MUNCIE – Over the coming years, the inevitable slew of books on COVID will identify villains and heroes, missteps and moments of prescient action. History will metaphorically adorn some with clown shoes, and others with halos. Like the Great Depression, world wars, or 9/11, COVID will bequeath us a before and after moment. Even as we return to a new normal, nearly all of us will speak of a life that preceded the pandemic and compare it to the life afterwards.

One important American institution that is sure to get less attention and praise than it deserves are those common and humdrum markets for goods and services. These most ubiquitous of human affairs, the buying and selling of products or labor, turned out to be the most significant and effective part of our COVID response.

No doubt many a reader will be displeased at the notion that profit-maximizing firms were the fiber that held together the nation in the midst of the pandemic. However, this profit maximization may not be what is depicted in movies. Smart, successful businesses chase consumer interests. They listen to buyers, anticipate their needs and respond not out of charity or goodwill, but to make money. This doesn’t make them uncharitable, just wise enough to understand that hiring workers and buying supplies takes more than good will.

In the process of making money, owners and managers seek to employ workers, protect their reputation and satisfy customers. While many folks may complain about shortages of toilet paper or bacon, the real story is how quickly and effectively businesses adapted to each and every stage of COVID.

From Feb. 26 to March 18, U.S. grocery store sales grew by more than 68%. From March 18 to March 30, sales dropped down to 108% of average January sales. Americans bought about three months’ worth of groceries last March. Despite plenty of news articles about shortages, I’ve seen no evidence that corncobs replaced toilet paper, or squirrel stew comprised dinner for any American.

The health care industry entered the pandemic as the most monopolized sector of the U.S. economy since the Gilded Age. From March 13, when the national emergency was declared until April 1, they quickly prepared for the pandemic. They postponed non-emergency procedures, and curtailed their most lucrative services, causing a 56% reduction in consumer spending on medical services. As damaging as hospital monopolies have been to many Indiana communities, we must be thankful for the speed with which hospitals responded to the pandemic.

The pandemic dramatically cut household spending on restaurants and hotels. By the end of March, consumer spending was down in this industry by 66%. It slowly recovered about half its lost sales after the CARES Act was passed. While the economic climate for restaurants and hotels has weakened in recent weeks as the disease expands, this sector faced the most daunting long-term effects of COVID. Still, over the past few months, the innovations in services are obvious almost everywhere. The growth of carry-out menus, the integration of food delivery services and the modifications to drive-through restaurants offered decades of restaurant innovation in a matter of weeks.

Surely the most obvious example of private sector success was the development of a vaccine for COVID. Though governments in nearly every nation subsidized R&D, the first effective vaccine did not receive them. Surely, there’s a lesson here.

All told, American businesses from the corner restaurant to large pharmaceutical firms have responded to COVID very effectively. Over the long term, that response will limit damage to the lives and livelihoods of Americans. It also offers a living demonstration of why the United States remains economically ascendant.

The success of businesses depended on the coordination of millions of economic agents who often could have no idea of their role. For example, the quick response of the humble local grocery store depended upon the response of thousands of farms, livestock facilities, commodity sellers, fuel bulk shipment operations, refineries, railroad maintenance operations, truck dispatchers, pallet makers, website developers, logistic algorithm writers, lawyers and even accountants.

The actions of all these folks wasn’t coordinated by the CDC or some mythical Department of Grocery Store Operations. It came from millions of vendor-managed inventory responses, calls from busy shipping clerks and purchasing managers all acting on the trust that is built in market exchange. Only the private sector can accomplish something like this, but the policy environment does matter. 

Michael J. Hicks, PhD, is the director of the Center for Business and Economic Research and the George and Frances Ball distinguished professor of economics in the Miller College of Business at Ball State University.