The Depth Report - A Hat Tip to Bill Ackman
This morning, Bill Ackman of Pershing Square, did a lengthy phone interview on CNBC. Ackman suggested that to stop the spread of the coronavirus, President Trump should close the borders and institute a country-wide quarantine for a month. He described this as an “extended spring break.” He advocated for a 30-day rent, interest, and tax holiday for everyone and suggested that the government pay the salaries of people who couldn’t work from home. Ackman described his thought process over the past two months about the current health and economic situation of the country. His thoughts closely mirror ours.
An Analysis of the Finance:
Ackman’s point is simple and elegant: If the government and our fellow Americans adjust slowly to the coronavirus, we could be fighting this for months, or possibly more than a year. In that scenario, entire industries would go bankrupt starting with the hospitality industry (hotels and restaurants), proceeding to the airlines, and moving on from there. He made the point that revenue in the hotel, restaurant, and airline businesses were trending toward $0, and that while most large businesses in the US could survive a month of no revenue, almost none could survive an 18-month deluge of rolling quarantines and shifting restrictions on public activity. His view is that we could survive shutting down all non-essential commerce and social activity for a month to stop the spread of the virus, but we wouldn’t be able to manage 4-6 quarters of severe disruption.
We agree. We’ve explained in previous pieces why the coronavirus is spreading differently than other diseases. It’s going to take a concerted, strongly coordinated effort to stop the spread, and we’re going to be better off from both a health and an economic perspective if we take a 1-month hit as opposed to fighting this slowly over multiple quarters. Ackman’s analysis is sound.
An Analysis of the Constitutional Impact:
While we think Ackman’s analysis is excellent and correct, we do think it’s important to note the danger of his proposed course of action. We believe that our shared freedoms and constitutional rights are important, and what’s being proposed here is suspending the First Amendment right to free assembly, and potentially other fundamental constitutional rights for the entire country for a month. In general, we should always be concerned when the government says it’s suspending our civil liberties for a short time and for our own protection. That doesn’t always go well. With that said, the country is in the early stages of a national emergency, and we don’t have a better plan.
What we’d prefer to see would be 50 governors and several hundred mayors making that call on a local level. To his credit, Mayor DeBlasio of New York is trying to do just that. We hope that any governmental official making that decision does so with proper constitutional analysis, and unfortunately, we’ve seen examples of some using this crisis as an opportunity to circumvent the legislative process and grab power for partisan purposes. Should President Trump need to exercise the power to implement Ackman’s proposed plan we hope he will limit as few rights as possible, and restore them as soon as possible. Ackman expressed confidence in President Trump, and if the president follows Ackman’s suggested plan, we hope and expect he will exercise this power carefully.
A Hat Tip to Ackman’s Morality and Persuasiveness:
During the interview, Ackman spoke about sending his employees to work from home almost a month ago, and talked about imposing a self-quarantine to protect the health of his elderly father. Ackman has thought this issue through carefully, and during this segment he was emotional, caring, and rational. He addressed the issue of college kids continuing to throw parties, and congregating in large numbers on spring break. Rather than try to convince the students that they were putting themselves in danger, he wisely asked them to think about who they might infect. He suggested that they consider the health of their parents and grandparents, or the health of a close friend who may have had recent surgery, all of whom may have compromised immune systems.
This was both brilliant and persuasive. In lieu of government orders and having the National Guard marching down 5th Avenue, we’d much prefer that people make the choice to be civic-minded. Staying at home is inconvenient, but as Ackman pointed out, it’s not much of a sacrifice to ask in order to protect the health of all of us.
We compliment Bill Ackman on presenting a well-thought-out plan to protect both the public health and the economy. We urge our readers to continue to exercise caution and maintain safe social distancing for the immediate future. And we wish everyone good health.