After the Outbreak
I’ve been reading and thinking more deeply about the medium and long term impacts of COVID-19. Two sentences, in particular, have been banging around my head for the past week or so.
The normal we knew is gone. When things return to normal, it will be a new normal.
But what is that new normal? And do we have any way of preparing for it?
This new normal will be heavily constrained by the economic, logistical, and cultural impacts of the coronavirus. These factors will combine and interact to shape the new features of the new normal.
In summary:
the economy is in deep trouble. New tools are required to fix it.
supply chains will reconfigure toward robustness (ideally, anti-fragility) and will become less open - these are not the same thing. Transition to remote and automated industry will accelerate.
a shift to conservative, security-oriented mindsets.
For each of these, changes fall into three categories:
pragmatic adjustments to life in virus-fighting-mode; some of which will remain after the crisis has passed.
acceleration of existing trends that allow us to quickly adapt to the new normal.
‘never-again’ responses to the pandemic.
Some fore-warning: this article is a bit of a downer. And that’s excluding the loss of life that has and will continue to be the main feature of the pandemic.
Economics & all it entails
I’m deeply pessimistic on our economic outlook. Regardless of unexpected good news that could come our way - rapid vaccine development, discovery of anti-viral treatments or dramatic over-estimation of the virus itself - we appear to be in trouble. Flattening the curve is absolutely necessary, but it won’t bring us back to the world of 2019.
The probability that this crisis is something that we can nuke in the next 4-6 weeks is approaching zero. That would require an immediate halt to the spread of the virus and an incredibly effective treatment emerging and scaling, almost overnight.
A coronavirus best-case has us begin to emerge from our nests in late May (Ireland & US). At that point we are in recession and bearing huge internal economic scars.
A coronavirus moderate-case looks something like the model below, taken from a paper by Neil Ferguson and team at Imperial College. Here, twelve weeks in lockdown allows a relaxation of suppression measures to be introduced. Things start to get back to ‘normal’ for many of us. But the virus re-emerges in pockets and ICU cases spike, meaning we need to re-introduce further partial, local or short-term suppression strategies.
For now, I’m ignoring the coronavirus worst-cases: i) we don’t find a treatment, or a vaccine, or ii) we battle, tank the economy, then give up anyway. In both the best-case and moderate-case scenarios we’re in for a rough ride economically. Why? Because we are in fact facing multiple crises layered on top of each other. In no particular order:
A pandemic crisis
A supply-chain crisis
A demand crisis
A labor market crisis
An equity market crisis
An oil price crisis
An (emerging) bond market crisis
A developing currency crisis
Given these underlying and interplaying issues, a coronavirus best-case slingshotting us economically into a roaring 20s seems ... unrealistic. These crises and their effects are explained here:
Tyler Cowen. The coronavirus is exposing market fears about economy and politics and Coronavirus could cause sudden collapse of global supply chains.
Jonathan Tepper. COVID has exposed our financial fragility.
Adam Tooze. This is the one thing that might save the world from financial collapse.
Depressions are bad because economic hardship causes suffering. That suffering means real people die. It means that the amount of options available to most people narrow - that’s fewer people with good prospects. Usually that suffering lasts years and its effects linger decades later.
Depressions occasionally come embroidered with thin silver-linings. Usually of two sorts. The first is ‘it reminds us what’s important’. I’m partial to this, it feels intuitive and it feels good. It’s also a bit of a cop-out; an exercise in semantically moving the goal posts.
The second and more relevant in terms of real population-level impact is that it can spur a necessary economic restructuring. A large-scale exercise in collectively getting our shit together; a mega-scale Marie Kondo and Gok Wan macro-makeover. If I see economic hope, it’s in this. We’ve been stagnating - is this the kick up the economic arse we’ve been waiting for?
Economic predictions.
We are in for a rough economic ride. We are headed for a recession, more likely depression.
In the short term, we can expect massive damage to businesses that rely on people coming together in large numbers: restaurants, bars, nightclubs, cafes, gyms, hotels, cinemas, art galleries, theatres, shopping centres, craft-fairs, museums, musicians, sports venues, conferences, cruise lines, airlines, public transport, private schools, and creches. This is worsened by the fact that more than 50% of small businesses have a cash buffer of less than 27 days.
As with most crises, the true cost will be borne by the poorest and weakest. Gig workers and those doing menial work have already been hardest hit. This macro shock will result in even more class consciousness than we’ve seen.
We’re looking at months of rent and mortgage holidays and the downstream effects of both.
We will see big economic stimulus packages, including in new forms such as UBI and UBI-variants.
New industry, New logistics.
The pandemic has been sobering in many ways - not least in our inability to take collective action and in the unwillingness of politicians globally to take fast, effective action when the data first presented.
It also pointed out gaping holes in our pandemic preparedness and our ability to scale medical capacity. We weren’t as prepared as we might have been for running the economy from a distance.
We’ve shown that for all of our tech innovation, we really didn’t respond to this quickly. The West has not adopted effective Asian innovations.
We’re already experiencing pragmatic adjustments to life in virus-fighting-mode: remote infrastructure, scaling medical capacity, operating the economy on a skeleton crew.
Software has been eating the world - fast, but not fast enough. We spent too much time on pointless shit. Before the pandemic, we were in the midst of multiple trends that have now been thrust front-and-centre. This has shone a new light on those trends and what they mean for society.
Remote work and education is perhaps the clearest winner. Every organisation now needs a remote strategy and more to the point, implementation. Some won’t be going back to working in offices.
automation is on the way
E-commerce equally is looking good, though don’t expect those numbers to play out in the short term. Fear has us holding our money tight. And the numbers won’t initially look rosy for all categories - nobody’ll be buying shoes this month.
Automation has been given a two-fold boost; it allows remote operation and reduces costs. That’s good news for drones, robotics and AI. Concerns about automation today seem regretful. In the longer term these concerns will re-emerge if a sizeable portion of the lay-offs never return to the labour force.
Trends like the access economy or the on-demand economy looks like a mixed bag. Anecdotally, digital subscriptions are spiking. But as the economic conditions worsen, frivolous expenditure on newsletters and ‘boxes of the month’ will be first to go.
VR is one of the big losers in all this - has anyone asked for VR meetings? AR hasn’t really featured - beyond surveillance. The key question is: are these due to irrelevance or being too early in the development cycle?
‘Never-again’ responses to the pandemic will mean restructuring supply chains; building in resilience and spare capacity. It also means bringing key pieces of the supply chain home. China is the big loser in that scenario. But other open economies like Ireland should take note -pharmaceuticals (Cork) and medical devices (Galway) seem particularly vulnerable.
Other ‘never-again’ responses will mean rolling out diagnostics and early-warning systems at scale. That has technical challenges but even bigger privacy ones. Coronavirus is to public health as 9/11 was to travel - welcome to the age of surveillance and the age of public health theatre.
New forms of governance are clearly needed. Upgrades to WHO, IMO, etc. will be proposed. The likelihood that meaningful change will be introduced will be correlated to the extent of the catastrophe. Given emerging early signals of nationalism and distrust, calls for a world government seem premature.
Industry & logistics predictions.
Investment and planning in pandemic prevention, mitigation and forecasting will increase. This could be highly valuable for the next time.
Investment in better public health infrastructure including the ability to scale up as required.
It is a huge stimulus for portable diagnostics, wearables, mobile clinics, telemedicine, right-to-try laws, accelerated approvals.
Remote delivery of mental health tools will see widespread adoption. Four large trends converged: mental health awareness, rising anxiety levels generally, remote products, and something to be anxious about that keeps individuals away their your support network and forms of distraction.
Influx of funding to biotech and anti-virals. A focus on the ability to develop and produce safe and effective vaccines in days instead of years.
Automation and robotics get a boost to adoption and depending on how long this goes on for, potentially investment.
Online education and MOOCs get a second chance.
The global industrial system is about to be reworked toward less fragile supply chains. One of the big lessons from the crisis is that local industrial capacity is a public health resource; and therefore a national security asset.
A reduction in ‘bad’ regulation for medical treatments and diagnostics speeding up innovation.
New culture, new norms.
The big change most people are feeling is that the crisis has given them a new perspective on what’s important. Public opinion has been overwhelmingly in favour of saving human lives at the expense of the economy.
This hasn’t been universally borne out in people’s adherence to social distancing. Behavioural change is hard.
Appreciation of family and appreciation of lifestyle came up in every conversation I had while writing this. Whether this commitment will survive first contact with the coming financial crisis remains to be seen.
But human behaviour is a fickle beast; will the changes we’ve seen in the past few weeks take hold? This is tricky to predict. Historically, we know that people’s attitudes at the beginning of a crisis don’t necessarily stay the course. We also know that crises make people more conservative. Short-term incursions to freedom of movement could quickly become permanent.
The problem with crises is they demand attention and they demand resources. We are, at this very moment, facing big risks that aren’t viral. Climate change is the obvious one. Beautiful photos of Venice’s crystal clear canals and staggering data visualisations of reductions in carbon emissions in the Pearl Delta are tangible evidence of the benefits of reducing our environmental impact. I fear that this will soon be forgotten. In the short term, we’ve got more immediate threats to deal with - who cares about the welfare of their great-grandchildren when their own lives are at risk? In the medium-term, the economic contraction will make climate spending a perceived luxury.
Venice … for now
Privacy is another loser in all this - we require immediate biomedical surveillance. We don’t have time to look after the finer details and get this right from the start. Western trepidation to tracking has already cost us lives. Let’s hope we can overcome this with time-limiting legislation and fix it later.
Culture & norms predictions.
More nationalism, less freedom of movement and fewer open borders.
Less focus and support for long and medium term risks like climate change.
We are facing a necessary ramp-up of biomedical tracking in our everyday lives. Temperature scanners everywhere and proof-of-immunity for entry: likely for flights, workplace, nightclubs, hospitals.
A renewed respect for certain aspects of teaching, e.g. crowd control and perhaps less for others (i.e. education itself).
The end to the progressive left amongst the middle class in the US. With their own lives and livelihoods threatened, redistributing wealth doesn’t sound so good.
A change in norms toward mask-wearing outside East Asia. This could have positive side effects in countries with high levels of air pollution (eg India and Pakistan) and in the reduction of other diseases.
New focus on washing hands will lead to reduction in other diseases.
More serious attention to and punishment for the spread of fake news.
Remote work becomes a new normal with benefits for the geographic distribution of wealth and moderate reduction in carbon emissions. A more family-centred work-life existence for many white-collar workers.
Rapid maturing of norms and tools for remote activities; WFH, virtual coffee dates, pints and conferences.
A renewed respect for medical staff, scientists and frontline workers. The re-rise of true experts, less respect for spin.
A temporary reduction in greenhouse gases and pollution. Reduction in climate change funding more generally.
— — —
The moral of this story is that there is nothing inevitable in all this. These are plausible futures. Given our current trajectory, to my mind, they’re probable futures. But they are not inevitable; with the right actions they can be steered and directed.
But they cannot be reversed to the world we’ve just left. The normal we knew is gone. When things return to normal, it will be a new normal.
Additional sources & inspiration
Title image. RNA sequence of COVID-19.
Shane Pharrish and Balaji Srinivasan. Exploring COVID-19.
Venkatesh Rao. Gigging in the Time of Corona.