The Long Term Impact of Covid 19
The Covid 19 pandemic is a genuinely historical event. Future historians will analyse the period leading up to the outbreak, searching for clues about why it got so bad so quickly, will then investigate how societies managed the initial phase of the outbreak and finally will make conclusions about the long term impacts. When they do so they will have the benefit of hindsight and history will look neat, with few loose ends.
From our prospective, in the early phases of the outbreak in March 2020, things look confused and even chaotic. Governments are struggling to find a way through the crisis whilst trying solve two seemingly contradictory problems; how to save individual lives and how to save their economies and societies.
This article provides a historical preview of how historians will look back at the longer term impacts of Covid 19. We look at 12 main forces, split into two parts, first what we refer to as “inevitable history” and second what we refer to as “broken history”.
Inevitable history is easier to predict and we look at forces that are essentially a foregone conclusion; they were ongoing prior to the Covid 19 outbreak and Covid 19 has strengthened those forces, making them even more inevitable. Broken history is harder to predict. These are forces that would have happened had Covid 19 not emerged or forces that are unlikely to have occurred in the absence of Covid 19.
At the end of this article we pull all the forces together to create a picture of how the world will look like post Covid 19.
Inevitable History
There are a number of forces that Covid 19 is strengthening. They include some obvious ones like the rise of the digital world, the reduction in relevance of physical locations and the rise of the Far East. Some are less obvious, such as the increased value of human life, the creation of a global culture and the decline of military conflict. What is important to note is that many of these forces are self reinforcing, making it more likely that all of them will occur.
The rise of the digital world
Societies are becoming more digital. The internet boom in the 2000s and the smartphone boom since 2006 pushed societies to become increasingly digital with dozens of physical items, such as maps, phones, board games, books, CDs, DVDs, being replaced by digital equivalents. It was always anticipated that more things would be purchased online and, as social distancing has forced societies to retreat inside, the digital world has expanded significantly faster than would have happened normally.
Internet shopping for items as basic as groceries has increased sharply as families have replaced their weekly trip to the supermarket with weekly internet deliveries. Amazon.com is an essential service to millions, providing access to a world of products that are currently out of reach from physical stores.
The entertainment industry has been digital for decades, starting with music and then videos. The Covid 19 pandemic has accelerated this trend, with more people signing up to services like Netflix and Disney+. Venues that could once hold hundreds, thousands and tens of thousands of people, such as theatres and sports stadia, stand empty as film distributors release movies direct to streaming platforms, theatres stream plays live and football matches are played in silence.
Education, which has had a range of online service providers struggling to find a market, is also going online as primary, secondary and university students are taught their core subjects at home. Cambridge University announced that all of its tuition for the 2020-2021 academic year will be done online and that residence in Cambridge would not be necessary. The cost of education will also be questioned. It is hard to justify a $250,000 bill from Harvard Online, and the concept of what is good enough for a degree will change as more people switch to lower cost online university specialists, such as the University of Phoenix. This has global implications.
This acceleration is likely to continue and to become permanent, resulting in a significant change in the physical landscape of our towns and cities, as shops and public venues close.
The irrelevance of location
The rise of the digital world is not just about more things going on line. It is also accompanied by the fall in the relevance of geographic location. The first humans lived in small extended family groups. They lived this way for hundreds of thousands of years, following the seasons in a nomadic search for food. Farming brought settlement and the end to their nomadic existence. Extended families expanded into villages, towns, cities, countries and civilisations. Where you happened to be born would dictate if you were a citizen of a rich and powerful country or a poor and weak one.
People today benefit from the work of others in two different physical forms. First, there is the work done in country by people who live in the country as well. These workers may be natives or immigrants. Second, there is work done by people who live outside the country. These workers might work in a factory that produces something that is imported into your country or might provide a service that you benefit from. A factory worker in China or a call centre operative in India would be two good examples.
Covid 19 has accelerated the rollout of work that could be done remotely, either by fellow citizens working from home or foreigners working from their homes. Millions of white collar workers in the West have been working from home over the last few months. To the surprise of both employers and employees, it is clear that a large amount of their work can be done effectively, without ever having to go into the office. Both employers and employees will have strong drivers to maintain the status quo, even after Covid 19 has been tamed. Many employees like the flexibility of working from home and the fact that they no longer need to commute. This saves time and money. Equally, many employers are realising that they could save a lot of money on office space by encouraging certain people to work from home.
But once you accept the fact that it is possible to work from home, where your home is located becomes less important than an overlapping time zone and a good internet connection. Many people living in cities or commuting into cities will move further away. This is a good thing as it will spread jobs more widely throughout the country and will reduce congestion on roads and public transport.
The next logical step, however, will benefit companies and negativity impact citizens of higher income countries. Once people start working remotely there is limited practical difference if an employee works in London, from a remote Austrian village or from a suburb of Bangalore, so long as the employee has all the right skills for the job. When they appear on a Zoom call, distance has become irrelevant. But the cost of hiring each employee will be radically different. This is great news for people from relatively low cost countries. But it is devastating for people living in more expensive countries who will be competing for work with a significantly larger talent pool who can work at a fraction of the cost as their own cost base is much lower. This “virtual immigration” will be almost impossible for governments to control.
It is not just work that will be impacted by the rise of online collaboration. It also has an impact on friends and family relationships.
Who your friends are is heavily dependent on physical proximity. You went to school with your childhood friends. Your first steps into becoming an adult were shared with university friends. You arranged outings with work friends by the coffee machine. And when you moved away from your home town you made new friends with people that went to the same pub or had children at the same school as your own.
Social distancing means that it is both difficult to meet everyone physically and easy to meet everyone on line. This is having a direct impact on who people are seeing and interacting with during lockdown. Family members living hundreds or thousands of miles apart have started to have virtual lunches or teas. Old school friends living in different towns can have drinks together, after work. New friends can be made as people go online to play multiplayer games on a PlayStation while simultaneously chatting over Skype.
Rise and rise of the East
Another long term trend is the continuing relative decline of the West compared to the East. This should not be a surprise as the power of the West has been in continuous decline since its peak on the eve of World War 1. World War 1 broke Europe up into fragments and triggered the initial loss of European colonies. World War 2 shifted power away from the cradle of Western power, Europe, to its American and Eurasian offshoots, the United States and the Soviet Union. The end of the Cold War left the United States as the only Western country as a global power. The wars of distraction in the Middle East and Afghanistan shrunk American power even further and allowed China and East Asia to emerge as full rivals to Western power. The rise of the West was not inevitable. Nor was its fall. It was the result of thousands of individual decisions made by both Western societies and those that it interacted with.
What has surprised many Westerners about the Covid 19 outbreak was how well East Asian countries such as China, Korea and Taiwan have managed the crisis, in stark contrast to Western countries. Asian governments responded quickly and competently and their citizens dutifully followed the rules. As a result they managed to save lives and their economies and societies.
Meanwhile, the West has been unable to show any leadership in this crisis. It is not simply that Western countries appeared to be incompetent. Rather Covid 19 revealed structural issues within Western economies. The West was unable to lead on testing for Covid 19 or providing its doctors, nurses and other front line workers with the necessary personal protection equipment such as masks and screens as they no longer had a supply chain that allowed them to make them at home. Covid 19 revealed to the world that the West had outsourced so much to East Asia that it could not look after its own basic needs. We will follow this up later on in this article, but for now Covid 19 has shown the West to be lacking and East Asia to be remarkably resilient.
A few Westerners will reflect on the core reasons why East Asian countries managed Covid 19 better than they did. Is it to do with their culture, their homogeneity, their political system, their economies, their educational systems? What? This process of questioning will be very uncomfortable for most Westerners as Western superiority in most things is something that has been taken for granted for at least 200 years.
The value of a human life
Covid 19 has also highlighted a global attitude to safety and the value of individual human lives. Lockdowns, of varying degrees, have been imposed in most countries around the world with the single aim of reducing the number of lives lost by reducing the spread of Covid 19. All other considerations have become secondary. To have such a universal attitude is really remarkable.
The world has become an increasingly safe place. Premature deaths, caused by disease, accidents and conflict have been declining around the world over the past 100 years. In most parts of the developed world it is unusual for people to know people who have died prematurely. This was not always the case. Childhood mortality used to be rampant as diseases caused by unsafe water killed millions. Accidents in factories were rife.
Bit by bit, however, modern advances have prolonged life and premature deaths are now generally caused by the luck of your genes, which can increase the risk of illnesses such as cancer, or are self inflicted, due to poor diet and lack of exercise. Workplace accidents have become rare as companies have been forced to spend more time, money and care in ensuring that employees go home safely to their families. Wars are almost a thing of the past. Very few people today expect to be called up to fight in a global conflict which will kill millions.
As a result of this trend, the value of each human life has gone up, significantly. Arguably the value of a human life in the West is almost incalculable as the cost of dealing with Covid 19 is adding trillions of dollars of debt to national budgets. The UK, for example, is expected to add an additional £400 billion to the national debt in 2020 alone. Thousands of companies will go bankrupt and hundreds of thousands will lose their jobs and thus incomes. At the time of writing, the UK death toll linked to Covid 19 was 34,000, meaning that each life was the equivalent of £11 million each, only counting the additional government debt.
It is likely that Covid 19 represents the peak point at which human lives are explicitly valued. Governments cannot continue to borrow at this rate and the economic collapse of entire countries would result if they attempted to do so. Still, it is remarkable how the value of human lives has changed over time.
The creation of a global culture
We are seeing the emergence of a global culture. In the late 1800s “human zoos” popped up all over the West as Europeans and American explorers brought back natives from Africa, Asia and South America and exhibited them in their “natural states”, frequently naked. People were very different in terms of how they looked, what they wore, how they thought and what they believed. The four previous trends, the value of a human life, the acceleration of our digital selves, the irrelevance of location and the rise of East Asia, underpin a wider trend towards the establishment of a global culture. The similarity of the response by most governments around the world to the Covid 19 outbreak points to a shared way of thinking by political and scientific leaders.
In part, this has been driven by global trade over the last thirty years, since the collapse of the Soviet Union ended the fragmentation of a world that had been divided into blocks; a first world, led by the United States, a second world, led by the Soviet Union, and a third world, of independent non aligned counties such as India. This trend towards interconnectivity, was then accelerated by India’s emergence as a software and back office powerhouse, thanks to the anticipated Y2K crisis, and China’s reemergence as a manufacturing powerhouse, thanks to its accession to the World Trade Organisation in 2001. We now live in a world of just in time global supply chains where people have to be able to communicate with and understand each others’ wishes. This is only possible with a greater understanding of a global culture.
The emergence of companies such as Netflix, who have financed dozens of films and TV shows from all over the world with excellent subtitles and dubbing, means that people are not just listening to Western music but are also enjoying programmes made in dozens of countries. Critically, while those programmes may differ in language and location, the fundamental way of telling stories and creating characters follows a similar, universally understood, template.
This international culture means that people all over the world increasingly wear the same clothes, listen to the same music and watch the same TV shows and movies. This is also not just a one directional trend emanating from the United States to the rest of the world; Korean pop bands and Spanish bank heist TV shows have become global phenomena.
Decline of military conflict
Covid 19 is going to make global military conflicts less likely. Prior to the outbreak of World War 1, military budgets were relatively small and few countries had large standing armies and conscription. World War 1 dramatically increased military budgets and World War 2 was a bonanza for weapons manufacturers. The long Cold War kept military budgets high, relative to the pre World War 1 era, but after the Cold War ended military budgets dropped significantly, with the exception of the United States and its continued involvement in wars in Muslim countries and its desire to keep spending ahead of other global rivals such as Russia and China.
As military budgets are reduced, military conflicts are less likely to occur. And military budgets will be cut, due to Covid 19. The first response from governments to the crisis has been to provide more liquidity to their economies by printing and borrowing money on a massive scale. The next phase will be to look at where they can raise taxes to pay for this expenditure and where they can cut costs. The one part of the budget that seems obvious to cut is the military, which has played almost no role during the Covid 19 pandemic. Long term capital programmes and new weapons systems will be postponed, possibly permanently. Recruitment will be frozen and early retirement encouraged.
Covid 19 will also raise questions about the payback of military expenditures. One of the primary duties that a country has to its people is to keep them safe.
The trillions spent by the US fighting poor Muslim countries have not benefited US citizens. At the same time the military budget has done nothing to fight the Covid 19 pandemic.
Military conflict is not just a financial calculation. Culturally it is now harder than ever to go to war. First, people all over the world value life more, something that we have discussed earlier. If they are prepared to spend trillions stopping a disease, it is hard to see people agreeing to fight and die. As a way of contrast, on the first day of the Battle of the Somme on 1 July 1916 the British Army suffered 57,470 casualties, of which 19,240 were killed.
A second reason is that as a global culture emerges people understand each other better and are more empathetic. We have seen how a common culture can change people’s perception of “others” in the past. A good example is the writing of nineteenth century writers like Charles Dickens and Victor Hugo who described the terrible working and living conditions of poor people in their own countries. This act of humanising people led to legislation that prohibited child labour and improved living and working conditions for the poor. The same thing is happening today. As people from all over the world work together, buy goods and services and enjoy the same TV shows it makes it harder to cast people who are not fellow citizens as evil boogeymen.
Finally, there is the practical question of war. Western countries have discovered that their home supply chains are woefully inadequate for manufacturing things. If Western governments can’t provide people with face masks, gloves and test kits it is hard to see them being able to kit out a high tech army to fight a powerful rival.
Broken History
So far we have discussed the inevitable macro forces that will be assisted and accelerated by the Covid 19 outbreak. As has been mentioned before, those inevitable forces are easier to predict.
In this section we look at “broken” history. These are forces that, prior to Covid 19, seemed to be like an unstoppable freight train steaming down a track. But the pandemic has caused a dangerous break in the track. The freight train might continue onwards, bouncing miraculously back onto the track as though nothing had happened. Equally, the train might be derailed completely. We start with a discussion on the private sector and government, move on to mass migration, globalisation, mass unemployment and then onto climate change. Finally, we discus the wild card of Covid 19, Universal Basic Income.
The retreat of the private sector and more government
Over the past thirty years large Western companies have outgrown their national borders and have become global companies. They have been the champions of globalisation, investing in supply chains overseas in a bid to drive down costs and promoting their brands in order to acquire customers in newly emerging, and hopefully lucrative, markets.
As global companies have become stronger, national governments have become, relatively speaking, weaker. Global companies have shed millions of jobs in their Western homelands and have imported lower cost goods made by lower cost labour back into the West, driving local Western companies, who cannot compete with the lower costs, out of business. This has reduced the tax base of Western governments, and global companies have worked hard to create tax loopholes which allows them to pay even less tax, or no tax at all.
It is no surprise then, that global companies, some of whom who have market capitalisations larger than the GDP of many countries, have frequently been cast as the villains in recent popular culture. This creeping power of the private sector compared to governments and society seemed to be a permanent, unstoppable, force.
No more. The coronavirus pandemic has firmly reestablished governments as the most important player in society. Corporations have switched from being bullies, threatening to move their businesses offshore, to being supplicants, begging governments for the funds they need to survive.
Unlike the 2008 Financial Crisis, where governments danced to the tune of the financial sector, Covid 19 has seen governments focus on individual citizens with direct payments being made to employees rather than employers. This appeared to be politically expedient. At the next election incumbent governments will loudly remind voters who it was that saved them from death, eviction and starvation.
But incumbent political parties may not be the only voice at the next election. Their opponents will remind small business owners that it was government policies that created the lockdowns that destroyed their businesses and lifelong work. Big businesses will try to unshackle themselves from government restrictions and emergency funding packages as fast as they can. Millions of young voters, who were barely affected by Covid 19 directly, may not forgive governments for allowing their welfare and life prospects to be curtailed in order to protect older voters.
What is clear is that governments are now having more direct influence in the lives of its citizens than since the end of World War 2. What is not clear is how long this will last.
Mass migration
Since the 1960s Western countries have been open to mass immigration, which has resulted in huge demographic shifts in Western societies. Over the last few years a large minority began to question this open border policy and this pushback was partially responsible for the electoral victories of Trump and Orban in the US and Hungary and the pro-Brexit vote in the UK.
In order for countries to reduce the spread of Covid 19 they have put in place lockdowns within their borders and many countries have also significantly reduced or restricted the movement of people from outside their borders. If you can’t get to a country by plane or boat, or if you need to go into quarantine for 14 days once you enter a country, this will significantly reduce the amount of legal and illegal immigration.
Even if you can get into a country, life for many immigrants will be significantly harder. Unemployment in many Western countries is approaching levels not seen since the Great Depression. There are very few jobs. In addition, furlough schemes, which have been brought in by countries such as Spain and the UK, are only eligible for native citizens, not for immigrants. This lack of jobs and lack of access to financial support for recent immigrants will make it particularly difficult to stay in the country. Finally, even recent immigrants will not welcome new immigrants as they will be competing for the few jobs that are around.
The question is how long this pause will last. If it is short-lived then there will be little long term change. If lasts a little longer the impact could be more permanent. One of the key dynamics of immigration is that people migrate to places where they already know people, typically family members or friends of family. This “chain migration” phenomenon also encourages cross border marriages as new immigrants marry more established immigrants. If those spouses are not available then it is likely that more local intermarrying will take place, which will accelerate the assimilation of immigrants into Western societies and create a break in the chain.
What is noteworthy is that this pause in mass immigration will be due to the desire to keep citizens safe, rather than due to a conscious anti immigration policy, which would be seen as highly controversial.
Globalisation
Globalisation and mass immigration are twinned phenomena that companies find appealing. Global corporations like globalisation as they can manufacture in low cost countries, sell in high income countries and divert profits to low tax countries. National corporations like immigration as it pushes down labour costs, increases the availability of scarce skills, which then pushes down labour costs even further.
For decades Western citizens accepted both globalisation and mass immigration as they remained relatively wealthy and employable. Their wealth meant that they could afford cheap imported products and could afford the products and services provided immigrants, ranging from farm workers, health workers, builders and cleaners. The relatively low number of immigrants also meant that socially they were not too affected by mass immigration.
Over the past decade the number of Western critics of globalisation and mass immigration has started to increase. And then came Covid 19, which froze just-in-time global supply chains. The West discovered that it could not make the medicines, test kits or personal protection equipment to keep its citizens safe. Globalisation had resulted in a fundamental hollowing out of Western manufacturing capability.
The initial reaction in Western board rooms, after wondering if Covid 19 was going to push them into bankruptcy, was to examine supply chains and to see where their businesses were vulnerable to Covid 19 based disruption. Many commentators believe that Covid 19 will bring back a wave of re-shoring opportunities.
This is likely to be wishful thinking. China remains open for business, as does most of East Asia. Western companies are likely to find it easier to deal with Chinese suppliers, who can rely on a network of other Chinese companies that have similarly come out of lockdown, than on Western suppliers who either can’t do the work or don’t have access to Western supply chains that can provide them with the components they need.
The only real way to disrupt globalisation is for it to be mandated by Western governments. Normally this would be highly improbable as large global companies have dominated national governments for years. But in a Covid 19 world, where global companies are lining up to take government money, it could be that governments push for more local manufacturing as a condition to getting a bail out.
Mass Unemployment in the West
There is a real possibility that Covid 19 will result in staggering levels of unemployment in the West. Our economies are like a large game of Jenga. You can pull out an incredible number of blocks and the tower remains standing. Then, all of a sudden, you pull out the final block and the entire structure falls down.
Take the airline industry as a good example of this. Airline travel could be depressed for a very long time as the heating and ventilation systems in airlines means that an infected passenger breathing out Covid 19 air would spread the virus to the entire cabin within a short period of time. Masks and screens will not prevent this. So travel will be restricted. If planes don’t fly all the jobs associated with the airline industry will suffer, or collapse, depending on how linked they are. Planes are typically leased, which means the owners of planes won’t get their regular payments, which will impact those who receive those payments. Engine manufactures like Rolls Royce, who derive their income from the number of hours a plane is flying, won’t get their income. That means they will have to lay off their staff. The airports, which employ thousands, will not need their shops and restaurants, which means those staff will be laid off. Hotels near airports will not be needed. The restaurants near those hotels will not be needed. The taxis that drive passengers from the airport to their destination will not be needed. Tourism heavy economies, like Greece, Spain and Italy, will not get their tourists, which means that the restaurants, shops, hotels, entertainment centres which serve the tourists will not be needed. Companies that make and sell souvenirs, clothing, swim suits, sun glasses, sun screen will all suffer, laying off their staff. The owners of AirB&B houses will not get their rental income which will mean they cant finance their loans they used to buy the flats to rent to tourists and so will default on their loans. Banks will step in to sell their properties but no one will be able to buy the properties and so house prices will fall. And so it goes on. And that is just one sector, linked to the airline industry.
In the meantime if people stop going to the office, as virtual working becomes easier and entrenched, then the need for offices space, especially in city centres will decline. That means that the restaurants, bars and coffee shops that catered to commuting office workers will not be needed. People will not need two cars at home so car sales will drop, as will maintenance of cars. Railway stations, like airports, will not be as needed as people stop using public transport and so jobs there will be cut. Cleaners working in offices will no longer be needed as few people will be in the office. Many people who live in city centres will question the point in living in a city where you cant go out to the theatre or the cinema or restaurants. If they are wealthy they may have summer houses or cottages and may choose to move there instead, reducing further the consumption in cities and the vitality that makes cities worth living in.
And if virtual immigration takes hold then those that can work from home will find themselves competing with other people who can work for less who live in other, low cost countries, all the while pushing unemployment levels up even higher.
Then the question arises about what will happen to all of these unemployed people? What will they do? How will they survive? What forms of support will they get? How will they go back to work? Will there be work for them to go back to?
Climate change
The world is getting hotter. There are signs that society is starting to take the problem of climate change seriously. Investors are focusing on low carbon companies, oil companies are diversifying into renewables and people are trying to reduce their personal carbon footprints. However, very little is actually being done to mitigate the risk. Most people who are involved in the detail of climate change issues think that it is more likely that the world will experience runaway climate change than a slowing and reversing of the problem. The scale of the problem and the numbers of people entering the global middle class is so large that any progress made in one area is offset by growth in emissions elsewhere.
Attempts to mitigate climate change have always failed as the time horizons have never been urgent. It might be warmer this year than last year, but not by much. Next year might be warmer than this year, but not by much. As a result it has always been possible to push doing anything about climate change to next year and the year after.
What Covid 19 has shown is that governments and society can respond to a short term crisis extremely quickly. Covid 19 was not on the radar of most governments in January / February 2020 and yet by March/April 2020 they had locked down their entire economy, restricted the movements of free citizens and had put in place massive government support mechanisms that actually distributed cash. It is interesting to note that greenhouse emissions during the first few months of 2020 dropped to levels not seen since 2006; Covid 19 has been a significant break on economic activity and thus emissions.
For some, the speed at which societies agreed to measures to deal with Covid 19 is encouraging. It shows that we can collectively respond to a global crisis. They are proposing a green comeback with investments in low carbon infrastructure and projects as a way to both bring back the economy and help the climate at the same time. They are trying to make the best use of a crisis. That is admirable.
Unfortunately, climate change is relentless. Most people don’t like being in lockdown. Most people don’t like losing their job. Most people don’t like not being able to go out to dinner or go travelling. Once lockdown is over those who can will embrace their freedom. Those who cant, as they have lost their jobs, will wait until things get better again, which they will, eventually. And then they will embrace their freedom too. And in the meantime, hundreds of millions of people in lower income countries will enter the middle class and will want to be part of the global culture of consumption that they can see on their smart phones and TVs. Yet by the 2070s some three billion people will live in places that are near un-livable, due to climate change as average temperatures exceed 29C.
But there are a lot of tomorrows between now and 1 January 2070. Governments will argue, with some justification, that their priority must be on the here and now. Once they have dealt with the Covid 19 pandemic, and its aftermath, they can get back to thinking about climate change.
Universal Basic Income
Finally, we arrive at Universal Basic Income, which might has the potential to be the most disruptive impact of the Covid 19 pandemic, on a scale similar to the introduction of income tax by Prime Minister William Pitt the Younger in 1799 as a “temporary” tax to pay for Britain’s involvement in the Napoleonic Wars.
The concept of Universal Basic Income is not new and many countries have trialled it, to varying degrees of success. It is also a variation of the Roman concept of bread and circuses. Rome, and then its successor Byzantium, provided a grain and then a bread dole to all citizens living in the capital. This was massively popular and made Rome one of the largest cities in the ancient world, with over one million citizens.
The key concept is that governments will pay every citizen a minimum amount of income per month. This income would replace all other benefits, such as unemployment and housing benefits, and would be easy to administer. People would be encouraged to work and working would not impact on the amount of Universal Basic Income that they received. This is different to unemployment benefit, which makes low paid work unappealing as while you may make a bit more than getting benefits, the downside was that you had to work for it. The cost benefit analysis of low paid work is bad.
Universal Basic Income has both left and right wing political support. But there are serious questions. Two obvious ones are how much people should be paid and where the money will come to pay for it. In addition, some say that Universal Basic Income will make people lazy and reliant on government hand outs. Yet millions of people work hard today without any income: school children do not earn money and are paid for by their parents, retired people do not earn money and are paid for via pensions and savings and many spouses earn little or no income and are supported by their other spouse. All those groups contribute to society while they can, either by studying, home making or doing volunteer work. Looking back historically, very few people worked for money as they predominantly lived in barter and self reliant communities.
The Covid 19 pandemic has given a number of governments the opportunity to trial schemes similar to Universal Basic Income on a mass scale. The UK government, for example, has introduced a Covid 19 furlough scheme of up to £2,500 per month for employees who would otherwise have been made redundant, due to Covid 19. It has also introduced a variation of this for self employed people, also for up to £2,500 per month, with essentially no questions asked. This is not explicitly a Universal Basic Income scheme and will only last for 6 months. Canada has introduced an even simpler system, by inverting the tax receipt system into a cash payout system, of $2000 per adult and $500 per child per month. The United States has sent cheques, ostentatiously signed by President Trump, to millions of families for similar reasons. Spain has taken a bigger step and has put in a scheme which is explicitly a Universal Basic Income scheme and is designed to be permanent. The Scottish government is also pushing for a Universal Basic Income scheme to be put in place.
If the Covid 19 pandemic lasts a long time it is likely that some form of Universal Basic Income will be rolled out in many countries. If job losses due to Covid 19 are large and long lasting, unemployment benefits will be a poor solution. There will be few jobs for unemployed people to move to and restrictions on working while being on unemployment benefits will discourage people from taking those jobs, unless the wages are significantly better. Universal Basic Income would provide a simpler way of providing similar levels of benefit and would encourage people to get back to work, which will then stimulate the economy creating more jobs for more people to start working in again.
Once it is in place, however, it may, like income tax, become a permanent feature in society.
Wrapping things up
It is time to wrap things up. Covid 19 has shown that the world, for all its superficial differences, has become an increasingly similar place. The world is more linked than ever before. The mass global migration of people from all over the world into Western countries has not just brought non Europeans into Europe and its major European former colonies, such as the United States and Australia, but has also transmitted Western ideas and values back to the rest of the world. Western corporate champions evolved into global businesses which then tied the world even closer, with factories in China and call centres in India. The East learned from the West and Eastern business giants are now using the same links to sell goods and services back to the West and to expand into new markets in the Rest of the world. Western companies and governments have seen how effective the East has been in dealing with the Covid 19 outbreak and the most inquisitive will look to the East for good ideas about governance and corporate strategy.
The physical interconnectivity of the last twenty years has now become increasingly digital. The Covid 19 induced lockdown has accelerated the birth of an online virtual world where everyone has been forced to work and play together, irrespective of physical distance. The numbers of virtual immigrants will exceed physical immigrants as millions of potential migrants in relatively low cost countries stay put and virtually work for companies in relatively high cost countries. As they join their colleagues in Zoom and Microsoft Meetings they will preface their work with chit chats about the latest e-sports games, TV shows and movies that they all have been watching on similar digital streaming platforms. Finally, as the physical and virtual ties increase the likelihood of armed conflict between great powers decreases.
Covid 19 is going to be particularly difficult for many Western countries. Large percentages of their economies are linked to the service and entertainment sectors, rather than manufacturing or primary extraction of raw materials. Millions of jobs that require physical interactions, such as restaurants, bars, theatres, cinemas, sports stadia, supermarkets, shopping malls and amusement parks are at risk. In the meantime, all service sector jobs that don’t need to be done in the office such as those in finance, law, accounting, design, marketing, digital arts, software development and TV and movie post production are also at risk from virtual immigrants. The furlough schemes that are now in place in many countries could be replaced by long term Universal Basic Income schemes which will support a basic, but adequate, standard of living, with less consumption. This will enhance the role of government as more people are reliant on government rather than private companies for their income.
The wild card remains climate change. A world that is more online and virtual needs less physical stuff. You don’t need energy to make and then transport things. You don’t need energy to move people from home to office. That should make the world less energy intensive on a per capita basis. Covid 19 has shown that governments and societies can respond very quickly, on a massive scale, to an immediate, specific, crisis. Climate change is not immediate and it is not specific. By the time it is really bad it will simply be too late to do anything about it. Carbon dioxide in the atmosphere is cumulative. Each tonne that was emitted 100 years ago is still in the atmosphere today. Each tonne that is emitted today will be around in 100 years in the future. A sudden cut in emissions - such as caused by Covid 19 - does virtually nothing to change this.
The only hope we have of dealing with climate change is that the common desire to save lives, as shown by the near universal responses by government to Covid 19, and the common global culture that is emerging will create a social consensus among all people in all countries to take significant steps to mitigate climate change, while we can. Otherwise, those predictions of 3 billion people living in places that are essentially un-livable by 2070 will become our reality.
That is a problem far worse than Covid 19.
April 2024 - how did this article age?
The article was written at the start of the Covid 19 pandemic. What went right and what went wrong with the thesis.
Right:
1. The pandemic has indeed accelerated the shift towards digitalization, remote work, and online services.
2. East Asian countries have generally managed the crisis more effectively than Western nations, highlighting the shifting balance of power.
3. Governments have taken on a more interventionist role in response to the pandemic, providing financial support to citizens and businesses.
4. The crisis has exposed the vulnerabilities of global supply chains and the West's reliance on manufacturing in other countries.
Wrong or questionable:
1. The claim that the pandemic will significantly reduce military conflicts seems overly optimistic, especially since we have had a war in the Ukraine and a conflict in Israel / Gaza. While economic challenges may limit military spending, geopolitical tensions and regional disputes may persist.
2. The article's prediction of a drastic decline in mass migration was wrong. While the pandemic temporarily restricted movement, the underlying factors driving migration, such as economic inequality and political instability, remain.
