POST-COVID19 WORLD (I): Societal and Microeconomics changes

This is the first of a series of articles about the world that awaits us out there. In this one I am focusing on the changes that will affect our social and domestic lives. Subsequent ones will talk about other angles like politics, geopolitics and macroeconomy.

The perspectives showed in this article and their intensity will depend very much on how long it takes until a vaccine is found, released and delivered, or until we get immunized at levels of over 60% of population (which is the %percentage considered as herd immunity by the WHO).

POTENTIAL MASSIVE UPHEAVAL DUE TO CITIZENS’ LACK OF SAVINGS TO SURVIVE UNTIL THE CRISIS GOES AWAY

The financial crisis in 2008 caught the world in a better off position. In average, people -or their significant others- had some savings that played out as a cushion to survive for a while. Now it is not the case. Over the last ten years the middle class has shrunk and the lower class has expanded, with 1% of the world population accumulating wealth equivalent to what the remaining 99% need to live. 60% of Americans say they have less than 1000$ in their bank accounts, and a similar situation happens in Europe. Salaries are very low compared with cost of living, impeding citizens to save money.

The middle class have played out a fundamental role as peace makers in the world since the WWII: they want to preserve their comforts, they step away from instability. Now the middle class is a tiny remnant of what it used to be. Under these circumstances, a vast majority of population who feel abandoned by the Establishment, might wonder “What do I have to lose if I can barely give a future to my children?”… that is the germ of upheavals and revolutions.

Governments, Central Banks, the 1% ultra rich citizens, and the solidarity of the tiny remaining middle class have the magic wand to avoid it from happening. They (we) should influence better fiscal and monetary policies and incentives, the environment to foster creative new jobs, and the creation of imaginative and altruistic solutions to lend a helping hand to those who have nothing.

COLLECTIVE MINDSET WILL BE IMPORTED FROM ASIAN CULTURES

We will import the collective mindset from Asian cultures. Even though individualism is in our genes and will remain, our levels of individual fragility have increased and we will seek the shelter of the tribe. The sense of belonging to a ‘global tribe’ will return, since we have realised that what one does individually – confinement, social distance, reinforced hygiene – affects the rest.

There will be two side effects of this:

• Climate change, the next pandemic-ish havoc round the corner, will be definitely tackled seriously by most countries (at last!).
• Time Banking will definitely take off. Currently it is used by very few people. It consists of members receiving ‘time credits’ when they provide a service ( mostly with a social orientation, never to be paid for with money) to another member of the time bank. The member receiving the service is debited an equal amount of time. See https://www.timebanking.org/what-is-timebanking/.

SOCIAL DISTANCING AT HIGH SCALE WILL BE THE NEW NORMAL

Long lines/queues will be the new reality when we go out for shopping or entertaining or public places, in order to keep the 2-metre safe distance.

It will have three side effects:

• Less consumerism. We will be much more selective with our shoppings.
• More online entertainment like pay-per-view live concerts.
• Strengthening and growth of online shopping channels. This can be the trigger for Amazon and Alibaba to become almighty, and an opportunity for smaller businesses to increment their digitisation levels.

DOMESTIC TRAVEL WILL INCREASE

We will travel more within the borders of our countries. Domestic travel will re-open relatively quickly, with a positive effect in an increase of GDP via domestic demand. Economies of scale will apply, thus prices not going on the rise significantly.

International travel will not re-open that quick. It will grow gradually, as borders will re-open slowly, with our governments announcing regularly the ‘safe’ countries allowed to visit. Social distance will have to be kept inside airplanes. Therefore, there will be no economies of scale for a long time: international flight prices will skyrocket, so less people will be able to travel internationally.

ONLINE SCHOOLING WILL BE READY-TO-GO

New platforms for online education will be developed, in order to be able to conduct formal schooling for our children as an anytime ready-to-go alternative option. This will not only be a matter of technology, but of new pedagogical methodologies focused on the student rather than the teacher. Governments will have a strict control on those platforms, their quality, usability and accessibility, even participating as shareholders.

REMOTE WORK IS HERE TO STAY

The vast majority of organizations will implement remote work as work-as-usual for certain type of jobs, either fully or partially.

It will bring more engagement and productivity for those companies that practice a culture of trust and outcome-orientation, as data tells for the handful of companies that have been working remotely for years. On the other hand, it will bring disengagement and burnout for those companies that micromanage and treat work as a process-oriented activity (that is, obsessed with controlling time dedication, effort and the way work is done).

There will be two side effects:

• At least 30% of total labour time (notice I said ‘labour time’, not people) in the planet will be worked remotely, which will reduce pollution in big cities at around the same percentage.
• Given the fact that we will gain freedom to organize our own time as best suits us and there will be less commuting time, it will be another lever for the expansion of Time Banking.

The future may be a negative self-fulfilling prophecy or a set of opportunities to build a better world. Either of those two options may be true. It’s in our hands.

I wish you the best.

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