive in rodents, birds, pigs, and bats. COVID-19 is the sixth pandemic of the 21st century, and we can expect more to follow.

  • Societal growth requires new technologies and new management theory, as envisioned in the Fourth Industrial Revolution. Products will become connected and autonomous, and economics will measure impacts on People and the Planet, as well as Prosperity. This is known as the Triple Bottom Line.


Introduction

In January 2020 I spoke at an aerospace conference which included a variety of face-to-face networking sessions… and just two months later this seemed unimaginable as the world suffers the effects of the COVID-19 pandemic. At the time, the only known cases were in Wuhan China, but later research finds unrecognized cases existed in at least the US, France, and Italy as early as December 2019.


This is all by way of saying that just after speaking at the conference I developed fifteen days of COVID-like symptoms. I'm happy to say that I recovered completely, but as a rhetorical device let’s assume that SARS-CoV-2 was present at the conference and it became a ‘spreader event’ affecting members of the aerospace community. Imagine that the event’s attendees returned to their offices and spread the virus, infecting the entire profession, and that every engineer, every designer, every maintenance technician, every employee at every aerospace manufacturer or supplier world-wide were simultaneously laid-up with COVID-19, in turn shutting down the world’s ability to supply new commercial aircraft.


That would be a better situation than the industry faces today.


Six months later, the number of US flyers has decreased by 70% (chart), with job reductions in the tens of thousands across the airline and aircraft manufacture industries. Tens of billions of dollars were lost in Q2-2020, and airlines expect that a return to pre-COVID traveler levels is years away and will require much of the world to be vaccinated. [1]



The travel industry relies on world-wide public health as travelers consider their entire infection risk, from the time they leave home until they return. It is not enough for aircraft, airlines, and airports to protect passengers: what about the taxis, the hotels, the offices, the restaurants, and the theme parks?

Destination locations face risks as well. Respiratory viruses with or without symptoms may spread long before humans are aware of them. The SARS-CoV-2 virus originated in bats, jumped to humans in China, to other humans in Europe, to even more humans in New York and throughout the world, and to lions and tigers in the Bronx Zoo [2]. Since the outbreak, nations and states have closed their borders and are enforcing quarantines upon arrival; business trips which used to take a week now require a month, if the traveler is allowed to enter at all.


Is This the Economy That We Want?


From the New York Times on 15-July-2020 [3]:

“WASHINGTON — The United States economy is headed for a tumultuous autumn, with the threat of closed schools, renewed government lockdowns, empty stadiums and an uncertain amount of federal support for businesses and unemployed workers all clouding hopes for a rapid rebound from recession.

“… failure to suppress a resurgence of confirmed infections is threatening to choke the recovery and push the country back into a recessionary spiral — one that could inflict long-term damage on workers and businesses large and small…

“Most economists abandoned hope for a “V-shaped” recovery long ago. Now they are warning of an outright reversal, with mounting job losses and business failures. And this time, much of the damage is likely to be permanent.”


The Economist, on 1-August [4]:

“Around 35% of the global fleet of around 25,000 aircraft is still parked—less than the 70% at the height of the crisis in April but still terrible. Even if traffic recovers to 80% of last year’s levels in 2021, as some optimists expect, plenty of aeroplanes will remain on the ground. Citigroup, a bank, forecasts excess capacity of 4,000 aircraft in 18 months’ time.”


And the Wall Street Journal on 2-September [5]:

“The pandemic is set to have an even deeper and longer-lasting impact on airlines’ finances than 9/11, several industry executives have said... Travel demand has stalled at around 30% of last year’s levels. Executives believe it will take years—and likely a vaccine—for it to fully rebound.”


Similar issues exist in the commercial real estate market. The Time-Life Building in Manhattan can house as many as 8,000 workers, but the daily average in July was just 500. Street level retail establishments closed, hot dog sales dropped from 400 per day to 10, and NYC investment banks with tens of thousands of workers find that they do not need to operate in offices. If workers no longer commute to their local office, why would they fly to another city? The business market for air travel generates two-thirds of airline earnings [6], and as it collapsed the Zoom online meeting platform grew from 10 million to 300 million daily participants, echoed by growth at Microsoft, Google, and Cisco [7]. New business habits are forming, which do not require air travel.


Systemic Risk Impacts the World Economy


The thesis of this and related posts is that the World is a global system and each industry affects the others. Regions in southern China grew to meet the needs of the global automotive industry, which in turn led to a viral "spillover" from bats to humans; infected airline passengers spread the virus throughout the world, and caused large portions of the global economy to shut down. Travel and entertainment industries collapsed as they now await improvements in public health, a necessity created by the automotive and airline industries. There have been six pandemics thus far in the 21st century, five in the past decade, and more are expected.


A century ago, as Henry Ford, William Boeing, and others created prosperity through high-volume mass production, they did do so with little concern of the affects that one industry had on another, or how they affected the planet as a whole. Since this time the human population quadrupled and only one-quarter of the planet’s surface remains wild. Prosperity and population grew but they are now limited by the planet.


The challenges humans now face are of our own making.


Related Posts:

This and related posts are extracted from a chapter developed for the 2020 Conference Proceedings for the American Institute of Aeronautics and Astronautics, held in Orlando in January 2020.


  • 1: A Bat Sneezed and the Economy Collapsed (Intro) (This Post)

  • 2: Mass-producing an Efficient Pandemic ("A Bat Sneezed" Pt. 2) Gives a brief history on Mass Production, Lean Management, and "bottom-line efficiency", which I combine beneath the term 'Industry 2.0'. Originating a century ago, these brought unprecedented value to society but have now reached their limits and create global systemic risk.

  • 3: Systems Thinking and Economic Disruption ("A Bat Sneezed" Pt. 3) Discusses 'Systems Thinking' models, Exponential Growth, Limits to Growth, Shifting the Burden, and Tragedy of the Commons, as means of understanding the systemic nature of pandemics, and how Industry 2.0 economics will lead to more.

  • 4: A New Economy for the Fourth Industrial Revolution ("A Bat Sneezed" Conclusion) Discusses how 'Industry 4.0', encompassing both new technologies and new economics of "People, Planet, and Prosperity". Includes impacts of Digital Twins, Automation, Reshoring Supply Chains, and Workforce Development.


References

[1] K. Conger and E. Griffith, ""The results are in for the sharing economy they are ugly." Published 2020-05-07," 7 5 2020. [Online]. Available: https://www.nytimes.com/2020/05/07/technology/the-results-are-in-for-the-sharing-economy-they-are-ugly.html

[2] D. E. McAloose, "“From people to Panthera: Natural SARS-CoV-2 infection in tigers and lions at the Bronx Zoo.”," 24 July 2020. [Online]. Available: https://www.biorxiv.org/content/10.1101/2020.07.22.213959v2

[3] J. Tankersley and B. Casselman, "“A Resurgence of the Virus, and Lockdowns, Threatens Economic Recovery”.," 15 July 2020. [Online]. Available: https://www.nytimes.com/2020/07/15/business/economy/economic-recovery-coronavirus-resurgence.html

[4] "“Air travel’s sudden collapse will reshape a trillion-dollar industry.”," 1 August 2020. [Online]. Available: https://www.economist.com/business/2020/08/01/air-travels-sudden-collapse-will-reshape-a-trillion-dollar-industry

[5] D. Cameron, "“United plans to Cut more than 16,000 Staff”," 2 September 2020. [Online]. Available: https://www.wsj.com/articles/united-plans-to-cut-more-than-16-000-staff-11599061023 .

 
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