May 18, 2020

Coming Back from COVID-19

Lessons in Entrepreneurship from Disaster Recovery Research

Stefanie Haeffele

Deputy Director, Academic and Student Programs

Anne Hobson

Program Manager, Academic & Student Programs

Virgil Storr

Vice President, Academic & Student Programs
Additional details

Read the original article at The Vienna Circle.

The current pandemic is an ongoing global crisis. Policymakers around the world are grappling with how to respond to the spread of SARS-CoV-2, the virus that causes coronavirus disease 2019 (COVID-19).[1] At the time of this writing, there have more than three million confirmed cases and more than 200,000 confirmed deaths from COVID-19.[2]

In accord with the guidance from the World Health Organization, public officials have ordered, insisted, or encouraged their residents to practice physical distancing. As a result, schools from the kindergarten to university level have either closed or are pursuing online learning strategies, businesses have switched to telework, restaurants have closed their dine-in operations and turned to pickup and delivery options, and religious services are being conducted largely online. In many locales across the United States, economic and social life has been brought to a standstill. As of April 13, only five states (Arkansas, Iowa, Nebraska, North Dakota, and South Dakota) did not have, at least partial, stay at home orders in place.[3]

While this public health strategy appears to be successful at arresting the spread of coronavirus, the economic, social, and psychological costs of this policy approach are immense. US unemployment has skyrocketed, with 4.4 million seasonally adjusted unemployment claims reported for the week ending April 18 and a total of more than 26 million claims since the beginning of the pandemic.[4] Worldwide domestic abuse cases are on the rise.[5] Additionally, almost everyone is suffering from heightened anxiety from the massive uncertainty regarding how long physical distancing practices will need to remain in place, when effective medication and vaccines will be developed and ready for use, when essential supplies will arrive, if the healthcare system can sustain the influx of patients, and how long the economy will take to recover once the pandemic ends.

The discussion on what can be done to blunt the economic, social, and psychological costs of the pandemic has largely focused on government bolstering small businesses through loans and grants, softening the effects of unemployment through unemployment insurance, and stimulating the economy through cash payouts. These policy prescriptions fail to appreciate the potential of entrepreneurship to help communities withstand and overcome crises.

Community Revival in the Wake of Disaster | Official Book Trailer

Societies across time and geographical location have endured and recovered from the death, destruction, and displacement brought on by profound crises such as hurricanes, famines, and war. Our extensive research on community response and recovery after disasters has shown that commercial and social entrepreneurs are key drivers of disaster response and recovery.[6] Like with those disasters, responding to and recovering from this pandemic will require a multifaceted set of entrepreneurial ideas and solutions and a policy environment that encourages rather than stifles entrepreneurship. Policymakers should give entrepreneurs the space to act in the midst of crises by expanding the notion of “essential” goods and services, suspending or removing regulations that stand in the way of entrepreneurial efforts, and avoiding confusing or conflicting policies.

‘Community Revival in the Wake of Disaster’ Book Panel

Entrepreneurship has already proven to be critical in our response to COVID-19

In uncertain times, entrepreneurs are harbingers of hope, facilitating recovery and signaling that community rebound is on its way. Entrepreneurs are individuals who recognize and act on opportunities to promote positive social change. In times of crisis, our research has shown that commercial and social entrepreneurs fill three important roles: (1) providing needed goods and services; (2) reconnecting or creating new social networks; and (3) signaling that recovery is likely to occur and is in fact on its way.[7] In the context of the COVID-19 pandemic, commercial and social entrepreneurs are already performing each of these key functions.

Providing needed goods and services

In the context of the COVID-19 pandemic, businesses and nonprofits need to find ways to continue to provide their customers with the goods and services they need, to figure out ways to adapt and to help others adapt to the challenges associated with maintaining physical distance, and to seek to solve current problems, including the scarcity of medical equipment, personal protective equipment, medications, testing kits, and other essential goods and services.

Local restaurants and stores, for instance, are sourcing needed supplies — like toilet paper, cleaning products, and staple foods such as eggs — from their wholesale suppliers that consumers can purchase along with their more traditional takeout or delivery options.[8] Customers are also turning to local community-supported agriculture cooperatives (CSAs) for fresh produce deliveries.[9] Additionally, local gyms are offering home workout options, with instructors offering group classes over various video conferencing platforms, and local musicians and artists are teaching lessons online as well as offering live concerts through social media and streaming services.


Medium and large businesses are also modifying their manufacturing facilities and supply chains to produce medical and cleaning supplies. Distilleries are now making hand sanitizer,[10] tennis shoe companies are turning their sneakers into face shields for healthcare workers,[11] appliance manufacturers are shifting resources away from producing appliances such as vacuum cleaners toward manufacturing ventilators,[12] and fashion designers are now producing personal protective equipment such as masks and gowns for frontline healthcare workers.[13]

Reconnecting or creating new social networks

While the practice of physical distancing is limiting people’s ability to physically gather and interact with one another in person, entrepreneurs are finding creative ways to maintain and foster connectedness and community while being physically apart. Such activities can provide a sense of community, opportunities for discussion, and ways to maintain and even grow social ties.

Churches, for instance, are bringing their services online, gyms are offering virtual classes, and colleagues are turning to virtual happy hours to network, share stories, and vent frustrations. Business leaders, celebrities, and individuals are organizing donations of medical supplies, creating fundraising sites for individuals who have lost their jobs, and finding numerous other ways to support and connect with their communities online. In addition to providing virtual concerts, museum tours, and other experiences, artists are also encouraging others to engage with art. Famous cellist Yo-Yo Ma shared his own recordings and started an online campaign to encourage others to share songs of comfort.[14] The professional cycling team Team Ineos hosted a virtual group ride in which the team was joined by more than ten thousand of its fans.[15] Additionally, children are making COVID-19 care packages for the elderly, coordinating mask donations, and posting signs reminding people to practice physical distancing.[16] The various ways in which Americans are fulfilling the needs of their communities are too numerous to list fully.[17]


These efforts to maintain and increase social connectivity while maintaining physical distance are dependent on technology provided by private companies. Conferences such as IEEE Conference on Virtual Reality and 3D User Interfaces are experimenting with new ways to facilitate online engagement and leveraging virtual reality to build their community and help participants network and feel connected.[18] Social media — such as Twitter, Instagram, and TikTok — and video conferencing applications — such as Google Meet, Webex, Zoom, and Kudo — have proven to be essential during this period. Additionally, several major technology companies such as Cisco (the company behind the web conference service Webex), Google, Facebook, Apple, and Amazon are donating resources to healthcare and educational efforts and expanding free access to their products and customer service programs.[19]

Signaling recovery is likely to occur

The uncertainty that surrounds crises is profound. Commercial and social entrepreneurs help individuals and groups navigate this uncertainty. For instance, spirits companies are pulling together funds to support local bars and restaurants and their employees.[20] Established nonprofits such as Meals on Wheels as well as newer organizations like DC-based chef José Andrés’s World Central Kitchen[21] are ramping up and starting new programs to deliver meals to the elderly and the poor and, importantly, to children no longer able to eat through school lunch programs. Even when there are confusing signals coming from government officials about how best to respond, entrepreneurs find ways to drive recovery and signal a sense of belonging even in the most uncertain and perilous times.[22] Perhaps the most important function that entrepreneurs perform during a crisis is that they can signal a commitment to recovery and a desire to foster long-term sustainability of the communities to which they belong.

Learning from Katrina: How Communities Can Flourish in the Wake of Disaster | Peter Boettke

Arguably, it will not be the relaxing of stay at home orders but the reopening of businesses that will alert us of a return to normalcy or the arrival of a new, post-pandemic normal.

Governing entrepreneurship during crises

Despite the emphasis on government-led response and recovery efforts, past disasters have shown that governments may fail to adequately understand the extent of the crisis and mobilize resources.[23] It is structurally difficult for bureaucracies to reorganize and deploy national social services to account for these quickly changing circumstances.[24] For instance, providing testing and medical supplies, providing seniors and schoolchildren meals in their homes, moving in-person processes online, and coordinating the administration of unemployment claims and stimulus disbursements can be bogged down with politics and red tape and overwhelmed by increased demand.

By contrast, entrepreneurs see these coordination problems as opportunities for change and are more able to adapt to shifting needs and circumstances. In order to facilitate entrepreneurial responses to the COVID-19 pandemic, policymakers must give entrepreneurs the space to experiment with solutions to emerging problems. This means that removing barriers to entrepreneurial activity should be at the top of the policy agenda.

Recommendation #1: Expand the notion of “essential” goods and services

Policymakers often exempt “essential” goods and services from the restrictive policies that they have adopted in response to the coronavirus. It is, however, difficult and perhaps impossible to predict which entrepreneurial efforts will be essential as the crisis evolves. Delivery services and video conferencing technologies, for instance, are proving to be essential services while society is maintaining physical distance. Some current restrictions, however, are making it difficult to purchase furniture and equipment that could better facilitate physical distancing.[25] Further, many companies and industries that may not be vitally important have shifted to producing medical and cleaning supplies crucial to response efforts. A particularly unexpected example is the increased demand in portable bidet attachments in response to widespread toilet paper shortages.[26] It is unclear that even just a few months ago people would have considered these services more than mere conveniences. That it is difficult to predict which goods and services will be essential means that policymakers should presume that a business is performing an essential service until proven otherwise and should adjust policies when unlikely operations are revealed to be important.

Walmart, Katrina, and Disaster Response | Steven Horwitz

Recommendation #2: Suspend or eliminate regulations on and restrictions of commercial and social entrepreneurship

Many of the regulations on and restrictions of commercial and social entrepreneurship during regular times can prove too costly during and after a crisis. Policymakers should also waive licensing fees and licensure requirements and grant out-of-state temporary licenses to make it easier for medical professionals to cross state lines or come out of retirement, and for military personnel to administer care to civilians.[27] Relaxing state certificate-of-need laws, expanding scope of practice for physician assistants and nurse practitioners, and removing restrictions on telemedicine will also allow hospitals to increase and improve services.[28] Similarly, delivery services are quickly becoming an essential service for people to receive needed food and supplies. Relaxing regulations on delivery technologies, labor policies, and state food and alcohol restrictions will further enable this industry to respond to the needs of its customers.[29]

“Black Wave” Book Panel

Recommendation #3: Avoid confusing and contradictory policies

Amidst such uncertainty, policymakers should focus on reducing the signal noise of confusing and contradictory policies and on setting clear guidelines for entrepreneurial activity.[30] At the federal level, regulatory agencies should provide clear guidelines on what individuals and manufacturers can do to help meet medical supply needs and what labs can do regarding testing, approving, and producing needed medical devices and virus test kits. Some of this guidance is already occurring. The US Food and Drug Administration (FDA) recently allowed commercial manufacturers and private and university labs to produce coronavirus tests and has moved regulatory oversight to the states, rather than continuing to rely on the Centers for Disease Control and Prevention (CDC) as the single source of tests.[31] Furthermore, the CDC recently clarified its guidelines on homemade mask development and use, reversing the earlier suggestion from US health officials that healthy people need not wear masks.[32]

Critically, policymakers should be as clear as possible about when they plan to relax the restrictions that they have imposed in response to the pandemic and the metrics that they will be using to determine their course of action. Policymakers should also be very clear about what they will do and what they will not do. Offering false hope that there will be a return to normalcy sooner than is likely or promising help that is unlikely to be forthcoming can paralyze entrepreneurs or push them to pursue strategies that are ill advised and unsustainable. Entrepreneurs can only plan in an uncertain world if the guideposts they are relying on to help them navigate that uncertainty are consistent and reliable.

Conclusion

The research on disaster recovery provides a hopeful lesson as we live through and ultimately recover from the COVID-19 pandemic. Unleashing entrepreneurial action while observing the physical distancing practices needed to save lives will provide people with needed goods and services, encourage essential social connections, and signal that recovery is likely to occur.

Read More:

Learn about the Hayek Program’s Community & Crisis research project and submit a research proposal to get involved.

More Commentary on the COVID-19 Pandemic:

Authors:

Stefanie Haeffele is a senior fellow for the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University.

Anne Hobson is a program manager for Academic & Student Programs at the Mercatus Center at George Mason University and a PhD student in economics at George Mason University.

Virgil Henry Storr is an associate professor of economics at George Mason University and the Don C. Lavoie Senior Fellow for the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University.

Notes:

[1] A modified version of this piece was published as a Mercatus Policy Brief for the Mercatus Center at George Mason University. Find it here: https://www.mercatus.org/publications/covid-19-policy-brief-series/coming-back-covid-19-lessons-entrepreneurship-disaster

[2] Johns Hopkins University & Medicine, “COVID-19 Dashboard,” Center for Systems Science and Engineeringhttps://coronavirus.jhu.edu/map.html.

[3] Several states (e.g. Georgia and Ohio) have announced plans to relax their stay-at-home orders.

[4] US Department of Labor, “Unemployment Insurance Weekly Claims,” News Release, April 9, 2020, https://www.dol.gov/ui/data.pdf.

[5] Amanda Taub, “A New Covid-19 Crisis: Domestic Abuse Rises Worldwide,” The New York Times, April 6, 2020, https://www.nytimes.com/2020/04/06/world/coronavirus-domestic-violence.html.

[6] For a list of research from the Mercatus Center Gulf Coast Recovery Project, see https://ppe.mercatus.org/expert_commentary/mercatus-disaster-recovery-research, and for further research on Hurricanes Katrina and Sandy, see http://www.communityrevival.us/research.

[7] Virgil Henry Storr, Stefanie Haeffele-Balch, and Laura E. Grube, Community Revival in the Wake of Disaster (New York: Palgrave Macmillan, 2015).

[8] Renatta Signorini, “Entrepreneurs Fill Shopping Void in Wake of Pandemic,” TribLive, March 25, 2020, https://triblive.com/local/westmoreland/entrepreneurs-filling-shopping-void-in-wake-of-pandemic/?utm_source=Commonwealth+Foundation+Emails&utm_campaign=3e863678da-EMAIL_CAMPAIGN_2019_09_16_04_38_COPY_108&utm_medium=email&utm_term=0_4b5e24dfcf-3e863678da-.

[9] Tove Danovich, “Is This the Start of a CSA Boom?” Eater, April 2, 2020, https://www.eater.com/2020/4/2/21200565/csa-trend-coronavirus-covid-19-stay-at-home-delivery-groceries.

[10] Mike Pomranz, “How the Spirits Industry Is Helping Out During the COVID-19 Pandemic,” Food & Wine, April 15, 2020, https://www.foodandwine.com/news/spirits-industry-donations-covid-19.

[11] “Transforming Nike Air to Help Frontline Healthcare Workers,” Nike News, April 7, 2020, https://news.nike.com/news/nike-ppe-face-shields-covid-19-support.

[12] Nada Bashir, “James Dyson Designed a New Ventilator in 10 Days. He’s Making 15,000 for the Pandemic Fight,” CNN Business, March 27, 2020, https://www.cnn.com/2020/03/26/tech/dyson-ventilators-coronavirus/index.html.

[13] Oscar Holland and Ananda Pellerin, “Fashion Industry Answers the Call for Masks and Personal Protective Equipment to Fight Covid-19,” CNN Style, March 24, 2020, https://www.cnn.com/style/article/fashion-industry-masks-protective-equipment-covid-19/index.html.

[14] PBS, “Yo-Yo Ma on Encouraging ‘Songs of Comfort’ Amid Global Crisis,” PBS News Hour, March 18, 2020, https://www.pbs.org/newshour/show/yo-yo-ma-on-encouraging-songs-of-comfort-amid-global-crisis.

[15] Cyclingnews, “Team Ineos Announce Zwift Ride and Race for Sunday April 12,” cyclingnews.com, April 8, 2020, https://www.cyclingnews.com/news/team-ineos-announce-zwift-ride-and-race-for-sunday-april-12/.

[16] Mark Hand, “2nd-Grader Gives 6k Masks, Caps to Hospital Staff: Coronavirus,” Patch, March 27, 2020, https://patch.com/virginia/ashburn/second-grade-boy-collects-6-000-masks-caps-hospital-workers.

[17] Hill Staff, “Selfless Acts: How Americans are Helping Each Other Rhrough the Coronavirus,” The Hill, March 24, 2020, https://thehill.com/homenews/state-watch/489046-selfless-acts-how-americansa-are-helping-each-other-through-the-coronavirus.

[18] IEEE VR, “Birds of a Feather and Social Hangouts,” IEEE VR Conference, March 22, 2020, http://ieeevr.org/2020/program/bof.html.

[19] Patrick Moorhead, “The Most Outrageously Awesome Ways Tech Companies Are Helping In Times of the Covid-19 Crisis,” Forbes, March 30, 2020, https://www.forbes.com/sites/moorinsights/2020/03/30/the-most-outrageously-awesome-ways-tech-companies-are-helping-in-times-of-the-covid-19-crisis/#54a12452796c.

[20] Mike Pomranz, “How the Spirits Industry Is Helping Out During the COVID-19 Pandemic,” Food & Wine, April 15, 2020, https://www.foodandwine.com/news/spirits-industry-donations-covid-19.

[21] Sean Gregory, “’Without Empathy, Nothing Works.’ Chef José Andrés Wants to Feed the World Through the Pandemic.” TIME, March 26, 2020, https://time.com/collection/apart-not-alone/5809169/jose-andres-coronavirus-food/.

[22] See Stefanie Haeffele and Virgil Henry Storr (eds.), Bottom-up Responses to Crisis (New York: Palgrave Macmillan, 2020).

[23] See Stefanie Haeffele and Virgil Henry Storr (eds.), Government Responses to Crisis (New York: Palgrave Macmillan, 2020).

[24] Yasmeen Abutaleb, Josh Dawsey, Ellen Nakashima, and Greg Miller, “The U.S. was Beset by Denial and Dysfunction as the Coronavirus Raged,” The Washington Post, April 4, 2020, https://www.washingtonpost.com/national-security/2020/04/04/coronavirus-government-dysfunction/?arc404=true.

[25] Hayley Peterson. “Walmart Clarifies Its Policy on the Sale of Nonessential Goods After a Shopper Said She Was Barred from Buying a Baby Seat,” Business Insider. April 13, 2020, https://www.businessinsider.com/walmart-clarifies-policy-on-nonessential-items-after-car-seat-backlash-2020-4.

[26] Nina Roberts, “Some Small Businesses are Flourishing During the COVID-19 Pandemic,” Marketplace.org, March 25, 2020, https://www.marketplace.org/2020/03/25/some-small-businesses-are-flourishing-during-the-covid-19-pandemic/.

[27] Ethan Bayne, Conor Norris, and Edward Timmons, “A Primer on Emergency Occupational Licensing Reforms for Combating COVID-19,” Mercatus Policy Brief (Arlington, VA: Mercatus Center at George Mason University, March 26, 2020), https://www.mercatus.org/publications/covid-19-policy-brief-series/primer-emergency-occupational-licensing-reforms-combating.

[28] Matthew D. Mitchell, “First, Do No Harm: Three Ways That Policymakers Can Make It Easier for Healthcare Professionals to Do Their Jobs,” Mercatus Policy Brief (Arlington, VA: Mercatus Center at George Mason University, March 26, 2020), https://www.mercatus.org/publications/covid-19-policy-brief-series/first-do-no-harm-three-ways-policymakers-can-make-it.

[29] See Brent Skorup and Connor Haaland, “How Drones Can Help Fight the Coronavirus,” Mercatus Policy Brief (Arlington, VA: Mercatus Center at George Mason University, March 30, 2020), https://www.mercatus.org/publications/covid-19-policy-brief-series/how-drones-can-help-fight-coronavirus; Daniel Griswold and Jack Salmon, “Lower Barriers to Immigrant Health Care Workers to Help Combat the COVID-19 Pandemic,” Mercatus Policy Brief (Arlington, VA: Mercatus Center at George Mason University, April 8, 2020), https://www.mercatus.org/publications/covid-19-policy-brief-series/lower-barriers-immigrant-healthcare-workers-help-combat.

[30] See Emily Chamlee-Wright, “The Long Road Back: Signal Noise in the Post-Katrina Context,” The Independent Review 12, no. 2 (Fall 2007): 235–59; Virgil Henry Storr, Stefanie Haeffele-Balch, and Laura E. Grube, Community Revival in the Wake of Disaster (New York: Palgrave Macmillan, 2015).

[31] Alec Stapp, “Timeline: The Regulations — and Regulators — That Delayed Coronavirus Testing,” The Dispatch, March 20, 2020, https://thedispatch.com/p/timeline-the-regulationsand-regulatorsthat.

[32] Centers for Disease Control and Prevention, “Use of Cloth Face Coverings to Help Slow the Spread of COVID-19,” April 13, 2020, https://www.cdc.gov/coronavirus/2019-ncov/prevent-getting-sick/diy-cloth-face-coverings.html.