They say pandemic will shape the World, much like World War II and the Great Depression.
Imagine its 2022, and the coronavirus is finally defeated. After a miserable two-year-and-a-half, alternating between lockdowns and outbreaks, life begins returning to normal – not the old normal. It will be a new world, with a reshaped economy reordered life, just like war and depression did to earlier generations.
Thousands of companies, stores, stalls, and vendors, especially restaurants that were vulnerable before the virus disappeared, are shutting down dozens of education institutions. People have also changed their long-held patterns of behavior like outdoor socializing is in, business trips are dead.
And even politics — while still divided in many ways as it was before the virus — has entered a new era with dynamics that have never imagined.
All of this situation is conjecture with the unknown future; with help from politicians, economists, doctors, and business executives, we have tried to imagine what a post-COVID economy would be look like. The best thing I heard is that scientific breakthroughs come quickly, and the virus will possibly be defeated this year, and there may not be any permanent changes to our everyday life.
What if a vaccine remains out of reach for years? Then, the long-term changes would be truly profound, and the large swaths of industries that depend on close human contact like, movie theaters, cruise-ship, theme-parks, restaurants, traditional depts. stores, etc., would be at a more significant loss.
The changes that we imagine in this article are based on what many scientists are considering. If a vaccine will arrive sometime in 2021 – not deduced from an unexpectedly fast or slow resolution.
One thing for sure, till the vaccine arrives, the World will witness waves of sickness, deaths, and uncertainty.
Before we get into the details, there is a caveat worth mentioning: Many things will not change. That’s what we have learned from history’s lessons; like,
- The financial crisis of 2007-9 didn’t lead to an overhaul of Wall Street and didn’t cause Americans to sour on stocks.
- The 9/11 attacks didn’t make anyone allergic to fly.
- The election of the first Black president didn’t end an era of racial conciliation.
- The Vietnam War didn’t stop the extended foreign wars that are being played without a clear mission.
Yet if the pandemic does something, it will be remembered as a more significant event than those precedents, especially those – World War II and the Great Depression – stretched the World for longer and left a legacy behind.
Now, let’s see how COVID-19 will change the World
- Weaker companies will be no more – like Warren Buffett says, “It’s only when the tide goes out, that you learn who’s been swimming naked.” Companies with flawed business models, especially those who look healthy in good times, get out of habit, once the economy weakens. Such downturns are opportunities to revisit inefficiencies, but coronavirus is likely to cause a larger version of this phenomenon.
- One of the casualties would be local newspapers – though were already struggling; local newspapers will probably be no more, as people would have moved to Google, Twitter, Facebook, and other social media platforms for their primary source of news. ‘
- Declines in advertising and other jobs will be visible – Due to which dozens of non-essential businesses, including paper ones, would fold or become tiny shells of their old selves.
- Traditional department stores would also one of the losers – In recent years, especially during lockdowns, the – big-box stores – have lost significant business to retailers who have an online presence. Many Americans have decided they prefer either discount stores or specialty stores over the one-stop-shopping experience.
- Big Shopping malls will become something else – Those malls that rely on department stores for foot traffic and rent will likely be surviving into other experiences, like dining, medical care, bowling, or a golf driving range.
- Another at-risk industry is higher education – a bit different from the others because there’s a government stake. Yet, dozens of schools, colleges, and universities, both private and public, will be closed or facing real trouble. Why? Because the virus is exacerbating almost all the problems that colleges faced, right from lost revenue from summer school, parking fees, food service, and more. Due to the recession, tightening state budgets will probably lead to future cuts in college funding. The immediate question is for now is – whether colleges will be able to bring students this fall or not? Administrators are desperately hoping to bring enough students if they can’t. Enrollment and tuition revenue would be likely to drop sharply, exaggerating existential crises for many less renowned private colleges and smaller universities.
According to the economist Joseph Schumpeter, business failures are part of the “creative destruction,” which is why they are healthy, allowing more efficient allocation of resources and letting innovative rivals rise. So, the disappearance of many old department stores won’t be a significant loss to the state and people – if they are replaced by stores that people prefer.
But this doesn’t mean that we can ignore some of the virus-related destructions that will create lasting damaging side effects. When local newspapers die, corruption and political polarization will rise, it may also cause a fall in voter turnout. And cuts in the education budget and the closure of academic institutions, make it harder for poor and middle-class students to get an education.