Coronavirus recovery: Former Google CEO Eric Schmidt weighs in on rebuilding economy

Eric Schmidt believes Amazon, Walmart, Costco and Target need to lead the way in hiring

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Former Google CEO Eric Schmidt shared his ideas on the best strategy to reopen the economy amid the coronavirus pandemic and how large companies can do their part in helping speed up the economic recovery as more than 17 million Americans have filed for unemployment. His remarks came during an interview with economist Marie Josee Kravis for the Economic Club of New York on Tuesday.

Eric Schmidt (Alex Wong/Getty Images)

While many experts and economists worry of a potential "unemployment hangover" lasting even after the economy is reopened, Schmidt believes it can be avoided through job retraining and reskilling.

"One way to think about it is that there are jobs being created by virtue of the digital platforms, as well as there are jobs being lost because of the loss of faith in the analog system because your retail stores and so forth are shut down," Schmidt said. "So the society just needs to change more quickly to this new paradigm."

In order to do that, Schmidt believes that larger companies like Amazon, Walmart, Costco and Target, who have all seen "very significant growth" while other retail companies and brands have been hurt, need to lead the way by hiring individuals displaced by the virus.

"It appears as though the distribution infrastructure, the networks, the winners are winning the majority of the share and the lesser parts of the infrastructure are suffering as a result," Schmidt said. "As you get a more networked society, you tend to produce network winners, which become the distribution platforms, the branding platforms and so forth, and they need to be the ones hiring."

TickerSecurityLastChangeChange %
AMZNAMAZON.COM INC.2,472.41+1.37+0.06%
WMTWALMART INC.123.94-0.02-0.02%
COSTCOSTCO WHOLESALE CORPORATION307.09-1.20-0.39%
TGTTARGET CORP.118.85-0.64-0.54%

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In terms of actually reopening the country and restarting the economy, Schmidt said that both the health problem and economic problem need to be solved at the same time, but that we have very few tools at our disposal to actually do that.

"We don't have mathematical models that understand the network paths that people follow," Schmidt said. "We didn't take the time in the last month or two to collectively figure out what the contact points of everyone are. That's a lost opportunity."

He added that the most likely scenario to reopen would be a "series of unlocks" with social distancing in stores and restaurants that will last for much longer than most people think.

"This will change our society for much longer than we think," Schmidt warned. "It's not going to be a quick recovery back to the hugging and kissing in restaurants and all the kind of behaviors that were perfectly fine before the pandemic. People will remember, and until there's a broadly available vaccine and herd immunity, it will be dangerous to engage in some of those activities, especially if you're older."

Overall, Schmidt believes the hardest decision will be when to reopen schools, primarily due to the difficulty for public schools to practice social distancing and because we "don't fully understand the transmission path with kids and their parents and especially their grandparents".

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He expects that each state will have a different process and timeline for reopening, but is worried that states are not currently equipped with the tools necessary to make that decision accurately, and that to do so would require collective action in order to fund and build the technology used to create a more accurate model that would assess the "incremental danger" associated with opening up an individual state or business.

"I wouldn't want to make that decision if I were a governor without having some facts right. I want to know what percentage of my workforce is covered by this. How many people am I exposing? What additional danger am I asking?", Schmidt said.

But rather than involving big tech companies, Schmidt believes there are plenty of individuals at universities across the country who would be just as capable at creating these tools.

"If I were the governor of a state, I would go to the university and all the people that I know and I'd say I want the 50 smartest technical people in my state," Schmidt said. "Every one of them has a smart university full of smart, smart folks there, and I want you guys to build me a model of how I can reopen my economy with the least risk to health."

He added that big tech has already done a good job thus far of stepping up during the pandemic, and hopes people will be more appreciative of tech giants' contributions to society as a whole going forward.

“Think about what your life would be like in America without Amazon, for example. The benefit of these corporations — which we love to malign — in terms of the ability to communicate ... the ability to get information, is profound — and I hope people will remember that when this thing is finally over,” Schmidt said. "So let’s be a little bit grateful that these companies got the capital, did the investment, built the tools that we’re using now and have really helped us out. Imagine having the same reality of this pandemic without these tools.”

TickerSecurityLastChangeChange %
GOOGLALPHABET INC.1,442.31+7.44+0.52%
AAPLAPPLE INC.323.34+1.49+0.46%
FBFACEBOOK INC.232.72+0.81+0.35%

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While he acknowledges that the type of models he's referring to are nonexistent at the moment, he says they are in the process of being developed. For the time being, however, Schmidt says state governors are the only ones who can make the decision of when to reopen, and they will have to do so blindly.

"If I were the decision-maker, I would say I'm flying blind," Schmidt said. "How could you possibly expect me to make the right decision? Probably the most important decision that I'll make in my political career from the standpoint of serving our nation, and I don't have that information. That's a problem that I think can be solved at a state level."

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In terms of testing, Schmidt said that while we don't have to test everyone, uniform testing across the country is the best way to get an accurate picture of how the coronavirus is impacting every "representative group". Unfortunately, the United States is currently in a situation where many groups have been "poorly served and poorly tested".

"We don't know how many asymptomatic carriers there were, we don't know how many people got sick and got better and we're never in the testing pools. We don't know how to count them," Schmidt said. "We don't know the transmission rate within families, although we have estimates broadly. So we're going to have to make some assumptions."

While many people are concerned about opening before an official vaccine is on the way or personal protective equipment has reached a sufficient amount, Schmidt warned that it isn't a "politically reasonable" or "economically viable" solution to wait to reopen. He believes that, in another month or two, a prolonged shutdown will lead to a "very significant bankruptcy cycle in many industries" and that once that cycle starts, it will become very hard to restart the economy.

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Though Schmidt acknowledged the United States has fallen behind on appropriately dealing with the coronavirus, he believes it can be a leader in the effort to find a vaccine if we allocate more money to scientific research.

"We are late to this party, but if we got our act together with respect to research in these areas and these mechanisms for social distancing that I'm describing, we could ultimately become the leader because all the other countries have the same problems with respect to a resurgence of the virus and so forth," Schmidt said. "If we in the next month or so figured this stuff out well, which includes the things that we've discussed, those ideas could become adopted by our democratic partners and friends who are struggling."

President Donald Trump speaks about the coronavirus in the Rose Garden of the White House, Tuesday, April 14, 2020, in Washington. (AP Photo/Alex Brandon)

Schmidt's comments came the same day that President Trump announced that some portions of the country could reopen sooner than the end of the month.

Trump said he will be reaching out to various companies in the coming days to gain insight on their individual situations and find out if the U.S. is ready to reopen for business.

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