Looking beyond the immediate coronavirus crisis
It’s fascinating already to think about the long term impacts of this coronavirus crisis, including the trends we expect to accelerate and those that might decline. Here we don’t attempt to provide premature answers but rather to highlight some of the areas of greatest interest.
Most immediately we are seeing an unprecedented role for the state in managing this crisis. The USA has announced a $2tn economic support package, while the UK and other leading nations are underwriting a huge share of private-sector salaries, and supporting the self-employed and small businesses. All of which would have been anathema to many politicians and economists just a few weeks ago.
You could argue that the delusions of the neo-liberal, small-state orthodoxy that have prevailed for almost 50 years are now being cruelly exposed. As we note elsewhere, the primacy of shareholder returns over all other stakeholder responsibilities was already under challenge. This crisis will surely further redefine the role of business for years to come – and the relationship between business and government.
Sweeping emergency powers
The Economist this week welcomed and acknowledged the need for an intervention of this scale. However, they also cautioned that the powers acquired by the state during crises are rarely completely handed back. This could have serious implications for security, surveillance economic powers. The UK followed other Governments in introducing sweeping emergency powers, including bans on freedom of assembly and movement (did anyone else notice our Home Secretary licking her lips at the prospect of police enforcement?).
Much has been made of the apparent contrast between the Chinese and (to a lesser extent) the Singaporean response to the crisis compared to that of other developed democracies. Many of these states have appeared slow at best, and in denial at worst, in responding to the scale of the situation. This is despite the fact that a global pandemic has been expected and forecast for a long time, and was presaged by the emergence of Ebola and SARS in recent decades.
This comes at a time when survey data was already showing a disturbing public appetite for strong leadership, as opposed to liberal democratic ideals. It will be fascinating to see how this plays out in the coming years as we recover from the immediate public health crisis and look to rebuild our shattered economies.
Whatever the bigger picture there is little doubt that China sees this crisis as an opportunity to increase its global status and to further weaken the hegemony of the USA. This at a time when POTUS is floundering in the face of the crisis, forcing the USA to brace for the impacts of indecision.
But it’s too easy to just highlight the role of a strong and pro-active state administration (democratic or otherwise). Active and empowered charity and community sectors are also vital. The response to the NHS volunteers appeal in the UK shows the depth of public support and appetite for playing a part in the response.
“Top Dogs” weather the storm
In terms of economics, we are already seeing the impacts on smaller businesses and the pain of the millions of freelance, self-employed and gig economy workers across the globe. Amid the carnage on global stock markets, we can also see that the stocks of the giants (“Top Dogs” as the Economist calls them) of the global economy are performing less badly, with commentators pointing to the depth of reserves available to them to weather the storm. After all, Apple’s cash stockpile of over $200bn is larger than many countries’ fiscal stimulus measures.
Thus we would expect to see the world’s largest companies consolidate their power in the global economy to the detriment of smaller and medium sized enterprises. But what will this all mean for our (vaunted) flexible employment market? We are seeing the limits of one-sided flexibility and the risks borne by the self-employed. Will the crisis have a chilling effect on our appetite for such risk and therefore a flight to secure employment?
Equally we are seeing workplace trends toward flexibility and remote working radically accelerated by the crisis. It will be fascinating to see how this plays out in the future as businesses struggle to rebuild and consider reducing fixed costs by permanently downsizing office spaces. Of course, remote working isn’t an option for everyone, and this is another dividing line in the current experience of the crisis. The knowledge economy is at a significant advantage to many other service sectors, let alone construction or manufacturing.
A crucial part of the shake-out to come will be in the retail sector, with UK high streets already having shed jobs at an unprecedented rate in recent years. Why is this so important? Well, the retail sector remains the largest employer in many economies and is a vital component of the dominant service sector. The crisis will not only destroy many small businesses, it will also accelerate the growth of e-commerce. After all, even as we despair of Amazon employment practices and workplace culture we become ever more dependent on them.
Alongside e-commerce, we are all experiencing the benefits of digital entertainment amid the lockdowns, with TV streaming services at the fore. It was not a bad time for Disney + to launch in the UK, while Netflix and Amazon Prime continue to go from strength to strength. Together with the acceleration of e-commerce and social media, this will only consolidate the grip of the largest and most resilient digital giants.
From a business perspective we can expect a greater focus on digitalisation and the shift to cloud-based platforms as a key source of business resilience, essential infrastructure for new, remote working models, and an essential part of future trading.
“The public has had enough of experts”
Amid all of this, from a UK perspective, it will be fascinating to see how the crisis impacts attitudes toward the BBC going forward. You will remember that the BBC was under assault from the current government with plans for swingeing cuts to the news department and the petty refusal of ministers to appear on the flagship Radio 4 Today programme. How times have changed in recent weeks.
Equally the public does seem to have recovered its belief in the role and value of experts, personified in the UK by Dr Neil Ferguson at ICL, Chris Whitty, Chief Medical Officer, and Sir Patrick Vallance, Chief Scientific Advisor.
Boris Johnson has been shrewd in choosing to appear alongside the latter two when making his public pronouncements. Even Sarah Vine, wife of Michal Gove (remember his famous quote, “the public has had enough of experts”), has written about the expertise required to educate children effectively – let alone to handle the wider crisis.
And what about Brexit?
Talking of Boris Johnson and Michael Gove… They are forever united by their lead roles in the 2016 Brexit referendum campaign. But what will happen with Brexit now? Already we hear that negotiations have stopped. There seems little prospect of any sort of resolution by the end of 2020. So what then?
If we dare to look ahead to a post-corona world, it will be fascinating to see how the public reacts to this period of lockdowns and extreme measures. Will there be a resurgence in appetite for live experiences of all types? Will community alliances and support continue to develop and deliver services across the country? Or will there be a long-term symptom of the experience of social distancing, especially for younger people?
Already we are seeing a return to voice communications to complement our various digital channels. Whether that’s House Party, the landline, or mobile, telephony has a vital role to play in alleviating isolation. In fact, it’s already being reported that this has been one of the innovations in the online dating market – among other changes to our social and sexual behaviours, as reported by MIT.
Thinking bigger, will the conversation move forward to consider the need for radical behaviour change to address the climate crisis? After all, we are all currently demonstrating an amazing capacity for behaviour change on a mass scale. One of the small silver linings from the de facto economic shutdown being the improvement in air quality already apparent across many major economies.
A global issue
Finally, in these reflections it is worth being aware that, so far, this has largely been a crisis of the developed world, including China and South East Asia, Europe and North America. We have yet to see the virus really take hold in many emerging economies, including sub-Saharan Africa and across India and South Asia. There can be little doubt as to the likely impact in these regions and nations with their under-developed health systems and wider lack of resources. This demands a generous global response if the virus is to be tackled for the long term.
All of which only serves to highlight the realities of inequality across the globe, already an increasing economic (if not moral and ethical) concern ahead of the crisis. The most vulnerable in our own society are in the frontline of this crisis as they will be across the globe.
One final thought, who now would truly object to the proper funding of the NHS and social care, and will we finally see some progress in pay and conditions for the millions of health and social care staff, as well as other public sector workers. Today they are being lauded and applauded as national heroes, will that translate into real action in the future?