Our Perspective on the Long-term Societal/Financial Impact of the Pandemic — Part 1
‘Events, dear boy, events’ is a famously never-uttered-quote by Harold Macmillan (which he was said to have responded when asked about the greatest difficulty a prime minister faces), very conveniently explains our lives right now. Ideas that have been laughed at or thought of as fringe at best (remember universal basic income?) have suddenly become reality beginning with handing out cash to every household in the US and other countries.
Keeping in mind the danger of myopia, we can still make certain assumptions for the long-term impacts of the pandemic which have been brewing for a long time and perhaps just got expedited due to the current crisis. I’ll approach this by analysing the events and the reactions through two different lenses at ‘macro’ and the ‘micro’ level. At the macro level I’ll take the global social, financial and investment trends that have been showing signs of change for a while. In part 2, I’ll focus at the micro level on the startup ecosystem and how it could evolve from here.
On a macro level;
Health comes first… preferably supported by the state
It is customary for every British citizen to complain about the NHS (same for many state owned health services worldwide); not anymore! It has always been loved despite the complaints and now it is revered. In times of crises, people turn to the state, they don’t want to be left out because they don’t have the means, or the profit oriented private sector simply doesn’t care about storing excess amounts of ventilators or more than a handful of ICU beds, whereas the government can and will.
People need to be healthier and should be incentivised to stay so
This pandemic has an elephant in the room from a health and environment perspective, which is; how safe is it to consume meat under these circumstances? Not just exotic wild ones but any domesticated animals in massive industrial complexes which are prone to pandemics at any given time. It is not sustainable economically and environmentally (there’s more than enough data to support this right now, one of which is the special report on climate change and land by the Intergovernmental Panel on Climate Change (IPCC) commissioned by the UN suggesting plant-based diets as a major opportunity for mitigating and adapting to climate change), but now it is obviously a threat to humanity’s survival. If we don’t let go of or reduce our meat consumption, healthcare systems need to be massively propped up for the next pandemic. Being healthy also means being resilient, do we still want to deal with life long very expensive diabetes treatments, or cardiac problems which can be prevented easily by better nutrition and preventive medicine?
Masks, ventilators, PPE suits?! Made in errrrr… UK!
1980s saw a complete transformation from manufacturing to services in developed countries especially in the US, UK. That policy change left very few champions nationally which by a turn of fortune became the target of attention (e.g. McLaren) when nations desperately ran out of necessary stock of healthcare machinery locally and the entire supply chain in the world collapsed. High quality, reliable manufacturing, fully digitised and smart, should now happen supported with massive investment in infrastructure nationally. This wouldn’t necessarily be a break from the disruption theory, what is not good enough will still be the centre of attention for innovators globally but perhaps this time by the help of governments; hundreds of billions of dollars to be flushed into these new companies perhaps similar to the space age or the birth of super computerisation in 60s and 70s subsidised by government funds.
‘Money can solve all known problems’, Eric Schmidt
Trillions of dollars will be pumped into economies, this time not to bail out spoilt and irresponsible big banks but to help otherwise quality businesses, small businesses, retail and hospitality sectors — ordinary people who are already struggling today. The time of big government will come back — with a vengeance. This means hundreds of billions of dollars of new debt for the governments which probably big tech will pay for. No more high double-digit profit margins for display, video, search advertising (thanks to the huge scale of economies) as they will have to pay much higher taxes. A provocative idea a couple of months ago could have been for the states to take equity in large private corporations in time of small government, but it is not that provocative anymore, it is indeed happening. Then it should also be the time to ask for a massive push for green tech and huge investments in infrastructure, this time environmentally friendly (complete solar powered airports, fully electric public transport)! It is time to ask for everything, correcting past mistakes, creating sustainable green jobs and saving the planet in the meantime.
‘Location, location, location’, My Real Estate Agent
Analysis of productivity during this time, should lead to the questioning of the real estate that employees occupy. The new norm of living the full 24 hours without compartmentalising our lives artificially should stay with us. We will have seen the value of those 3–4 hours of concentrated real work compared to pretending to work on that report your VP keeps asking for for no other reason than keeping you busy. Cost of labour vs cost of living conversation should be void now; you can be creative and productive in the place you choose and be happy there with the totality of your life.
High unemployment, much longer term recovery
It took 10 years after the 2008 financial crisis for the world economy to recover, and it wasn’t even a done deal. It will take longer this time, that means we’re here for a long time to suffer and adapt eventually.