Is a Return to Normal What the World Needs? A Look at the Post-Covid Economy
World War 2, the invention of the internet, Covid-19. What these three things have in common is that they are all events with the capability to dramatically transform our lives. The impacts of the ongoing pandemic, ranging from lockdowns to economic recession, have allowed us to put into perspective all the aspects of daily life that we considered so normal only half a year ago.
Recently, the UK government has been promoting a return to offices, to reboot the British economy with money spent by office workers and commuters. In response to this new government proposal, many people are raising concerns that they actually are perfectly happy working from home, as they don’t need to suffer lengthy commutes and get to spend more time with their families. The private sector seems to be divided in its approach as well, with Goldman Sachs issuing “invitations” for workers to return to offices, whilst Linklaters and Schroders are encouraging more flexible work from home on a long-term basis.
The reasoning for these different responses brings to light one of the most fundamental features of modern market economies: Private consumption is the biggest driver of economic growth in developed countries, and for growth to continue, consumption has to return. As EU data between 2000 and 2020 has shown, private consumption has steadily increased over time, until Covid-19 struck. As many people have not been able to consume along normal patterns for months, this has put into context which of the things that people spend money on are really necessary.
For example, even without a nation-wide lockdown, spending on clothing and retail decreased by 58.9% in the US. Many other sectors, including the travel and restaurant industry have been heavily affected by the ongoing pandemic.
Many economists are focused on arguing how the changes in consumption are temporary, as they are caused by lockdown restrictions and fear of unemployment. But what this all ignores is the all-important question: Should we really strive to go back to the normal?
One thing that is undeniable about the ongoing pandemic is that it has shown how many economic sectors in developed countries cater to people’s increasingly trivial needs, in a pursuit of economic growth. At the same time, a large share of the world population lacks access to many basic necessities, including healthcare and clean drinking water.
The UK government’s push for a return to the pre-pandemic state of affairs could waste a unique opportunity to dramatically reform economic activity in a way that addresses the pressing issues of the 21st century.
Many companies in England have announced that they are downsizing office operations, and are encouraging flexible working hours for employees. This could mean that the 50% drop in air pollution that London experienced during lockdown could be prolonged, as the amount of daily commuters decreases.
As for the newly unused office space, in a city with chronic housing shortages and sky-high real estate prices, the London city council could surely find a way to repurpose these spaces in a societally beneficial manner. Whilst this is only a single example, it shows that with creative thinking, economic and social efficiency can be increased in the new environment we live in.
Another major problem caused by Covid-19 is widespread unemployment and indefinite furloughs. Rather than encouraging people to go back to working along pre-pandemic patterns, the newly freed up human capital could be used in other ways. In particular, entrepreneurship and ingenuity can be redirected to tackle issues such as inequality, poverty, and environmental degradation.
Economic output can be refocused towards providing basic necessities for the global population. With this, many of the problems that humanity faces can be targeted without massively harming the quality of life of those that are already well off.
Whilst it may seem idealistic to assume that human effort can be redirected for societal benefit, it is equally apathetic to assume that this is in no way possible.
The responses of many private sector organisations, and most importantly of governments and economic institutions have swayed strongly in the direction of apathy. In using conventional methods to tackle an unprecedented situation, it shows a lack of creativity on the behalf of decision makers to use this opportunity to tackle many of the deep-seeded issues of the modern world economy.
Although there is little certainty of the course of the world throughout the pandemic and beyond, surely it is uncontroversial to say that the benefits of a globally sustainable Post-Covid economy would be felt by all of humanity. By encouraging societies and individuals to think creatively and re-direct economic potential in a more social manner, it can be ensured that the opportunity provided by the pandemic will not be wasted in a “return to the normal”.
