It was probably inevitable that many would declare that the Covid-19 pandemic changes everything. The only question was how that sentiment would be expressed. It is a portal between one world and another, says one. It is rewriting the economic rulebook, says another. We are not going back to normal, argues a third. Conventional wisdoms have been shattered is a different formulation. There are many more variations on the theme.
The striking thing, though, is how little is genuinely new. What seems to be happening is the acceleration of pre-existing trends. The key developments already in train before the pandemic are moving at a faster pace.
That, of course, is not the same as saying that nothing has changed. Such an argument would be as foolish as saying everything will be different. But the key shifts prompted by the pandemic were already under way before anyone had heard of COVID-19. It is essential to get the balance right in this discussion.
An arguably mundane example illustrates the point well. Home working and video conferencing existed before, but they were confined to a few. However, the experience of working under lockdown has accelerated the trend.
Once the lockdown is over, it is likely that such ways of working will become more prevalent. Companies could shrink their office space with ‘hot desking’ becoming more common. Demand for office property could fall sharply as a result.
So the world has not turned into a ‘zoom society’ which operates according to new rules. It is, rather, that the experience of living under the pandemic has acted as a catalyst to speed up a pre-existing shift.
There are many examples that could be used to illustrate the point but the fractious relations within the euro-zone provide an instructive example. It looks likely that these will become more entrenched and bitter over time.
To the euro-idealists it was no doubt a huge disappointment that the proposal for euro-bonds did not take off. The old divide between a richer northern Europe and the poorer southern member states remained entrenched despite the severity of the crisis.
But eurosceptics expecting the euro-zone to collapse under the weight of its own contradictions were undoubtedly also annoyed. The euro-zone is pursuing a messy compromise, with the European Central Bank enhancing its regional role, but no sign of true fiscal integration. It is muddling through on an even more epic scale.
Far from conventional wisdoms being shattered they have been reinforced. Those who already held strong opinions are generally doubling down on them.
Daniel Ben-Ami, Deputy Editor
daniel.ben-ami@ipe.com
No comments yet