Things are developing quickly, and as a result everyone on earth is caught in a reactive state at the moment. We don’t have any choice, there is no room for pro-activity in the face of such a rapidly changing situation. Even our leaders are telling us to deal with today and worry about everything later. Pause the economy! Who cares? This is a health emergency!
Yes, it is a health emergency. That’s obvious. It’s also one of the biggest tests of our economy in history. This has never happened before. We’ve never closed our borders, we’ve never effectively entirely suspended private enterprise.
We’ve never had a situation where we have no idea how long we are going to have zero economic activity (apart from a few limited sectors) for. Yes, there was the Great Depression between the two World Wars. There was the Global Financial Crisis.
They cost jobs, they hurt commerce. They did damage. They did not do this, businesses were still operating. People were still spending money on normal things.
What is about to happen is going to be a glorious experiment in economics. It is going to be extremely painful for many people. It also going to completely change our lives in an enduring manner.
We’re going to travel a lot less.
This is perhaps obvious. We’re not going to be traveling like we used to, quite possibly forever. We will spread our wings again, it’s in our nature, particularly in New Zealand.
We are world beaters, we are seafarers and we are explorers. It’s in our culture, it’s in our history, it’s in our DNA. Flights will probably start again gradually. Quite possibly for not some time to come, but they will come back. When they do, they’re likely to be a whole lot more expensive.
The reason that air travel became so cheap was competition. As airlines fold, and many will, particularly in the low cost space, the pressure of that competition is going to ease and that is going to put upward pressure on ticket prices.
Especially after an extended period of low (quite probably negative) revenue the ones that remain will use the opportunity to yield the capacity they do have to maximize their profits. Hotels, on the other hand will likely be far cheaper.
There is no elasticity in hotel supply, they can’t just mothball a property. Some of them will probably go broke but cities like Hong Kong, Singapore and Auckland are going to find themselves with a huge oversupply. Hotels won’t be cheap enough to offset the hit in getting there though.
We’ll be traveling a lot less for business as well. I looked at my passport and went back through the last three years ago recently. I have taken a long-haul international flight an average of every three months. Short-haul multiple times a month.
It’s what I’ve always done. 80% of the trips are somehow related to how I earn my living. Why not just go? It was so easy.
The Virgin Australia flight I took out of Hong Kong on February 16th and the subsequent connection to Sydney spell the end of that carefree, easy chance to travel.
There will be less options and they will be far more expensive. The various global lockdowns have also left us with no choice but to find new ways of filling the need for international business travel.
We are doing more video conferencing, more phone calls, less long lunches in far-flung countries and there’s a serious dearth of cocktail parties in most people’s calendars.
That’s probably a good thing. It will enable us to find a more sustainable balance in the way that we approach the world. We will be more critical of the necessity to travel, more conscious of the cost of travel and by us being forced to be more deliberate in our approach to travel it will greatly benefit our environment.
Domestically we’ll see our national carrier gradually phase flights back in once we are again able to move. As the country’s alert level gradually comes down and these businesses start to get a feel for what demand is going to look like in the new normal they will expand supply.
People are likely to be dubious about the safety of travel for a while. When a fright like this goes though a population it takes a while for confidence to return.
We saw this to a lesser degree in the years following the World Trade Center Attacks.
People are also likely to have a lot less disposable money as property owners start to come to terms with the fact that they’ve got another six months of interest on their mortgages, their property has dropped in value and that many of them have lost their jobs.
That money that would normally be a part of people’s discretionary budgets will, by necessity, find other places to be spent.
The combination of people being poorer, travel being more expensive and people being scared is going to mean that a return to the carefree days of hopping over to Sydney for lunch or a long weekend in Bangkok is a long way off. This will be further compounded by our remoteness.
Aside from mobility there will, of course, be other things to consider.
We’re going to have less choice.
We’ve had the benefit of a buoyant economy for some time now. Since the GFC we’ve consistently done well. This year, all bets are off. Subsequent years? Also anyone’s guess.
We know we are in for economic atrophy, that’s a given. However, we’re not sure just how far that shrinkage is going to go. That all depends on how long it takes for us to be let out of our houses and get our confidence back. That means we’re going to have less options in many areas.
While trade links remain largely unaffected by the current situation the same cannot be said of the production that is essential to supply. We’re going to find less product being exported from countries that are going through the same thing as we are.
That means imports from many places like the United States and Europe are likely to be less available and more expensive if they can be found. The costs of these products are also going to be impacted by the weaker New Zealand Dollar.
There’s also the fact that many economies that we traditionally rely on for cheap imports, such as China, are getting back to work ahead of us. That means they’re likely to have more money and their currencies are likely to strengthen.
At the checkout, particularly when we’re buying apparel, home appliances and all the other things we bring in from Asia, that’s going to hurt.
The weak dollar is great news for exporters, as is the fact that our larger trading partners, again, like China, are getting back to work. We can expect demand for our meat, produce and wine from Asia to come back relatively quickly.
It’s also good news for local producers and manufacturers who have an interest in selling domestically. As the price of imports go up their products will no longer appear so prohibitively expensive, as long as people have the money to buy them.
We’re going to have less options when it comes to employment too. Jobs are going to be scarce after this is over. Pundits suggest a return to Great Depression-era unemployment, that could be nudging 30%.
It’s going to take a very long time for the economy to find places for all of those idle hands, but it has been done before and it won’t last forever. What it may require though is some personal agility when it comes to learning new skills, gaining some additional qualifications and adjusting how we define ourselves career-wise.
I saw an interview on Australia’s ABC recently with a flight attendant who lost her job due to the Virgin Australia shut down, she was over the moon to have landed a position as a checkout operator at her local Woolworths. She said that she was happy to have any job.
All of us will have to start thinking like this, although those in the travel industry are likely to be the ones who have to make the more drastic career changes quickly.
The way we work will change forever.
There is no denying it, the global outbreak of COVID-19 has forced an experiment to happen that has been a long-time coming. Businesses have been forced to empower their staff to work from home.
They’ve been forced to put the trust in them to do that effectively and a lot of people who used to have a commute as an essential part of their work day are finding it’s not quite as essential as everyone thought it was.
I first started my life as a road warrior nearly a decade ago. I quit the day job and started supporting myself from my computer, wherever that computer happened to find me. Working in isolation outside the confines of an office is nothing new to me.
To many people it is very new, some are likely to love it, some won’t. Whichever side of that argument defines you. it won’t matter. It’s far more cost-effective for companies to have people working remotely if their productivity can be effectively managed.
They don’t have to maintain huge premises, pay big utility bills and have the added headache of managing all that. Arguably everyone who is not in a human-facing role could do some or all of their work from home, excluding most production workers of course.
Some employees are going to demand a more flexible lifestyle as a part of the new normal. Many employers, already hurt by the economic downturn that resulted from the outbreak, will take any opportunity to find operational efficiencies.
One really obvious efficiency is more staff working remotely and as we progress through the experiment that is now happening, they are being forced to find ways to manage the perceived lack of productivity that may result from that.
For me, working independently as I have for so long has been a very positive experience. I don’t have a job, so I don’t have to work. If I don’t work then I have some financial issues, I tend to spend my life a long way away from any sort of safety net.
That has taught me to have a far more responsible approach to my own pecuniary matters and to take far more personal responsibility for my finances. I do have deadlines when I do work, that means I have to self-motivate.
When I first started it was really difficult but people are going to have to learn to build that discipline into their daily lives in order to remain professionally competitive as our lives make the final jump over the digital divide.
We’re going to lose people.
It is almost certain that people you know today will die as a part of this outbreak. This is particularly true if the government’s plan to stamp it out has been implemented too late.
Many observers, including me, feel that it was too late. Time will tell and we won’t know if our leaders made the right call on the timing until we’ve tested a whole lot more people.
People are going to die though and it’s going to be a very awkward sort of a grieving process. This will be compounded by the lock down. Anyone who dies during the lock down period is going to be either cremated immediately or “kept on ice” for a service afterwards. Our ability to store cadavers is going to come under some pressure though so if it gets out of control families will likely be given no choice.
That’s going to be very difficult for a lot of people, particularly those with religious beliefs. Everyone is going to have to come up with new grief mechanisms that enable them to find the closure they seek without necessarily being able to physically say goodbye.
Depending on how long our period of isolation lasts this may become the norm for a while, we are going to have to get used to that.
We’re also going to lose a lot of knowledge. Now is the time to talk to elderly relatives about family history. I know that sounds awfully morbid, but oral history is lost in death and for future generations these anecdotes from the past, our “pre-COVID” past, are going to be extremely important.
We’re now a part of history!
This is huge. This is not a small thing, this thing we’re going through. We are facing the biggest shake-up of humanity in history. The history books will remember this the same way they did the World Wars, the Spanish Flu, we’re in the middle of our defining moment. What side of that history we emerge on is completely up to us.
It would be extraordinarily easy for the entire fabric of society to unravel off the back of this, it’s also not that difficult to see us emerging stronger, smarter and more responsible than when we went into it.
Our definition of essential is being redefined on a daily basis, we’re being forced to ask ourselves what is really important, what we really need. I certainly hope that we are in this state of being long enough for some of that to stick.
The urgency that is inherent to life in today’s world is gone. Delaying gratification is no longer a choice, it’s a state of being. Not getting everything we want immediately is no easy lesson to learn but if humanity can come to terms with it, it is extremely powerful.
We have a chance to emerge from this with new focus, new understanding and a level of patience that most in my generation have never considered before. It’s going to hurt, but it’s time and it’s completely alright to allow it to take its course.
This is not our Armageddon, this is a shot across our bow, if we take heed then we’re going to live far fuller and happier lives at at the end of it. If we don’t then it’s only a matter of time before the human parasite consumes its host and itself.
Originally published at https://davebramovich.com on April 3, 2020.