There was once a world when executives woke up in Madrid, met in London, and went home to sleep. The United States led the planet at will. Governments and companies were blindly entrusting their supply to globalizing supply chains.
And Brussels, whip in hand, threatened sanctions on countries that exceeded 3% deficit. Almost no one went out without a few coins in their pocket. And when the store below did not have the desired product, it was sent to order and the customer waited patiently until their arrival. Extending the day at the office, anchored at the table until the boss leaves, might even seem like a good idea.
They probably recognize it. They lived in it not so long ago. And although in some cases the old has not just died or the new has been born, the sentence seems passed.
The answers, according to the experts consulted, also: videoconferencing will replace part of the tiring and polluting lightning round trips; Debt has prevented a recession of daunting proportions and almost no one today disputes that the States resort to it – you have to learn to love it, says Paul Krugman.
China has gained meters in its climb to the top of the world economy; contactless payment formulas will only grow; Amazon will continue to gain share because its window flashes inside the houses, the new shelters, its stockIt is almost unlimited, and we want our order now; and there will be more days of teleworking, although it will coexist with the presence.
Life after the coronavirus “will be, in many ways, an accelerated version of the world we know,” writes Fareed Zakaria in Ten Lessons for a Post-Pandemic World – Ten Lessons for a Post-Pandemic World . That vision is widely shared. “There are people who think that we are going to have more radical changes. But today I don’t think there is going to be a revolution, “says André Sapir, from the Bruegel think tank in Brussels , on the phone .
“The time reference is not innocent. The options for a more negative scenario B, in which the pandemic becomes chronic due to unexpected mutations, have not completely disappeared; the economy opens and closes like a yo-yo, according to contagions; schools and universities do not achieve the continuity necessary to give value to their degrees; unemployment increases and the street perceives poor management by the political class.” stated entrepreneur Esti Prager. The populist ghost will be there, just around the corner, to make a profit. And from political to economic risk there is only one step.
But let’s breathe. It is still 2021, the year of effective vaccines even against new strains. The end of a tale of terror to tell children, grandchildren and other generations to come that has to end with the triumph of science.
If the control of the virus ends up being a matter of months, the effects of its devastating presence will be noticeable, but they will not leave the ground we walk unrecognizable.
The Belgian analyst predicts among the fundamental transformations one of technological root, with many companies and public organizations allowing up to two days of teleworking per week, and applications such as Zoom eating part of the cake of business trips. These changes carry a string of economic consequences: Will the expenses of business travelers and congresses that airlines, hotels and restaurants had until now partially disappear?
Sébastien Maillard, president of the Delors Institute, a Paris-based think tank, sets an example himself to illustrate this new reality. “A few years ago I went to Madrid, I spoke for half an hour in a ceremony, and I returned to France. Today I think I would not do that. He would intervene from Zoom and would not go to Madrid. And that also has effects on mental balance and carbon footprint ”.
It’s not just that the message can be delivered just as clearly across the screen. It is what happens before and after. Although conciliation has been in many cases a nightmare for parents, forced to have one eye on the screen and another on children in the sometimes reduced domestic space, Maillard believes that difficult times, with the loss of close relatives and freezing of social life has led to a strengthening of family emotional ties.
“Many families have rediscovered themselves thanks to confinement by spending more time at home with their children. Parents will not want to lose that new relationship. The balance between work and personal life will be a sought after value ”. Of course, it warns that the transfer to teleworking,
The autonomy to work outside the office raises other questions. Will it be necessary to continue building office skyscrapers? Has the population of the metropolis peaked? The number of cities with between 5 and 10 million inhabitants has more than doubled since 1990, those with more than 10 million have gone from a dozen that year, to 33 in 2018, and will be 43 in 2030, according to UN projections .
The pandemic, together with high real estate prices, traffic problems or pollution, threaten to disrupt this trend.Although other large cities are growing, New York and Paris were already losing population before the pandemic.
And Maillard perceives that the virus has increased interest in settling in small and medium-sized French cities. Barclays, in a report entitled The Post-Covid Economy , does not believe however that a mass exodus will take place.
“Although large-scale deurbanization is highly unlikely, interest could shift to smaller, less densely populated cities,” the bank notes. Ignacio de la Torre, Arcano’s chief economist, believes, on the other hand, that in Spain the getaway will not be significant beyond specific trips to the suburbs of the big cities.
A new rearmament of the public
The technological homo in gestation will also be a sanitary homo. The pandemic will undoubtedly be an argument used for years or decades when some manager reduces health items and there are protests. Bruegel’s Sapir awaits a structural spike in spending instigated from the bottom up, but the resources are finite, putting the political class in a dilemma.
“In many European countries the trend was to cut back on healthcare, which is understandable because we have made progress that allows us to live longer, but which entails a series of pathologies that are expensive, especially in the last ten years of life.
That ended. It will no longer be possible to make further cuts. Citizens will demand more hospital beds and the health budget will at least be maintained. That creates a political problem:
Its prestige was already high, but will the reputation of the medical staff rise further? Experts are pointing to pay hikes in essential jobs that have cared for humanity in dire circumstances. Socialist MEP Javi López agrees to glimpse a new rearmament of the public.
“The protective state is the unexpected winner of the pandemic. The demand for an effective state has increased and its universal benefits have been highlighted. It is a change in their favor after 40 years of reduction in their role ”.
Europe realized its fragility when it saw the virus spread while waiting for Chinese planes loaded with medical supplies. There were delays, resale of material to the highest bidder and withholdings on some scale, as happened in a tortuous stop in Turkey in which it was feared that 150 respirators destined for Spain would be seized.
Marketing and inflated prices touched the pride of countries like France, with President Emmanuel Macron openly talking about relocating strategic industries.
Health supply problems are also at the epicenter of vaccine distribution, and have hit other sectors more recently: the motor industry has been forced to slow down its production due to the lack of chips in the international market due to the boomof purchases of computers , smartphones and video game consoles due to pandemic restrictions and Christmas.
And the container shortage in Asia has made shipping more expensive and delayed, a problem some blame on shipping lines and these on the spectacular growth of e-commerce.
Backtracking on globalization?
These setbacks at the moment of truth have fueled mistrust and turned the word deglobalization into one of the loudest of the new world that some draw. Barclays considers it probable that companies will try to be less dependent on China, diversifying their supply chains towards other Asian countries, or even trying to favor the creation of national suppliers.
According to their data, the Asian giant accounts for more than 18% of US imports, more than 20% for the EU and more than 23% for Japan. And that percentage shoots above 50% when it comes to electronics and machinery.
But experts doubt that the relocation will be far-reaching, and they stick it to the medical field. Sapir sees the idea useless. How can we produce at home material for unknown pandemics or disasters to come? “In the last year relocations have been absolutely marginal. We can start producing masks in our countries, but later the problem will be another.
It does not make any sense. We can make a list of 20 essential products in which we must have more domestic capacity, but that will not alter international trade, “he says. For Ignacio de la Torre, from Arcano, the difference between what a Chinese and a Western employee charges for doing the same “remains brutal”, which will discourage return, or in any case will limit it to other low-wage countries.
The Canadian historian Quinn Slobodian, professor at Wellesley College in Massachusetts, who has just published his work Globalistas in Spain . The end of empires and the birth of neoliberalism (Captain Swing) sees a positive shift towards just in case production ( just in case) instead of the current just in time import model , lacking storage, followed by industries such as automotive.
The American academic cites as an example the EU’s attempt to create a fully European battery for electric cars. “We can also see a version of economic chauvinism in the resistance to Chinese companies like Huawei building 5G networks. There is potentially something good in these developments in the sense that free trade no longer appears as the only possible option, ”he says.
The Green MEP, Ernest Urtasun, notes a change in mentality within the EU. “We have never before had discussions about the strategic autonomy of the EU. It was widely established that globalization and free trade, without limits and without governance, was positive for the EU. Now this is changing, and opens up new opportunities for strategic industrial sectors in areas such as biomedicine, energy or mobility ”.
His political group, the ecologist, has grown strongly on the continent, and even aspires to be part of the next German Government, which could give immense power to ideas, those of preserving the planet, which have already been partially assumed. by other political forces.
Urtasun assumes that combustion cars and motorcycles will disappear and electric car charging points will grow. “Transport and mobility will be fundamentally electric in a few years and that will be a very visible and far-reaching change. Policies to improve air and water quality and protect biodiversity will change urban and rural landscapes ”.
The EU will dedicate a large part of the reconstruction plan financed by the first joint debt issue in the history of the community club to transit to renewables. The transformation has been endowed with a just transition fund in order not to leave behind the workers of polluting industries destined to disappear, whose prototype is the Polish miner.
The pandemic has put new stones in the way: unemployment has grown, and there are fears that the rise of robotization, which raises productivity without the need for social distance or quarantines, coupled with the change to an emissions-free economy, which will force reinvent thousands of workers, cause more unemployment.
“Artificial intelligence already powers many of our favorite apps and websites, and in the coming years it will drive our cars, manage our wallets, manufacture much of what we buy, and the consequences could put us out of work,” says entrepreneur Kai-Fu Read in his book Superpowers of artificial intelligence ( Ediciones Deusto) .
Faith in its possibilities is also shared by the European Commission. “It will change our lives, as it will improve health care, for example, by increasing the accuracy of diagnoses and allowing better prevention of diseases,” says the Brussels white paper on the subject.
Sapir sees similarities with what happened in the oil crisis of the 70s. “There was a lot of unemployment and little by little things got better. Now we have the shock of the pandemic, and if we add technological change and climate transformation to it, it can create adaptation problems that hit employment. But they won’t last forever. The problem is that although ten years in the life of a country are nothing, it is a long time in that of a citizen ”.
The debate on inequality can rage in such an environment. The confinements have generated two classes. On the one hand, salaried employees with the possibility of teleworking have taken savings to the maximum . They continue to collect their payroll, and spend less on leisure, travel or hospitality.
In front of them, the self-employed from face-to-face sectors, the unemployed, and young people who try to access the labor market, are paying the bill for the crisis, which has led the State to increase aid. But the inequality in that is also geographical. While the United States sends checks to millions of its citizens and Germany provides direct aid to those most affected, other countries lack such a wide margin to spend.
Investors have taken on the exponential growth of debt without blinking. Risk premiums remain low thanks to low interest rates. But Sapir believes that it is too early to claim victory. “Italy has long stagnant growth and recurring political problems. Super Mario Draghi can save the country for a few months, but what happens next?
Is Italy going to radically change, start to grow and solve endemic problems? If markets capsize from debt, instability and low growth, it could be a problem for the euro zone. Greece was a tiny economy and it was talked about daily in newspapers around the world. ”
The Chinese rise
The great geopolitical threat of the 21st century, however, will be the competition between the United States and China for world hegemony. “The pandemic has deepened trends already underway rather than creating new directions.
Here I am thinking especially of China’s rise to economic dominance. Insecurity about the Chinese challenge runs very deep among the American elite and is starting to creep into average Americans, who are slowly realizing that their country is no longer the dynamo of global capitalism.
China’s recovery has been much faster than that of the US, and they have managed the pandemic much more efficiently, “says Canadian Quinn Slobodian.
This high-voltage geopolitical competition is destined to mark the next decades, but this new Cold War will have nothing to do with the previous one according to Sapir, who just published the book China and the WTO: Why Multilateralism Still Matters. Unlike what happened with the USSR, it is not possible to cut the bridges with the world’s leading exporter of goods.
“There are two different things that we can expect from Joe Biden’s attitude towards China: on the one hand, recognizing that it will always be there and the US cannot defeat it but must live with it, and on the other, cooperating with the EU to create a a united front that puts pressure on China to become more like us ”.
The end of the First World War brought the collapse of the Empires, that of the Second, the new multilateral order and a golden age of capitalism. What period will the post-pandemic look like? On this, hardly anyone agrees. Maillard sees parallels with post-world wars.
For Urtasun, “we still don’t know if it will be more like the New Deal, or to the Lampedusian changes [that everything changes so that everything remains the same] that we experienced after the financial crisis in 2008 ″. Slobodian likens it to the oil crisis of the 1970s, when the industrialized world suddenly realized how dependent its lifestyle had been on cheap energy.
“There was an ambition to rethink the world in that decade that corresponds to what I would hope, in my most optimistic moments, that it could follow the pandemic.”