Business Briefs: the pandemic’s worst advice

Empty tables

Restaurant booking website OpenTable has released data which shows the chilling impact that Covid-19 is having on restaurant bookings.

The site shows the growth rate in bookings compared with the same day last year. In early March, Australian bookings had been fairly stable year on year. On 15 March they were only down 12% (where global bookings were down 47%).

As of March 22, before they were ordered shut, bookings were down 66%, while globally they were down 99%, with Australia lagging most of the world by four days.

Silver linings

While the death and economic destruction wrought by COVID-19 has been obvious, in some areas the effects of the virus may have actually saved lives.

During the COVID-19 devastation in China, most of the country’s industry was shut down. According to Stanford University economist Marshall Burke speaking on the Freakenomics podcast, child, infant and old-age mortality is believed to have massively dropped during the peak of the six week Chinese epidemic.

This is because the shutdown led to a drop in pollution that was similar to the decrease witnessed during the Beijing Olympics, which saw a 20% improvement in air quality.

Burke predicted that the industry shutdown would have saved around 50,000 lives, while tens of thousands of lives which would have been spared due to a reduction in car accidents (which number around 250,000 annually in China).

Just over 3000 people died directly from COVID19 (although there would have also been significant numbers of indirect deaths due to shortage of hospital beds and economic stagnation).

Thanks to China’s lockdown (and its otherwise horrific levels of pollution), the net effect of the epidemic appears to be around 70,000 fewer deaths. Sadly, this is unlikely to be the case anywhere else in the world. 

‘Peace in our time’

History is unlikely to be kind to Scott Morrison, who is quickly becoming a modern day Neville Chamberlain.

While most of the world locks down — with New Zealand and a swathe of American states doing so in the last few days — Scotty not only refuses to take proper measures, but actually convinced Victoria and NSW to wind back their restrictions last Sunday.

Chamberlain famously trusted Hitler after meeting him several times because he gave him a warm, two-handed handshake, before declaring there would be “peace in our time”. Morrison, as recently as 12 days ago, was ferociously trying to shake Gladys Berejoklian’s hand, and our chief medical officer Brendan Murphy (the person who appears to be most influencing the PM) was still saying handshakes were “low risk” as of March 15.

With lockdowns in Italy are working (three consecutive days of falling case numbers is a hugely positive development), Morrison’s decision to overrule NSW and Victoria looks like it might be his Chamberlain moment — with millions of jobs, thousands of businesses and countless lives potentially being lost as a result.

Great advice

Hats off to Victoria’s Chief Medical Officer Brett Sutton, who two weeks ago encouraged all Victorians to buy “two weeks’ worth of food and medicine”. The advice came amid already widespread panic buying, and couldn’t have helped rampant shelf-clearing at many supermarkets.

Sutton seemed to realise his error a little late, noting that “if everybody goes out and buys not two weeks’ worth of staples but two months’ worth, the shelves will be empty and the only people who suffer then are vulnerable people …”

Now, two weeks later, we can see that that’s exactly what happened.

WeWork gets ‘defensive’

Ousted WeWork founder Adam Neumann last year boasted that the company could benefit from a downturn and had defensive characteristics.

Fast forward a year and WeWork’s inflated valuation, which briefly stood at US$47 billion thanks to backer SoftBank, is almost certainly worth less than zero. WeWork’s major competitor, IWG (which had actually been profitable while WeWork was burning billions of dollars each year), has seen its share price destroyed, dropping 72% in a few of months.

Given all that, it’s not surprising that Softbank is set to walk away from buying US$3 billion in shares from other WeWork shareholders. (It had already provided US$5 billion in debt to keep the business afloat.)

Under the proposed deal, Neumann, the architect of WeWork’s demise, had been set to collect an astonishing US$925 million, on top of a US$185 million “consulting fee”. With widespread speculation that WeWork isn’t far from collapse, it’s likely that Softbank, which has already smoked billions in WeWork, isn’t keen on destroying any more capital. As Forbes eloquently noted, “by the time of [Neumann’s] ouster in September, he was seen as a greedy, self-dealing buffoon, and the ensuing months have done little to dispute that”.

House rules

Of all the confusing COVID-19 restrictions and non-restrictions that the government has clumsily enacted, potentially the dumbest are the rules regarding real estate inspections. While “open inspections” and auctions have (rightfully) been banned, inexplicably the government is still allowing “private inspections”.

For a start, it is difficult to understand how a real estate agent would be deemed “essential”, but more concerningly, the rule allows agents to enter the home of a tenant with another person.

So you could have an elderly resident (highly at risk) who has been given notice to vacate their property, and a possibly-infected property manager and viewer barging in completely in accordance with the government’s rules. You couldn’t make this stuff up.

Adam Schwab is the author of Pigs at the Trough: Lessons from Australia’s Decade of Corporate Greed.