To understand the long-term consequences of the pandemic on Main Street and local tax revenues, we need to consider first and second order effects. The immediate consequences of lockdowns and changes in consumer behavior are first-order effects: closures of Main Street, job losses, massive Federal Reserve bailouts of the top 0.1%, loan programs for small businesses, stimulus checks to households that earned less than $200,000 last year, and so on.

The second-order effects cannot be bailed out or controlled by central authorities. Second-order effects are the result of consequences have their own consequences.

Gordon Long and I look at two highly correlated second-order effects: the collapse of Main Street and local tax revenues.

The first-order effects of the pandemic on Main Street are painfully obvious: small businesses that have barely kept their heads above water as costs have soared have laid off employees as they've closed their doors.