Thursday, 30 April 2020

Things will never be the same - Pt I

In the short term, the falling spread-rate and lower numbers of deaths from Covid-19 suggest that we are past the worst. Maybe so, but there will not be a return to the way of life we enjoyed up to early this year. If the 1918-1920 Spanish Flu pandemic is anything to go by, there may well be a second and even third wave. The virus may well mutate to a nastier form before any vaccine is developed, in which case the choice will be taking greater risks to live a normal life, or seclusion and extreme vigilance. Mask-wearing may become the norm. After the SARS outbreak of 2002-2003, which resulted in 8,000 cases and 800 deaths mainly in the Far East, seeing Asiatic people wearing masks as they pass through international airports became commonplace. I for one (having caught a bad dose of flu in 2018 on public transport) will not be going out without a mask, gloves, glasses or hand-sanitiser for a long, long time.

The thought that a virus could wreak such havoc throughout the global economy would have been unthinkable at Christmas - now look at us. The short-term is all about prevent the hospitals from being overrun, using PPE, testing and epidemiological modelling to get R0 below 1, and slowly unlocking the lockdown.

Barring a scenario in which the virus mutates into something far uglier before a vaccine can be developed and deployed, the next phase will be about getting the global economy gradually back on its feet. Given the massive, simultaneous shock to both the supply-side and demand-side, this will not be easy. The cost of keeping firms from laying off workers has been borne in some measure by the taxpayer - the very workers being protected. Government debt will rise; the pensions we can all look forward to will be more meagre than we have been expecting up till now. Not only state pensions, but also private occupational pensions, often invested in 'safe' sectors such as commercial and retail property.

Cinemas, theatres, restaurants and bars can wait until the number of new confirmed cases drops to near enough zero to make it feel safe enough to return to society. [Incidentally, this is a fascinating  account of how the fledgling US movie industry coped with the Spanish Flu pandemic; closing cinemas and film studios, mask-wearing etc - all familiar stuff, yet written in 2005.]

Things will never be the same. Office buildings in prime city-centre locations, large shopping malls with impressive footfall - this is where pension funds could see respectable yields rolling in from corporate tenants - money that came from savers and will be returned to pensioners.

The very awareness that this virus could mutate, or that in future another virus could jump the species barrier and start this nastiness all over again will profoundly reshape our thinking about our place in the economic world - where we live, where we work, how we entertain ourselves, how we shop.

This is a very new situation, so thinking will evolve further. But for decades, the tendency has been for mankind to gather in cities, to live in high-density housing, to work together, to come together to shop and to be entertained. And travel - we have got used to flying around the world for exotic holidays, with hundreds of other people crammed in an aluminium tube, 35,000ft in the sky for several hours. It will be a while before we get back to that. Routine health screening will join security screening as part of the nuisance attached to boarding an airliner, which will take longer. The whole low-cost flights model will not survive in the form we've become accustomed to.

Having got used to keeping two metres apart from each other, it will be difficult psychologically for us to cram into bars, cinemas, sports stadiums and theatres, knowing that one sneeze from someone near could mean you end up on a ventilator.

We have very quickly gone virtual. Skype, Zoom, Team, WebEx as well as other platforms I've never previously heard of have brought the meeting room to our bedrooms and kitchens. Having done this for seven weeks - do we need an office? Doing more shopping online than ever before, it is reasonable to assume that the world of real estate will never be the same again. Warehouse space for e-commerce - especially that which services last-mile logistics - will be in demand, while land-banks built up across the world's Central Business Districts will rapidly lose value.

Consumers' behaviour will change. Many will have seen their savings diminish, many will be pushed to the edge of poverty in a very short space of time, and will want to rebuild their reserves. Discretionary spending will be limited - fripperies abandoned. New clothes, new cars, fancy holidays - wants not needs - will have to wait. But others will want (in the short term at least) to get even with the virus and do some revenge shopping. Adopting the motto 'you only live once', some (mainly older) consumers will plunge headlong into hedonism on the basis  that their existence might suddenly get swept away by some vulgar little virus, and so push the boat out. But if you are a responsible person with a young family and mortgage, that makes no sense.

Back to housing. My life these past seven weeks has been very tolerable. Surrounded by a large garden, farmland and low-density housing, Jeziorki has proved to be the ideal place to be locked down in. It's 1,300 paces to Lidl and a similar distance to Biedronka. Both have been exemplary in terms of customer and staff safety (only 18 customers in the shop at any one time, so an hour's wait to be let in, but hey, the sun was shining). In the evenings, I can close my laptop and do my 10,000 paces, taking in Jeziorki's ponds, or the fields out towards Mysiadło, or across the tracks to see how the S7 is getting on, all this walking and seeing very few people along the way (most but not all in masks). I can see that many folk who've hitherto been enthusiasts of inner-city life will start looking over estate agents' offers of houses located a safe distance from the centres of infection. This may lead to an urban re-balancing and the very thing I've been warning against on this blog - suburban and exurban sprawl.

Optimal location for lockdown, just nine miles from centre of a capital city.

Things will never be the same. The technology that has made the lockdown bearable - streaming video, online conferencing, e-commerce etc, will develop at an even faster pace. If you can code - the future is yours. Healthcare and healthtech - these too will experience a boom. Research and development - clinical trials - will have to happen at a faster pace. There will no doubt be knock-on discoveries as R&D teams stumble upon unexpected side effects that can spin off into other areas of medicine.

Transport - we've learnt that we don't need cars as much as we thought we did. There are too many of them anyway. I can expect many two-car households to be ridding themselves of one. Used cars will become ridiculously cheap - for a while anyway. The car manufacturers already has an over-capacity problem; many plants will close down. There will be fewer cars on the road; after a while supply will balance out demand - but at the same time, fossil-fuel-powered cars will lose out to electric ones.

The environment has had a chance to recover - polluted cities such as New Delhi and Los Angeles have seen marked improvements in air quality. Citizens would like that to continue.

Politically, proponents of free-market economic solutions are as rare as atheists on a sinking ship. The state will be having a comeback. Chancers and liars will be chased out of political office as populist solutions will be shown up to have failed at the cost of hundreds of thousands of lives. Voters and consumers have long memories. Businesses that have responded to the crisis with understanding and kindness will be paid back; business owners and managers that have revealed their greed and selfishness will be punished.

A better, fairer world may yet emerge. But we are a long way from the end of this story. Above all, pray that the virus doesn't mutate, and pray that science can find a cure - fast.

This time last year:
April's end, summer's beginning

This time two years ago:
Best April ever?

This time three years ago:
The search for the Gold Train: Day Two

This time four years ago:
Semi-automatic (short story)

This time eight years ago:
So good to be back in Warsaw

This time nine years ago:
At the President's

This time 11 years ago:
Summer's here, and the time is right...

This time 13 years ago:
Why I'm staying in Warsaw


Anonymous said...

Uniquely insightful, sensitively wrought, heartfelt and bloody depressing ....

Frater Mace Fask

Unknown said...

Veey insightful. From someone whoi moved from the society I know, to one I tried to move to over 20 years ago. Onw that has moved on. The message of hope is that the populist and right wingers will go. That good businesses will reap the rewards. The greedy self interest people will go. Poland has been a lot stricter with the lockdown, than the UK. Poland is a lot formal with things. I worked under a Polish boss in the UK. She was really horrid to all of us. She was giving commands in a polish formal style, which has put me off ever having anything to do with Poland. As I lived in the 90s, I observed people becoming increasingly nasty. My little rant. Oh and I do look forward to those who from a position of power lie, cover up, explain away, deny, humiliate and fire others so it all comes back to them.

Unknown said...

I like the comment above.

Just read an article in current London Review of Books 'Pointing The Finger', Jacqueline Rose on Camus's 'The Plague'. An exploration of the above themes and more. Worth a look.

Mike, millions of rough or 'migrant' workers forced to leave cities in an instant in India and elswhere. These are the people who will suffer. Those with power have never cared about anyone but themselves and their contacts, and they will give just enough false reassurance in the form of tax rates, social investment etc. to make it seem that they have a conscience. But they don't, and they WILL lead all of us onward into a social and economic chaos which they will misrepresent until more wars will be called for to sustain their centres of economic stability, that is, oil and military wrecking of centres/states of imcomveneient opposition to domination. At least South Korea was able to resist them and act for themselves.

student SGH said...

Of one thing I can be sure - we will be poorer as a result of this crisis. Efficiency in several industries has declined, costs of running businesses have increased. Markets of several goods and services will find new equilibria, with lower supply and higher prices.

I am not fond of teleconferencing nor of online shopping. Face-to-face contact with people is what I appreciate and what much improves communication and helps build business relationships. I prefer to see stuff I want to buy or try them out. Half of what I bought online had to be shipped back, since in fact what I had ordered did not look like it was online.