In Part 1 – The Inevitables, the first in this special three-part series, Executive Coach and freelance blogger for The Slade Report, David Simpson, offers some observations on the factors at play in determining the new normal. David has been a past CEO of global organisations, working in cities across North America, South Africa, China, Japan and Australia. A little bit of distance is often a good thing, and now he also has time to recast lessons from the past and paint us some future scenarios.
What the world is going through currently is a once in a generation, if not a lifetime, occurrence. Historically tsunami-like impact events bring about significant change because they are a shock to the system. Odds are that the future won’t look like the old normal.
The following long form blog looks at the impact of automation on employment, the cost/benefit of urban living and the fragmentation/partisanship in representative government. These and other topics have been for conjecture for some time, but these and other questions have been brought into sharp relief by COVID-19.
To echo our mate, Peter Thomas, the COVID-19 pandemic has pushed several emergent social trends into hyper-drive. Given the world’s inability to cope comfortably with the pace of change, even before lockdown, predicting the outcomes of the “new normal” is exceedingly difficult. In order to make some sense of it for my own peace of mind, I am attempting to articulate some of the apparent dynamics at play and the perplexing questions they raise.
- Institutionalisation of Unemployment
No matter the rate of recovery post COVID-19, the percent of jobless will remain high for some time. Sections of commerce (e.g. travel, retail) will be decimated and unable to hire. Other businesses contending with the public’s reduced appetite for consumption (see new depression mentality below) will need to manage cost and be hesitant to staff except where necessary. Additionally, the work from home experience has likely identified unnecessary areas of operation that can be shed, so many furloughed employees may not be asked back.
This is occurring at a time when the impact of AI and machine learning is starting to appear on the radar. The significant displacement of manpower in areas like transport due to self-driving vehicles and routine customer service delivery using intelligent bots is already anticipated. However, the professional ranks are not immune either. If a medical database with appropriate sensing tech can deliver a superior diagnosis or a virtual judiciary can deliver fairer and more reasoned verdicts, is there not going to be redundancy in the high paid ranks as well?
These may be considered distant development that will be resisted with scepticism because of a belief in the superiority of human intellect and the importance of face to face contact in important decision making. But after two months of isolation and the normalisation of Zoom interaction, the progression from telemedicine to avatar advice and counsel may have been given a kick along by the virus.
Whatever happens, we will need to refresh our thinking about people without jobs. It is hard to imagine new areas of endeavour that will come on stream to soak up those displaced by automation. If there are not enough paying jobs to go around, we will have to find ways to share the wealth or deal with massive civil unrest.
The number of people who would never have considered being on the dole, but have subsequently applied due to the lockdown, has exploded. A renewed appreciation for a social safety net is certain. The JobKeeper/JobSeeker programs portend to greater consideration of the basic minimum income concept, how it might be managed and how it could be funded.
- The New Depression Mentality
If the lessons of the late 1920s offer any insight, it is that a prolonged severe downturn leads the population to greater frugality. Boomers who have seen their super funds plunge will be more cautious. Gen X, Y and Millennials who have been encouraged to spend everything they earn will now have a real appreciation for the notion of “saving for a rainy day”.
In the short term, as many climb out from under credit card bills/overdrafts, they will, out of necessity, postpone or forego many normal routine purchases. This forced belt tightening may in turn habituate a predisposition to thrift.
On top of all this, the massive government debt incurred in coping with quarantine will necessitate a heavying up of the tax burden across the board so there will be less free cash flow along with a growing “save first” mentality. This in turn takes the consumption driver out of the economy limiting a V shape bounce back. On the upside, the availability of greater personal saving (no doubt sitting in “easy to access” savings accounts at zero interest) could make investment capital plentiful (and cheap) for growth industries.
- Accelerated Virtualisation
Experience with video conference as a way of communicating and working is now ubiquitous. Concerns about WFH productivity loss have been largely neutralised and caused many to question the cost/benefit of “being in the office”. The effect on office rentals, commuting and even residential location is potentially enormous.
Likewise, any resistance to e-commerce has been ploughed over with late adopters sampling Amazon, Uber Eats, Netflix and video yoga. The slow demise of bricks and mortar retail has been put into high gear with “on the margin” department stores like Myer and Nieman Marcus heading to the retail boneyard. There will many storefront causalities when the dust settles.
With the hammering that tourism has taken, it is conceivable that VR travel will come into its own. (i.e. “Walk along the Boulevards of Paris without the worry of infection from the French.”) Regulating intellectual property rights will become even more complex when digital service expands to virtual experience.
It goes without saying that the power of GAFA (Google, Amazon Facebook and Apple) along with other tech giants like Microsoft, Netflix and Alibaba has increased as a result of the shutdown. It is in their self-interest to be pushing virtuality even further. Anti-trust pressure will almost certainly be brought to bear, but if the busting up of Standard Oil is anything to go by, the component parts of these firms will become individually more powerful if demerged, basically defeating the purpose.
- Recognition of Systemic Faults
Clearly the pandemic has highlighted the world’s lack of readiness for a global health disaster. The response has been slow, mixed and uncoordinated. The WHO seems at the mercy of its major funders, under-empowered and overly focussed on third world Ebola type problems. There is some debate about whether the health experts had response plans in place. If so, they were ignored, or stripped of support and put on the back burner. In the wake of the crisis the scientific community has done a good job, sharing information and collaborating on solutions while treading the thin line of fact versus politic interest. The hope is that we learn from best practice and are better prepared for next time.
Perhaps the bigger vulnerability in crisis is the intensification of partisanship in Western democracy and the resistance to intra and inter-governmental cooperation. The US is the most obvious example of adversarialism, but Brexit and the bushfire relief response show that entrenched political divisions are not unique to America. China’s initial withholding of epidemiological information is classic “look after your own interests first” in a global context.
The willingness for ScoMo to engage with State Premiers effectively and the cooperating Democratic and Republican US Governors are certainly encouraging. But the mainstreaming of the populist radical right around the world and politically correct intransigence on the left are creating roadblocks to effective non-partisan action even when emergencies occur. Will the pandemic convince voters of the need for their politicians to cooperate more willingly for the overall public good? That is the billion-dollar question.