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| Re: Long term political and economic impacts of the pandemic (1714185) | |||
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Re: Long term political and economic impacts of the pandemic |
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Posted by Charles G on Sun Apr 5 17:24:44 2020, in response to Long term political and economic impacts of the pandemic, posted by Easy on Sun Apr 5 13:27:15 2020. It is probably too early to identify any long-term impacts, as we are still probably closer to the beginning of the crisis than we are to the end.I do think there is a likelihood of increased nationalism / regionalism. A globalized supply chain is wonderful for cheap products in normal times, but far from ideal in a crisis. People banged the drum for the President to nationalize production, without realizing that the US no longer has the means to be a great manufacturer -- certainly not on short notice. As recently as the late 80's the US economy was 70% manufacturing and 30% service. That flipped around to 30/70 in the early 2000's and I'd guess is closer to 20/80 now. People are going to bang the drum for domestic production -- but domestic production isn't about paying 10% more, it's about paying 2, 3 or 4 times more. Are Americans ready to pay $25 for a t-shirt that costs $7 today? Abroad, the EU is more fractured than ever -- so many of the principles that it was based on were tossed out the window even by the staunchest supporters. Though I don't think it likely, it isn't beyond the realm of possibility that the EU loses more countries or dissolves entirely. Politically, I don't see any individual or political party taking a major hit from this. Outside of Asia, where people had the SARS experience to fall back on and were quickly receptive to social isolation, no country has handled the outbreak all that well -- and this spans all political ideologies and all types of health delivery systems (private competition, single payer etc.). And this was not an unforeseen crisis -- Global Pandemic has been a regular among the top 10 global risks at the World Economic Forum in Davos for as long as I can recall. At my old firm, it was something we planned for (i.e. what are all the things that can go wrong in a pandemic and how does the firm survive?). Clearly politicians past and present and of all political stripes dropped the ball. Economically, it is far more difficult to figure out. One thing that is clear is that the next generation if F--ked with a capital F. The trillions and trillions of stimulus spending will have to paid over the next 20-30 years and land squarely on the backs of the current 20- and 30- somethings. I am concerned about an inflation spike as the social isolation ends. Once the social isolation does end, production may not be ready to handle whatever demand is unleashed. Full disclosure on that one - I have called 10 out of the last 2 inflation spikes. Beyond that, it isn't even clear how the crisis ends. The "flatten the curve" argument was a gross oversimplification in that the curve varies regionally (and nobody ever labeled the x-axis beyond just calling it "time", which would horrify my HS Algebra teacher). What happens when New York is near the end of the curve but the rest of the country isn't? In Europe, they seem to have thought about it a bit more -- but with no good solutions. People are kicking around ideas of "Covid-19 passports" allowing people who show certain antibodies to go back to work -- which seems a sure-fire road to social unrest (How does one acquire the antibodies if they've been diligently social distancing all this time? Does that mean everyone else gets to work and you get to socially isolate forever?). |
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