“If you want to make God laugh; tell him your plans.”
To characterize the current situation as ‘febrile’ would be an understatement. The goalposts shift daily. Perhaps even God is considering his options at present as the global status quo is smashed to pieces.
This once-in-a-century pandemic has exposed fissures in the global economic order that have had all-powerful democratic governments, and autocracies, scrambling for economic levers and restrictions on civil liberties; the kind of which would, perhaps, make a Pharaoh blush. We’ve seen, in just a few short weeks, the UK government commit €350bn to a fiscal rescue package, the European Central Bank going on a €750bn corporate and sovereign bond buying rearguard action; only to be outshone by the jaw-dropping commitment of $2.2 trillion by the Trump administration as an economic stimulus to a US economy that has just experienced 10 million of its citizens signing up for unemployment benefits inside a two week period. Not to mention the stock markets. Breathless yet?
The resulting weakening of global demand has prompted calls from distressed industries for bailout cash– with the rail, retail, tourism and, mighty, aviation sector all hurting like never before. The global airline industry is on its collective knee. It would be remiss, however, not to state that there are winners in this economic docu-soap. There always is that’s why we still have stock markets. Primed firms in cybersecurity, digital tech and telehealth are experiencing a boom in fortunes. Just ask a Zoom shareholder (NASDAQ: ZM) about their portfolio.
Such industry growth should be of note to our partners in the IPA world and, perhaps, if we can all hunker-down for one quarter of pain – and court Lady Luck – the undoubted recession will only leave our respective economies punch drunk and with a manageable hangover. That shouldn’t mean, however, that a severe course of introspection doesn’t follow. Serious questions must be asked of a system that has seen stockpiles of essential equipment, in mission-critical industries, fall to dangerously low levels due to the closing of factories in China. The sight of individual US states and the devolved nations of the United Kingdom having to play Ebay Roulette, on the open market for ventilators and the Personal Protection Equipment (masks, visors, gowns and headguards) that our fellow citizens, in the healthcare sector, rely upon for their own individual protection whilst trying to save the lives of our aged and/or vulnerable parents, grandparents and siblings. This certainly seems like a breach of the social contract and can’t be an acceptable state of affairs in G8 economies. If the Governor of the state of New York admits to considering barter as a reasonable course of action; then what chance for a Mayor of a smaller jurisdiction? We can and must do better.
For ordinary citizens there is something deeply conflicting about being forced to endure an under- stocked health service, exacerbated by supply chain restrictions in the very market delegated to serve as the factory of the world, whilst simultaneously being Ground Zero for the global pandemic. The mental gymnastics required are tortuous even for people whose job it is to understand such global dependencies. Some industries and sectors are surely worth the cost of doing business, if it ensures security of medicine, food supply and other essentials of survival for the nation state. Politicians may need to come up with some answers for this in the coming months.
This feels like a moment of global convergence for new ways of doing things, that heretofore, we all talked about being important ‘in the future’. The Fourth Industrial Revolution, 3D printing, telehealth and genomic sequencing is very much of the here-and-now and part of our economic and, actual, survival. Advocates on the left and right of the political spectrum are eager for a soapbox moment to promote their cause célèbre; whether that be the adoption of a system of Universal Basic Income, a fiscal tightening on the highest earners or smashing the prevalence of Modern Monetary Theory; manifested in now unlimited quantitative easing. In the US and Europe, the considerations of national sovereignty-security in ports, nuclear facilities and 5G telecommunications have vexed the brightest and most partisan minds for quite a while.
Expect medical supplies to be added to the list. Perhaps it is time to listen more intently and make some hard choices. Expect to see this front-and-centre when we manage to get to the other side of this surreal scenario; particularly around the US Presidential Election, later in 2020. Heated debate about reshoring to local economies and dialing-down on dependencies in Asia and elsewhere; all in the pursuit of a regionalization of global supply chains. The now, painfully, apparent ‘bottlenecking’ of supply chains centred on China, and the theory underpinning it, will surely face its stiffest test. Should it come through this unscathed, then it will prevail for as long as it needs to. The mortality-rate linked to Covid-19 will likely determine the severity of the inquisition. As of writing, in the early hours of 3rd April 2020, the global death count stands at +50,000. Tabloid editors are not usually known for their restraint. Testing for antibody resistance also seems to be key for returning the world to work, short of the longer-term holy grail of a vaccine for this virus.
We are witnessing, in real time, a leveling of the global playing field, through the medium of a novel highly-contagious virus that seeks no acknowledgement of wealth or status; thereby reminding us that something as blunt a measure of success, as GDP growth, is no match for Mother Nature and that is the true Status Quo.
May you live in interesting times, somebody once said…