The year 2020 will become a historical boundary, like 1815 or 1945. Lots of things will be done differently after COVID-19. Most of the changes will accelerate existing trends, much like the Black Death hastened the end of serfdom or World War I ushered in the era of the nation-state. But some will have the opposite effect. Let’s start with the accelerations.
1) Higher government spending: A constant lament of this column has been that the Tea Party disappeared when it was most needed. Before the first coronavirus case, the Trump administration was already running a trillion-dollar deficit, as high as anything seen under President Barack Obama, and without the excuse of a financial crisis. Yet the people who had been protesting Obama’s spending suddenly stopped caring. This year, the deficit looks like it will be $3 trillion. If you think that will lead to a sudden demand for fiscal rectitude, you cannot have been watching. Spending takes on a momentum of its own. “If you can find $3 trillion,” people will say, “you can find a few hundred million to help my business recover” (or “increase my benefits” or whatever).
2) Asian century: Long before the crisis, it was clear that the East was outgrowing the West. The pandemic has tilted the balance further. Asian countries, scarred by the experience of SARS, had their defenses in place. Testing and tracing systems were ready; face masks were widespread. Singapore built a specialist hospital. In consequence, those nations are already firing up their economies, while the West faces months of economic shutdown and years of indebtedness.
3) Bipolar world: Any hope for a rapprochement between the United States and China has gone, and we face the prospect of a trade war between the world’s largest- and second-largest economies. Both parties are weaker than they were three months ago, but the U.S. has taken by far the harder hit.
4) Stronger strongmen: Epidemics make people more suspicious, more introverted — in a word, more authoritarian. We don’t just put up with massive increases in state power; we actively demand them. It had been fashionable to criticize, say, Hungary’s Viktor Orban for seizing emergency powers, but almost every regime in the world is now doing the same thing, and to general applause.
5) Oil bust: The scramble for oil, which dominated the past 80 years, is over. It’s about time. Cheaper oil is bad news for some very nasty regimes, including Iran, Saudi Arabia, and Russia.
6) Hard borders: The free movement of people is over, even in the European Union, where it had been elevated as a ruling principle. Even if screening measures can be put in place, no government will lightly relinquish control over who can enter its territory after this.
7) National sovereignty: If the coronavirus had been expressly designed to undermine the euro, it would have targeted the region it did — not just Italy, but the industrial heart of northern Italy. A virus that had mainly impoverished Germany would, paradoxically, have made the euro more manageable. And the EU responded very badly, even in its own terms. Its primary purpose is (to use the favorite Eurocrat buzzword) “solidarity”. But, when the crisis came, each country hoarded equipment, forcing Italy to turn to China for supplies. The EU may survive this, but only in the sense that the Holy Roman Empire did — as a shell of its former self.
Those are the trends that the coronavirus will hasten. But there are some it will halt.
1) Falling prices: How many hours of work do you have to put in to buy a cup of coffee or a shirt or a washing machine? Whatever the answer is, it is almost certainly less than it would have been a decade ago. For as long as we can remember, we have expected living standards to rise. Not anymore. We will have to get used to a new world of unemployment and privation.
2) Ecolunacy: For decades, environmental activists have been telling us that we need less growth, less trade, more local production, grounded aircraft, and a massive drop in carbon emissions. Now that we know precisely how those things feel, there will be no rush to experience them again.
3) Home learning: It used to be fashionable to say that we could do many more things from our sofas. I think I may have been guilty of making the idiotic suggestion that college campuses were unnecessary and that universities should supplement largely online courses with occasional face-to-face tutorials. If you still think along those lines, I can only assume you haven’t had a teenager at home over the past month.
