Left and right, predictions on the post COVID-19 era are shooting by.
The short term seems to be either a crash worse than the great crash of the thirties or a rapid recovery. Those with a long-term vision are even less helpful. Many of their “predictions” fall in a few specific classes:
- Whoa, the world will change; it’s the biggest revolution since whatever;
- The changes in the COVID-19 era will be maintained;
- I like X, so COVID-19 means we need more of it (an advocacy group specialty);
- I sell Y and COVID-19 has shown how good it is.
Time for a different point of view. My first contention is that humanity is a very slow learner.
In 1901, SS Islander was sunk by an iceberg. In 1912, RMS Titanic was sunk by another iceberg and in 1959 MS Hans Hedtoft suffered the same fate on its maiden voyage in the same area with the loss of all on board.
Is it different in medicine? In medieval times, the bubonic plague ravaged the world. Humanity learned about contamination and isolation.
Nevertheless, a third of the human population died in the second pandemic (around 1347) as victims were rejected from their own communities and started spreading the disease by travelling around, like passengers on a cruise ship.
In recent times, the “Spanish flu” illustrated the bad consequences of suppressed information and lack of international co-operation. The polio virus raged in the 1950s.
Hospitals were short of beds. New inventions included the intensive care unit and the iron lung, a forerunner of the ventilator. It took three decades to eradicate polio.
SARS showed the promise of quick containment. Practically all the worst hit countries were in East Asia. Which of these lessons were applied in 2019? The lessons of SARS, but in hard-hit East Asian countries only.
The financial sector is no exception either. Remember how Barings gave the world an important lesson in the necessity of separating trading and execution? Remember how many rogue traders we have had since?
The conclusion that this time it is not different is inescapable. Normal humans resist change; they want to return to 2019 and if that means forgetting the lessons learned, so be it.
My second contention is that we can already see how nothing will change. The benchmark is climate change. Like COVID-19, climate change is a global crisis.
However, while COVID-19 had a variable lead time from zero for China to six weeks for Western Europe, two months for the US and more for Eastern Europe, the lead time was spent for political manoeuvring for short-term gain.
Medical expertise was often ignored or worse. Outside East Asia, few if any countries prepared for COVID-19.
For climate change, the lead time is far longer. It is being used for political bickering and symbolic action. As we approach the crucial 2030 date, the gap with the minimal goals of the Paris agreement grows.
While the clear lesson of COVID-19 is that an international crisis needs a coordinated international response, the US reaction of blaming China and deserting the World Health Organisation flies in its face. The Paris agreement is faring no better.
And yet, humanity has made progress since the bubonic plague. History shows that change was never revolutionary. The Middle Ages becoming the Renaissance was a process, not a revolution. Not the French revolution, but the age of enlightenment (the whole 18th century) brought real change.
It is safe to conclude that children will continue to go to school, cruises will come back, working at home will change little, no politician has changed his or her mind about the use of international co-operation, it will take years to eradicate COVID-19, but we will soon be shaking hands again.
The medical sector will be ready to beat another outbreak of COVID-19, but not the next virus.
It is also safe to assume that world will keep changing. Climate change is looming large. ALM studies going beyond 2030 that do not go into the consequences of climate change are useless.
Think of the erratic market behaviour during the present, smaller crisis. Consider the consequences for economic growth, the dislocation of production and people.
What does the loss of stranded assets mean? Your beneficiaries will not forgive you. You knew what was coming, so apply the lessons.
Peter Kraneveld is an international pensions adviser at PRIME bv.