When I was a youth in NYC, I used to stare at the big yellow signs with the three triangles upside down that said, “fallout shelter”. I recall the infamous original infomercial from the late 1940s and early 1950s featuring “Bert the turtle” advising all the school kids when there is an “attack” to “duck and cover”.
It was not until years later that I realized how ridiculous that advice was. The dropping of the atomic bombs over the Japanese cities of Hiroshima and Nagasaki in August 1945 vaporized about 125,000 people instantly. It was not until at least a decade later the full effect of those nuclear weapons would have on thousands more Japanese citizens and the potential threat it presented to our planet. Despite this warning, in October 1962 the world came to the brink of nuclear war between the United States and Russia.
For example, after the Civil War, president Ulysses s. Grant instituted an “age of reconstruction” which was supposed to unite our nation after a partisan and bloody conflict between the North and South. To this day, we still remain divided not realizing how the civil war defined us at that time and how it would affect many years later.
At the end of World War I the leaders of France, England, Italy and the United States thought they had adopted a “league of nations” that would stop any subsequent world conflict, create an equitable settlement of reparations owed by Germany, and prevent Germany from rising up again after the devastation that took place from 1914 to 1918.
In November 1918, fueled by women’s suffrage and a temperance movement, the united states passed the eighteenth amendment prohibiting the sale of alcohol for human consumption. It would take effect on January 1, 1920 and would not be repealed until the twenty-first amendment was passed which would take effect on January 1, 1934.
In 1922, to avert a civil war in Italy, king Victor Emmanuel requested and allowed a radical journalist to form a fascist government in an attempt to unite the unravelling nation not realizing the effect this would have for the next twenty years.
In October 1929, after a decade of US self-indulgence, Wall Street stocks crashed and the World was plunged into economic chaos. It would take ten years and another world war to lift nations out of this “depression” – and allow a bigoted, deranged World War I Corporal to rise to power in Germany in an attempt to establish a new world order to last “1000 years”.
All of these events in world history have one thing in common. Nobody had any idea of what the “fallout” would be after the events described above occurred. All the years that followed were not the end…but just the beginning of a much longer and deeper chasm that we would encounter.
The pandemic of 2020, and its effect upon the business world, is not different by any means.
Prior to the pandemic, the business world, by and large, was speaking about “AI” (artificial intelligence) that would at its optimum, eliminate as many as 40% of the manufacturing and financial services jobs that exist today. With the pandemic striking almost every sector of the economy, let’s apply some of what we know about history as well as what we have learned about ourselves in the last six months and play an old game called “twenty questions” and see what kind of solutions you can think of:
- With the advent of working from home, when is a good time to: watch TV, go to bed (or wake up for that matter), do (office) work, and eat. With twenty-four hours in the same location, regimentation of daily activities can become blurred and carelessly variable at best.
- If we work at home, how and when will we move around to perform regular daily chores…by cars, bicycles, e-bikes?
- How will we conduct business meetings? No more conference rooms? All video conferencing? With rising rental spaces and the threat of sickness ever present, how will remaining offices be designed?
- Will clients still require the in-person visit to their locations or will we just have virtual communication? Even today, despite the use of TeamViewer and teleconferencing, clients still look for personal contact with advice,
- What kind of effect will the pandemic have on the world economy, namely:
- The production of oil, coal, and other such commodities, and the use of solar, nuclear or wind energy?
- The power shift among nations from an economic as well as a military standpoint.
- How many businesses will be “wiped out” as a result of the pandemic? What industries will be temporarily or permanently being affected by this crisis? How will the change in the income stream in these industries affect financial services such as CPA firms, investment management, etc.
- How will real estate values change in crowded cities like New York, Chicago or Los Angeles as people used their residences as places of businesses?
- How will the IRS and local jurisdictions change their tax laws to accommodate the changing income streams and work habits arising from the current crisis? Will changes result in new or higher sales tax, income taxes, value-added taxes, etc. To compensate for the government shortfalls in revenues?
- In our own backyard, how will the yearly audit, quarterly compilation or transaction testing be affected? As a point of information, despite a few exceptions, anything a human can do a computer can do – including being timely, objective and without bias of any kind.
- How will employment procedures change? At its height, there are roughly forty million Americans out of work (approximately 15% to 20% of the workforce) which includes not only seniors and parents with two or more jobs but also the millions of students who will graduate into the current workforce. Who will lose their jobs…and for what reasons? How will these families survive?
- With the stimulus packages issued by the Federal Government as well as extending unemployment benefits as a “temporary fix”, how will the government account for these monies in their budgets furthering already existing deficits?
- After WWI, the monetary values changes in the German economy spiraled out of control (a loaf of bread cost one million marks). Additionally, the rate of inflation there accelerated at an alarming rate leading to their country being worse hit by the “crash”.
- In the 1930s, after Franklin Roosevelt was elected President, although the US economy began to recover with new social programs and government projects, will our economy recover without the government’s continuing and extensive intervention?
- How will education change? Will all testing (including the CPA exam) be graded by letter basis (p for pass or f for fail)? Will virtual classes which do not have the enforcing and capturing of the student’s attention have the same educational effect as old “live” classroom participation?
- How will overtime and work performance be evaluated? Will we all be lines on a piece of paper subject to termination (by phone or e-mail of course)? (don’t laugh…it is happening even today). Work ethics consists of many factors flowcharts, budgets, reports and projections do not necessarily provide.
- How will office construction and layouts be affected in major cities? Will we have offices only when we do need to venture to a different location similar to windowed bank tellers partitioned by glass and at least six feet apart? Will individual offices be eliminated in favor of loft-like staff-rooms flanked by work stations?
- During the 1920s, blue chip stocks rose to incredible values. With the maximization of durable purchases as a result of job losses (how many refrigerators and cars have you bought in last ten years), how will blue chip corporations, staples of economic indices, survive (J. C. Penney and Neiman-Marcus have already filed Chapter 10)?
- With families drawing on their retirement funds and insurance policies to pay bills, what will thirty and forty year olds have funds left for retirement in the year 2040…or 2050?
- With social security funds supposedly being drained out by 2032, what alternatives will adults have to survive financially? Will the government keep printing money for more stimulus payouts thus devaluing the dollar even further causing more inflation…and so on?
- I’ll leave the last question for you to pose. What other problems can or will result or linger from such things as the current pandemic, artificial intelligence, etc. Better yet, do you have a solution? Only time will tell us if we are right.
It does not look like, as history has taught us, the pandemic will fade away with a vaccine hopefully coming sometime next year! Get ready – it is going to be a bumpy ride!
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