The pernicious economic impacts of the pandemic are being felt across the U.S. and each new data point illustrates the worsening situation for most Americans. The longer term impacts of the virus may be more frightening for many Americans, while also potentially creating new, seemingly new opportunities. Two vectors of long-term change in our economy, fundamental in nature, may take root. I characterize the mechanisms by which the virus may induced more fundamental change in our economy as either: 1) an accelerant, whereby the virus works as a force multiplier, rapidly increasing the rate by which slower-developing trends become normalized; or 2) a transformative, force function agent, inducing new types of economic and business models and consumption behavior previously unanticipated.
As an “accelerant,” the virus forces the rapid adoption of purchase of previously slower moving trends in how we consume, work, and engage with one another. Leading examples include the rapid, scaling adoption of e-commerce across households. Geopolitically, the tensions between the U.S. and China, brought to a new nadir during the trade war, will only worsen as blame and aspersions are cast about, sowing further distrust, and opening long-festering wounds only partially resolved by the partial truce known as the Phase I trade deal. The push to reconfigure supply chains, especially of products deemed of national security and/or public health importance, such as both technology products and face masks, will (and has) gain new fuel, and furthering calls for tangible, actual decoupling. Near-shoring and re-shoring will be terms we’re likely to continue to hear, at higher and higher decibels, particularly as we approach the height of election season.
As a force function transformative agent. This one is more interesting, and opens a whole range of possible future outcomes. Households savings may shoot up and remain at an elevated level, as households will continue to be rattled by the exogenous impact of the virus on economic stability and an uncertain future. Working from home may become a truly normalized phenomenon or paradigm shift, as businesses re-evaluate their real estate needs in downtown corridors. Households may also re-calibrate the meaning of leisure, and opt to divert some of the disposable income from outdoor dining to other forms of entertainment and relaxation. Or, simply realize the benefits of dining at home, while still enjoying the convenience of well-cooked food purchased via take out.
These changes, and many more, could result in a near-permanently displaced and dislocated labor force. Individuals who earned their living, albeit often in low wage positions, serving customers in person. Many of these workers lack advanced education, including not much more than a high school diploma, and thus may be ill-equipped for the new economy they may find themselves already during the pandemic and afterwards, on a sustained basis, as well. And for some of these workers, no matter their desire to continue working, they may face near insurmountable barriers to being re-employable. And then what? As a society, we’ll need to collectively choose the values we wish to express through policy. Do we guarantee basic necessities to make individuals economically whole, such as a safe place to live, steady supply of food, and programs to help them transition to other forms of gainful employment, providing them with the resources to enable them to re-enter the labor market and contribute as active members of the economy? Or do we allow the private non-profit sector, or any other service provider, to fill this void? (Or let the void become what it is, and leave the displaced at the mercy of the vagaries of our economy?)
Spencer Cohen PhD 柯西本 