“There are decades where nothing happens; and there are weeks where decades happen.“Vladimir Lenin, Russian revolutionary and political theorist (and keen cyclist)
In March 2020 sport and most other human activity that we take for granted was shut down across the globe. The fate of humanity lies in the hands of healthcare workers, scientists and politicians. They face an atrocious choice: how to save lives without destroying the economies on which those lives depend.
We don’t know enough about the virus – but we do know that this is not the end, we are not facing mass extinction. However, it could be a matter of years, not weeks or months, before the virus is truly under control and many more before the world achieves economic and psychological recovery.
The point of this section is to frame the thinking that comes after it and not to offer amateur epidemiology or economics – the world has had enough of people who don’t know what they are talking about. Feel free to skip this section and get straight into the bit about sport.
- The world is in a lockdown which could last up to eighteen months
The science and grim maths of Coronavirus are best left to epidemiologists and statisticians. What we do know is:
- Governments around the world have decided that without a vaccine they must forcibly isolate and lock down their populations.
- Immunity, critical care, new treatments, testing will all be factors in determining whether lockdowns, permanent or recurring, last a few weeks or even as many as 18 months.
- The virus is senicidal – older people will die from it at rates 10-100 greater than younger people
- The impact will be greater in countries with less developed governance, healthcare systems and economies, the so called “fat tail”.
It is unclear how, once the infected and recovered have been identified, they may be able to freely circulate in society and what tensions that may give rise to.
- Coronavirus’ short, medium and long term economic effects will be more profound than anything we have seen in our lifetimes
- The balance of power between China and America may shift, while globalisation as we know it may unravel
Some of the economic impacts of the virus will be familiar from previous shocks and market collapses – including, of course, the recent downturn of 2008. That means a a decline in spending, collapse of consumer confidence, new priorities for voluntary spend, bankruptcies, unemployment, debt.
But this downturn threatens to be much uglier, longer and more profound than anything that has come in our lifetimes – if you are lucky enough not to live in a war torn country. People are literally locked in so stuff is not available to buy and people are not available to buy it – the “human credit crunch”.
The longer this continues the more the interdependence of our economies and globalisation itself may may unravel leading to a fundamental shift in the very nature of the global economy and distributed, localised supply chains.
A quick turnaround even in the most optimistic scenarios seems unlikely. Massive bail outs are being enacted by every government and according to the Economist may amount to 23% of leading economies’ GDP. The legacy will be an unsustainable debt mountain that falls on younger members of society who are also the least affluent – it may have to be written off altogether. If not, taxes will rise.
China is vying with America to be the world’s trusted partner in a crisis, boosting its global image by exporting Coronoavirus medical supplies and health workers and aiming to become an economic safe haven. America has been slow to act and its President seems uniquely ill-equipped to deal with an enemy that can’t read Tweets. China has the advantage of strong domestic demand and levels of household saving and, currently at least, consumer optimism. America may yet bounce back but its valuation premium is at risk.
Watching these two superpowers vying not to be top of the Coronavirus table is going to be this summer’s goulish spectator sport (America has just taken the lead). There will be cheating, and a lot of it, but not nearly enough drugs.
For businesses a downturn means a flight to quality, a squeeze on cash, abandonment of capital spend and concerns over marketing. But it is also a time of opportunity. Google and PayPal weathered the dot-com bust and AirBnB, Square and Stripe were founded in the wake of the crisis of 2008. Constraints focus the mind and provide fertile ground for creativity.
Our way of life
- The virus will directly affect millions of people and disease and the fear of death will cause a realignment of values and priorities
The short term effects Coronavirus on how we think and act are obvious:
- more time spent at home (willingly or not), more time spent consuming news, streaming, messaging, gaming and video conferencing
- delaying or cancelling purchases altogether
- worry, confusion and stress
Global Web Index is producing regular and excellent reports on global consumer sentiment should you wish to track it.
The wider implications of the fight to defeat the virus are not so easy to predict.
State control over our lives will expand of necessity. This will have a huge impact on public trust in institutions and organisations, including sport institutions and organisations.
The good stuff is more investment, more services and more support. While the current bail out is more of a rescue than a levelling up it will likely lead to a change in our collective values and priorities: a renewed sense of common purpose and appreciation of the value of mutual self-help. A third of the UK workforce have been designated as Key Workers demonstrating how mutually dependent we already are.
In the west after the first and second world wars expansion of the voting franchise, introduction of more women to the workforce, better education, unemployment and health insurance and improving technology were a key part of economic recovery. In the east the strength of collectivism may be a key driver and have lessons for the wider world.
One section of our workforce, the health workers, will be universally lauded as our new heroes. And these heroes are mainly female. In the future we may all have to take our turns as health workers in the community.
The bad stuff is more surveillance, more controls and less liberty. We are already in voluntary lockdown. Governments may require telecoms and technology companies to make individual network graphs and location data available to public health authorities for every infected individual identified. We may also see rifts in society between have and have nots (and in the short term between infected and uninfected or infected and recovered) deepen further.
Once our freedoms have been taken away, how will we get them back?
We are more connected than ever and yet forcibly living apart. Will we go back to how things were? And will we want to?