There are very few people alive today who have any memory of the last global crisis – the Second World War. The apprehension since then has been to avoid any recurrence of such hostilities and needless loss of millions of lives.
Little did we know that the next global crisis will be caused not by international war or an environmental calamity – but in the form of a pandemic which has already cut short a quarter of a million lives since the virus’s rampage began in January 2020. No one knows when and how it will end.
We have been hearing a new phrase often lately – “life on the other side”. Human history will, hereafter, be written based on two distinct periods – pre and post Covid-19.
What will life on the other side be like? I wish I had a crystal ball! In the absence of such a device, my vision will be based on a combination of perspectives – hard-nosed objective predictions, my ideological leanings and largely on wishful thinking focusing on how things should be.
First, everyone is talking about the economy. The global economy had been languishing ever since the Global Financial Crisis (GFC). The so called advanced economies have been struggling to achieve GDP growth rates of anything above 2 per cent, barely above the population growth rate, for quite a while. The pandemic has made things even worse, most economies will see a contraction – the extent of which is still not clear but might well be close to 10 per cent accompanied by staggering levels of unemployment and underemployment.
My intuitive guess – I hope by some magic or miracle I am proved wrong – is that it will take between 3 to 5 years before aggregate levels of economic activity return to pre-Covid levels. The journey will unfortunately not be painless, accompanied by structural changes not clear at the moment. The worst affected industries in the medium term, apart from manufacturing and construction, will be travel, tourism and hospitality. A survey in Australia has revealed that even after easing of restrictions, a significant number of respondents will avoid pubs and restaurants. For Australia, education is one of the top exports. The future of the industry is unclear, but I reckon that with practical measures, such as forced quarantining of international students for two weeks after arrival, things will return to previous levels reasonably quickly.
The new world order post CoViD-19 (Picture courtesy: Getty Images)
As regards the country of my birth, India, I reckon the recovery will be quicker, thanks to the huge domestic economy, and the likely shift of significant amount of direct foreign investment in manufacturing from China – if current negative sentiments take shape. This might be offset by shifts in some service industries such as call centres moving away from India if protectionist sentiments eventuate.
There will certainly be some huge shifts in patterns of government expenditure. I must admit this is where my ideological leanings influence my predictions. After combating the pandemic most nations spending big on defence will have little appetite and resources left for physical warfare resulting in a significantly reduced share for defence expenditure. There even might be strong public backlash against such spending. The biggest winner will hopefully be health, followed by education and welfare (necessitated by increased levels of unemployment and accompanying poverty).
Another huge change will be in the way we interact socially. Social media have already had an impact on the mode of social interactions. A long period of social distancing will probably get a lot more people used to isolation. Well, the reverse might happen too. Sick of isolation, partying might come back with a vengeance once the fear of infection recedes. I fervently hope that this happens!
As regards political structures and systems – the jury is still out. With the end of the Cold War and China embracing a form of authoritarian capitalism since the demise of Mao, the face of communism as it was known in the days of my youth has changed. Coupled with technology led globalisation, Capitalism has been the winner – for a while. The so called growth, based on high GDP increases from the mid 90s to the GFC, has not benefitted the have-nots as much as it should have, resulting in widening gaps in social and economic inequity in comparison with the rich and the burgeoning upper middle classes. At the same time, Kerala, an Indian state with a communist government, has so far handled the pandemic in an exemplary manner – supported by decent public health and state run welfare systems, and an educated population. Australia, a capitalist country with a well managed economy, a universal health care system and a strong welfare safety net , has also handled the pandemic very well. On the other hand, the obscene social and economic inequity of the USA has laid bare the nation’s structural – and arguably moral – shortcomings. The future political structures might thus be a hybrid of socialism and capitalism, with a dash of Chinese style authoritarianism thrown in for enforcing the inevitable new rules.
Finally, the environment. Lockdowns have prepared many organisations for home based work. Depending on impacts on productivity and efficiency, this might bring in a big change in the way many people work. This will have a direct impact on transportation and office space. The unprecedented levels of recent natural calamities, coupled with the horror of the pandemic, will perhaps force policy makers to think beyond immediate profits and growth, and consider environmental issues with more seriousness and dedication than before.
So, coming back to life on the other side, what will it be like when mankind reaches there? An incorrigible optimist, my take is that despite a lot of changes and considerable medium term pains – some predictable, others unforeseen – for the vast majority, it will be for the better.
SIDDHARTHA DE is former Assistant Director with the Australian Bureau of Statistics.
Opinions expressed in this article are of the author’s and do not represent the policy of The Edition. The writers are solely responsible for any claim arising out of the contents of their articles.
Tags: #CoViD19 #Pandemic #GDP #Economy #Virus #WorldWar #Lockdown #GlobalFinancialCrisis #China #Australia #SocialMedia #SocialDistancing #Isolation #ColdWar #USA #Capitalism
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