Subtle Changes Will Spread The Epidemic To The Economy
2021-02-14 | by CusiGO
There was a world where executives woke up in Madrid, had meetings in London and went home to sleep. The United States leads the planet at will. Governments and businesses blindly entrust their supply to global supply chains, while Brussels threatens to impose sanctions on countries with deficits of more than 3%. Few people are on the street without a few coins in their pockets. When the shops downstairs don’t have the products they want, they send people to order, and customers wait patiently for them. It seems like a good idea to spend a day in the office and sit at a table until the boss leaves.
They may know him. They lived in it not long ago. Although in some cases the old are not dead and the new are not born, the verdict seems to have been made. According to consulting experts, the answer is also: video conferencing will replace some of the fatigue and pollution of the round trip; debt has avoided a Dante like recession, and today few people question whether countries will turn to it – you have to learn to love it, says Paul Krugman; China has reached the top of the world economy; the contactless payment model will only grow; Amazon will continue to gain share because its windows are glittering with houses and new shelters, its inventory is almost unlimited, and we are going to order now; there are more remote working days, But he will live with the people present.
“In many ways, life after coronavirus will be an accelerated version of the world as we know it,” Farid Zakaria wrote in “ten lessons for the post pandemic world.”. This view is widely accepted. “Some people think we’re going to make a more radical change. But I don’t think there will be a revolution today, “Andr é Sapir of bruselense Bruegel, a Brussels think tank, said by phone.
Temporary references are not innocent. In a more negative situation, B’s choice does not disappear completely. In this case, the epidemic will exist for a long time due to unexpected mutation; according to the impact of infectious diseases, the economy will open and close like a Yo Yo; schools and universities do not have the continuity needed to realize the value of degree; and universities do not have the continuity needed to realize the value of degree; Unemployment is rising and the political class on the streets is mismanaged. The specter of populism is around the corner, to make money. There is only one step from political risk to economic risk.
But let’s breathe. It’s still 2021, even for effective vaccines against new strains. The end of a horror story tells children, grandchildren and other generations that it must end with the triumph of science.
If the control of the virus takes only a few months, its devastating effects will be well known, but it will not make the soil under our feet unrecognizable. One of the fundamental changes, the Belgian analyst predicts, is technological change, with many companies and public institutions allowing telecommuting up to two days a week, and apps such as zoom eating part of the business travel cake. These changes have brought about a series of economic consequences: the cost of business and conference passengers, airlines, hotels and restaurants will partially disappear so far?
Sebastien Maillard, the president of the Delors Institute in Paris, a laboratory of ideas, has set an example for himself to illustrate this new reality. “A few years ago, I went to Madrid, talked for half an hour at an event, and then returned to France. I don’t think I’ll do that today. I’ll step in from zoom, not Madrid. It also has an impact on mental balance and carbon footprint. ”
It’s not just a matter of information being transmitted equally clearly on the screen. Although reconciliation is, in many cases, a nightmare for parents, who have to keep one eye on the screen and the other eye on minors in sometimes narrow family space, Maillard believes that in difficult times, the loss of close relatives and the freezing of social life, It helps to strengthen family emotional ties. “Many families rediscover their limitations by staying at home longer with their children. Parents don’t want to lose this new relationship, and the balance between work and life will be a value to pursue. ” He warned that the shift to telework, teleshopping and telemedicine would enhance the security of cyber attacks.
Autonomy to work outside the office raises other issues. Is it necessary to continue to build high-rise office buildings? Has the population of metropolis reached its peak? Since 1990, the number of cities with 5-10 million residents has more than doubled. The number of cities with more than 10 million residents has increased from 10 in that year to 33 in 2018 and will reach 43 by 2030.
The epidemic, coupled with high house prices, traffic problems or pollution, has the potential to undermine this trend, although other major cities are growing and New York and Paris have lost their populations before the epidemic. Maillard believes that the virus has increased people’s interest in settling in small and medium-sized cities in France. However, in a report entitled “post kovich economy”, the bank did not believe that mass exodus would happen. “While large-scale de urbanization is unlikely, interest is likely to shift to less populated, smaller cities,” the bank said In contrast, Ignacio de la Torre, arcano’s chief economist, believes that in Spain, the trip will be meaningless except to get to the suburbs of big cities on time.
Pregnant technology people will also be healthy people. There is no doubt that the epidemic will be used for years or decades when some managers cut health care programs and cause protests. Mr. de brueger’s Mr. Sapir expects a structural rebound in bottom-up spending, but limited resources, which will put the political class in a difficult position. “In many European countries, the trend is to cut health care, which is understandable, because we have made some progress so that we can live longer, but it also involves some expensive diseases, especially in the past decade. That’s it. It’s not going to be cut any more. The public will need more beds and the medical budget will be kept to a minimum. This creates a political problem: either cut other spending or increase public spending. ”
Your reputation is already very high, but will the reputation of health workers be further improved? Some experts point out that in extreme cases, the wages of basic jobs that take care of human beings rise. Javi L ó PEZ, a socialist MP, agreed to rearm the public. “The protectorate is the unexpected winner of the pandemic. The demand for an effective country has increased and its general interests have been taken seriously. It’s a change that’s good for them, 40 years after their role has been reduced. ”
When Europe realized its vulnerability, it saw the virus spread and waited for Chinese planes to load sanitary equipment. There were delays, the materials were resold to the highest bidder and, to some extent, detained, for example, during a detour in Turkey, where there were concerns that 150 breathing apparatus bound for Spain would be expropriated. The price of market and inflation has touched the pride of France and other countries. French President Emmanuel macron talked openly about the reorientation of strategic industries. Health supply is also a central issue in vaccine distribution. Recently, it has also affected other sectors: in the face of the upsurge of computer purchase, the automobile industry has been forced to slow down production due to the lack of chips in the international market, The popularity of smartphones and video game consoles limits and Christmas. The shortage of containers in Asia has led to the increase and delay of transportation costs, which some people blame on the amazing growth of shipping companies and e-commerce.
These setbacks in the moment of truth fuel mistrust and make the word non globalization one of the loudest words in the new world that some have described. Companies may try to reduce their dependence on China, diversify their supply chains to other Asian countries and even try to encourage the establishment of domestic suppliers, according to estimates by Barclays. According to his data, the Asian giant accounts for more than 18% of imports from the United States, more than 20% from the European Union, more than 23% from Japan, and more than 50% from electronics and machinery.
However, experts suspect that resettlement will be a big problem and limit it to health care. Sapir thought the idea was useless. How do we produce materials at home for an unknown epidemic or impending disaster? “In the past year, relocation has been completely marginalized. We can start making masks in our own country, but the problem will be different later. It doesn’t make any sense. We can list 20 basic products that need more domestic capacity, but that will not change international trade, “he pointed out. For Ignacio de la Torre, the mystic, the difference between the fees charged by a Chinese employee and a Western employee for the same conduct “remains brutal”, which would prevent them from returning home, or in any case limit them to other low wage countries.
Canadian historian Quinn slobodian, a professor at Wellesley College of Massachusetts, has just published his book on globalization in Spain. The end of the Empire and the birth of neoliberalism (Captain swing) saw a positive shift, that is, production under appropriate circumstances (just in case), rather than the current just in time (just in time) import model, lack of inventory, followed by industries such as automobiles. The American scholar gave an example of the European Union’s attempt to make batteries for electric vehicles across Europe. “We have also seen a version of economic chauvinism, that is, Chinese companies such as Huawei resist the establishment of 5g networks. These developments may have some advantages, that is, free trade is no longer the only possible option,” he said.
Ernest urtasun, a Green MP, points out that the mindset within the EU is changing. “We have never discussed the EU’s Strategic Autonomy before. Most people believe that globalization and free trade, without restrictions and governance, are positive for the EU. Now that is changing and opening up new opportunities for strategic industrial sectors in areas such as biomedicine, energy or mobility. ”
His political group, environmentalists, flourishes on the European continent and even aspires to be part of the next German government, which may bring great power to some ideas, namely, the idea of protecting the earth, which have been taken over by other political forces. Urtasun believes that burning cars and motorcycles will disappear, and charging points for electric vehicles will increase. “Transportation and mobility will be basically electric in a few years, which will be a very obvious and far-reaching change. Policies to improve air quality, water and biodiversity conservation will transform urban and rural landscapes. ”
The EU will spend a large part of its reconstruction program on the transport of renewable energy, funded by the first joint debt issue in the history of the EU club. This transformation has received a fair transition fund to prevent the disappearance of workers in polluting industries, whose prototypes are polish miners. The epidemic has opened up a new way forward: rising unemployment, concerns that the rise of robotics, increased productivity without social distance or separation, and a shift to a non emission economy will force thousands of workers to reinvent themselves, possibly leading to more unemployment.
“Artificial intelligence has driven many of our favorite apps and websites. In the next few years, it will drive our cars, manage our portfolio, manufacture most of the products we buy, and its consequences may make us unemployed.”, Entrepreneur Li Kaifu said in his book the superpower of artificial intelligence (Deusto Edition). The European Commission is also confident in its potential. “It will change our lives because it will improve health care, for example, by improving the accuracy of diagnosis and better prevention of disease,” said the white paper on the subject in Brussels.
Sapir saw similarities in the oil crisis of the 1970s. “The unemployment rate remains high and things are getting better. We now have the impact of a pandemic, and if we add technological change and climate change, it could create adaptation problems that affect employment. But they won’t last forever. The problem is that although ten years of life in a country is meaningless, it is a big problem for a citizen. ”
In this environment, the debate about inequality is likely to intensify. There are two types of confinement. On the one hand, it is possible that the working class working remotely has peaked their savings. They continue to receive wages, spending less on leisure, tourism or hotels, while the face-to-face, unemployed and young self-employed who are trying to enter the labor market are paying for the crisis, leading to increased state aid. But inequality is also geographical. While the United States issues cheques to millions of citizens and Germany provides direct assistance to the most affected countries, other countries do not have such spending space.
Investors don’t hesitate to assume that debt is growing exponentially. The risk premium continued to fall due to low interest rates, but Sapir thought it was too early to declare victory. “Italy’s economic growth has been stagnant for a long time, with repeated political problems. Super Mario Draghi can save the country for a few months, but what happens next? Will Italy fundamentally change, start to grow and solve local problems? If markets collapse because of debt, instability and low growth, it could be a problem for the eurozone. Greece is a small economy, and newspapers all over the world talk about it every day. ”
However, the biggest geopolitical threat in the 21st century will be the US China struggle for global hegemony. “The epidemic deepens existing trends, not creates new directions. Here, I particularly think of the rise of China’s economy. The uncertainty of the challenge to China is deeply rooted in the American elite and begins to spread to ordinary Americans, who gradually realize that their country is no longer the generator of global capitalism. China’s recovery is much faster than that of the United States. U.S.A. Canadian Quinn slobodian believes they have managed the epidemic more effectively.
This high-pressure geopolitical competition is destined to happen in the next few decades, but according to Sapir, this new cold war has nothing to do with the previous one. Sapir has just published China and the WTO: why multilateralism is still important. Unlike the Soviet Union, it was impossible to break ties with the world’s largest exporter of goods. “In Biden’s attitude towards China, we can expect two different things: on the one hand, to recognize that it will always exist, and that the United States cannot defeat it, but must coexist with it; on the other hand, to cooperate with the European Union to establish a united front and force China to be more like us.”
The end of the first World War brought about the collapse of the Empire, and the Second World War brought about a new multilateral order and a golden age of capitalism. What is the post pandemic period like? In this regard, there is little agreement. Maillard thinks this is similar to the post-war. For utasone, “we don’t know whether it will be more like the new deal after the 2008 financial crisis or the change in lampeducia (let everything change, let everything stay the same).” Slobodian compares it to the oil crisis of the 1970s, when the industrialized world suddenly realized how dependent its lifestyle was on cheap energy. “In this decade, there is an ambition to rethink the world in line with what I expected at my most optimistic time, that is, I can continue after the pandemic.”