Since the corona pandemic, countless headlines have used some variation of the phrases “go back to the new normal” and “everything must change.” But what exactly needs to change? Let me make an effort to shape the “new normal”.
The global pandemic has shed light on major domestic and international weaknesses. It also exposed some of the myths and fallacies used to explain the world until now. Changes that were already happening have gathered momentum, happening in a matter of months that might otherwise take decades.
Not every change should be a cause for concern. Now is the time for the current and next generation of leaders to make their mark and take their chance to correct these mistakes and enable a real reset.
The pandemic has highlighted the need to question our assumptions and our understanding. We need to change what is clearly out of step with our time and the future we want, in the face of various existential threats. Here are ten broad domains to consider.
1. Transformation of the business world
Before the pandemic, global businesses seemed to be incredibly resilient. Interconnectivity had to ensure that a problem in one place would simply move supply chains elsewhere, and that the consumer would never notice the difference. The goods would remain on store shelves (or, increasingly, on e-commerce sites), without the customer knowing what is going on behind the scenes.
But the pandemic, a truly global shock, exposed the vulnerability of the global economy and its networks. Rather than bolster resilience, an interconnected economy amplified the domino effect – spreading economic pain and disruption around the world as companies began laying off workers.
Governments cannot prevent another global shock, but they can make sure that companies are ready to meet their obligations to society. This starts with the employees, the basis of the social contract between business and society. Policymakers need to think about how to shape business incentives to build resilience.
2. A Monetary Policy for the Common Good
To respond to the economic pain and disruption of the pandemic and related public health measures, governments are distributing record-size aid packages totaling billions of dollars. Before the pandemic, governments were skeptical about spending too much money. The question ‘but how do you pay for this?’ was common in discussing large-scale public programs in both the legislature and the media.
The pandemic has torpedoed these beliefs. As governments tap into reserves to release government spending, they could invest in necessary infrastructure, pay for the public supply of basic needs and services, and invest in research and development to prepare society for future challenges.
For example, offering low-cost housing would provide security for low-income families and the necessary resources to invest in themselves. From starting their own business to improving their health, it would be a long-term investment in increasing the ability of more segments of the population to contribute to society.
3. Reinventing Growth
Before the pandemic, governments relied on continued growth for political legitimacy. Economic growth is an indication of success. It is common for emerging economies to choose a ‘growth target’: either a targeted growth rate for the year or a targeted economic size for a specific period.
The world must refrain from growth as an end in itself. Continuous growth forces society to consume more and more resources. As a result, economic policy has been distorted. The emphasis is on accounting tricks and investment tricks rather than real economic development and progress.
Instead, governments in both emerging and advanced economies must remember what growth is for: improving the living standards of an entire population, not just segments of society.
If countries forego economic growth as a measure, they will need more meaningful metrics to guide them. Perhaps a combination of employment, access to basic needs, sustainability goals and investments aimed at the future can provide a solution.
4. Giving up the Invisible Hand of the Market
As the pandemic spread, consumers faced shortages of essential products: mouth masks, hand cleansers, household cleaners, toilet paper and frozen products. Hospitals and doctors were short of medical facilities and personal protective equipment.
The pandemic has shown that the market is unable to reply quickly to major crises. However countries with robust governments were able to mobilize the personal sector and focus it on what’s required for society. For instance, China distended its production of masks and medical instrumentality and South Korea was able to drastically expand its testing capability. The personal sector wants steering, support and, maybe most significantly, a bonded buyer: things the general public sector might offer. Society should regain management of the market and also the personal sector and make sure that they’re targeted on the commonweal. Firms have a license to control, however once firms violate that notion, societies should make sure that the personal sector behaves responsibly.
5. Withdrawing FREE rein for the GIG Economy
The tensions of the so-called gig economy began to show up before the pandemic, with heavy workloads and tight courier schedules. Platforms set strict operational guidelines, penalizing any play in the system. Still, these platforms are attracting funding based on their scalability, so that the cost of their model is offset by the employees and the rest of society. Despite their shortcomings, these platforms do succeed in what they aim for: connecting providers and customers. A platform that allows a provider – be it a restaurant, handyman, driver, artist or small business – to deliver goods and services more efficiently to a customer would be a real asset to small and medium-sized companies that do not have the resources to create a tailor-made solution. Governments need to look at which platforms are successful and why, and then try to support alternatives that do not depend on the scale-obsessed model of technical financing.
6. Valuing work that is Essential
Many countries resorted to stay-at-home orders, with the aim of stopping the transmission of viruses in the community and avoiding an overload on the health system. Workplaces and schools were closed, shops and restaurants were closed. Businesses and entire industries – air travel, tourism, live entertainment – came to a halt. But not everyone could stay at home. The pandemic introduced the term “ essential worker ” into our lexicon: it includes not only health workers and those providing other essential public services, but also delivery workers, cleaners, supermarket employees, agricultural workers and factory workers who pack food. These jobs are often underpaid, but the pandemic has highlighted the social value of these jobs. Just as governments need to rethink the goods that are strategically essential to an economy in crisis, they also need to rethink what labor is truly essential. They must ensure that those who work in these positions are properly compensated and protected.
7. Reformation of Development Priorities
The economic story of the past two decades revolves around digital possibilities and the internet. Development priorities have shifted to accommodate the rise of the Internet and to deepen the introduction of smartphones. This was despite the lack of any real evidence that this was what people really want. Underinvestment in infrastructure that would have helped combat this current pandemic and mitigate the risk of the next crisis: clean water, better nutrition, better sanitation and a broader public health infrastructure. Basic services are not the only development priority that has been ignored. Millions of people in the world still lack safe and secure housing, stable access to electricity or important public services such as education. Society must curb the use of development or public money for digital technology unless an independent body – and not one dominated by technology companies – can demonstrate convincingly why this would improve development outcomes.
8. Rebuilding the Collapsed Food System
The pandemic has given rise to two very different stories about the food industry. On the one hand, empty shelves and panicking shoppers; on the other, concerned farmers who dump surplus produce. Our food systems are proving fundamentally unstable: the need for migrant workers who are blocked by closed borders, the bottlenecks in factories and ports and the dependence on a few large institutional consumers. The pandemic also reveals the dangers of long-term social food choices. Poor nutrition due to the global proliferation of junk food has led to an increase in the number of non-communicable diseases, which also contribute to how infectious diseases are perceived. Governments will have to radically rethink how we approach food systems. First, governments need to develop better systems for distributing food, especially in poorer communities with few options. Second, governments must ensure that groceries have adequate supplies of essential goods. Finally, governments must invest in local food production, especially in basic products.
9. Start of a Guided Retreat from Nature
A silver lining to people’s retreating indoors is the restoration of the environment, from the return of wildlife to public spaces to better air quality. In many countries, environmental damage was presented as a necessary consequence of growth – a kind of collateral damage to a greater good. But restoring the environment and regenerating wildlife during lockdowns is proof that nature is more resilient. The decline is not irreversible. So we can and must invest in large-scale restoration, repair and conservation. Governments should see this as an encouragement to be bolder in their environmental strategies. Can air pollution not be minimized, but eradicated? What about solid waste? Can we limit the expansion of the suburbs and expand the nature reserves? Society can begin to restore certain areas by drastically limiting human activity and scaling back the expansion of human habitation. If the pandemic is any indication, we could be seeing its natural benefits sooner than we think.
10. Geopolitics Beyond Western Domination
The world’s failed response to the pandemic will affect international relations. Asia has rapidly tightened controls and contained the outbreak. The response from China, Japan, South Korea, Vietnam, Singapore and Taiwan contrasted sharply with that of Europe and America. The soft power of the West has also been significantly damaged by the pandemic.
Far from being China’s ‘Chernobyl’, as The Financial Times suggested when the disease first emerged, Asian governments have been quick and decisive in their response to contain the pandemic. With Europe and the United States deeply divided and struggling to control the pandemic, this has raised serious concerns about the governance system in the West.
A Post-Pandemic World will be one of many different powers:
China, India, Russia, Europe, Africa, Brazil and the United States. Tensions will exist between these different countries and the limits of their influence will be disputed. But there are also important global problems that can only be solved through close cooperation between them.
If there is one thing the COVID-19 pandemic taught us, it is that the old assumptions no longer hold. Countries, companies and individuals must adapt to the new normal that is imminent. Countries must deal with other powers, even those over which they have serious disagreements. Otherwise, global problems will remain unsolved and global society will suffer.
The COVID-19 pandemic shows that the global system falls flat on its face when faced with a global problem. Businesses must deal with the new realities for resilience in the interconnected economy, and what growth means in an increasingly digital world.
As much as we all yearn to return to pre-pandemic life, individuals must adapt to a life that has more limitations on what we can do, and most importantly, in harmony with nature.
The leaders in particular must leave their mark and seize the opportunity to correct the mistakes of the past and enable a real reset.