The next catastrophe that will befall our world will be another pandemic, not a nuclear explosion.
We are poised at one of our world’s biggest inflection points. This is the first time in world history when a pandemic has paralysed the world’s businesses and economies. The inability to socialise has resulted in a lockdown on production and manufacturing facilities, leading to unprecedented losses to the global economy. An estimate of the expected loss in GDP growth has been calculated by the Economic Intelligence Unit.
The “After Pandemic” (AP) world will be very different from the “Before Pandemic” (BP) world. The change from BP to AP will be historic and as important in the timeline of our world as the traditional BC and AD have been historically.
In the AP world, de-globalisation will be a major thrust area with near-term shrinkage in global GDP. The World Health Organisation (WHO) has failed in its role as a healthcare monitor and needs to be restructured in order to be effective. Effectiveness will also mean accountability of nation-states for creating epidemics/pandemics. Nation-states will focus on healthcare for predicting and managing epidemics, pandemics and natural disasters at the cost of fiscal responsibility management. Companies will modify their business models to incorporate remote working, reducing costs, and manage volatility in capacity utilisation.
This will significantly affect the work lives and personal lives of their employees. People will discover new hobbies, become more responsible for their environment, and form special interest groups to drive solutions for emerging global concerns. Migrating workers will face restrictions. The overall trend will be towards building greater self-sufficiency by nation-states. Information authenticity and blazing bandwidth required for the coming online data explosion will be key to the progress in our AP world. Data storage within the country along with identity of data source will take precedence in our AP world.
De-globalisation has been taking place with the US government under Trump’s administration driving US companies to bring manufacturing back to the US from foreign countries by providing tax incentives. Balance of trade positions has assumed importance for the US, as bilateral trade negotiations progress hand in hand with tariff wars with China.
This is a radical departure from multi-lateral trade agreements supported by the WTO, weakening these global organisations built painstakingly over the past half-century. National trade interests will be protected by countries and tariff barriers will spring up. Nations-states will use their purchasing power to achieve political ends. These changes are likely to speed up further in many countries across the world.
The oil price war combined with the current lack of demand is putting the greatest pressure on oil-producing nations for storage of excess stocks. Storage facilities are running out. The largest supertankers in the world are being used as oil storage facilities whilst stationary and tied to their mooring buoys. Oil producers such as Saudi Arabia are struggling to balance their budgets, while the US shale oil business is shutting down due to unviable prices.
Through new, re-purposed and effective global multi-lateral bodies, nation-states will be held accountable for origination of epidemics and pandemics. There should be pressure brought upon China to explain how the coronavirus was caused, and its role in why the information was not conveyed to the rest of the world earlier.
The WHO has proved that in its current form, it is woefully inadequate to meet today’s global healthcare needs. Not only was the news of COVID-19 highlighted late to the world and its classification as a pandemic delayed, the WHO missed communicating the vortex of the danger to human life to the rest of the world. The organisation, instead, lauded the efforts of China in containing the virus within the Hubei province. This very short-sighted and tactical view of the great danger that the coronavirus posed to the rest of our world makes the WHO worthless as a healthcare monitor.
It should be restructured, funded and staffed with the clear responsibility to track, and test emerging infectious diseases and viruses (amongst its other responsibilities) as they emerge in any part of the world in real-time, and to provide accurate and early warnings to the rest of the world. Its independence as a multi-lateral body needs to be ensured. The restructured WHO and other global multi-lateral bodies should hold nation states accountable for the origination of epidemics and pandemics.
After studying the economic impact of the current pandemic, the World Bank and other multilateral financial organisations should enact regulations to re-build the economies of nations through the banking sector in addition to other measures. Such actions should include enhancing capital adequacy ratios of banks and additional steps to bolster the economy back to health.
Countries will realise the need to close their national borders (whether via air/sea/land) during times of a pandemic/epidemic. Nation-states will augment staff and processes for executing the border closure seamlessly. Borders will also be equipped with processes to permit the movement of essential commodities and services.
As crowding increasing the chances of infections to spread, shared travel modes will be less preferred. The sales of cars to the affluent will rise. Other than travel for leisure, people will travel for personal purposes sparingly, and travel will be need-based.
Nation-states can ask travelers for stringent epidemic/infection-free medical certificates at immigration control points or prior to approving visa applications. They may also conduct tests before permitting entry. Airline companies will have to recalibrate their business models in the AP world taking into account global and local pandemics. This could mean unpredictable lumpy consumer demand with breaks in service in between. Airlines will need to reduce their fixed costs further and new models of leasing aircraft will be incorporated to reduce costs. Cooperation with aircraft manufacturers will deepen.
Supply chains will undergo changes with an emphasis on moving away partially or wholly from China. Companies will build alternative supply chains particularly if their vendors are in a foreign country. Redundancies in supply chain will become a common feature. Nations will lay priority on adding to their own research and manufacturing capacities for essential items like medicines, food and specialised clothing.
Digital newspapers are now to stay. The early morning newspaper delivery service will become a thing of the past. People will be self-sufficient for information and news on their mobile phones/notepads/laptops.
Hotels will see occupancy rates fall even in normal circumstances as travel stabilises permanently at lower levels than before the pandemic. Conferences, events and seminars will decline in numbers, which will further reduce the revenue of the hotel industry. Hotel chain consolidation and re-purposing of hotel chains for other purposes such as hospitals, student hostels, or academic institutions will take place.
Restaurants will become adept at online ordering and dispatch of orders to customers. Traditional in-situ dining will continue during times when there is no epidemic. In order to control costs during lean periods, restaurants will adopt shared kitchens and shared delivery arrangements.
During times of epidemics/pandemics, multiplex theatres and malls/theme parks will not find takers. In these times, virtual entertainment and online games and virtual social meeting apps will be preferred by people. Multiplex theatres and malls will also undergo consolidation and re-purposing.
Government’s priorities have over-ridden restrictions such as Fiscal Responsibility Management and other ratios such as debt/GDP, fiscal deficit, market cap/GDP, etc. in a global effort to save lives. The focus is on providing money to the poor for food and wage security. The second main area of focus for governments is the stimulus package for economic revival. Governments will provide for a “Pandemic Provision”, which will be a line item of expense earmarked in the Annual Budget. One of the best ways for governments to kick start the economy will be a massive public investment in infrastructure with projects such as the creation of 100 Smart cities as announced by the Modi-led government in India.
In order to recover from the economic downturn caused by the pandemic, central banks (Reserve Bank of India) will implement interest rate cuts, loan moratoriums for fixed periods, other liquidity boosting measures including cutting CRR, increasing the MSF and utilising the LTRO and LAF windows.
Banks will enhance capital adequacy ratios to cater to the loan moratoriums granted by central banks and set aside provisions for non-performing assets such as loan repayment defaults by enterprises which are an economic impact of the pandemic. They will abide by global banking regulations, which will be enacted by the World Bank and other Multi-lateral Financial organisations as an outcome of learnings from the pandemic experience.
Healthcare And Disaster Management
The trends will be set towards achieving greater self-sufficiency by nation-states for the most critical needs and to reduce dependencies on other nations. This is a movement towards the old socialistic order.
Healthcare innovations for predicting and managing epidemics and pandemics will be a top priority for governments. The project led teams managed by nodal agencies such as Indian Council of Medical Research (ICMR) and the Health Ministry will be set up to meet the need to be able to reach out to India’s 640 districts and 649,481 villages for healthcare monitoring and management. A chain of public and private specialised medical testing laboratories will be established. Critical APIs, which constitute the active ingredients of medicines, will be manufactured within the country.
Telemedicine is growing at an extremely rapid pace. This business trend is here to stay. The way we access healthcare is undergoing a sea change. Telemedicine providers are hiring doctors and other healthcare personnel at a hectic pace to meet the newfound, galloping demand.
Governments will fine-tune lockdown processes for better supply chain and essential commodities production efficiencies while meeting the core goal of social distancing. The focus will be on how to limit the damage to the economy and business during the period of lockdown. Passes for essential services workers will be issued by government authorities. Police forces will be educated not to use their truncheons/lathis while dealing with people on the road during a period of lockdown.
Border lockdowns to stop or restrict movements across land/sea/air borders will be implemented. This will lead to political tensions in a global environment already fraught with fear and stretched resources.
The National Disaster Management Authority (NDMA) will be strengthened by learnings from the coronavirus pandemic. The Armed Forces will have representation in the NDMA apex body. This will provide defense expertise and permit coordination of operations with the Armed Forces in real-time.
Information technology systems will be upgraded for coordinating, executing and monitoring disaster management operations in real-time. Governments will ensure “information authenticity” and the availability of much larger bandwidths using 5G technologies based on which the online information explosion can propagate faithfully. Data will be stored within the country and the source of every data element will be identifiable.
Companies will encourage remote working as a norm wherever possible to reduce their costs. They will modify their staffing model to reduce their fixed costs by hiring more contractors, who can then be ramped up and down based on requirements from time to time. There will be a pay differential, with employees working out of the office being paid more than those working from home. Video conferencing will also become the preferred option, rather than travel, for all but critical meetings where face to face discussions are a must.
Business models will change substantially to support greater volatility in capacity utilisation. Staffing and asset acquisition models will also change to support leasing, shared ownership and reduced costs for the customer. Companies will transform to support more granular organization structures which will provide greater flexibility in terms of cost and operating models. The changing environmental and social realities in the future will challenge companies to re-invent themselves and innovate to deliver the desired high-quality outputs.
Training will move entirely online. Training quality will improve dramatically with new investments in technology and content.
People will develop new hobbies. They will appreciate the value of friendships more. People will interact with each other by discovering new and different ways, which will compensate for the lack of physical proximity and being in the same location. Apps like Zoom, which enable remote meetings, are already being increasingly used for “virtual meetings’” during the lockdown. People will tend to build even stronger relationships.
People will realise that we share the planet with other species. People driven “special interest group” movements will spring up. These movements will moderate unilateral decisions and actions of organisations and nations, which will affect the environment and the world we live in. Families will become more self-sufficient depending less on outside help to run their own households.
Falling interest rates and frequent crunches on liquidity, which has become the harbinger of our times, are to stay. Home mortgage rates will fall due to the lowering of interest rates and lack of liquidity. Homeowners will clamber to re-negotiate their mortgage rates.
Social media has already become the core information-sharing medium among people in our society. Nation-states will regulate social media for obtaining access to data and its source. In-country storage of data will become the norm. Laws will be enacted for identifying people generating ‘fake news’ and criminal punishment will be instituted.
In order to prevent mass uprisings of people, methods to prevent mass dissemination of information via social media will be implemented. Governments will establish methods to ascertain “information authenticity” and the availability of much larger bandwidths using 5G technologies based on which the online information explosion can propagate faithfully.
Constitution Of Workforces
India is not a small country like Germany, France or Spain. India represents the complexities of a continent in terms of a number of people and diversities of all types. In India, there are 13.4 million migrant workers. People are free to migrate to any part of the country to earn their livelihoods. However, post the lockdown imposed on 25th March 2020, these migrant workers have been deprived of their work and daily wages. So, they rightly feel threatened and wish to travel back to their hometowns, wherein lies their natural area of comfort. This constitutes normal human behavior. This migration, being a second-order effect, was not easy to predict. The Government and employers have been caught unaware.
It is conceivable that employers will henceforth prefer to employ local workers at the lowest end of the working chain in order to avoid the perils of worker panic led to reverse migration. Governments will insist on the employer providing assurance of work and wages to the migrant workforce during times of a disaster affecting the migrant workforce. Visa/work permit restrictions on low-tech migrant workers will become a reality.
As global threat perceptions have changed, our lives AP are going to change substantially. Whether you are a government or private sector employee, or a retired person, the changes will affect each and every one of us. We need to be aware of the forthcoming changes and be prepared in advance if we are not to be caught by surprise. Just as this is true for individuals, nation-states and governments too are affected, and this is the time for them to start preparing to incorporate those changes for the benefit of its citizens. We need to be well-prepared for the next catastrophe that can befall our world, which is the next pandemic, not a nuclear explosion.
About the Author: Rajagopal Tampi is MD of VALUEMOVES Computing Private Limited. Views expressed are personal. Please leave your comments on the author’s blog at www.planetnation.org or you may email the author at Rajagopal.firstname.lastname@example.org.
Note: Originally published here.