THERE'S NO SOCIAL PATHOLOGY COVID HASN'T IMPROVED:

Corporations try hard to control costs, and the Covid epidemic has forced companies to aggressively reduce those costs.

Costs fall into two broad buckets: fixed, such as insurance, rent and interest payments, and variable, like energy, materials, and labor.

Fixed costs don't change, but variable costs do. If you can control variable costs, or turn them into fixed costs, you can usually take in more on the bottom line.

Labor is the largest single cost a company has. Labor is variable. There's many pay grades, people come and go, the workforce fluctuates depending on demand.

If you can replace your workers using technology -- robots, or better software -- you can substitute a variable cost (labor) for a fixed cost (technology).

Voila. Higher profits, particularly once revenues pick up. That's operating leverage.

Of course, there are other way to reduce costs, including cutting real estate and travel costs, or reducing debt.

If you're looking for an example of how reducing expenses can help a company's bottom line, look at the energy companies, which have been aggressively reducing staff and cutting costs.

Kinder Morgan, for example, operates oil and natural gas pipelines and terminals. The company saw year-over-year revenues decline by 7.1%, but earnings per share increased by 3.8%. How did they do that? They cut operating expenses by 44.8%.

Kinder Morgan isn't alone. Many companies hit hard by Covid have restructured -- cutting jobs and other expenses -- and are now anticipating higher profits and higher margins in 2021.

These include casinos, railroads, oil services, restaurants, and retail. "These business have reorganized substantially in 2020 so investors will probably see surprises to the upside," Nick Mazing, head of research at Sentieo, told me.

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