The Covid-19 Pandemic has led to a massive global lockdown. In most countries all but ‘essential’ businesses are shuttered or moved totally online and governments have stepped in to take onto their books the huge costs of keeping businesses solvent while maintaining some security in the employment markets. Similar to the 2008 Financial Crisis fiscal and monetary probity has taken a back seat to addressing immediate social and economic concerns. Of course, unlike the Financial Crisis in 2008, Covid-19 makes the decisions government needs to make clearer in that the balance of the equation between saving lives and ensuring the constancy of economic activity is clearly going to be skewed to saving lives.
What the COVID-19 Pandemic has also brought out is a belief that what we are experiencing is so unique that it will upset life as we know it forever. All one has to do is look through the various news outlets, blogs and social media posts to get an understanding of extent of the belief that COVID-19 will: change the geopolitical landscape (Wall Street Journal[1]), change the nature of our relationships to one another (Financial Times[2]), change the nature of work (Forbes[3]), reset our moral and ethical norms (Australian Broadcasting Network[4]), redefine the corporation and its relationship with society (Financial Times[5]), and my favorite, be the death knell of capitalism (Jacobin[6]).
It is quite natural for individuals to express anxiety, concern and worry at times of high uncertainty and stress. The fact that people are locked down in their homes with time on their hands to reflect and fret about their future circumstances is natural and expected. Indeed, in some ways, lockdowns such as we are experiencing now are worse than many other forms of natural disasters as much of the natural human interaction can still exist in other forms of public emergencies and normally there is work to be had that can distract individuals from the uncertainties of what happens when the disaster passes.
It is also quite common for individuals to believe that what they are experiencing is unique. That it never occurred before. That because they have no conception of what is really happening to them that it will forever change things in ways that are unique. However, as is well documented, the reactions to pandemics have many similarities and mistakes. For example, scanning the archives of the New York Times for 1918-1920, reveals variants of headlines most people today would find familiar, from short warning in June 1918 – “Spain Affected by German Sickness and Other Countries Will Be, Says Hollander” and the military’s denial it is a problem for them – “NO INFLUENZA IN OUR ARMY” – to the rise of ‘fake’ news – “GERMANS DIE OF HUNGER. Malady Described as Influenza Is Really Due to Starvation” – to the vector of travel and initial missed opportunities – “SPANISH INFLUENZA HERE, SHIP MEN SAY” and “NO FEAR OF AN EPIDEMIC: Health Officer of the Port Says He Does Not Intend to Quarantine Against the Disease” – to the denials of concern – “CITY IS NOT IN DANGER FROM SPANISH GRIP; Health Commissioner Says Persons Here Have Not Been Infected” – to hope for a quick cure – “TELLS OF VACCINE TO STOP INFLUENZA; Dr. Copeland Says Discovery Has Been Made by Dr. Park, City Bacteriologist” – as well as quack cures – “TEST CURE IN PITTSBURGH.; Dr. Baer of Homeopathic Hospital Gives Out His Formula” – and to conflicts over capacity – “EXPERTS DISAGREE ON EPIDEMIC HERE. Dr. Goldwater Asserts Situation Is Serious with Lack of Nurses and Hospital Beds. DR. COPELAND DENIES IT”. It is amazing how similar many of the same things capture the public imagination and that of the media reporting it and how the governmental response rings of consistency.
But in 1918, there was a global distraction and after that distraction life went on. The 1918 pandemic, from the standpoint of deaths was quite significant for many communities, yet as the Roaring 20s revealed, there is a natural human desire for normality and routine.
And this is where I urge caution in the rush to the “nothing will be the same”. As much of this discussion ignores the reality of everyday life. Once the lockdown is over nearly everything will be the same. People will need to go to work. Children will need to go to school. Universities will need teach students and do research (albeit a lot will relate to Covid-19 for a period). Companies will need to deal with customers, restaurants will need to feed people and bar, clubs and pubs will no doubt be providing liquid refreshment and entertainment in abundance. People’s priorities will be driven by having to get the children to/from school, going to the gym and grocery stores, heading for holidays and days out, and so on. None of this will change.
Now what this does not mean is that some people and organizations will be changed. Many firms will go bankrupt and many individuals will remain unemployed for a period of time. Opportunities for recent graduates will be diminished. It would be remiss on a society to ignore the needs of these individuals, but we have lessons from the past that help in this readjustment.
In addition, there is a lot of discussion about the nature of business and the geopolitical balance, but there is no indication that Covid-19 will do anything but nudge things in directions that reflect trends that existed before. Larger organizations that face failure were invariably in a weak position before the virus hit (a good example being Debenhams in the UK, which filed yet again for restructuring). The fact that China or Russia may take geopolitical advantage of the situation in the United States is simply a continuing reflection of the geopolitical pressures that have been effective against an administration that is not a poster child for functionality. The fact that the European Union’s coordination mechanisms are not all that coordinated in the face of national interests was one reason why Brexit was possible and that the EU has been less of a geopolitical force than has been hoped. And, in the end, all of the various government’s policies will have to be paid for. This no doubt means, despite the reticence of politicians to answer the question directly, future tax increases that might limit economic growth and constrain policy making for years to come (as was the case with the 2008 Financial Crisis).
However, all of this said, there are positives. Firms and the top managers and boards will see the present circumstances and ask questions about resiliency, particularly with respect to their supply chains[7]. The work at home experiment will no doubt lead to a rethink about not just how people work but what IT systems need to be in place to make this simpler and more secure. Universities, for example, may find that “chalk and talk” is not as necessary as the source of the ‘talk’ can be virtualized. What COVID-19 has done is forced many organizations out of their comfort zones and into a mode of operation that can do little but spur innovation – as what is innovation other than doing something in a different way or for a different purpose.
Finally, there is a view that ultimately COVID-19 will change the beliefs and tradeoffs of individuals. In other words, we will value different things. However, there is no indication we were valuing the wrong things in the first place. For example, a group of colleagues and I ran experiments on nearly 14,000 people in Australia, the USA, Germany, and the UK. What we found was that fundamentally people in these countries value the things that you would expect fair and productive society’s valuing. A summary is below. This varies very little by country and reveals that long before COVID-19 individuals people believed that health care and freedom mattered. And one reason lockdowns create stress is that we are being forced not to trade-off something that doesn’t matter to us but because we are being forced to make hard decisions about things we view as very important: our freedoms, our health, our economic welfare and opportunities for our communities.
A number of years ago, I was involved in a symposium in Bulgaria with an academic who was at the heart of changes from the old communist system. One thing he said to me that I will remember forever is what it was that his people wanted from all of the changes: “We just wanted to be normal. Living normal lives, just like you have been doing for years and years”. The real fact of the matter is all of the pundits telling you that life or business or geopolitics will never be the same, actually have no data to back up their predictions. In fact, as we know from the work of Philip Tetlock’s work that is encapsulated in the book Expert Political Judgment: How Good Is It? How Can We Know?, most media pundits are wrong and seriously so. They are the hedgehogs – they know one grand thing and look for confirmation in what they see. So COVID-19 for them reflects their desire to see the things they want to see, be that the end of capitalism or an alteration in the fundamental values of society. I would hope I am a fox – seeing more nuance in the many small details of what matters. At the end of the day, I am sure that what nearly every person in lockdown wants is not a social revolution but a return to normality, boring and mundane as that is.
[1] Henry A. Kissinger, The Coronavirus Pandemic Will Forever Alter the World Order, Wall Street Journal, April 3, 2020.
[2] Simon Kuper, The Pandemic Will Forever Transform How We Live, Financial Times, 9 April 2020.
[3] Tracy Brower, 5 Predictions About How Coronavirus Will Change The Future Of Work, Forbes, Apr 6, 2020.
[4] Luke Bretherton, COVID-19 Presents a Moral Crisis, Not Just a Medical One, Australian Broadcasting Corporation – ABC Religion & Ethics, 31 March 2020.
[5] Editorial Board, Virus Puts Responsible Capitalism to the Test, Financial Times, 29 March 2020.
[6] Andrej Markovčič, Capitalism Caused the COVID-19 Crisis, Jacobin, April 2020.
[7] Beata Javorcik, Coronavirus Will Change The Way The World Does Business For Good, Financial Times, 2 April 2020.
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