A MEASURED APPROACH TO THE POST COVID-19 ECONOMY

Only a few disagree that the global economy will mutate in a post-Covid-19 era. Lessons learned from the Trillions of Dollars in realized losses, missed opportunities and government subsidies to support communities will not go unnoticed. The G20 governments have already pledged a USD 5 Trillion stimulus package and according to the United Nations, the global economy is inclined to shrink by a minimum of 1% by year-end instead of growing by 2.5%, which is a reversal from previous projections.

However, before exploring the potential future direction of the world economy, it’s key to understand one of the key pitfalls of Globalization: risk concentration.

In pursuit of lower costs and higher operational efficiency, firms from around the world depended almost exclusively on Chinese chains of supply with quasi-disregard for non-financial measures of success like autonomy, sovereignty, and localized economic welfare. Corporations looked at each other to know what to do, which led decision-makers to concentrate risks around China while making little use of uncertainty, risk and vulnerability assessments. The Covid-19 pandemic super accelerated and much condensed what would have been an eventual but inescapable outcome. We estimate that the economic costs of the epidemic over the next five years will most likely offset the entire savings of USD 25 Trillion businesses have accumulated since the fall of the Soviet Union a decade ago.

Staying away from generalization; but as individuals, we often look for immediate gratification and material gains, ignoring the consequences of our choices and their far-reaching implications. We also tend to forget that people have the most bearing on events and the choices that make things happen drive the results. Looking beyond the simplistic financial factors, the changes in the international economic model will be driven by non-financial factors and yardsticks by which countries can navigate.

And, in such world, governments and businesses will ensure they maintain their sovereignties and control over their national resources and capabilities, and on mitigating the temptations of foreign opportunities to safeguard the independence of their decision-making and economic, social and health welfares.

A move to a highly digitized world is a near certainty. Calls are already painting A.I. and digitization as the “solution to all of our problems”.

While the benefits of digitization are welcome and undeniable, human beings are famous for our extremely short-term memories and myopic views and perceptions. Our current, recent and distant history is full of case studies of existential miscalculations, misconceptions, and over-hyped fads and trends. In a post-Covid-19 world, we must avoid the traps of short-term planning and side-step going from one risk concentration to another. In other words, we ought to avoid going from sheer Globalization to ruthless Digitization. In the past, Globalization introduced us to the merits of integration while Digitization is honing our technologies. We ought to consider both as means-to-an-end (Variables) instead of end-goals.

We are cautioned to keep our eyes on a constant that matters: human welfare. Digitization may very likely accentuate individualism and the lack of leadership on every level imaginable where every person, community and country turned to safeguard its private interests more than we ever did before. Technology should be a complement to real life and not a substitute, and Big Tech must be reined in order not to concentrate more power in their hands.

Case in point: it makes sense for “distance working” to gather steam, but this evolution in business practices may be used as a precursor or an accelerator that extends to more speculative and dramatically disruptive aspects such as predictive medicine, block-chain currencies, privacy intrusions, and data security breaches, social distancing, extremist content (prejudice, hate, and disinformation), technology addictions and mental health challenges to name only a few. Humans have a habit of using advances in technologies malevolently instead of serving the public good.

To further illustrate the point, we must hone distance working as a contingency plan (just like we do when we simulate fire drills) instead of using it as a permanent cost-saving measure.

An over-reaction to the pandemic and over-enthusiasm over digitization will almost certainly lead to a great polarization of wealth and socio-economic inequities and unrest on national and international levels with all the off-setting financial and non-financial consequences that those entail.

As we embark on our next evolutionary step with great expectations, let us commit to a measured and humane digital world that strikes the right balance between values and technology, quality of life and the ease of doing things.