Outlining five trends I’m observing at the moment. NB: These are my personal opinions, mostly based on business news coming out and social media sentiments of people I’m following.
I: Monetary policy of lowering interest rates and “printing money” by buying bonds and stocks by central banks has a limited effect on alleviating the financial crisis. This is because, on one hand, frozen private spending cannot be replaced with these efforts. On the other hand, private investors are in state of fear and uncertainty that the monetary influx cannot mitigate, especially giving the historically long loose monetary policy that has eroded the psychological effect of printing money being the solution.
II: For the same reason, finance policy cannot prevent bankruptcies: it cannot replace private consumption. GDPs of Western societies typically consist more than two-thirds of service sectors — and this is mostly physical, not digital services (especially when looking at number of jobs provided). The lack of this type of economic activity results in immediate drop in demand for labor and thus unemployment. Bankruptcies are expected to follow once financial buffers of the small and medium sized companies are depleted. Finance policy can help by providing unemployment benefits after people have lost their job. It appears increased socialism is a must for surviving the crisis without society going into chaos of crime and looting.
III: What work is essential? Many people now observe that their work effort is really not “needed” — they stay at home and society can still provide functions for basic needs. Food, transportation, utilities… as long as these are provided, anything else is extra. Most people’s jobs are in the “extra” category and thus not necessary for the society to function in the short term. However, their spending on digital services, home delivery services etc. helps alleviate the crisis. This highlights the situation where a minority of workers “do the work” and the role of others is to “consume”, getting their money for consumption from surplus of economic activity.
IV: Inequality among workers that can “go remote” and those that cannot. The large physical service sector consists of jobs that cannot be done remotely (hotels, restaurants, airlines, drivers, leisure services such as cinema). Even those that can are being cancelled which is felt especially heavily by freelancers in creative industries (events, music/audio, etc.). The inequality is drastic: some continue working at home, posting Instagram picture of their “cool” home offices while others are scraping for survival.
V: Trade-off between health and economy. In the short term, society sacrifices economic growth for health, especially that of vulnerable groups, corresponding to a sort of tyranny by minority situation. The longer the crisis continues, the more likely this is to change: one’s people’s livelihood become at risk large-scale, they start less weighing the wellbeing of “others” and demand more wellbeing for themselves. This is especially likely to take place among the work-aged population that most suffers from the seizure of economic activity. Increased questioning of isolutionary measures is likely to take place by latest when the adverse effects hit the white-collar remote workers (marketers, HR consultants, software engineers, etc.). The world cannot stay on hold forever.