Covid-19: how it will change the world | The Economist

Had a car, deputy editor of

economist

s. Hello, my name is Callan Williams. I'm a senior economics writer at The Economist, and I'll join ed to answer your questions on this call. I'd like to think that's what would happen. I'm not sure. This is what is going to happen and partly because I think we are going to go through a very, very difficult time in the economy and major economic disruptions tend to destabilize politics and create grievances and resentments; The second thing is the context in which this pandemic hit and it is one in which the post-World War II order is falling apart, where China is clearly the rising power, where the United States certainly under Donald Trump has less

will

or ability to be able to play the role of a kind of global authority. power that is

will

ing to get involved around the

world

to try to solve people's problems and I think that kind of sense of a

world

that is falling apart slightly and a more rival hrus world in which the United States is concerned about power Chinese who have had the pandemic.

The comments hit the world and just when those problems are getting more intense, then I think I'm afraid that makes them harder to solve instead of easier to solve. Their era of globalization was very slow and long before the Kovach pandemic came along and that was only partly related to the election of Donald Trump, it was slowing down even before he became president and I think that was kind of a lingering effect after the financial crisis, but what historical experience tends to show is that crises tend to To reinforce pre-existing trends and old globalization was one of them, financial markets expect this idea of ​​a V-shaped recession and that's the idea that in one quarter or maybe two quarters the GDP will drop maybe a you know a staggering amount, but because the lockdowns will come to an end, people will make up for lost time and you'll see a rapid rebound to where we were at the beginning of 2020.

I think what people are now starting to wonder is whether that's really going to happen and in particular they're looking at what's happening in China, which started easing its lockdown at the end of February in March and At this point I want to say that it is certainly true that economic activity has recovered from its lows. but it's still a long way from the Chinese economy being running at about 90% capacity or compared to what it was before the pandemic hit and that's really for a few reasons, you know, seeing people come back. to the office and back. to the factory and all that kind of stuff basically because they have to, but what they're not doing is going out and actually spending the money, having a good time investing in great things and what that means is that the kind of offer The part The Chinese economy has somewhat returned to normal, but there is a portion of demand that has not and that means that unemployment will probably be persistently quite high in China for quite some time, so if people who work in restaurants in bars in stores and all that kind of stuff, there's really no demand for their services, so I think what you're going to start to see now is that, as you know, several American states are starting to loosen the lockdown, so Now of course, as Europe starts to go out a lot, I think it's very unlikely that we'll get back to where we were at the beginning of this year.

The first effects of this disease were the disruption of supply chains and I think that could remain with companies that they could diversify their supply chains and that was happening anyway because China is becoming a more expensive place to manufacture things, as opposed to supply chains have a strong driving force to reduce costs and optimize costs and are quite intolerant of inefficiencies and therefore that will continue to be a very strong push in the other direction. I guess one thing I could add today is to think about the financial system and how that world that you know is part of a supply chain for you know how an electric company can access financing to start producing things, what you're seeing It's unprecedented levels of uncertainty right now around the world, so I think what you can see is that you know how to fund new projects and get it.

It could actually be very difficult to get people to commit to projects and this is starting to appear in the data now, where if you look at surveys of managers you know they ask them what your investment plans are, etc., is much lower. Now that you were even in the absolute depths of the 2008 9 financial crisis and back in the day, keep in mind that back then some people actually thought that the financial system was going to come to a grinding halt. to the most vulnerable aspects of society, I mean, you know Singapore is a great example of that, you know it's a country that had apparently handled the outbreak extremely well and then a few weeks later you know there are huge outbreaks in the migrant labor camps that keep the Singapore economy going and there is a sort of underbelly of the Singapore economy and the people there have very little access to healthcare and of course there are still millions of people who are not insured in the US and you know There are concerns that those people, and while you know some people in particular will lose their jobs, that people will be less willing to come forward for testing, etc., I think what you could see and this would perhaps be one of the most important ones you know.

The upside of the whole pandemic Is there an idea that universal access to healthcare that is free at the time of use could start to become common sense in all countries? So I think the pandemic will make states more powerful if we look back. You know, over centuries of Western history, two lessons emerged about the power of states: one is that it tends to increase over time as a kind of background effect, and the second is that states tend to become much more powerful. during and then immediately after crisis periods, normally in a recession what happens is that the state doesn't like to say this, but it sort of accepts that in a recession companies will go bankrupt and people will be unemployed and says that that's Okay, because the idea is that you want to reallocate people and capital and all that kind of stuff from areas that were failing to areas that are thriving and that's how it normally works, but what happened right now is that the state governments and politicians are basically saying that if we can we want to avoid all bankruptcies and we want to make sure that no one is left unemployed, what that does is it opens the door to really significant government intervention in the economy in the future, so let's imagine that in a Son Few years have we made progress to overcome this pandemic but, of course, there will be another recession at some point.

I think if it's generally accepted that the government did a pretty good job during this crisis protecting jobs and businesses, then people will say, "Well, geez, if it worked last time, why not do it again?" I think. that we could see quite radical

change

s in expectations of what the State should do and what the State believes is legitimate to do. Let's say at least one good thing that has come out of the pandemic is that it has been good for the climate. You can calculate how many hundreds of thousands of tons of carbon dioxide have not been emitted into the atmosphere because there has been less. flights and so on, and I guess there's a kind of demonstration effect, you know, people might know that this is in the sense of something that doesn't normally happen, but in contrast, they know a poorer world, a world that has less inclination to invest and A world so concerned about unemployment and life and death is a world that I think is less inclined to invest in transforming the world towards some kind of carbon-free economy.

However, there is a big problem in that, which is the oil industry and the price. has collapsed countries in the Middle East Russia Venezuela that depended on oil is a very important source of their foreign ex

change

earnings are suddenly realizing that they are getting enough money to do the things they want to do the oil companies are starting to see that maybe the price of oil may not recover for a long time, which is also giving people a kind of inclination and a vision that there may be a future without oil, which is a very important component of the transition to a carbon-based economy. will become more distant, I guess, in the sense that I think you know if you're going to have a meeting with someone and face to face, you know, in the foreseeable future there has to be a meeting that's worth it, so I think the idea of ​​going for a speculative coffee with someone well regarded at least for a while kind of weird you're only going to reserve your adventures away from home for people who you know you're going to have a productive time with So I think that will potentially reduce the exchange of ideas and those kinds of things, and I think the same thing applies to travel, business trips and research trips, etc., if you look at what has happened, let's say, in the scientific community and in economics, most of articles, research papers, now most research projects involve a large team of people and also an increasing proportion of those projects involve people in more than one country that you normally know, which could be the United States or Canada, but you get incredible diversity in the cooperation. and I think if you know that meeting people and traveling becomes more difficult, you can see a lot of success in innovation and patents and all that kind of stuff, probably quite a bit, so we did an analysis a couple of weeks ago looking at the countries that They are going to potentially affect us more due to their reduction and if we look at the top of the ranking, the most affected countries are true and dependent economies.

Unfortunately, Greece is right at the top. and then Italy and Spain are also printing at the top and Turkey is also very high there, particularly in Europe, and tourism ministers are starting to talk to each other and say: do you know how we can make this work if Greece doesn't have a tourist season this year this summer their economies and it's in really serious trouble, so I hope you start to see people thinking they know quite creatively what they could do, if they take the example of Israel earlier this week, hotels said They could reopen, but you could only stay on the ground floor.

In fact, I'm still quite optimistic in saying that the prospects of people being able to travel etc., I think it could become something that is open to fewer people, you know, if a flight from, say, London to Spain can only be two-thirds full due to required social distancing, then that means ticket prices will have to go up and would therefore be available to fewer people, but my feeling is that because this is such an important issue for some countries is that people will find a way to make this work if everything is possible if you want to register.

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