Rarely do we find in our modern history, events that culminate in a total shutdown of human life. Wars with all their destructive power couldn’t even dampen the human nature to live as normal a life as possible. Back then though, it was different. Mentalities were different and we certainly, were different. Covid-19 managed to put a break on 90% of human function. A pandemic that mirrors the common flu and yet it’s major claim to fame is the aggressive nature by which it spreads.
However, and with so much time on one’s hands to read and reflect, I can’t seem to shake away the writings of Folkstien, Icke and Clemence. Socio-economists that since the early 70s have foreseen many of what we are experiencing today. Chance, coincidence or just pure shit-out-of-luck sentiments?
I won’t go that far but will start in the early 90s. It’s just been one rollercoaster ride after another. All testing the human will, the economic rails and gauging to what extent nations and their populations will act and react. Covid-19 is not unique. Yes it’s frightening, but how much so compared to SARS, MERS, Ebola or some other mutated virus? The news is filled with comparisons to the 1918s Spanish Flu. A pandemic that claimed the lives of over 4M people but clearly in a different time. There were no early warning signs to think of, no medical advancements comparable and certainly not enough “value” weight placed in markets.
For today’s generation, what you see is the new normal. For our generation, we’ve been there and done that. The spices and flavoring change but the concept remains. Every single major event since the 90s (and they are quite a lot for a period as condensed), has driven a complete reorganization of today’s socio-economic and political landscape. Let’s explore:
Don’t watch the clock; do what it does. Keep Going. Sam Levenson
- Oil is no more the energy King. With the USA far less reliant on foreign oil, massive surplus remain in Venezuela and Iran due to the political stalemate and Shale/Fracking along with acceleration in leveraging alternative sources of energy – Oil is now a second rated commodity. It will still be needed. However its importance and the willingness to be protected is no longer there. This does pose a problem for budgets still tied to oil but economies will need to aggressively diversify to compensate for the difference. A difference that’s causing a pretty pickle of a deficit.
- Digitization of monetary instruments is accelerating at a greater pace. Cash is no longer King. Your debit/payment card is. Pioneered in Europe in the early 80s, the reliance on plastic means ease of spend and convenience but also a better understanding of habits. It also could potentially allow greater control over people’s access to funds. On the far end of the spectrum – crypto currencies. A hard to regulate alternative that has crafted a side economy worth Billions!
- AI (artificial intelligence) now takes center stage. From your smartphone, smart gadgets, digitized home appliances, to social media, cookies, etc etc. – BIG data is everywhere. Habits are analyzed, choices are made and the once seemingly personal and private nature of people is now readily available for marketing and advertising purposes. AI today is getting bigger, smarter and ultimately can think, decide and action – on your behalf. The ease of innovation and convenience could also mean we hand over our life to “Lucy the box”.
- “Corporatized” Small Businesses. It’s no hidden fact that SMEs get the wrong end of any deal in a crisis due to their weight and size. They drive 60% of many economies and provide key services that many corporations simply don’t want to get involved in. Their supply chain is nimbler and their running costs are flexible. They are easy to setup and easy to manage. Yet because they are uncontrollable, too small, too many and too risky – they are also a burden to an economy. Not when the economy is going right – but when it all goes wrong. As SMEs drive employment, they also very quickly create it. SMEs also tend to require far more “less structured” financial support in a downturn which banks are more reluctant to give; and this will generally be tied to industry type, collateral and other factors. A corporation can survive due to scale and guarantees it can provide against new loans and bailouts. Keeping this simple statement in mind, we will see many of these “valuable” SMEs be absorbed into corporations. Under their umbrella of control, they will be able to trade and expand from within a structure. Amazon MarketPlace is such an example. So the question now is: Will SMEs continue to be a driving force in tomorrow’s new economy? Will the appetite for 100% risk still be there?
- Homeland Sufficiency. This is probably the biggest kink that was exposed by the pandemic. With globalization and delocalization of jobs and industry, many of the needed basics such as ventilators, surgical masks, gloves and medicines, have been outsourced beyond borders. Now we see countries at the mercy of the supply chain. The very cost reduction high margin and high profit programs they embarked on in the mid 90s – has come back to bite them. This should never have happened! Tomorrow, this will all change as more of these critical industries return home to guarantee the basics. What is clear: Homeland security is not just about the physical threat. It is the self sufficiency in food and water, medicine, raw materials and energy.
So there are quite a lot of elements to digest and 5 have been presented. Only time will tell how things will eventually pan out and at what cost(s). However the path since the 90s and for which many Economists, Political Scientists and commentators have addressed – is in a way, coming true. One now asks how did all the health, social, political and economical events of the past 15-20 years, contribute? How is it still contributing?
Final Thought: Catastrophes that bring or would naturally bring about changes are nothing new. They came and will continue to come in many shapes and sizes. They’ll start in the usual hotspots or elsewhere. But to say that the current pandemic is purely scientific is just wrong. What is certain is that our world will never be the same again. Most certainly from an economic standpoint. One can only hope that it will be better. That the steps being taken, the collateral damage and the cost associated – will mean a more stable future.