Covid and Councils

Well, we're not gonna need Conference Centres for a while either. And as several Councils have declared themselves to be in a Climate Emergency, they won't be needing:

1. those divvies from the airport companies (who just facilitate Nasty Emissions)
2. Tourism and business development agencies (neither is gonna come roaring back in the next year or three, so just fire 'em all)
3. Rates penalties set at 10% (when fer gosh sakes, even IRD's UOMI is 8.35% and even that's usurious when OCR is 0.25%)
4. Festivals, buskers, events and other Covid-Cluster-Generators
5. 4WD's and SUV's for Council staff who never get off the seal - buy 'em e-bikes with trailers

This Emergency could turn out to be Quite the Tipping-point for Councils....bring popcorn.

Define 'essential'

The Gubmint's definition of 'essential services' (tucked inside the Covid19 Levels blurb here) includes the airy statement 'including their supply chains'.

This raises the eternal question of exactly what constitutes 'essential' parts of a 'supply chain'.

E.g. the 3-waters functions of TLA's are certainly Essential. But suppose a water main blows (we've had four instances in our street over the space of 18 months). That'll need a digger, a tip-truck at minimum. One of them blows a hydraulic hose. That needs the Hose Guy to roll his truck and fix it. So he's Essential too. The Hose Guy gets a flattie on the way to or from the fix, that needs the Tyre Guy to either roll his truck, or stay open. So the Tyre Guy's Essential too.

You can by now discern where this is going. Just how far down the 'Supply Chain'/Bill of Materials does the Essential designation flow? And how to give certainty to the Hose, Tyre, Parts, Mechanics etc firms as to how Essential they are?

The Reverse-Bill-of-Materials conundrum

This is a reverse-bill-of-materials moment for the economy. A BOM is usually intended to show what one needs to Build something, and often a BOM is largely composed of many 'kits' - sub-assemblies, and that recursion can go many layers down to arrive at the ultimate content. That's what makes such a nonsense of trying to, for example, derive a 'carbon footprint' for a finished product of any complexity - too many ultimate components and thus far too many assumptions needed.

A dis-assembling economy. OTOH, crucially has no BOM's which specify the componentry which will ultimately be affected. So the unravelling of entire sectors (events, festivals, tourism) is inherently unable to be predicted in the precision needed to direct remediable action or arrange substitutions.

That's what makes this whole thing so not-amenable to ordinary economic modelling. Because BOM's only work during Assembly, not for Demolition. Hence the headless-chicken circling seen from prognosticators of all stripes, and from not a few commenters right here on Interest.....

As a thought experiment, imagine an AirNZ engineer, a barista, and an RE salesbot (sorry, Personage). 

1. The engineer has two mortgages, two cars on HP, an overdraft and significant CC debt, but owns two residential rentals and is now jobless. 
2. The barista has zero mortgage and moderate CC debt, but a student loan and a small overdraft - little to no other assets beyond a motorscooter, and her boss has just announced a 3-day week. 
3. The RE bot has a thumping mortgage, no rentals, a large Amex balance, two leased vehicles and a few other toys/assets, and the firm has just cut the commission rate by 50%. 

Now, kindly predict the economic effects of this small sample's situation. Then multiply that by a million.....

And here's the real kicker. It's far, far easier to Demolish than to Build.....