ou know there are times, perhaps once every 30 years, when there is a sea-change in politics. It then does not matter what you say or what you do. There is a shift in what the public wants and what it approves of."
This was how Labour Prime Minister Jim Callaghan described the political scene in Britain on the eve of Margaret Thatcher’s election victory in 1979. Although COVID-19 is still in its early stages, I believe it will herald similar once-in-a-generation changes across a range of political and economic issues.
New questions will be asked about globalization and risk. The crisis has highlighted the vulnerability of our globalized, just-in-time economy when international flows of goods and people suddenly grind to a halt.
Some citizens and governments may wish to prioritize increased domestic capacity, resilience and control in a range of sectors from healthcare and telecoms to food production and manufacturing. Such a move would likely drive renewed interest in liberal western economies in reshoring jobs from overseas and supporting national industrial champions alongside debates over the appropriate level of state intervention in the economy, and who should ultimately pay. Others, however, may prefer to regard COVID-19 as a “black swan” event in order to avoid asking such difficult and costly questions.
For now, governments are funding the immediate costs of their national stimulus packages through increased borrowing at historically low interest rates. It is likely that this money will only be repaid after many decades, as was the case with European countries’ Marshall Plan debts. Indeed, Britain did not finally clear its World War II debts until 2006.
Over time, we can expect political leaders to increase general taxation, arguing that because COVID-19 impacts all members of society, the costs should be shared. But alongside this the biggest international businesses seen to have weathered the coronavirus storm the best—or indeed won increased market share during the crisis, as some of the biggest tech firms are now doing—should expect higher taxes and increased regulatory scrutiny. After the pandemic, all businesses will feel increased pressure from consumers, governments, and investors to demonstrate, in a real and tangible way, their positive contribution to all their stakeholders, including employees, customers and the wider community.
Governments around the world have been careful to frame the stimulus measures as temporary and exceptional. But as the economic damage of COVID-19 becomes clearer, the demands to do even more will only increase. Despite this there will be real political and economic pressure for things to “return to normal” as quickly as possible. This view will be particularly strong among the large numbers of people whose jobs or businesses have been disrupted by the virus, especially those who may already be skeptical towards globalization and have previously supported populist causes. Determining the right time to unwind COVID-19 support programmes will therefore be one of the key political, economic and policy questions for the coming years.
This points to a broader question related to whether it will be desirable for life to “return to normal” at all. Without wishing to minimize the large numbers whose health and economic prospects have suffered as a result of coronavirus, we are also seeing a great deal of innovation and creative thinking being applied to a wide range of problems. Technologies from AI to conferencing platforms like Zoom are helping everything from fighting online misinformation to enabling large numbers of people to work remotely. With the crisis still ongoing, people appear largely willing to overlook some of the very real privacy and surveillance concerns that arise from some of the more intrusive technological solutions that have been developed to enforce lockdowns and track the spread of the disease. But in time societies will need to decide where they wish to draw the line on data collection and its use.
While the ultimate costs of COVID-19 are likely to dwarf those of the 2008 crash, many are already arguing that people’s willingness to make collective sacrifices for the greater good shows that it will be possible to tackle long term challenges like climate change. If stakeholders emerge from this crisis more willing to consider innovative solutions to previously intractable issues, and work collaboratively to address shared issues, then coronavirus will have had at least one positive impact.
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Coronavirus Will Herald a Sea-Change in Global Affairs
April 14, 2020
"Y
ou know there are times, perhaps once every 30 years, when there is a sea-change in politics. It then does not matter what you say or what you do. There is a shift in what the public wants and what it approves of."
This was how Labour Prime Minister Jim Callaghan described the political scene in Britain on the eve of Margaret Thatcher’s election victory in 1979. Although COVID-19 is still in its early stages, I believe it will herald similar once-in-a-generation changes across a range of political and economic issues.
New questions will be asked about globalization and risk. The crisis has highlighted the vulnerability of our globalized, just-in-time economy when international flows of goods and people suddenly grind to a halt.
Some citizens and governments may wish to prioritize increased domestic capacity, resilience and control in a range of sectors from healthcare and telecoms to food production and manufacturing. Such a move would likely drive renewed interest in liberal western economies in reshoring jobs from overseas and supporting national industrial champions alongside debates over the appropriate level of state intervention in the economy, and who should ultimately pay. Others, however, may prefer to regard COVID-19 as a “black swan” event in order to avoid asking such difficult and costly questions.
For now, governments are funding the immediate costs of their national stimulus packages through increased borrowing at historically low interest rates. It is likely that this money will only be repaid after many decades, as was the case with European countries’ Marshall Plan debts. Indeed, Britain did not finally clear its World War II debts until 2006.
Over time, we can expect political leaders to increase general taxation, arguing that because COVID-19 impacts all members of society, the costs should be shared. But alongside this the biggest international businesses seen to have weathered the coronavirus storm the best—or indeed won increased market share during the crisis, as some of the biggest tech firms are now doing—should expect higher taxes and increased regulatory scrutiny. After the pandemic, all businesses will feel increased pressure from consumers, governments, and investors to demonstrate, in a real and tangible way, their positive contribution to all their stakeholders, including employees, customers and the wider community.
Governments around the world have been careful to frame the stimulus measures as temporary and exceptional. But as the economic damage of COVID-19 becomes clearer, the demands to do even more will only increase. Despite this there will be real political and economic pressure for things to “return to normal” as quickly as possible. This view will be particularly strong among the large numbers of people whose jobs or businesses have been disrupted by the virus, especially those who may already be skeptical towards globalization and have previously supported populist causes. Determining the right time to unwind COVID-19 support programmes will therefore be one of the key political, economic and policy questions for the coming years.
This points to a broader question related to whether it will be desirable for life to “return to normal” at all. Without wishing to minimize the large numbers whose health and economic prospects have suffered as a result of coronavirus, we are also seeing a great deal of innovation and creative thinking being applied to a wide range of problems. Technologies from AI to conferencing platforms like Zoom are helping everything from fighting online misinformation to enabling large numbers of people to work remotely. With the crisis still ongoing, people appear largely willing to overlook some of the very real privacy and surveillance concerns that arise from some of the more intrusive technological solutions that have been developed to enforce lockdowns and track the spread of the disease. But in time societies will need to decide where they wish to draw the line on data collection and its use.
While the ultimate costs of COVID-19 are likely to dwarf those of the 2008 crash, many are already arguing that people’s willingness to make collective sacrifices for the greater good shows that it will be possible to tackle long term challenges like climate change. If stakeholders emerge from this crisis more willing to consider innovative solutions to previously intractable issues, and work collaboratively to address shared issues, then coronavirus will have had at least one positive impact.
