COVID-19:

THE GREAT RESET

KLAUS SCHWAB
THIERRY MALLERET

FORUM PUBLISHING

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 Edition 1.0

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 About Covid-19: The Great Reset
Since it made its entry on the world stage, COVID-19 has
dramatically torn up the existing script of how to govern countries,
live with others and take part in the global economy. Written by
World Economic Forum Founder Klaus Schwab and Monthly
Barometer author Thierry Malleret, COVID-19: The Great Reset
considers its far-reaching and dramatic implications on tomorrow’s
world.

The book’s main objective is to help understand what’s coming in

a multitude of domains. Published in July 2020, in the midst of the
crisis and when further waves of infection may still arise, it is a
hybrid between a contemporary essay and an academic snapshot
of a crucial moment in history. It includes theory and practical
examples but is chiefly explanatory, containing many conjectures
and ideas about what the post-pandemic world might, and
perhaps should, look like.

The book has three main chapters, offering a panoramic overview

of the future landscape. The first assesses what the impact of the
pandemic will be on five key macro categories: the economic,
societal, geopolitical, environmental and technological factors.
The second considers the effects in micro terms, on specific
industries and companies. The third hypothesizes about the
nature of the possible consequences at the individual level.

In early July 2020, we are at a crossroads, the authors of COVID-

19: The Great Reset argue. One path will take us to a better
world: more inclusive, more equitable and more respectful of
Mother Nature. The other will take us to a world that resembles
the one we just left behind – but worse and constantly dogged by
nasty surprises. We must therefore get it right. The looming
challenges could be more consequential than we have until now
chosen to imagine, but our capacity to reset could also be greater
than we had previously dared to hope.

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 About the authors

Professor Klaus Schwab (1938, Ravensburg, Germany) is the

Founder and Executive Chairman of the World Economic Forum.
In 1971, he published Modern Enterprise Management in
Mechanical Engineering. He argues in that book that a company
must serve not only shareholders but all stakeholders to achieve
long-term growth and prosperity. To promote the stakeholder
concept, he founded the World Economic Forum the same year.

Professor Schwab holds doctorates in Economics (University of

Fribourg) and in Engineering (Swiss Federal Institute of
Technology) and obtained a master’s degree in Public
Administration (MPA) from the Kennedy School of Government at
Harvard University. In 1972, in addition to his leadership role at the
Forum, he became a professor at the University of Geneva. He
has since received numerous international and national honours,

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including 17 honorary doctorates. His latest books are The Fourth
Industrial Revolution (2016), a worldwide bestseller translated into
30 languages, and Shaping the Future of the Fourth Industrial
Revolution (2018).

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Thierry Malleret (1961, Paris, France) is the Managing Partner of
the Monthly Barometer, a succinct predictive analysis provided to
private investors, global CEOs and opinion- and decision-makers.
His professional experience includes founding the Global Risk
Network at the World Economic Forum and heading its Programme
team.

Malleret was educated at the Sorbonne and the Ecole des Hautes
Etudes en Sciences Sociales, Paris, and at St Antony's College,
Oxford. He holds master’s degrees in Economics and History, and
a PhD in Economics. His career spans investment banking, think
tanks, academia and government (with a three-year spell in the
prime minister's office in Paris). He has written several business
and academic books and has published four novels. He lives in
Chamonix, France, with his wife Mary Anne.

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 CONTENTS
INTRODUCTION
1. MACRO RESET
1.1. Conceptual framework – Three defining
characteristics of today’s world
1.1.1. Interdependence
1.1.2. Velocity
1.1.3. Complexity

1.2. Economic reset

1.2.1. The economics of COVID-19
1.2.1.1. Uncertainty
1.2.1.2. The economic fallacy of sacrificing a few lives to save growth

1.2.2. Growth and employment

1.2.2.1. Economic growth
1.2.2.2. Employment
1.2.2.3. What future growth could look like

1.2.3. Fiscal and monetary policies

1.2.3.1. Deflation or inflation?
1.2.3.2. The fate of the US dollar

1.3. Societal reset

1.3.1. Inequalities
1.3.2. Social unrest
1.3.3. The return of “big” government
1.3.4. The social contract

1.4. Geopolitical reset

1.4.1. Globalization and nationalism
1.4.2. Global governance
1.4.3. The growing rivalry between China and the US
1.4.4. Fragile and failing states

1.5. Environmental reset

1.5.1. Coronavirus and the environment
1.5.1.1. Nature and zoonotic diseases
1.5.1.2. Air pollution and pandemic risk
1.5.1.3. Lockdown and carbon emissions

1.5.2. Impact of the pandemic on climate change and other environmental

policies

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 1.6. Technological reset
1.6.1. Accelerating the digital transformation
1.6.1.1. The consumer
1.6.1.2. The regulator
1.6.1.3. The firm

1.6.2. Contact tracing, contact tracking and surveillance

1.6.3. The risk of dystopia

2. MICRO RESET (INDUSTRY AND BUSINESS)

2.1. Micro trends

2.1.1. Acceleration of digitization
2.1.2. Resilient supply chains
2.1.3. Governments and business
2.1.4. Stakeholder capitalism and ESG

2.2. Industry reset

2.2.1. Social interaction and de-densification
2.2.2. Behavioural changes – permanent vs transient
2.2.3. Resilience

3. INDIVIDUAL RESET
3.1. Redefining our humanness
3.1.1. The better angels in our nature… or not
3.1.2. Moral choices

3.2. Mental health and well-being

3.3. Changing priorities

3.3.1. Creativity
3.3.2. Time
3.3.3. Consumption
3.3.4. Nature and well-being

CONCLUSION

ACKNOWLEDGEMENTS

ENDNOTES

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 INTRODUCTION

The worldwide crisis triggered by the coronavirus pandemic

has no parallel in modern history. We cannot be accused of
hyperbole when we say it is plunging our world in its entirety and
each of us individually into the most challenging times we’ve faced
in generations. It is our defining moment – we will be dealing with
its fallout for years, and many things will change forever. It is
bringing economic disruption of monumental proportions, creating
a dangerous and volatile period on multiple fronts – politically,
socially, geopolitically – raising deep concerns about the
environment and also extending the reach (pernicious or
otherwise) of technology into our lives. No industry or business
will be spared from the impact of these changes. Millions of
companies risk disappearing and many industries face an
uncertain future; a few will thrive. On an individual basis, for many,
life as they’ve always known it is unravelling at alarming speed.
But deep, existential crises also favour introspection and can
harbour the potential for transformation. The fault lines of the
world – most notably social divides, lack of fairness, absence of
cooperation, failure of global governance and leadership – now lie
exposed as never before, and people feel the time for reinvention
has come. A new world will emerge, the contours of which are for
us to both imagine and to draw.

At the time of writing (June 2020), the pandemic continues to

worsen globally. Many of us are pondering when things will return
to normal. The short response is: never. Nothing will ever return to
the “broken” sense of normalcy that prevailed prior to the crisis
because the coronavirus pandemic marks a fundamental inflection
point in our global trajectory. Some analysts call it a major
bifurcation, others refer to a deep crisis of “biblical” proportions,
but the essence remains the same: the world as we knew it in the
early months of 2020 is no more, dissolved in the context of the
pandemic. Radical changes of such consequence are coming that

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some pundits have referred to a “before coronavirus” (BC) and
“after coronavirus” (AC) era. We will continue to be surprised by
both the rapidity and unexpected nature of these changes – as
they conflate with each other, they will provoke second-, third-,
fourth- and more-order consequences, cascading effects and
unforeseen outcomes. In so doing, they will shape a “new normal”
radically different from the one we will be progressively leaving
behind. Many of our beliefs and assumptions about what the world
could or should look like will be shattered in the process.

However, broad and radical pronouncements (like “everything

will change”) and an all-or-nothing, black-and-white analysis
should be deployed with great care. Of course, reality will be
much more nuanced. By itself, the pandemic may not completely
transform the world, but it is likely to accelerate many of the
changes that were already taking place before it erupted, which
will in turn set in motion other changes. The only certainty: the
changes won’t be linear and sharp discontinuities will prevail.
COVID-19: The Great Reset is an attempt to identify and shed
light on the changes ahead, and to make a modest contribution in
terms of delineating what their more desirable and sustainable
form might resemble.

Let’s begin by putting things into perspective: human beings

have been around for about 200,000 years, the oldest bacteria for
billions of years and viruses for at least 300 million years. This
means that, most likely, pandemics have always existed and been
an integral part of human history since people started travelling
around; over the past 2000 years they have been the rule, not the
exception. Because of their inherently disruptive nature,
epidemics throughout history have proven to be a force for lasting
and often radical change: sparking riots, causing population
clashes and military defeats, but also triggering innovations,
redrawing national boundaries and often paving the way for
revolutions. Outbreaks forced empires to change course – like the
Byzantine Empire when struck by the Plague of Justinian in 541-
542 – and some even to disappear altogether – when Aztec and
Inca emperors died with most of their subjects from European
germs. Also, authoritative measures to attempt to contain them

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have always been part of the policy arsenal. Thus, there is nothing
new about the confinement and lockdowns imposed upon much of
the world to manage COVID-19. They have been common
practice for centuries. The earliest forms of confinement came
with the quarantines instituted in an effort to contain the Black
Death that between 1347 and 1351 killed about a third of all
Europeans. Coming from the word quaranta (which means “forty”
in Italian), the idea of confining people for 40 days originated
without the authorities really understanding what they wanted to
contain, but the measures were one of the first forms of
“institutionalized public health” that helped legitimatize the
“accretion of power” by the modern state.[1] The period of 40 days
has no medical foundation; it was chosen for symbolic and
religious reasons: both the Old and New Testaments often refer to
the number 40 in the context of purification – in particular the 40
days of Lent and the 40 days of flood in Genesis.

The spread of infectious diseases has a unique ability to fuel

fear, anxiety and mass hysteria. In so doing, as we have seen, it
also challenges our social cohesion and collective capacity to
manage a crisis. Epidemics are by nature divisive and
traumatizing. What we are fighting against is invisible; our family,
friends and neighbours may all become sources of infection; those
everyday rituals that we cherish, like meeting a friend in a public
place, may become a vehicle for transmission; and the authorities
that try to keep us safe by enforcing confinement measures are
often perceived as agents of oppression. Throughout history, the
important and recurring pattern has been to search for scapegoats
and place the blame firmly on the outsider. In medieval Europe,
the Jews were almost always among the victims of the most
notorious pogroms provoked by the plague. One tragic example
illustrates this point: in 1349, two years after the Black Death had
started to rove across the continent, in Strasbourg on Valentine’s
day, Jews, who’d been accused of spreading the plague by
polluting the wells of the city, were asked to convert. About 1,000
refused and were burned alive. During that same year, Jewish
communities in other European cities were wiped out, forcing
them to massively migrate to the eastern part of Europe (in

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Poland and Russia), permanently altering the demography of the
continent in the process. What is true for European anti-Semitism
also applies to the rise of the absolutist state, the gradual retreat
of the church and many other historical events that can be
attributed in no small measure to pandemics. The changes were
so diverse and widespread that it led to “the end of an age of
submission”, bringing feudalism and serfdom to an end and
ushering in the era of Enlightenment. Put simply: “The Black
Death may have been the unrecognized beginning of modern
man.”[2] If such profound social, political and economic changes
could be provoked by the plague in the medieval world, could the
COVID-19 pandemic mark the onset of a similar turning point with
long-lasting and dramatic consequences for our world today?
Unlike certain past epidemics, COVID-19 doesn’t pose a new
existential threat. It will not result in unforeseen mass famines or
major military defeats and regime changes. Whole populations will
neither be exterminated nor displaced as a result of the pandemic.
However, this does not equate to a reassuring analysis. In reality,
the pandemic is dramatically exacerbating pre-existing dangers
that we’ve failed to confront adequately for too long. It will also
accelerate disturbing trends that have been building up over a
prolonged period of time.

To begin elaborating a meaningful response, we need a

conceptual framework (or a simple mental map) to help us reflect
on what’s coming and to guide us in making sense of it. Insights
offered by history can be particularly helpful. This is why we so
often search for a reassuring “mental anchor” that can serve as a
benchmark when we are forced to ask ourselves tough questions
about what will change and to what extent. In doing so, we look
for precedents, with questions such as: Is the pandemic like the
Spanish flu of 1918 (estimated to have killed more than 50 million
people worldwide in three successive waves)? Could it look like
the Great Depression that started in 1929? Is there any
resemblance with the psychological shock inflicted by 9/11? Are
there similarities with what happened with SARS in 2003 and
H1N1 in 2009 (albeit on a different scale)? Could it be like the
great financial crisis of 2008, but much bigger? The correct, albeit

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unwelcome, answer to all of these is: no! None fits the reach and
pattern of the human suffering and economic destruction caused
by the current pandemic. The economic fallout in particular bears
no resemblance to any crisis in modern history. As pointed out by
many heads of state and government in the midst of the
pandemic, we are at war, but with an enemy that is invisible, and
of course metaphorically: “If what we are going through can
indeed be called a war, it is certainly not a typical one. After all,
today’s enemy is shared by all of humankind”.[3]

That said, World War II could even so be one of the most

relevant mental anchors in the effort to assess what’s coming
next. World War II was the quintessential transformational war,
triggering not only fundamental changes to the global order and
the global economy, but also entailing radical shifts in social
attitudes and beliefs that eventually paved the way for radically
new policies and social contract provisions (like women joining the
workforce before becoming voters). There are obviously
fundamental dissimilarities between a pandemic and a war (that
we will consider in some detail in the following pages), but the
magnitude of their transformative power is comparable. Both have
the potential to be a transformative crisis of previously
unimaginable proportions. However, we must beware of
superficial analogies. Even in the worst-case horrendous
scenario, COVID-19 will kill far fewer people than the Great
Plagues, including the Black Deaths, or World War II did.
Furthermore, today’s economy bears no resemblance to those of
past centuries that relied on manual labour and farmland or heavy
industry. In today’s highly interconnected and interdependent
world, however, the impact of the pandemic will go well beyond
the (already staggering) statistics relating “simply” to death,
unemployment and bankruptcies.

COVID-19: The Great Reset is written and published in the

midst of a crisis whose consequences will unfold over many years
to come. Little wonder that we all feel somewhat bewildered – a
sentiment so very understandable when an extreme shock strikes,
bringing with it the disquieting certainty that its outcomes will be
both unexpected and unusual. This strangeness is well captured

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by Albert Camus in his 1947 novel The Plague: “Yet all these
changes were, in one sense, so fantastic and had been made so
precipitately that it wasn’t easy to regard them as likely to have
any permanence.”[4] Now that the unthinkable is upon us, what will
happen next, in the immediate aftermath of the pandemic and
then in the foreseeable future?

It is of course much too early to tell with any reasonable

accuracy what COVID-19 will entail in terms of “momentous”
changes, but the objective of this book is to offer some coherent
and conceptually sound guidelines about what might lie ahead,
and to do so in the most comprehensive manner possible. Our
aim is to help our readers grasp the multifaceted dimension of the
changes that are coming. At the very least, as we will argue, the
pandemic will accelerate systemic changes that were already
apparent prior to the crisis: the partial retreat from globalization,
the growing decoupling between the US and China, the
acceleration of automation, concerns about heightened
surveillance, the growing appeal of well-being policies, rising
nationalism and the subsequent fear of immigration, the growing
power of tech, the necessity for firms to have an even stronger
online presence, among many others. But it could go beyond a
mere acceleration by altering things that previously seemed
unchangeable. It might thus provoke changes that would have
seemed inconceivable before the pandemic struck, such as new
forms of monetary policy like helicopter money (already a given),
the reconsideration/recalibration of some of our social priorities
and an augmented search for the common good as a policy
objective, the notion of fairness acquiring political potency, radical
welfare and taxation measures, and drastic geopolitical
realignments.

The broader point is this: the possibilities for change and the
resulting new order are now unlimited and only bound by our
imagination, for better or for worse. Societies could be poised to
become either more egalitarian or more authoritarian, or geared
towards more solidarity or more individualism, favouring the
interests of the few or the many; economies, when they recover,
could take the path of more inclusivity and be more attuned to the

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needs of our global commons, or they could return to functioning
as they did before. You get the point: we should take advantage of
this unprecedented opportunity to reimagine our world, in a bid to
make it a better and more resilient one as it emerges on the other
side of this crisis.

We are conscious that attempting to cover the scope and

breadth of all the issues addressed in this book is an enormous
task that may not even be possible. The subject and all the
uncertainties attached to it are gargantuan and could have filled
the pages of a publication five times the size of this one. But our
objective was to write a relatively concise and simple book to help
the reader understand what’s coming in a multitude of domains.
To interrupt the flow of the text as little as possible, the reference
information appears at the end of the book and direct attributions
have been minimized. Published in the midst of the crisis and
when further waves of infection are expected, it will continuously
evolve to consider the changing nature of the subject matter.
Future editions will be updated in view of new findings, the latest
research, revised policy measures and ongoing feedback from
readers.

This volume is a hybrid between a light academic book and an

essay. It includes theory and practical examples but is chiefly
explanatory, containing many conjectures and ideas about what
the post-pandemic world might, and perhaps should, look like. It
offers neither simple generalizations nor recommendations for a
world moving to a new normal, but we trust it will be useful.

This book is structured around three main chapters, offering a

panoramic overview of the future landscape. The first assesses
what the impact of the pandemic will be on five key macro
categories: the economic, societal, geopolitical, environmental
and technological factors. The second considers the effects in
micro terms, on specific industries and companies. The third
hypothesizes about the nature of the possible consequences at
the individual level.

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 1. MACRO RESET

The first leg of our journey progresses across five macro

categories that offer a comprehensive analytical framework to
understand what’s going on in today’s world and how this might
evolve. For ease of reading, we travel thematically through each
separately. In reality, they are interdependent, which is where we
begin: our brains make us think in linear terms, but the world that
surrounds us is non-linear, that is to say: complex, adaptive, fast-
paced and ambiguous.

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 1.1. Conceptual framework – Three defining
characteristics of today’s world
The macro reset will occur in the context of the three prevailing
secular forces that shape our world today: interdependence,
velocity and complexity. This trio exerts its force, to a lesser or
greater degree, on us all, whoever or wherever we may be.

1.1.1. Interdependence
If just one word had to distil the essence of the 21st century, it
would have to be “interdependence”. A by-product of globalization
and technological progress, it can essentially be defined as the
dynamic of reciprocal dependence among the elements that
compose a system. The fact that globalization and technological
progress have advanced so much over the past few decades has
prompted some pundits to declare that the world is now
“hyperconnected” – a variant of interdependence on steroids!
What does this interdependence mean in practice? Simply that
the world is “concatenated”: linked together. In the early 2010s,
Kishore Mahbubani, an academic and former diplomat from
Singapore, captured this reality with a boat metaphor: “The
7 billion people who inhabit planet earth no longer live in more
than one hundred separate boats [countries]. Instead, they all live
in 193 separate cabins on the same boat.” In his own words, this
is one of the greatest transformations ever. In 2020, he pursued
this metaphor further in the context of the pandemic by writing: “If
we 7.5 billion people are now stuck together on a virus-infected
cruise ship, does it make sense to clean and scrub only our
personal cabins while ignoring the corridors and air wells outside,
through which the virus travels? The answer is clearly: no. Yet,
this is what we have been doing. … Since we are now in the same
boat, humanity has to take care of the global boat as a whole”.[5]

An interdependent world is a world of deep systemic

connectivity, in which all risks affect each other through a web of
complex interactions. In such conditions, the assertion that an

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economic risk will be confined to the economic sphere or that an
environmental risk won’t have repercussions on risks of a different
nature (economic, geopolitical and so on) is no longer tenable. We
can all think of economic risks turning into political ones (like a
sharp rise in unemployment leading to pockets of social unrest),
or of technological risks mutating into societal ones (such as the
issue of tracing the pandemic on mobile phones provoking a
societal backlash). When considered in isolation, individual risks –
whether economic, geopolitical, societal or environmental in
character – give the false impression that they can be contained
or mitigated; in real life, systemic connectivity shows this to be an
artificial construct. In an interdependent world, risks amplify each
other and, in so doing, have cascading effects. That is why
isolation or containment cannot rhyme with interdependence and
interconnectedness.

The chart below, extracted from the World Economic Forum

Global Risks Report 2020,[6] makes this plain. It illustrates the
interconnected nature of the risks we collectively face; each
individual risk always conflates with those from its own macro
category but also with the individual risks from the other macro
categories (economic risks appear in blue, geopolitical in orange,
societal in red, environmental in green and technological in
purple). In this manner, each individual risk harbours the potential
to create ricochet effects by provoking other risks. As the chart
makes clear, an “infectious diseases” risk is bound to have a
direct effect on “global governance failure”, “social instability”,
“unemployment”, “fiscal crises” and “involuntary migration” (to
name just a few). Each of these in turn will influence other
individual risks, meaning that the individual risk from which the
chain of effects started (in this particular case “infectious
diseases”) ends up amplifying many other risks not only in its own
macro category (societal risks), but also in the other four macro
categories. This displays the phenomenon of contagion by
systemic connectivity. In the following sub-chapters, we explore
what the pandemic risk might entail from an economic, societal,
geopolitical, environmental and technological perspective.

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 Figure 1

Source: World Economic Forum, The Global Risks Report 2020, Figure IV: The
Global Risks Interconnections Map 2020, World Economic Forum Global Risks
Perception Survey 2019-2020

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 Interdependence has an important conceptual effect: it
invalidates “silo thinking”. Since conflation and systemic
connectivity are what ultimately matter, addressing a problem or
assessing an issue or a risk in isolation from the others is
senseless and futile. In the past, this “silo thinking” partly explains
why so many economists failed to predict the credit crisis (in
2008) and why so few political scientists saw the Arab Spring
coming (in 2011). Today, the problem is the same with the
pandemic. Epidemiologists, public-health specialists, economists,
social scientists and all the other scientists and specialists who
are in the business of helping decision-makers understand what
lies ahead find it difficult (and sometimes impossible) to cross the
boundaries of their own discipline. That is why addressing
complex trade-offs, such as containing the progression of the
pandemic versus reopening the economy, is so fiendishly difficult.
Understandably, most experts end up being segregated into
increasingly narrow fields. Therefore, they lack the enlarged view
necessary to connect the many different dots that provide the
more complete picture the decision-makers desperately need.

1.1.2. Velocity
The above firmly points the finger at technological progress
and globalization as the primary “culprits” responsible for greater
interdependence. In addition, they have created such a culture of
immediacy that it’s not an exaggeration to claim that, in today’s
world, everything moves much faster than before. If just one thing
were to be singled out to explain this astonishing increase in
velocity, it would undoubtedly be the internet. More than half
(52%) of the world’s population is now online, compared to less
than 8% 20 years ago; in 2019, more than 1.5 billion smartphones
– a symbol and vector of velocity that allows us to be reached
anywhere and at any time – were sold around the world. The
internet of things (IoT) now connects 22 billion devices in real
time, ranging from cars to hospital beds, electric grids and water
station pumps, to kitchen ovens and agricultural irrigation
systems. This number is expected to reach 50 billion or more in
2030. Other explanations for the rise in velocity point to the

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“scarcity” element: as societies get richer, time becomes more
valuable and is therefore perceived as evermore scarce. This may
explain studies showing that people in wealthy cities always walk
faster than in poor cities – they have no time to lose! No matter
what the causal explanation is, the endgame of all this is clear: as
consumers and producers, spouses and parents, leaders and
followers, we are all being subjected to constant, albeit
discontinuous, rapid change.

We can see velocity everywhere; whether it’s a crisis, social

discontent, technological developments and adoption, geopolitical
upheaval, the financial markets and, of course, the manifestation
of infectious diseases – everything now runs on fast-forward. As a
result, we operate in a real-time society, with the nagging feeling
that the pace of life is ever increasing. This new culture of
immediacy, obsessed with speed, is apparent in all aspects of our
lives, from “just-in-time” supply chains to “high-frequency” trading,
from speed dating to fast food. It is so pervasive that some
pundits call this new phenomenon the “dictatorship of urgency”. It
can indeed take extreme forms. Research performed by scientists
at Microsoft shows, for example, that being slower by no more
than 250 milliseconds (a quarter of a second) is enough for a
website to lose hits to its “faster” competitors! The all-embracing
result is that the shelf life of a policy, a product or an idea, and the
life cycle of a decision-maker or a project, are contracting sharply
and often unpredictably.

Nothing illustrated this more vividly than the breakneck speed

with which COVID-19 progressed in March 2020. In less than a
month, from the maelstrom provoked by the staggering speed at
which the pandemic engulfed most of the world, a whole new era
seemed to emerge. The beginning of the outbreak was thought to
have taken place in China sometime earlier, but the exponential
global progression of the pandemic took many decision-makers
and a majority of the public by surprise because we generally find
it cognitively hard to grasp the significance of exponential growth.
Consider the following in terms of “days for doubling”: if a
pandemic grows at 30% a day (as COVID-19 did around mid-
March for some of the worst affected countries), registered cases

23
(or deaths) will double in a little more than two days. If it grows at
20%, it will take between four and five days; and if it grows at
10%, it will take just more than a week. Expressed differently: at
the global level, it took COVID-19 three months to reach 100,000
cases, 12 days to double to 200,000 cases, four days to reach
300,000 cases, and then 400,000 and 500,000 cases were
reached in two days each. These numbers make our heads spin –
extreme velocity in action! Exponential growth is so baffling to our
cognitive functions that we often deal with it by developing
exponential “myopia”,[7] thinking of it as nothing more than “very
fast”. In a famous experiment conducted in 1975, two
psychologists found that when we have to predict an exponential
process, we often underestimate it by factor of 10.[8]
Understanding this growth dynamic and the power of exponentials
clarifies why velocity is such an issue and why the speed of
intervention to curb the rate of growth is so crucial. Ernest
Hemingway understood this. In his novel The Sun Also Rises, two
characters have the following conversation: “How did you go
bankrupt?" Bill asked. “Two ways,” Mike said. “Gradually, then
suddenly.” The same tends to happen for big systemic shifts and
disruption in general: things tend to change gradually at first and
then all at once. Expect the same for the macro reset.

Not only does velocity take extreme forms, but it can also
engender perverse effects. “Impatience”, for example, is one, the
effects of which can be seen similarly in the behaviour of
participants in the financial markets (with new research
suggesting that momentum trading, based on velocity, leads stock
prices to deviate persistently from their fundamental value or
“correct” price) and in that of voters in an election. The latter will
have a critical relevance in the post-pandemic era. Governments,
by necessity, take a while to make decisions and implement them:
they are obliged to consider many different constituency groups
and competing interests, balance domestic concerns with external
considerations and secure legislative approval, before putting into
motion the bureaucratic machinery to action all these decisions.
By contrast, voters expect almost immediate policy results and
improvements, which, when they don’t arrive fast enough, lead to

24
almost instantaneous disappointment. This problem of
asynchronicity between two different groups (policy-makers and
the public) whose time horizon differs so markedly will be acute
and very difficult to manage in the context of the pandemic. The
velocity of the shock and (the depth) of the pain it has inflicted will
not and cannot be matched with equal velocity on the policy side.

Velocity also led many observers to establish a false

equivalence by comparing seasonal flu with COVID-19. This
comparison, made again and again in the early months of the
pandemic, was misleading and conceptually erroneous. Let’s take
the example of the US to hammer out the point and better grasp
the role played by velocity in all of this. According to the Centers
for Disease Control (CDC), between 39 and 56 million Americans
contracted the flu during the 2019-2020 winter season, with
between 24,000 and 62,000 deaths.[9] By contrast, and according
to Johns Hopkins University, on 24 June 2020, more than 2.3
million were diagnosed with COVID-19 and almost 121,000
people had died.[10] But the comparison stops there; it is
meaningless for two reasons: 1) the flu numbers correspond to
the estimated total flu burden while the COVID-19 figures are
confirmed cases; and 2) the seasonal flu cascades in “gentle”
waves over a period of (up to six) months in an even pattern while
the COVID-19 virus spreads like a tsunami in a hotspot pattern (in
a handful of cities and regions where it concentrates) and, in
doing so, can overwhelm and jam healthcare capacities,
monopolizing hospitals to the detriment of non-COVID-19
patients. The second reason – the velocity with which the COVID-
19 pandemic surges and the suddenness with which clusters
emerge – makes all the difference and renders the comparison
with the flu irrelevant.

Velocity lies at the root of the first and second reasons: in a

vast majority of countries, the speed with which the epidemic
progressed made it impossible to have sufficient testing
capabilities, and it then overwhelmed many national health
systems equipped to deal with a predictable, recurrent and rather
slow seasonal flu but not with a “superfast” pandemic.

25
 Another important and far-reaching consequence of velocity is
that decision-makers have more information and more analysis
than ever before, but less time to decide. For politicians and
business leaders, the need to gain a strategic perspective collides
ever-more frequently with the day-to-day pressures of immediate
decisions, particularly obvious in the context of the pandemic, and
reinforced by complexity, as we see in the next section.

1.1.3. Complexity

In its simplest possible form, complexity can be defined as

what we don’t understand or find difficult to understand. As for a
complex system, the psychologist Herbert Simon defined it as
“one made up of a large number of parts that interact in a
nonsimple way”.[11] Complex systems are often characterized by
an absence of visible causal links between their elements, which
makes them virtually impossible to predict. Deep in ourselves, we
sense that the more complex a system is, the greater the
likelihood that something might go wrong and that an accident or
an aberration might occur and propagate.

Complexity can roughly be measured by three factors: “1) the

amount of information content or the number of components in a
system; 2) the interconnectedness – defined as the dynamic of
reciprocal responsiveness – between these pieces of information
or components; and 3) the effect of non-linearity (non-linear
elements are often called ‘tipping points’). Non-linearity is a key
feature of complexity because it means that a change in just one
component of a system can lead to a surprising and
disproportionate effect elsewhere.”[12] It is for this reason that
pandemic models so often yield wide ranges of outcomes: a
difference of assumption regarding just one component of the
model can dramatically affect the end result. When one hears
about “black swans”, “known unknowns” or “butterfly effects”, non-
linearity is at work; it thus comes as no surprise that we often
associate world complexity with “surprises”, “turbulence” and
“uncertainty”. For example, in 2008, how many “experts”
anticipated that mortgage-backed securities originating in the
United States would cripple banks around the world and ultimately

26
bring the global financial system to the verge of collapse? And in
the early weeks of 2020, how many decision-makers foresaw the
extent to which a possible pandemic would wreak havoc on some
of the most sophisticated health systems in the world and would
inflict such major damage to the global economy?

A pandemic is a complex adaptive system comprising many

different components or pieces of information (as diverse as
biology or psychology), whose behaviour is influenced by such
variables as the role of companies, economic policies,
government intervention, healthcare politics or national
governance. For this reason, it can and should be viewed as a
“living network” that adapts to changing conditions – not
something set in stone, but a system of interactions that is both
complex and adaptive. It is complex because it represents a “cat’s
cradle” of interdependence and interconnections from which it
stems, and adaptive in the sense that its “behaviour” is driven by
interactions between nodes (the organizations, the people – us!)
that can become confused and “unruly” in times of stress (Will we
adjust to the norms of confinement? Will a majority of us – or not –
abide by the rules? etc.). The management (the containment, in
this particular case) of a complex adaptive system requires
continuous real-time but ever-changing collaboration between a
vast array of disciplines, and between different fields within these
disciplines. Just to provide a broad and oversimplified example,
the containment of the coronavirus pandemic will necessitate a
global surveillance network capable of identifying new outbreaks
as soon as they arise, laboratories in multiple locations around the
world that can rapidly analyse new viral strains and develop
effective treatments, large IT infrastructures so that communities
can prepare and react effectively, appropriate and coordinated
policy mechanisms to efficiently implement the decisions once
they are made, and so on. The important point is this: each
separate activity by itself is necessary to address the pandemic
but is insufficient if not considered in conjunction with the others. It
follows that this complex adaptive system is greater than the sum
of its parts. Its effectiveness depends on how well it works as a
whole, and it is only as strong as its weakest link.

27
 Many pundits have mischaracterized the COVID-19 pandemic
as a black-swan event simply because it exhibits all the
characteristics of a complex adaptive system. But in reality it is a
white-swan event, something explicitly presented as such by
Nassim Taleb in The Black Swan published in 2007: something
that would eventually take place with a great deal of certainty.[13]
Indeed! For years, international organizations like the World
Health Organization (WHO), institutions like the World Economic
Forum and the Coalition for Epidemic Preparedness Innovations
(CEPI – launched at the Annual Meeting 2017 in Davos), and
individuals like Bill Gates have been warning us about the next
pandemic risk, even specifying that it: 1) would emerge in a highly
populated place where economic development forces people and
wildlife together; 2) would spread quickly and silently by exploiting
networks of human travel and trade; and 3) would reach multiple
countries by thwarting containment. As we will see in the following
chapters, properly characterizing the pandemic and understanding
its characteristics are vital because they were what underpinned
the differences in terms of preparedness. Many Asian countries
reacted quickly because they were prepared logistically and
organizationally (due to SARS) and thus were able to lessen the
impact of the pandemic. By contrast, many Western countries
were unprepared and were ravaged by the pandemic – it is no
coincidence that they are the ones in which the false notion of a
black-swan event circulated the most. However, we can
confidently assert that the pandemic (a high probability, high
consequences white-swan event) will provoke many black-swan
events through second-, third-, fourth- and more-order effects. It is
hard, if not impossible, to foresee what might happen at the end of
the chain when multiple-order effects and their ensuing cascades
of consequences have occurred after unemployment spikes,
companies go bust and some countries are teetering on the verge
of collapse. None of these are unpredictable per se, but it is their
propensity to create perfect storms when they conflate with other
risks that will take us by surprise. To sum up, the pandemic is not
a black-swan event, but some of its consequences will be.

28
 The fundamental point here is this: complexity creates limits to
our knowledge and understanding of things; it might thus be that
today’s increasing complexity literally overwhelms the capabilities
of politicians in particular – and decision-makers in general – to
make well informed decisions. A theoretical physicist turned head
of state (President Armen Sarkissian of Armenia) made this point
when he coined the expression “quantum politics”, outlining how
the classical world of post-Newtonian physics – linear, predictable
and to some extent even deterministic – had given way to the
quantum world: highly interconnected and uncertain, incredibly
complex and also changing depending on the position of the
observer. This expression recalls quantum physics, which
explains how everything works and is “the best description we
have of the nature of the particles that make up matter and the
forces with which they interact.”[14] The COVID-19 pandemic has
laid bare this quantum world.

29
 1.2. Economic reset
1.2.1. The economics of COVID-19
Our contemporary economy differs radically from that of
previous centuries. Compared to the past, it is infinitely more
interconnected, intricate and complex. It is characterized by a
world population that has grown exponentially, by airplanes that
connect any point anywhere to another somewhere else in just a
few hours, resulting in more than a billion of us crossing a border
each year, by humans encroaching on nature and the habitats of
wildlife, by ubiquitous, sprawling megacities that are home to
millions of people living cheek by jowl (often without adequate
sanitation and medical care). Measured against the landscape of
just a few decades ago, let alone centuries ago, today’s economy
is simply unrecognizable. Notwithstanding, some of the economic
lessons to be gleaned from historical pandemics are still valid
today to help grasp what lies ahead. The global economic
catastrophe that we are now confronting is the deepest recorded
since 1945; in terms of its sheer speed, it is unparalleled in history.
Although it does not rival the calamities and the absolute
economic desperation that societies endured in the past, there are
some telling characteristics that are hauntingly similar. When in
1665, over the space of 18 months, the last bubonic plague had
eradicated a quarter of London’s population, Daniel Defoe wrote
in A Journal of the Plague Year[15] (published in 1722): “All trades
being stopped, employment ceased: the labour, and by that the
bread, of the poor were cut off; and at first indeed the cries of the
poor were most lamentable to hear … thousands of them having
stayed in London till nothing but desperation sent them away,
death overtook them on the road, and they served for no better
than the messengers of death.” Defoe’s book is full of anecdotes
that resonate with today’s situation, telling us how the rich were
escaping to the country, “taking death with them”, and observing
how the poor were much more exposed to the outbreak, or
describing how “quacks and mountebanks” sold false cures.[16]

30
 What the history of previous epidemics shows again and again
is how pandemics exploit trade routes and the clash that exists
between the interests of public health and those of economics
(something that constitutes an economic “aberration” as we will
see in just a few pages). As the historian Simon Schama
describes:

In the midst of calamity, economics was always at

loggerheads with the interests of public health. Even though,
until there was an understanding of germ-borne diseases, the
plague was mostly attributed to ‘foul air’ and noxious vapours
said to arise from stagnant or polluted marshes, there was
nonetheless a sense that the very commercial arteries that
had generated prosperity were now transformed into vectors
of poison. But when quarantines were proposed or imposed
(…), those who stood to lose most, merchants and in some
places artisans and workers, from the stoppage of markets,
fairs and trade, put up stiff resistance. Must the economy die
so that it could be resurrected in robust good health? Yes,
said the guardians of public health, who became part of urban
life in Europe from the 15th century onwards.[17]

History shows that epidemics have been the great resetter of

countries’ economy and social fabric. Why should it be different
with COVID-19? A seminal paper on the long-term economic
consequences of major pandemics throughout history shows that
significant macroeconomic after-effects can persist for as long as
40 years, substantially depressing real rates of return.[18] This is in
contrast to wars that have the opposite effect: they destroy capital
while pandemics do not – wars trigger higher real interest rates,
implying greater economic activity, while pandemics trigger lower
real rates, implying sluggish economic activity. In addition,
consumers tend to react to the shock by increasing their savings,
either because of new precautionary concerns, or simply to
replace the wealth lost during the epidemic. On the labour side,
there will be gains at the expense of capital since real wages tend
to rise after pandemics. As far back as the Black Death that
ravaged Europe from 1347 to 1351 (and that suppressed 40% of
Europe’s population in just a few years), workers discovered for

31
the first time in their life that the power to change things was in
their hands. Barely a year after the epidemic had subsided, textile
workers in Saint-Omer (a small city in northern France) demanded
and received successive wage rises. Two years later, many
workers’ guilds negotiated shorter hours and higher pay,
sometimes as much as a third more than their pre-plague level.
Similar but less extreme examples of other pandemics point to the
same conclusion: labour gains in power to the detriment of capital.
Nowadays, this phenomenon may be exacerbated by the ageing
of much of the population around the world (Africa and India are
notable exceptions), but such a scenario today risks being
radically altered by the rise of automation, an issue to which we
will return in section 1.6. Unlike previous pandemics, it is far from
certain that the COVID-19 crisis will tip the balance in favour of
labour and against capital. For political and social reasons, it
could, but technology changes the mix.

1.2.1.1. Uncertainty

The high degree of ongoing uncertainty surrounding COVID-19

makes it incredibly difficult to precisely assess the risk it poses. As
with all new risks that are agents of fear, this creates a lot of social
anxiety that impacts economic behaviour. An overwhelming
consensus has emerged within the global scientific community
that Jin Qi (one of China’s leading scientists) had it right when he
said in April 2020: “This is very likely to be an epidemic that co-
exists with humans for a long time, becomes seasonal and is
sustained within human bodies.”[19]

Ever since the pandemic started, we have been bombarded

daily with a relentless stream of data but, in June 2020, roughly
half a year after the beginning of the outbreak, our knowledge is
still very patchy and as a result we still don’t really know just how
dangerous COVID-19 is. Despite the deluge of scientific papers
published on the coronavirus, its infection fatality rate (i.e. the
number of COVID-19 cases, measured or not, that result in death)
remains a matter of debate (around 0.4%-0.5% and possibly up to
1%). The ratio of undetected to confirmed cases, the rate of
transmissions from asymptomatic individuals, the seasonality

32
effect, the length of the incubation period, the national infection
rates – progress in terms of understanding each of these is being
made, but they and many other elements remain “known
unknowns” to a large extent. For policy-makers and public
officials, this prevailing level of uncertainty makes it very difficult to
devise the right public-health strategy and the concomitant
economic strategy.

This should not come as a surprise. Anne Rimoin, a professor

of epidemiology at UCLA, confesses: “This is a novel virus, new to
humanity, and nobody knows what will happen.”[20] Such
circumstances require a good dose of humility because, in the
words of Peter Piot (one of the world’s leading virologists): “The
more we learn about the coronavirus, the more questions
arise.”[21] COVID-19 is a master of disguise that manifests itself
with protean symptoms that are confounding the medical
community. It is first and foremost a respiratory disease but, for a
small but sizeable number of patients, symptoms range from
cardiac inflammation and digestive problems to kidney infection,
blood clots and meningitis. In addition, many people who recover
are left with chronic kidney and heart problems, as well as lasting
neurological effects.

In the face of uncertainty, it makes sense to resort to scenarios

to get a better sense of what lies ahead. With the pandemic, it is
well understood that a wide range of potential outcomes is
possible, subject to unforeseen events and random occurrences,
but three plausible scenarios stand out. Each may help to
delineate the contours of what the next two years could be like.

These three plausible scenarios[22] are all based on the core

assumption that the pandemic could go on affecting us until 2022;
thus they can help us to reflect upon what lies ahead. In the first
scenario, the initial wave that began in March 2020 is followed by
a series of smaller waves that occur through mid-2020 and then
over a one- to two-year period, gradually diminishing in 2021, like
“peaks and valleys”. The occurrence and amplitude of these
peaks and valleys vary geographically and depend on the specific
mitigation measures that are implemented. In the second

33
scenario, the first wave is followed by a larger wave that takes
place in the third or fourth quarter of 2020, and one or several
smaller subsequent waves in 2021 (like during the 1918-1919
Spanish flu pandemic). This scenario requires the
reimplementation of mitigation measures around the fourth quarter
of 2020 to contain the spread of infection and to prevent
healthcare systems from being overwhelmed. In the third
scenario, not seen with past influenza pandemics but possible for
COVID-19, a “slow burn” of ongoing transmission and case
occurrence follow the first wave of 2020, but without a clear wave
pattern, just with smaller ups and downs. Like for the other
scenarios, this pattern varies geographically and is to a certain
extent determined by the nature of the earlier mitigation measures
put into place in each particular country or region. Cases of
infection and deaths continue to occur, but do not require the
reinstitution of mitigation measures.

A large number of scientists seem to agree with the framework

offered by these three scenarios. Whichever of the three the
pandemic follows, they all mean, as the authors explicitly state,
that policy-makers must be prepared to deal with “at least another
18 to 24 months of significant COVID-19 activity, with hotspots
popping up periodically in diverse geographic areas”. As we will
argue next, a full-fledged economic recovery cannot take place
until the virus is defeated or behind us.

1.2.1.2. The economic fallacy of sacrificing a few

lives to save growth

Throughout the pandemic, there has been a perennial debate

about “saving lives versus saving the economy” – lives versus
livelihoods. This is a false trade-off. From an economic standpoint,
the myth of having to choose between public health and a hit to
GDP growth can easily be debunked. Leaving aside the (not
insignificant) ethical issue of whether sacrificing some lives to
save the economy is a social Darwinian proposition (or not),
deciding not to save lives will not improve economic welfare. The
reasons are twofold:

34
 1. On the supply side, if prematurely loosening the various
restrictions and the rules of social distancing result in an
acceleration of infection (which almost all scientists believe
it would), more employees and workers would become
infected and more businesses would just stop functioning.
After the onset of the pandemic in 2020, the validity of this
argument was proven on several occasions. They ranged
from factories that had to stop operating because too many
workers had fallen ill (primarily the case for work
environments that forced physical proximity between
workers, like in meat-processing facilities) to naval ships
stranded because too many crew members had been
infected, thus preventing the vessel from operating
normally. An additional factor that negatively affects the
supply of labour is that, around the world, there were
repeated instances of workers refusing to return to work for
fear of becoming infected. In many large companies,
employees who felt vulnerable to the disease generated a
wave of activism, including work stoppages.
2. On the demand side, the argument boils down to the most
basic, and yet fundamental, determinant of economic
activity: sentiments. Because consumer sentiments are
what really drive economies, a return to any kind of
“normal” will only happen when and not before confidence
returns. Individuals’ perceptions of safety drive consumer
and business decisions, which means that sustained
economic improvement is contingent upon two things: the
confidence that the pandemic is behind us – without which
people will not consume and invest – and the proof that the
virus is defeated globally – without which people will not be
able to feel safe first locally and subsequently further afield.

The logical conclusion of these two points is this: governments

must do whatever it takes and spend whatever it costs in the
interests of our health and our collective wealth for the economy
to recover sustainably. As both an economist and public-health
specialist put it: “Only saving lives will save livelihoods”,[23] making
it clear that only policy measures that place people’s health at

35
their core will enable an economic recovery, adding: “If
governments fail to save lives, people afraid of the virus will not
resume shopping, traveling, or dining out. This will hinder
economic recovery, lockdown or no lockdown.”

Only future data and subsequent analysis will provide

incontrovertible proof that the trade-off between health and the
economy does not exist. That said, some US data collected in the
early phases of reopening in some states showed a drop in
spending and working even before the lockdown.[24] Once people
began to worry about the pandemic, they effectively started to
“shut down” the economy, even before the government had
officially asked them to do so. A similar phenomenon took place
after some American states decided to (partially) reopen:
consumption remained subdued. This proves the point that
economic life cannot be activated by fiat, but it also illustrates the
predicament that most decision-makers experienced when having
to decide whether to reopen or not. The economic and societal
damage of a lockdown is glaringly obvious to everybody, while
success in terms of containing the outbreak and preventing
deaths – a prerequisite for a successful opening – is more or less
invisible. There is no public celebration when a coronavirus case
or death doesn’t happen, leading to the public-health policy
paradox that “when you do it right, nothing happens”. This is why
delaying the lockdown or opening too early was always such a
strong policy temptation. However, several studies have since
shown how such a temptation carried considerable risk. Two, in
particular, coming to similar conclusions with different
methodologies, modelled what could have happened without
lockdown. According to one conducted by Imperial College
London, wide-scale rigorous lockdowns imposed in March 2020
averted 3.1 million deaths in 11 European countries (including the
UK, Spain, Italy, France and Germany).[25] The other, led by the
University of California, Berkeley, concluded that 530 million total
infections, corresponding to 62 million confirmed cases, were
averted in six countries (China, South Korea, Italy, Iran, France
and the US) by the confinement measures that each had put into
place.[26] The simple conclusion: in countries afflicted with

36
registered COVID-19 cases that, at the peak, were roughly
doubling every two days, governments had no reasonable
alternative but to impose rigorous lockdowns. Pretending
otherwise is to ignore the power of exponential growth and the
considerable damage it can inflict through a pandemic. Because
of the extreme velocity of the COVID-19 progression, the timing
and forcefulness of the intervention were of the essence.

1.2.2. Growth and employment

Before March 2020, never had the world economy come to

such an abrupt and brutal stop; never before had anyone alive
experienced an economic collapse so dramatic and drastic both in
its nature and pace.

The shock that the pandemic has inflicted on the global

economy has been more severe and has occurred much faster
than anything else in recorded economic history. Even in the
Great Depression in the early 1930s and the Global Financial
Crisis in 2008, it took several years for GDP to contract by 10% or
more and for unemployment to soar above 10%. With the
pandemic, disaster-like macroeconomic outcomes – in particular
exploding unemployment levels and plunging GDP growth –
happened in March 2020 over the course of just three weeks.
COVID-19 inflicted a crisis of both supply and demand that led to
the deepest dive on record for the global economy for over 100
years. As the economist Kenneth Rogoff warned: “Everything
depends on how long it lasts, but if this goes on for a long time,
it’s certainly going to be the mother of all financial crises.”[27]

The length and acuteness of the downturn, and its subsequent

hit to growth and employment, depend on three things: 1) the
duration and severity of the outbreak; 2) each country’s success
at containing the pandemic and mitigating its effects; and 3) the
cohesiveness of each society in dealing with the post-confinement
measures and the various opening strategies. At the time of
writing (end of June 2020), all three aspects remain unknown.
Renewed waves of outbreaks (big and small) are occurring,
countries’ success at containing the outbreak can either last or

37
suddenly be reversed by new waves, and societies’ cohesion can
be challenged by renewed economic and social pain.

1.2.2.1. Economic growth

At different moments between February and May 2020, in a

bid to contain the pandemic, governments worldwide made the
deliberate decision to shut down much of their respective
economies. This unprecedented course of events has brought
with it a fundamental shift in the way the world economy operates,
marked by an abrupt and unsolicited return to a form of relative
autarky, with every nation trying to move towards certain forms of
self-sufficiency, and a reduction in national and global output. The
impact of these decisions seemed all the more dramatic because
they concerned first and foremost service industries, a sector
traditionally more immune than other industries (like construction
or manufacturing) to the cyclical swings of economic growth.
Consequently, the service sector that represents by far the largest
component of economic activity in any developed economy (about
70% of GDP and more than 80% of employment in the US) was
hit the hardest by the pandemic. It also suffered from another
distinctive characteristics: contrary to manufacturing or agriculture,
lost revenues in services are gone forever. They cannot be
deferred because service companies don’t hold inventories or
stock raw materials.

Several months into the pandemic, it looks like even a

semblance of a return to “business as usual” for most service
companies is inconceivable as long as COVID-19 remains a
threat to our health. This in turn suggests that a full return to
“normal” cannot be envisaged before a vaccine is available. When
might that be? According to most experts, it is unlikely to be
before the first quarter of 2021 at the earliest. In mid-June 2020,
already more than 135 trials were under way, proceeding at a
remarkable pace considering that in the past it could take up to 10
years to develop a vaccine (five in the case of Ebola), so the
reason is not science, but production. Manufacturing billions of
doses constitutes the real challenge that will require a massive
expansion and diversion of existing capacity. The next hurdle is

38
the political challenge of vaccinating enough people worldwide
(we are collectively as strong as the weakest link) with a high
enough compliance rate despite the rise of anti-vaxxers. During
the intervening months, the economy will not operate at full
capacity: a country-dependent phenomenon dubbed the 80%
economy. Companies in sectors as varied as travel, hospitality,
retail or sports and events will face the following triple whammy: 1)
fewer customers (who will respond to uncertainty by becoming
more risk-averse); 2) those who consume will spend less on
average (because of precautionary savings); and 3) transaction
costs will be higher (serving one customer will cost more because
of physical-distancing and sanitation measures).

Taking into account the criticality of services for GDP growth

(the richer the country, the greater the importance of services for
growth), this new reality of a 80% economy begs the question of
whether successive possible shutdowns of business activity in the
service sector will have lasting effects on the broader economy
through bankruptcies and losses of employment, which in turn
begs the question of whether these possible lasting effects could
be followed by a collapse in demand as people lose their income
and their confidence in the future. Such a scenario will almost
inevitably lead to a collapse in investment among business and a
surge in precautionary saving among consumers, with fallout in
the entire global economy through capital flight, the rapid and
uncertain movement of large amounts of money out of a country,
which tends to exacerbate economic crises.

According to the OECD, the immediate yearly impact of the

economy having been “switched-off” could be a reduction in GDP
in the G7 countries of between 20% and 30%.[28] But again, this
estimate depends on the outbreak’s duration and severity in each
country: the longer lockdowns last, the greater the structural
damage they inflict by leaving permanent scars in the economy
through job losses, bankruptcies and capital spending
cancellations. As a rule of thumb, every month that large parts of
an economy remain closed, annual growth might fall by a further 2
percentage points. But as we would expect, the relationship
between the duration of restrictive measures and the

39
corresponding impact on GDP is not linear. The Dutch central
planning bureau found that every additional month of containment
results in a greater, non-proportional deterioration of economic
activity. According to the model, a full month of economic
“hibernation” would result in a loss of 1.2% in Dutch growth in
2020, while three months would cause a 5% loss.[29]

For the regions and countries that have already exited

lockdowns, it is too early to tell how GDP growth will evolve. At the
end of June 2020, some V-shaped data (like the eurozone
Purchasing Manufacturing Indices - PMI) and a bit of anecdotal
evidence generated a stronger-than-expected rebound narrative,
but we should not get carried away for two reasons:

1. The marked improvement in PMI in the eurozone and the

US does not mean that these economies have turned the
corner. It simply indicates that business activity has
improved compared to previous months, which is natural
since a significant pickup in activity should follow the period
of inactivity caused by rigorous lockdowns.

2. In terms of future growth, one of the most meaningful

indicators to watch is the savings rate. In April (admittedly
during the lockdown), the US personal savings rate
climbed to 33% while, in the eurozone, the household
savings rate (calculated differently than the US personal
savings rate) rose to 19%. They will both significantly drop
as the economies reopen, but probably not enough to
prevent these rates from remaining at historically elevated
levels.

In its “World Economic Outlook Update” published in June

2020, the International Monetary Fund (IMF) warned about “a
crisis like no other” and an “uncertain recovery”.[30] Compared to
April, it revised its projections for global growth downwards,
anticipating global GDP at -4.9% in 2020, almost two percentage
points below its previous estimate.

1.2.2.2. Employment

40
 The pandemic is confronting the economy with a labour market
crisis of gigantic proportions. The devastation is such and so
sudden as to leave even the most seasoned policy-makers almost
speechless (and worse still, nigh on “policy-less”). In testimony
before the US Senate Committee on Banking on 19 May, the
Federal Reserve System’s chairman – Jerome “Jay” Powell –
confessed: “This precipitous drop in economic activity has caused
a level of pain that is hard to capture in words, as lives are
upended amid great uncertainty about the future.”[31] In just the
two months of March and April 2020, more than 36 million
Americans lost their jobs, reversing 10 years of job gains. In the
US, like elsewhere, temporary dismissals caused by the initial
lockdowns may become permanent, inflicting intense social pain
(that only robust social safety nets can alleviate) and profound
structural damage on countries’ economies.

The level of global unemployment will ultimately depend on the

depth of the collapse in economic activity, but hovering around or
exceeding two-digit levels across the world are a given. In the US,
a harbinger of difficulties to come elsewhere, it is estimated that
the official rate of unemployment could reach a peak of 25% in
2020 – a level equivalent to that of the Great Depression – that
would be even higher if hidden unemployment were to be taken
into account (like workers who are not counted in official statistics
because they are so discourage they abandoned the workforce
and ceased looking for a job, or part-time workers who are looking
for a full-time job). The situation of employees in the service
industry will be particularly dire. That of workers not officially
employed will be even worse.

As for GDP growth, the magnitude and severity of the

unemployment situation are country-dependent. Each nation will
be affected differently, depending on its economic structure and
the nature of its social contract, but the US and Europe offer two
radically different models of how the issue is being addressed by
policy-makers and of what lies ahead.

As of June 2020, the rise in the US unemployment rate (it

stood at a mere 3.5% prior to the pandemic) was much higher

41
than anywhere else. In April 2020, the US unemployment rate had
risen by 11.2 percentage points compared to February, while,
during the same period in Germany, it had increased by less than
one percentage point. Two reasons account for this striking
difference: 1) the US labour market has a “hire-and-fire” culture
that doesn’t exist and is often prohibited by law in Europe; and 2)
right from the onset of the crisis, Europe put into place fiscal
measures destined to support employment.

In the US, government support so far (June 2020) has been

larger than in Europe, but of a fundamentally different nature. It
provides income support for those who lost their job, with the
occasional result that those displaced are better off than in their
full-time jobs before the crisis. In Europe, by contrast, the
governments decided to directly support those businesses that
kept workers formally “employed” in their original jobs, even when
they were no longer working full time or not working at all.

In Germany, the short-time working scheme (called Kurzarbeit

– a model emulated elsewhere) replaced up to 60% of earnings
for 10 million employees who would have otherwise lost their jobs,
while in France a similar scheme also compensated a similar
number of workers by providing them with up to 80% of their
previous salary. Many other European countries came up with
similar solutions, without which lay-offs and redundancies would
have been much more consequential. These labour market
supporting measures are accompanied by other governmental
emergency measures, like those giving insolvent companies the
possibility to buy time. In many European countries, if firms can
prove that their liquidity problems were caused by the pandemic,
they won’t have to file for bankruptcy until later (possibly as late as
March 2021 in some countries). This makes eminent sense if the
recovery takes hold, but it could be that this policy is only
postponing the problem. Globally, a full recovery of the labour
market could take decades and, in Europe like elsewhere, the fear
of mass bankruptcies followed by mass unemployment looms
large.

42
 In the coming months, the unemployment situation is bound to
deteriorate further for the simple reason that it cannot improve
significantly until a sustainable economic recovery begins. This
won’t happen before a vaccine or a treatment is found, meaning
that many people will be doubly worried – about losing their job
and about not finding another one if they do lose it (which will lead
to a sharp increase in savings rates). In a slightly more distant
time (from a few months to a few years), two categories of people
will face a particularly bleak employment situation: young people
entering for the first time a job market devastated by the pandemic
and workers susceptible to be replaced by robots. These are
fundamental issues at the intersection of economics, society and
technology with defining implications for the future of work.
Automation, in particular, will be a source of acute concern. The
economic case that technology always exerts a positive economic
effect in the long term is well known. The substance of the
argument goes like this: automation is disruptive, but it improves
productivity and increases wealth, which in turn lead to greater
demands for goods and services and thus to new types of jobs to
satisfy those demands. This is correct, but what happens between
now and the long term?

In all likelihood, the recession induced by the pandemic will

trigger a sharp increase in labour-substitution, meaning that
physical labour will be replaced by robots and “intelligent”
machines, which will in turn provoke lasting and structural
changes in the labour market. In the technology chapter, we
analyse in more detail the impact that the pandemic is having on
automation, but there is already ample evidence that it is
accelerating the pace of transformation. The call centre sector
epitomizes this situation.

In the pre-pandemic era, new artificial intelligence (AI)-based

technologies were being gradually introduced to automate some
of the tasks performed by human employees. The COVID-19
crisis, and its accompanying measures of social distancing, has
suddenly accelerated this process of innovation and technological
change. Chatbots, which often use the same voice recognition
technology behind Amazon’s Alexa, and other software that can

43
replace tasks normally performed by human employees, are being
rapidly introduced. These innovations provoked by necessity (i.e.
sanitary measures) will soon result in hundreds of thousands, and
potentially millions, of job losses.

As consumers may prefer automated services to face-to-face

interactions for some time to come, what is currently happening
with call centres will inevitably occur in other sectors as well.
“Automation anxiety” is therefore set for a revival,[32] which the
economic recession will exacerbate. The process of automation is
never linear; it tends to happen in waves and often in harsh
economic times, when the decline in companies’ revenues makes
labour costs relatively more expensive. This is when employers
replace less-skilled workers with automation to increase labour
productivity.[33] Low-income workers in routine jobs (in
manufacturing and services like food and transportation) are those
most likely to be affected. The labour market will become
increasingly polarized between highly paid work and lots of jobs
that have disappeared or aren’t well paid and are not very
interesting. In emerging and developing countries (particularly
those with a “youth bulge”), technology runs the risk of
transforming the “demographic dividend” into a “demographic
nightmare” because automation will make it much harder to get on
the escalator of economic growth.

It is easy to give way to excessive pessimism because we

human beings find it much easier to visualize what is disappearing
than what is coming next. We know and understand that levels of
unemployment are bound to rise globally in the foreseeable future,
but over the coming years and decades we may be surprised. We
could witness an unprecedented wave of innovation and creativity
driven by new methods and tools of production. There might also
be a global explosion of hundreds of thousands of new micro
industries that will hopefully employ hundreds of millions of
people. Of course, we cannot know what the future holds, except
that much will depend on the trajectory of future economic growth.

1.2.2.3. What future growth could look like

44
 In the post-pandemic era, according to current projections, the
new economic “normal” may be characterized by much lower
growth than in past decades. As the recovery begins, quarter-to-
quarter GDP growth may look impressive (because it will start
from a very low basis), but it may take years before the overall
size of most nations’ economy returns to their pre-pandemic level.
This is also due to the fact that the severity of the economic shock
inflicted by the coronavirus will conflate with a long-term trend:
declining populations in many countries and ageing
(demographics is “destiny” and a crucial driver of GDP growth).
Under such conditions, when lower economic growth seems
almost certain, many people may wonder whether “obsessing”
about growth is even useful, concluding that it doesn’t make
sense to chase a target of ever-higher GDP growth.

The deep disruption caused by COVID-19 globally has offered

societies an enforced pause to reflect on what is truly of value.
With the economic emergency responses to the pandemic now in
place, the opportunity can be seized to make the kind of
institutional changes and policy choices that will put economies on
a new path towards a fairer, greener future. The history of radical
rethinking in the years following World War II, which included the
establishment of the Bretton Woods institutions, the United
Nations, the EU and the expansion of welfare states, shows the
magnitude of the shifts possible.

This raises two questions: 1) What should the new compass

for tracking progress be? and 2) What will the new drivers of an
economy that is inclusive and sustainable be?

In relation to the first question, changing course will require a

shift in the mindset of world leaders to place greater focus and
priority on the well-being of all citizens and the planet. Historically,
national statistics were amassed principally to furnish
governments with a better understanding of the available
resources for taxation and waging war. As democracies grew
stronger, in the 1930s the remit of national statistics was extended
to capture the economic welfare of the population,[34] yet distilled
into the form of GDP. Economic welfare became equivalent to

45
current production and consumption with no consideration given
to the future availability of resources. Policy-makers’ over-reliance
on GDP as an indicator of economic prosperity has led to the
current state of natural and social resource depletion.

What other elements should an improved dashboard for

progress include? First, GDP itself needs to be updated to reflect
the value created in the digital economy, the value created
through unpaid work as well as the value potentially destroyed
through certain types of economic activity. The omission of value
created through work carried out in the household has been a
long-standing issue and research efforts to create a measurement
framework will need new momentum. In addition, as the digital
economy is expanding, the gap between measured activity and
actual economic activity has been growing wider. Furthermore,
certain types of financial products, which through their inclusion in
GDP are captured as value creating, are merely shifting value
from one place to another or sometimes even have the effect of
destroying it.

Second, it is not only the overall size of the economy that

matters but also the distribution of gains and the progressive
evolution of access to opportunity. With income inequality more
marked than ever in many countries and technological
developments driving further polarization, total GDP or averages
such as GDP per capita are becoming less and less useful as true
indicators of individuals’ quality of life. Wealth inequality is a
significant dimension of today’s dynamic of inequality and should
be more systematically tracked.

Third, resilience will need to be better measured and

monitored to gauge the true health of an economy, including the
determinants of productivity, such as institutions, infrastructure,
human capital and innovation ecosystems, which are critical for
the overall strength of a system. Furthermore, the capital reserves
upon which a country can draw in times of crisis, including
financial, physical, natural and social capital will need to be
tracked systematically. Albeit that natural and social capital in
particular are difficult to measure, they are critical to the social

46
cohesion and environmental sustainability of a country and should
not be underestimated. Recent academic efforts are beginning to
tackle the measurement challenge by bringing public- and private-
sector data sources together.

Real examples of a shift in policy-makers’ emphasis are

appearing. It is no coincidence that in 2019, a country placed in
the top 10 ranking of the World Happiness Report unveiled a
“well-being budget”. The Prime Minster of New Zealand’s decision
to earmark money for social issues, such as mental health, child
poverty and family violence, made well-being an explicit goal of
public policy. In so doing, Prime Minister Ardern turned into policy
what everybody has known for years, that an increase in GDP
does not guarantee an improvement in living standards and social
welfare.

Additionally, several institutions and organizations, ranging

from cities to the European Commission, are reflecting on options
that would sustain future economic activity at a level that matches
the satisfaction of our material needs with the respect of our
planetary boundaries. The municipality of Amsterdam is the first in
the world to have formally committed to this framework as a
starting point for public policy decisions in the post-pandemic
world. The framework resembles a “doughnut” in which the inner
ring represents the minimum we need to lead a good life (as
enunciated by the UN’s Sustainable Development Goals) and the
outer ring the ecological ceiling defined by earth-system scientists
(which highlights the boundaries not to be crossed by human
activity to avoid environmentally negative impact on climate, soil,
oceans, the ozone layer, freshwater and biodiversity). In between
the two rings is the sweet spot (or “dough”) where our human
needs and those of the planet are being met.[35]

We do not know yet whether the “tyranny of GDP growth” will

come to an end, but different signals suggest that the pandemic
may accelerate changes in many of our well-entrenched social
norms. If we collectively recognize that, beyond a certain level of
wealth defined by GDP per capita, happiness depends more on
intangible factors such as accessible healthcare and a robust

47
social fabric than on material consumption, then values as
different as the respect for the environment, responsible eating,
empathy or generosity may gain ground and progressively come
to characterize the new social norms.

Beyond the immediate ongoing crisis, in recent years the role

of economic growth in advancing living standards has varied
depending on context. In high-income economies, productivity
growth has been steadily declining since the 1970s, and it has
been argued that there are currently no clear policy avenues for
reviving long-term growth.[36] In addition, the growth that did
materialize disproportionately accrued to individuals at the top end
of the income distribution. A more effective approach may be for
policy-makers to target welfare-enhancing interventions more
directly.[37] In low- and middle-income countries, the benefits of
economic growth have lifted millions out of poverty in large
emerging markets. The policy options to boost growth
performance are better known (e.g. addressing basic distortions),
yet new approaches will have to be found as the manufacturing-
led development model is fast losing its power with the advent of
the Fourth Industrial Revolution.[38]

This leads to the second key question around future growth. If

the direction and quality of economic growth matter as much as –
or perhaps even more than – its speed, what are likely to be the
new drivers of this quality in the post-pandemic economy? Several
areas have the potential to offer an environment capable of
boosting a more inclusive and sustainable dynamism.

The green economy spans a range of possibilities from

greener energy to ecotourism to the circular economy. For
example, shifting from the “take-make-dispose” approach to
production and consumption to a model that is “restorative and
regenerative by design”[39] can preserve resources and minimize
waste by using a product again when it reaches the end of its
useful life, thus creating further value that can in turn generate
economic benefits by contributing to innovation, job creation and,
ultimately, growth. Companies and strategies that favour reparable
products with longer lifespans (from phones and cars to fashion)

48
that even offer free repairs (like Patagonia outdoor wear) and
platforms for trading used products are all expanding fast.[40]

The social economy spans other high-growth and job-creating

areas in the fields of caregiving and personal services, education
and health. Investment in childcare, care for the elderly and other
elements of the care economy would create 13 million jobs in the
US alone and 21 million jobs in seven economies, and would lead
to a 2% rise in GDP growth in the countries studied.[41] Education
is also an area of massive job creation, particularly when
considering primary and secondary education, technical and
vocational education and training, university and adult training
together. Health, as the pandemic has demonstrated, requires
much greater investment both in terms of infrastructure and
innovation as well as human capital. These three areas create a
multiplier effect both through their own employment potential and
the long-term benefits they unleash across societies in terms of
equality, social mobility and inclusive growth.

Innovation in production, distribution and business models can

generate efficiency gains and new or better products that create
higher value added, leading to new jobs and economic prosperity.
Governments thus have tools at their disposal to make the shift
towards more inclusive and sustainable prosperity, combining
public-sector direction-setting and incentives with commercial
innovation capacity through a fundamental rethinking of markets
and their role in our economy and society. This requires investing
differently and deliberately in the frontier markets outlined above,
areas where market forces could have a transformative effect on
economies and societies but where some of the necessary
preconditions to function are still lacking (for instance, technical
capacities to sustainably produce a product or asset at scale are
still insufficient, standards are not well defined or legal frameworks
are not yet well developed). Shaping the rules and mechanisms of
these new markets can have a transformational impact on the
economy. If governments want the shift to a new and better kind
of growth, they have a window of opportunity to act now to create
incentives for innovation and creativity in the areas outlined
above.

49
 Some have called for “degrowth”, a movement that embraces
zero or even negative GDP growth that is gaining some traction
(at least in the richest countries). As the critique of economic
growth moves to centre stage, consumerism’s financial and
cultural dominance in public and private life will be overhauled.[42]
This is made obvious in consumer-driven degrowth activism in
some niche segments – like advocating for less meat or fewer
flights. By triggering a period of enforced degrowth, the pandemic
has spurred renewed interest in this movement that wants to
reverse the pace of economic growth, leading more than 1,100
experts from around the world to release a manifesto in May 2020
putting forward a degrowth strategy to tackle the economic and
human crisis caused by COVID-19.[43] Their open letter calls for
the adoption of a democratically “planned yet adaptive,
sustainable, and equitable downscaling of the economy, leading to
a future where we can live better with less”.

However, beware of the pursuit of degrowth proving as

directionless as the pursuit of growth! The most forward-looking
countries and their governments will instead prioritize a more
inclusive and sustainable approach to managing and measuring
their economies, one that also drives job growth, improvements in
living standards and safeguards the planet. The technology to do
more with less already exists.[44] There is no fundamental trade-off
between economic, social and environmental factors if we adopt
this more holistic and longer-term approach to defining progress
and incentivizing investment in green and social frontier markets.

1.2.3. Fiscal and monetary policies

The fiscal and monetary policy response to the pandemic has
been decisive, massive and swift.

In systemically important countries, central banks decided

almost immediately after the beginning of the outbreak to cut
interest rates while launching large quantitative-easing
programmes, committing to print the money necessary to keep the
costs of government borrowing low. The US Fed undertook to buy
Treasury bonds and agency mortgage-backed securities, while

50
the European Central Bank promised to buy any instrument that
governments would issue (a move that succeeded in reducing the
spread in borrowing costs between weaker and stronger eurozone
members).

Concomitantly, most governments launched ambitious and

unprecedented fiscal policy responses. Urgent and expansive
measures were taken very early on during the crisis, with three
specific aims: 1) fight the pandemic with as much spending as
required to bring it under control as rapidly as possible (through
the production of tests, hospital capabilities, research in drugs and
vaccines, etc.); 2) provide emergency funds to households and
firms on the verge of bankruptcy and disaster; and 3) support
aggregate demand so that the economy can operate as far as
possible close to potential.[45]

These measures will lead to very large fiscal deficits, with a

likely increase in debt-to-GDP ratios of 30% of GDP in the rich
economies. At the global level, the aggregate stimulus from
government spending will likely exceed 20% of global GDP in
2020 with significant variation across countries, ranging from 33%
in Germany to more than 12% in the US.

This expansion of fiscal capabilities has dramatically different

implications depending on whether the country concerned is
advanced or emerging. High-income countries have more fiscal
space because a higher level of debt should prove sustainable
and entail a viable level of welfare cost for future generations, for
two reasons: 1) the commitment from central banks to purchase
whatever amount of bonds it takes to maintain low interest rates;
and 2) the confidence that interest rates are likely to remain low in
the foreseeable future because uncertainty will continue
hampering private investment and will justify high levels of
precautionary savings. In contrast, the situation couldn’t be starker
in emerging and developing economies. Most of them don’t have
the fiscal space required to react to the pandemic shock; they are
already suffering from major capital outflows and a fall in
commodity prices, which means their exchange rate will be
hammered if they decide to launch expansionary fiscal policies. In

51
these circumstances, help in the form of grants and debt relief,
and possibly an outright moratorium,[46] will not only be needed
but will be critical.

These are unprecedented programmes for an unprecedented

situation, something so new that the economist Carmen Reinhart
has called it a “whatever-it-takes moment for large-scale, outside-
the-box fiscal and monetary policies”.[47] Measures that would
have seemed inconceivable prior to the pandemic may well
become standard around the world as governments try to prevent
the economic recession from turning into a catastrophic
depression. Increasingly, there will be calls for government to act
as a “payer of last resort”[48] to prevent or stem the spate of mass
layoffs and business destruction triggered by the pandemic.

All these changes are altering the rules of the economic and
monetary policy “game”. The artificial barrier that makes monetary
and fiscal authorities independent from each other has now been
dismantled, with central bankers becoming (to a relative degree)
subservient to elected politicians. It is now conceivable that, in the
future, government will try to wield its influence over central banks
to finance major public projects, such as an infrastructure or green
investment fund. Similarly, the precept that government can
intervene to preserve workers’ jobs or incomes and protect
companies from bankruptcy may endure after these policies come
to an end. It is likely that public and political pressure to maintain
such schemes will persist, even when the situation improves. One
of the greatest concerns is that this implicit cooperation between
fiscal and monetary policies leads to uncontrollable inflation. It
originates in the idea that policy-makers will deploy massive fiscal
stimulus that will be fully monetized, i.e. not financed through
standard government debt. This is where Modern Monetary
Theory (MMT) and helicopter money come in: with interest rates
hovering around zero, central banks cannot stimulate the
economy by classic monetary tools; i.e. a reduction in interest
rates – unless they decided to go for deeply negative interest
rates, a problematic move resisted by most central banks.[49] The
stimulus must therefore come from an increase in fiscal deficits

52
(meaning that public expenditure will go up at a time when tax
revenues decline). Put in the simplest possible (and, in this case,
simplistic) terms, MMT runs like this: governments will issue some
debt that the central bank will buy. If it never sells it back, it
equates to monetary finance: the deficit is monetized (by the
central bank purchasing the bonds that the government issues)
and the government can use the money as it sees fit. It can, for
example, metaphorically drop it from helicopters to those people
in need. The idea is appealing and realizable, but it contains a
major issue of social expectations and political control: once
citizens realize that money can be found on a “magic money tree”,
elected politicians will be under fierce and relentless public
pressure to create more and more, which is when the issue of
inflation kicks in.

1.2.3.1. Deflation or inflation?

Two technical elements embedded in the issue of monetary

finance are associated with the risk of inflation. First, the decision
to engage in perpetual quantitative easing (i.e. in monetary
finance) doesn’t have to be taken when the central bank buys the
debt issued by the government; it can be left to the contingent
future to hide or circumvent the idea that money “grows on trees”.
Second, the inflationary impact of helicopter money is not related
to whether the deficit is funded or unfunded, but is directly
proportional to the amount of money involved. There are no
nominal limits to how much money a central bank can create, but
there are sensible limits to how much they would want to create to
achieve reflation without risking too much inflation. The resultant
increase in nominal GDP will be split between a real output effect
and an increase in price level effect – this balance and its
inflationary nature will depend on how tight the supply constraints
are, so ultimately on the amount of money created. Central
bankers may decide that there is nothing to worry about with
inflation at 2% or 3%, and that 4% to 5% is also fine, but they will
have to define an upper limit at which inflation becomes disruptive
and a real concern. The challenge will be to determine at what

53
level inflation becomes corrosive and a source of obsessive
concern for consumers.

For the moment, some fear deflation while others worry about
inflation. What lies behind these divergent anxieties for the future?
The deflation worriers point to a collapsing labour market and
stumbling commodity prices, and wonder how inflation could
possibly pick up anytime soon in these conditions. Inflation
worriers observe the substantial increases in central bank balance
sheets and fiscal deficits and ask how these will not, one day, lead
to inflation, and possibly high inflation, and even hyperinflation.
They point to the example of Germany after World War I, which
inflated away its domestic war debt in the hyperinflation of 1923,
or the UK, which eroded with a bit of inflation the massive amount
of debt (250%) it inherited from World War II. These worriers
acknowledge that, in the short term, deflation may be the bigger
risk, but argue that inflation is ultimately unavoidable given the
massive and inevitable amounts of stimulus.

At this current juncture, it is hard to imagine how inflation could

pick up anytime soon. The reshoring of production activities could
generate occasional pockets of inflation, but they are likely to
remain limited. The combination of potent, long-term, structural
trends like ageing and technology (both are deflationary in nature)
and an exceptionally high unemployment rate that will constrain
wage increases for years puts strong downward pressure on
inflation. In the post-pandemic era, strong consumer demand is
unlikely. The pain inflicted by widespread unemployment, lower
incomes for large segments of the population and uncertainty
about the future are all likely to lead to an increase in
precautionary savings. When social distancing eventually eases,
pent-up demand could provoke a bit of inflation, but it is likely to
be temporary and will therefore not affect inflation expectations.
Olivier Blanchard, the former chief economist of the IMF, thinks
that only the combination of the following three elements could
create inflation: 1) a very large increase in the debt to GDP ratio,
larger than the current forecast of 20-30%; 2) a very large
increase in the neutral rate (i.e. the safe real rate required to keep
the economy at potential); and 3) fiscal dominance of monetary

54
policy.[50] The probability of each individually is already low, so the
probability of the three occurring in conjunction with each other is
extremely low (but not nil). Bond investors think alike. This could
change, of course, but at the moment the low rate differential
between nominal and inflation-indexed bonds paints a picture of
ongoing very low inflation at best.

In the coming years, high-income countries may well face a

situation similar to that of Japan over the past few decades:
structurally weak demand, very low inflation and ultra-low interest
rates. The possible “Japanification” of the (rich) world is often
depicted as a hopeless combination of no growth, no inflation and
insufferable debt levels. This is misleading. When the data is
adjusted for demographics, Japan does better than most. Its GDP
per capita is high and growing and, since 2007, its real GDP per
member of the working age population has risen faster than in any
other G7 country. Naturally, there are many idiosyncratic reasons
for this (a very high level of social capital and trust, but also labour
productivity growth that surpasses the average, and a successful
absorption of elderly workers into the labour force), but it shows
that a shrinking population doesn’t have to lead to economic
oblivion. Japan’s high living standards and well-being indicators
offer a salutary lesson that there is hope in the face of economic
hardship.

1.2.3.2. The fate of the US dollar

For decades, the US has enjoyed the “exorbitant privilege” of
retaining the global currency reserve, a status that has long been
“a perk of imperial might and an economic elixir”.[51] To a
considerable extent, American power and prosperity have been
built and reinforced by the global trust in the dollar and the
willingness of customers abroad to hold it, most often in the form
of US government bonds. The fact that so many countries and
foreign institutions want to hold dollars as a store of value and as
an instrument of exchange (for trade) has anchored its status as
the global reserve currency. This has enabled the US to borrow
cheaply abroad and benefit from low interest rates at home, which
in turn has allowed Americans to consume beyond their means. It

55
has also made large recent US government deficits possible,
permitted the US to run substantial trade deficits, reduced the
exchange-rate risk and made the US financial markets more
liquid. At the core of the US dollar status as a reserve currency
lies a critical issue of trust: non-Americans who hold dollars trust
that the United States will protect both its own interests (by
managing sensibly its economy) and the rest of the world as far as
the US dollar is concerned (by managing sensibly its currency, like
providing dollar liquidity to the global financial system efficiently
and rapidly).

For quite some time, some analysts and policy-makers have

been considering a possible and progressive end to the
dominance of the dollar. They now think that the pandemic might
be the catalyst that proves them right. Their argument is twofold
and relates to both sides of the trust issue.

On the one hand (managing the economy sensibly), doubters

of US dollar dominance point to the inevitable and sharp
deterioration of the US fiscal position. In their mind, unsustainable
levels of debt will eventually erode confidence in the US dollar.
Just prior to the pandemic, US defence spending, plus interest on
the federal debt, plus annual entitlement payments – Medicare,
Medicaid and social security – represented 112% of federal tax
receipts (versus 95% in 2017). This unsustainable path will
worsen in the post-pandemic, post-bailout era. This argument
suggests that something major will therefore have to change,
either through a much reduced geopolitical role or higher taxation,
or both, otherwise the rising deficit will reach a threshold beyond
which non-US investors are unwilling to fund it. After all, the status
of reserve currency cannot last longer than foreign confidence in
the ability of the holder to honour its payments.

On the other hand (managing the US dollar sensibly for the

rest of the world), doubters of the dollar’s dominance point to the
incompatibility of its status as a global reserve currency with rising
economic nationalism at home. Even though the Fed and the US
Treasury manage the dollar and its influential network worldwide
with efficacy, sceptics emphasize that the willingness of the US

56
administration to weaponize the US dollar for geopolitical
purposes (like punishing countries and companies that trade with
Iran or North Korea) will inevitably incentivize dollar holders to
look for alternatives.

Are there any viable alternatives? The US remains a

formidable global financial hegemon (the role of the dollar in
international financial transactions is far greater, albeit less visible,
than in international trade), but it is also true than many countries
would like to challenge the dollar’s global dominance. In the short
term, there are no alternatives. The Chinese renminbi (RMB)
could be an option, but not until strict capital controls are
eliminated and the RMB turns into a market-determined currency,
which is unlikely to happen in the foreseeable future. The same
goes for the euro; it could be an option, but not until doubts about
a possible implosion of the eurozone dissipate for good, which
again is an unlikely prospect in the next few years. As for a global
virtual currency, there is none in sight yet, but there are attempts
to launch national digital currencies that may eventually dethrone
the US dollar supremacy. The most significant one took place in
China at the end of April 2020 with a test of a national digital
currency in four large cities.[52] The country is years ahead of the
rest of the world in developing a digital currency combined with
powerful electronic payment platforms; this experiment clearly
shows that there are monetary systems that are trying to become
independent from US intermediaries while moving towards greater
digitization.

Ultimately, the possible end of the US dollar’s primacy will

depend on what happens in the US. As Henry Paulson, a former
US Treasury Secretary, says: “US dollar prominence begins at
home (…). The United States must maintain an economy that
inspires global credibility and confidence. Failure to do so will,
over time, put the US dollar’s position in peril”.[53] To a large
extent, US global credibility also depends on geopolitics and the
appeal of its social model. The “exorbitant privilege” is intricately
intertwined with global power, the perception of the US as a
reliable partner and its role in the working of multilateral
institutions. “If that role were seen as less sure and that security

57
guarantee as less iron clad, because the US was disengaging
from global geopolitics in favour of more stand-alone, inward-
looking policies, the security premium enjoyed by the US dollar
could diminish,” warns Barry Eichengreen and European Central
Bank representatives.[54]

Questions and doubts about the future status of the dollar as a

global currency reserve are an apt reminder that economics does
not exist in isolation. This reality is particularly harsh in over-
indebted emerging and poor countries now unable to repay their
debt often denominated in dollars. For them, this crisis will take on
huge proportions and years to sort out, with considerable
economic damage translating fast into social and humanitarian
pain. In all these countries, the COVID crisis may well end the
gradual process of convergence that was supposed to bring highly
developed and emerging or developing countries into closer
alignment. This will lead to an increase in societal and geopolitical
risks – a stark reminder of the extent to which economic risks
intersect with societal issues and geopolitics.

58
 1.3. Societal reset
Historically, pandemics have tested societies to their core; the
2020 COVID-19 crisis will be no exception. Comparable to the
economy, as we just saw, and geopolitics, as we will see in the
next chapter, the societal upheaval unleashed by COVID-19 will
last for years, and possibly generations. The most immediate and
visible impact is that many governments will be taken to task, with
a lot of anger directed at those policy-makers and political figures
that have appeared inadequate or ill-prepared in terms of their
response to dealing with COVID-19. As Henry Kissinger
observed: “Nations cohere and flourish on the belief that their
institutions can foresee calamity, arrest its impact and restore
stability. When the COVID-19 pandemic is over, many countries’
institutions will be perceived as having failed”.[55] This will be
particularly true for some rich countries endowed with
sophisticated health systems and strong assets in research,
science and innovation where citizens will ask why their
authorities did so poorly when compared to others. In these, the
very essence of their social fabric and socio-economic system
may emerge and be denounced as the “real” culprit, guilty of
failing to guarantee economic and social welfare for the majority of
citizens. In poorer countries, the pandemic will exact a dramatic
toll in terms of social costs. It will exacerbate the societal issues
that already beset them – in particular poverty, inequality and
corruption. This could, in some cases, lead to extreme outcomes
as severe as social and societal disintegration (“social” refers to
interactions between individuals or groups of individuals while
“societal” is the adjective that relates to society as a whole).

Are there any systemic lessons to be learned relating to what

has and hasn’t worked in terms of dealing with the pandemic? To
what extent does the response of different nations reveal some
inner strengths and weaknesses about particular societies or
systems of governance? Some, such as Singapore, South Korea
and Denmark (among others), seemed to fare rather well and
certainly better than most. Others, such as Italy, Spain, the US or

59
the UK, seemed to underperform on different counts, whether in
terms of preparation, crisis management, public communication,
the number of confirmed cases and deaths, and various other
metrics. Neighbouring countries that share many structural
similarities, like France and Germany, had a rough equivalent
number of confirmed cases but a strikingly different number of
deaths from COVID-19. Apart from differences in healthcare
infrastructure, what accounts for these apparent anomalies?
Currently (June 2020), we are still faced with multiple “unknowns”
regarding the reasons why COVID-19 struck and spread with
particular virulence in some countries and regions, and not in
others. However, and on aggregate, the countries that fare better
share the following broad and common attributes:

They were “prepared” for what was coming (logistically

and organizationally).
They made rapid and decisive decisions.
They have a cost-effective and inclusive healthcare
system.
They are high-trust societies in which citizens have
confidence in both the leadership and the information
they provide.
They seem under duress to exhibit a real sense of
solidarity, favouring the common good over individual
aspirations and needs.

With the partial exception of the first and second attributes that
are more technical (albeit technicality has cultural elements
embedded in it), all the others can be categorized as “favourable”
societal characteristics, proving that core values of inclusivity,
solidarity and trust are strong determining elements and important
contributors to success in containing an epidemic.

It is of course much too early to depict with any degree of

accuracy the form that the societal reset will take in different
countries, but some of its broad global contours can already be
delineated. First and foremost, the post-pandemic era will usher in
a period of massive wealth redistribution, from the rich to the poor

60
and from capital to labour. Second, COVID-19 is likely to sound
the death knell of neoliberalism, a corpus of ideas and policies
that can loosely be defined as favouring competition over
solidarity, creative destruction over government intervention and
economic growth over social welfare. For a number of years, the
neoliberal doctrine has been on the wane, with many
commentators, business leaders and policy-makers increasingly
denouncing its “market fetishism”, but COVID-19 brought the coup
de grâce. It is no coincidence that the two countries that over the
past few years embraced the policies of neoliberalism with most
fervour – the US and the UK – are among those that suffered the
most casualties during the pandemic. These two concomitant
forces – massive redistribution on the one hand and abandoning
neoliberal policies on the other – will exert a defining impact on
our societies’ organization, ranging from how inequalities could
spur social unrest to the increasing role of governments and the
redefinition of social contracts.

1.3.1. Inequalities

One seriously misleading cliché about the coronavirus resides

in the metaphor of COVID-19 as a “great leveller”.[56] The reality is
quite the opposite. COVID-19 has exacerbated pre-existing
conditions of inequality wherever and whenever it strikes. As
such, it is not a “leveller”, neither medically nor economically, or
socially or psychologically. The pandemic is in reality a “great
unequalizer”[57] that has compounded disparities in income,
wealth and opportunity. It has laid bare for all to see not only the
vast numbers of people in the world who are economically and
socially vulnerable, but also the depth and degree of their fragility
– a phenomenon even more prevalent in countries with low or
non-existent social safety nets or weak family and social bonds.
This situation, of course, predates the pandemic but, as we
observed for other global issues, the virus acted as an amplifier,
forcing us to recognize and acknowledge the severity of the
problems relating to inequality, formerly brushed aside by too
many for too long.

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 The first effect of the pandemic has been to magnify the macro
challenge of social inequalities by placing a spotlight on the
shocking disparities in the degree of risk to which different social
classes are exposed. In much of the world, an approximate, albeit
revealing, narrative emerged during the lockdowns. It described a
dichotomy: the upper and middle classes were able to telework
and self-school their children from their homes (primary or, when
possible, secondary, more remote residences considered safer),
while members of the working class (for those with a job) were not
at home and were not overseeing their children’s education, but
were working on the front line to help save lives (directly or not)
and the economy – cleaning hospitals, manning the checkouts,
transporting essentials and ensuring our security. In the case of a
highly developed service economy like the US, roughly a third of
total jobs can be performed from home, or remotely, with
considerable discrepancies that are highly correlated with
earnings by sectors. More than 75% of American finance and
insurance workers can do their job remotely, while just 3% of
much lesser paid workers in the food industry can do so.[58] In the
midst of the pandemic (mid-April), most new cases of infection
and the death count made it clearer than ever that COVID-19 was
far from being the “great leveller” or “equalizer” that so many
people were referring to at the beginning of the pandemic.
Instead, what rapidly emerged was that there was nothing fair or
even-handed about how the virus went about its deadly work.

In the US, COVID-19 has taken a disproportionate toll on

African Americans, low-income people and vulnerable
populations, such as the homeless. In the state of Michigan where
less than 15% of the population is black, black residents
represented around 40% of deaths from COVID-19 complications.
The fact that COVID-19 affected black communities so
disproportionately is a mere reflection of existing inequalities. In
America as in many other countries, African Americans are
poorer, more likely to be unemployed or underemployed and
victims of substandard housing and living conditions. As a result,
they suffer more from pre-existing health conditions like obesity,
heart disease or diabetes that make COVID-19 particularly deadly.

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 The second effect of the pandemic and the state of lockdown
that ensued was to expose the profound disconnect between the
essential nature and innate value of a job done and the economic
recompense it commands. Put another way: we value least
economically the individuals society needs the most. The sobering
truth is that the heroes of the immediate COVID-19 crisis, those
who (at personal risk) took care of the sick and kept the economy
ticking, are among the worst paid professionals – the nurses, the
cleaners, the delivery drivers, the workers in food factories, care
homes and warehouses, among others. It is often their
contribution to economic and societal welfare that is the least
recognized. The phenomenon is global but particularly stark in the
Anglo-Saxon countries where poverty is coupled with
precariousness. The citizens in this group are not only the worst
paid, but also those most at risk of losing their jobs. In the UK, for
example, a large majority (almost 60%) of care providers working
in the community operate on “zero-hour contracts”, which means
they have no guaranteed regular hours and, as a result, no
certainty of a regular income. Likewise, workers in food factories
are often on temporary employment contracts with fewer rights
than normal and with no security. As for the delivery drivers, most
of the time categorized as self-employed, they are paid per “drop”
and receive no sick or holiday pay – a reality poignantly portrayed
in Ken Loach’s most recent work “Sorry We Missed You”, a movie
that illustrates the dramatic extent to which these workers are
always just one mishap away from physical, emotional or
economic ruin, with cascading effects worsened by stress and
anxiety.

In the post-pandemic era, will social inequalities increase or

decrease? Much anecdotal evidence suggests, at least in the
short term, that the inequalities are likely to increase. As outlined
earlier, people with no or low incomes are suffering
disproportionately from the pandemic: they are more susceptible
to chronic health conditions and immune deficiency, and are
therefore more likely to catch COVID-19 and suffer from severe
infections. This will continue in the months following the outbreak.
As with previous pandemic episodes like the plague, not everyone

63
will benefit equally from medical treatments and vaccines.
Particularly in the US, as Angus Deaton, the Nobel laureate who
co-authored Deaths of Despair and the Future of Capitalism with
Anne Case, observed: “drug-makers and hospitals will be more
powerful and wealthier than ever”,[59] to the disadvantage of the
poorest segments of the population. In addition, ultra-
accommodative monetary policies pursued around the world will
increase wealth inequalities by fuelling asset prices, most notably
in financial markets and property.

However, moving beyond the immediate future, the trend could

reverse and provoke the opposite – less inequality. How might it
happen? It could be that enough people are sufficiently outraged
by the glaring injustice of the preferential treatment enjoyed
exclusively by the rich that it provokes a broad societal backlash.
In the US, a majority or a very vocal minority may demand
national or community control over healthcare, while, in Europe,
underfunding of the health system will no longer be politically
acceptable. It may also be that the pandemic will eventually
compel us to rethink occupations we truly value and will force us
to redesign how we collectively remunerate them. In the future,
will society accept that a star hedge fund manager who
specializes in short-selling (whose contribution to economic and
social welfare is doubtful, at best) can receive an income in the
millions per year while a nurse (whose contribution to social
welfare is incontrovertible) earns an infinitesimal fraction of that
amount? In such an optimistic scenario, as we increasingly
recognize that many workers in low-paid and insecure jobs play
an essential role in our collective well-being, policies would adjust
to improve both their working conditions and remuneration. Better
wages would follow, even if they are accompanied by reduced
profits for companies or higher prices; there will be strong social
and political pressure to replace insecure contracts and
exploitative loopholes with permanent positions and better
training. Inequalities could therefore decline but, if history is any
guide, this optimistic scenario is unlikely to prevail without
massive social turmoil first.

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 1.3.2. Social unrest

One of the most profound dangers facing the post-pandemic

era is social unrest. In some extreme cases, it could lead to
societal disintegration and political collapse. Countless studies,
articles and warnings have highlighting this particular risk, based
on the obvious observation that when people have no jobs, no
income and no prospects for a better life, they often resort to
violence. The following quote captures the essence of the
problem. It applies to the US, but its conclusions are valid for most
countries around the world:

Those who are left hopeless, jobless, and without assets

could easily turn against those who are better off. Already,
some 30% of Americans have zero or negative wealth. If
more people emerge from the current crisis with neither
money, nor jobs, nor access to health care, and if these
people become desperate and angry, such scenes as the
recent escape of prisoners in Italy or the looting that followed
Hurricane Katrina in New Orleans in 2005 might become
commonplace. If governments have to resort to using
paramilitary or military forces to quell, for example, riots or
attacks on property, societies could begin to disintegrate.[60]

Well before the pandemic engulfed the world, social unrest

had been on the rise globally, so the risk is not new but has been
amplified by COVID-19. There are different ways to define what
constitutes social unrest but, over the past two years, more than
100 significant anti-government protests have taken place around
the world,[61] in rich and poor countries alike, from the yellow
vests’ riots in France to demonstrations against strongmen in
countries such as Bolivia, Iran and Sudan. Most (of the latter)
were suppressed by brutal crackdowns, and many went into
hibernation (like the global economy) when governments forced
their populations into lockdowns to contain the pandemic. But
after the interdiction to gather in groups and take to the streets is
lifted, it is hard to imagine that old grievances and temporarily
suppressed social disquiet will not erupt again, possibly with
renewed strength. In the post-pandemic era, the numbers of

65
unemployed, worried, miserable, resentful, sick and hungry will
have swelled dramatically. Personal tragedies will accrue,
fomenting anger, resentment and exasperation in different social
groups, including the unemployed, the poor, the migrants, the
prisoners, the homeless, all those left out… How could all this
pressure not end in an eruption? Social phenomena often exhibit
the same characteristics as pandemics and, as observed in
previous pages, tipping points apply equally to both. When
poverty, a sense of being disenfranchised and powerlessness
reach a certain tipping point, disruptive social action often
becomes the option of last resort.

In the early days of the crisis, prominent individuals echoed

such concerns and alerted the world to the growing risk of social
unrest. Jacob Wallenberg, the Swedish industrialist, is one of
them. In March 2020, he wrote: “If the crisis goes on for long,
unemployment could hit 20-30 per cent while economies could
contract by 20-30 per cent ... There will be no recovery. There will
be social unrest. There will be violence. There will be socio-
economic consequences: dramatic unemployment. Citizens will
suffer dramatically: some will die, others will feel awful.”[62] We are
now beyond the threshold of what Wallenberg considered to be
“worrying”, with unemployment exceeding 20% to 30% in many
countries around the world and with most economies having
contracted in the second quarter of 2020 beyond a level
previously considered of concern. How is this going to play out
and where is social unrest most likely to occur and to what
degree?

At the time of writing this book, COVID-19 has already

unleashed a global wave of social unrest. It started in the US with
the Black Lives Matter protests following the killing of George
Floyd at the end of May 2020, but it rapidly spread around the
world. COVID-19 was a determining element: George Floyd’s
death was the spark that lit the fire of social unrest, but the
underlying conditions created by the pandemic, in particular the
racial inequalities that it laid bare and the rising level of
unemployment, were the fuel that amplified the protests and kept
them going. How? Over the past six years, nearly 100 African

66
Americans have died in police custody, but it took the killing of
George Floyd to trigger a national uprising. Therefore, it is not by
chance that this outburst of anger occurred during the pandemic
that has disproportionately affected the US African-American
community (as pointed out earlier). At the end of June 2020, the
mortality rate inflicted by COVID-19 on black Americans was 2.4
times higher than for white Americans. Simultaneously,
employment among black Americans was being decimated by the
corona crisis. This should not come as a surprise: the economic
and social divide between African Americans and white
Americans is so profound that, according to almost every metric,
black workers are disadvantaged compared to white workers.[63]
In May 2020, unemployment among African Americans stood at
16.8% (versus a national level of 13.3%), a very high level that
feeds into a phenomenon described by sociologists as
“biographical availability”:[64] the absence of full-time employment
tends to increase the participation level in social movements. We
do not know how the Black Lives Matter movement will evolve
and, if it persists, what form it will take. However, indications show
it is turning into something broader than race-specific issues. The
protests against systemic racism have led to more general calls
about economic justice and inclusiveness. This is a logical segue
to the issues of inequality addressed in the previous sub-chapter,
which also illustrates how risks interact with each other and
amplify one another.

It is important to emphasize that no situation is set in stone

and that there are no “mechanical” triggers for social unrest – it
remains an expression of a collective human dynamic and frame
of mind that is dependent upon a multitude of factors. True to the
notions of interconnectedness and complexity, outbursts of social
unrest are quintessential non-linear events that can be triggered
by a broad variety of political, economic, societal, technological
and environmental factors. They range from things as different as
economic shocks, hardship caused by extreme weather events,
racial tensions, food scarcity and even sentiments of unfairness.
All these, and more, almost always interact with each other and
create cascading effects. Therefore, specific situations of turmoil

67
cannot be forecasted, but can, however, be anticipated. Which
countries are most susceptible? At first glance, poorer countries
with no safety nets and rich countries with weak social safety nets
are most at risk because they have no or fewer policy measures
like unemployment benefits to cushion the shock of income loss.
For this reason, strongly individualistic societies like the US could
be more at risk than European or Asian countries that either have
a greater sense of solidarity (like in southern Europe) or a better
social system for assisting the underprivileged (like in northern
Europe). Sometimes, the two come together. Countries like Italy,
for example, possess both a strong social safety net and a strong
sense of solidarity (particularly in intergenerational terms). In a
similar vein, the Confucianism prevalent in so many Asian
countries places a sense of duty and generational solidarity before
individual rights; it also puts high value on measures and rules
that benefit the community as a whole. All this does not mean, of
course, that European or Asian countries are immune from social
unrest. Far from it! As the yellow vests movement demonstrated in
the case of France, violent and sustained forms of social unrest
can erupt even in countries endowed with a robust social safety
net but where social expectations are left wanting.

Social unrest negatively affects both economic and social

welfare, but it is essential to emphasize that we are not powerless
in the face of potential social unrest, for the simple reason that
governments and to a lesser extent companies and other
organizations can prepare to mitigate the risk by enacting the right
policies. The greatest underlying cause of social unrest is
inequality. The policy tools to fight unacceptable levels of
inequality do exist and they often lie in the hands of governments.

1.3.3. The return of “big” government

In the words of John Micklethwait and Adrian Wooldridge: “The

COVID-19 pandemic has made government important again. Not
just powerful again (look at those once-mighty companies begging
for help), but also vital again: It matters enormously whether your
country has a good health service, competent bureaucrats and

68
sound finances. Good government is the difference between living
and dying”.[65]

One of the great lessons of the past five centuries in Europe

and America is this: acute crises contribute to boosting the power
of the state. It’s always been the case and there is no reason why
it should be different with the COVID-19 pandemic. Historians
point to the fact that the rising fiscal resources of capitalist
countries from the 18th century onwards were always closely
associated with the need to fight wars, particularly those that took
place in distant countries and that required maritime capacities.
Such was the case with the Seven Years’ War of 1756-1763,
described as the first truly global war that involved all the great
powers of Europe at the time. Since then, the responses to major
crises have always further consolidated the power of the state,
starting with taxation: “an inherent and essential attribute of
sovereignty belonging as a matter of right to every independent
government”.[66] A few examples illustrating the point strongly
suggest that this time, as in the past, taxation will increase. As in
the past, the social rationale and political justification underlying
the increases will be based upon the narrative of “countries at
war” (only this time against an invisible enemy).

France’s top rate of income tax was zero in 1914; a year after
the end of World War I, it was 50%. Canada introduced income
tax in 1917 as a “temporary” measure to finance the war, and then
expanded it dramatically during World War II with a flat 20%
surtax imposed on all income tax payable by persons other than
corporations and the introduction of high marginal tax rates (69%).
Rates came down after the war but remained substantially higher
than they had been before. Similarly, during World War II, income
tax in America turned from a “class tax” to a “mass tax”, with the
number of payers rising from 7 million in 1940 to 42 million in
1945. The most progressive tax years in US history were 1944
and 1945, with a 94% rate applied to any income above $200,000
(the equivalent in 2009 of $2.4 million). Such top rates, often
denounced as confiscatory by those who had to pay them, would
not drop below 80% for another 20 years. At the end of World War
II, many other countries adopted similar and often extreme tax

69
measures. In the UK during the war, the top income tax rate rose
to an extraordinarily stunning 99.25%![67]

At times, the sovereign power of the state to tax translated into

tangible societal gains in different domains, such as the creation
of a welfare system. However, these massive transitions to
something entirely “new” were always defined in terms of a
response to a violent external shock or the threat of one to come.
World War II, for example, led to the introduction of cradle-to-
grave state welfare systems in most of Europe. So did the Cold
War: governments in capitalist countries were so worried by an
internal communist rebellion that they put into place a state-led
model to forestall it. This system, in which state bureaucrats
managed large chunks of the economy, ranging from
transportation to energy, stayed in place well into the 1970s.

Today the situation is fundamentally different; in the

intervening decades (in the Western world) the role of the state
has shrunk considerably. This is a situation that is set to change
because it is hard to imagine how an exogenous shock of such
magnitude as the one inflicted by COVID-19 could be addressed
with purely market-based solutions. Already and almost overnight,
the coronavirus succeeded in altering perceptions about the
complex and delicate balance between the private and public
realms in favour of the latter. It has revealed that social insurance
is efficient and that offloading an ever-greater deal of
responsibilities (like health and education) to individuals and the
markets may not be in the best interest of society. In a surprising
and sudden turnaround, the idea, which would have been an
anathema just a few years ago, that governments can further the
public good while run-away economies without supervision can
wreak havoc on social welfare may now become the norm. On the
dial that measures the continuum between the government and
the markets, the needle has decisively moved towards the left.

For the first time since Margaret Thatcher captured the

zeitgeist of an era when declaring that “there is no such thing as
society”, governments have the upper hand. Everything that
comes in the post-pandemic era will lead us to rethink

70
governments’ role. Rather than simply fixing market failures when
they arise, they should, as suggested by the economist Mariana
Mazzucato: “move towards actively shaping and creating markets
that deliver sustainable and inclusive growth. They should also
ensure that partnerships with business involving government
funds are driven by public interest, not profit”.[68]

How will this expanded role of governments manifest itself? A

significant element of new “bigger” government is already in place
with the vastly increased and quasi-immediate government control
of the economy. As detailed in Chapter 1, public economic
intervention has happened very quickly and on an unprecedented
scale. In April 2020, just as the pandemic began to engulf the
world, governments across the globe had announced stimulus
programmes amounting to several trillion dollars, as if eight or
nine Marshall Plans had been put into place almost
simultaneously to support the basic needs of the poorest people,
preserve jobs whenever possible and help businesses to survive.
Central banks decided to cut rates and committed to provide all
the liquidity that was needed, while governments started to
expand social-welfare benefits, make direct cash transfers, cover
wages, and suspend loan and mortgage payments, among other
responses. Only governments had the power, capability and reach
to make such decisions, without which economic calamity and a
complete social meltdown would have prevailed.

Looking to the future, governments will most likely, but with

different degrees of intensity, decide that it’s in the best interest of
society to rewrite some of the rules of the game and permanently
increase their role. As happened in the 1930s in the US when
massive unemployment and economic insecurity were
progressively addressed by a larger role for government, today a
similar course of action is likely to characterize the foreseeable
future. We review in other sub-chapters the form this will take (like
in the next one on the new social contract), but let’s briefly identify
some of the most salient points.

Heath and unemployment insurance will either need to be

created from scratch or be strengthened where it already exists.

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Social safety nets will need to be strengthened as well – in the
Anglo-Saxon societies that are the most “market-oriented”;
extended unemployment benefits, sick leave and many other
social measures will have to be implemented to cushion the effect
of the shock and will thereafter become the norm. In many
countries, renewed trade union engagement will facilitate this
process. Shareholder value will become a secondary
consideration, bringing to the fore the primacy of stakeholder
capitalism. The financialization of the world that gained so much
traction in past years will probably go into reverse. Governments,
particularly in the countries most affected by it – the US and the
UK – will be forced to reconsider many features of this obsession
with finance. They could decide on a broad range of measures,
from making share buy-backs illegal, to preventing banks from
incentivizing consumer debt. The public scrutiny of private
companies will increase, particularly (but not only) for all the
businesses that benefited from public money. Some countries will
nationalize, while others will prefer to take equity stakes or to
provide loans. In general, there will be more regulation covering
many different issues, such as workers’ safety or domestic
sourcing for certain goods. Businesses will also be held to
account on social and environmental fractures for which they will
be expected to be part of the solution. As an add-on, governments
will strongly encourage public-private partnerships so that private
companies get more involved in the mitigation of global risks.
Irrespective of the details, the role of the state will increase and, in
doing so, will materially affect the way business is conducted. To
varying degrees, business executives in all industries and all
countries will have to adapt to greater government intervention.
Research and development for global public goods such as health
and climate change solutions will be actively pursued. Taxation
will increase, particularly for the most privileged, because
governments will need to strengthen their resilience capabilities
and wish to invest more heavily in them. As advocated by Joseph
Stiglitz:

The first priority is to (…) provide more funding for the

public sector, especially for those parts of it that are designed

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 to protect against the multitude of risks that a complex society
faces, and to fund the advances in science and higher-quality
education, on which our future prosperity depends. These are
areas in which productive jobs – researchers, teachers, and
those who help run the institutions that support them – can be
created quickly. Even as we emerge from this crisis, we
should be aware that some other crisis surely lurks around
the corner. We can’t predict what the next one will look like –
other than it will look different from the last.[69]

Nowhere will this intrusion of governments, whose form may

be benign or malign depending on the country and the culture in
which it is taking place, manifest itself with greater vigour than in
the redefinition of the social contract.

1.3.4. The social contract

It is almost inevitable that the pandemic will prompt many
societies around the world to reconsider and redefine the terms of
their social contract. We have already alluded to the fact that
COVID-19 has acted as an amplifier of pre-existing conditions,
bringing to the fore long-standing issues that resulted from deep
structural frailties that had never been properly addressed. This
dissonance and an emergent questioning of the status quo is
finding expression in a loudening call to revise the social contracts
by which we are all more or less bound.

Broadly defined, the “social contract” refers to the (often

implicit) set of arrangements and expectations that govern the
relations between individuals and institutions. Put simply, it is the
“glue” that binds societies together; without it, the social fabric
unravels. For decades, it has slowly and almost imperceptibly
evolved in a direction that forced individuals to assume greater
responsibility for their individual lives and economic outcomes,
leading large parts of the population (most evidently in the low-
income brackets) to conclude that the social contract was at best
being eroded, if not in some cases breaking down entirely. The
apparent illusion of low or no inflation is a practical and illustrative
example of how this erosion plays out in real-life terms. For many

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years the world over, the rate of inflation has fallen for many
goods and services, with the exception of the three things that
matter the most to a great majority of us: housing, healthcare and
education. For all three, prices have risen sharply, absorbing an
ever-larger proportion of disposable incomes and, in some
countries, even forcing families to go into debt to receive medical
treatment. Similarly, in the pre-pandemic era, work opportunities
had expanded in many countries, but the increase in employment
rates often coincided with income stagnation and work
polarization. This situation ended up eroding the economic and
social welfare of a large majority of people whose revenue was no
longer sufficient to guarantee a modestly decent lifestyle
(including among the middle class in the rich world). Today, the
fundamental reasons underpinning the loss of faith in our social
contracts coalesce around issues of inequality, the ineffectiveness
of most redistribution policies, a sense of exclusion and
marginalization, and a general sentiment of unfairness. This is
why many citizens have begun to denounce a breakdown of the
social contract, expressing more and more forcefully a general
loss of trust in institutions and leaders.[70] In some countries, this
widespread exasperation has taken the form of peaceful or violent
demonstrations; in others, it has led to electoral victories for
populist and extremist parties. Whichever form it takes, in almost
all cases, the establishment’s response has been left wanting – ill-
prepared for the rebellion and out of ideas and policy levers to
address the problem. Although they are complex, the policy
solutions do exist and broadly consist in adapting the welfare state
to today’s world by empowering people and by responding to the
demands for a fairer social contract. Over the past few years,
several international organizations and think tanks have adjusted
to this new reality and outlined proposals on how to make it
happen.[71] The pandemic will mark a turning point by accelerating
this transition. It has crystallized the issue and made a return to
the pre-pandemic status quo impossible.

What form might the new social contract take? There are no
off-the-shelf, ready to go models because each potential solution
depends upon the history and culture of the country to which it

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applies. Inevitably and understandably, a “good” social contract for
China will be different from one for the US, which in turn will not
resemble that of Sweden or Nigeria. However, they could all share
some common features and principles, the absolute necessity of
which has been made ever-more obvious by the social and
economic consequences of the pandemic crisis. Two in particular
stand out:

1. A broader, if not universal, provision of social assistance,

social insurance, healthcare and basic quality services
2. A move towards enhanced protection for workers and for
those currently most vulnerable (like those employed in
and fuelling the gig economy in which full-time employees
are replaced by independent contractors and freelancers).

It is often said that a nation’s response to a disaster speaks

volumes about its strengths and dysfunctions, and first and
foremost about the “quality” and robustness of its social contract.
As we progressively move away from the most acute moments of
the crisis and begin a thorough examination of what went right
and what didn’t, we should expect a lot of soul-searching that will
ultimately lead to a redefinition of the terms of our social contract.
In countries that were perceived as providing a sub-par response
to the pandemic, many citizens will start asking critical questions
such as: Why is it that in the midst of the pandemic, my country
often lacked masks, respirators and ventilators? Why wasn’t it
properly prepared? Does it have to do with the obsession with
short-termism? Why are we so rich in GDP terms and so
ineffective at delivering good healthcare to all those who need it?
How can it be that a person who has spent more than 10 years’
training to become a medical doctor and whose end-of-year
“results” are measured in lives receives compensation that is
meagre compared to that of a trader or a hedge fund manager?

The COVID-19 crisis has laid bare the inadequate state of

most national health systems, both in terms of costs of lives of
patients and of nurses and doctors. In rich countries where tax-
funded health services have suffered for a long time from a lack of
resources (the UK National Health Service being the most

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extreme example) due to political concerns about rising taxes,
calls for more spending (and therefore higher taxes) will get
louder, with a growing realization that “efficient management”
cannot compensate for underinvestment.

COVID-19 has also revealed yawning gaps in most welfare

systems. At first glance, the nations that reacted in the most
inclusive manner are those with an elaborate welfare system,
most notably the Scandinavian countries. To provide an example,
as early as March 2020, Norway guaranteed 80% of self-
employed workers’ average incomes (based on the tax returns of
the previous three years), while Denmark guaranteed 75%. At the
other end of the spectrum, the most market-oriented economies
played catch-up and showed indecisiveness in how to protect the
most vulnerable segments of the labour market, particularly the
gig workers, the independent contractors and on-call and
temporary workers whose employment consists of income-earning
activities that are outside the traditional employer–employee
relationship.

An important topic that may have a decisive impact on the new

social contract is sick leave. Economists tend to agree that the
absence of paid sick leave makes it harder to contain the spread
of an epidemic, the simple reason being that if employees are
denied access to it, they may be tempted or forced to go to work
while they are infected and thus spread the disease. This is
particularly true for low-income and service workers (the two often
go hand in hand). When the swine flu (H1N1) pandemic occurred
in 2009-2010, the American Public Health Association estimated
that around 7 million people were infected and an additional 1,500
died because contagious employees could not afford not to go to
work. Among the rich economies, only the US has a system that
leaves it at the discretion of employers to decide whether to
provide paid sick leave. In 2019, almost a quarter of all US
workers (about 40 million, largely concentrated in low-wage
positions) did not benefit from it. In March 2020, when the
pandemic started to rage in the US, President Trump signed into
law new legislation that temporarily required employers to provide
two weeks of sick leave plus family leave at partial pay, but only

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for workers with childcare problems. It remains to be seen how
this will feature in the redefinition of the social contract in the US.
By contrast, almost all European countries require employers to
provide paid sick leave for varying periods during which workers
are also protected from dismissal. New laws that were
promulgated at the beginning of the pandemic also meant that the
state would compensate part of or the whole salary of people
confined at home, including those working in the gig economy and
freelancers. In Japan, all workers are entitled to up to 20 days of
paid leave every year while, in China, they are entitled to sick pay
that ranges from 60% to 100% of daily wages during any period of
illness with the length of sick leave contractually agreed or defined
between workers and employers. As we move forward, we should
expect such issues to intrude more and more in the redefinition of
our social contract.

Another aspect that is critical for social contracts in Western

democracies pertains to liberties and freedom. There is currently
growing concern that the fight against this pandemic and future
ones will lead to the creation of permanent surveillance societies.
This issue is explored in more detail in the chapter on the
technological reset, but suffice to say that a state emergency can
only be justified when a threat is public, universal and existential.
In addition, political theorists often emphasize that extraordinary
powers require authorization from the people and must be limited
in time and proportion. One can agree with the former part of the
assertion (public, universal and existential threat), but what about
the latter? Expect it to be a prominent component of future
discussions about what our social contract should look like.

Collectively redefining the terms of our social contracts is an

epochal task that binds the substantial challenges of the present
moment to the hopes of the future. As Henry Kissinger reminded
us: “The historic challenge for leaders is to manage the crisis
while building the future. Failure could set the world on fire”.[72]
While reflecting on the contours we think a future social contract
might follow, we ignore at our peril the opinion of the younger
generation who will be asked to live with it. Their adherence is
decisive and thus to better understand what they want, we must

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not forget to listen. This is made all the more significant by the fact
that the younger generation is likely to be more radical than the
older one in refashioning our social contract. The pandemic has
upended their lives, and a whole generation across the globe will
be defined by economic and often social insecurity, with millions
due to enter the work force in the midst of a profound recession.
They will bear these scars forever. Also, starting off in a deficit –
many students have educational debts – is likely to have long-
term effects. Already the millennials (at least in the Western world)
are worse off than their parents in terms of earnings, assets and
wealth. They are less likely to own a home or have children than
their parents were. Now, another generation (Gen Z) is entering a
system that it sees as failing and that will be beset by long-
standing problems revealed and exacerbated by the pandemic. As
a college junior, quoted in The New York Times, put it: “Young
people have a deep desire for radical change because we see the
broken path ahead.”[73]

How will this generation respond? By proposing radical

solutions (and often radical action) in an attempt to prevent the
next disaster from striking – whether it’s climate change or social
inequalities. It will most likely demand a radical alternative to the
present course because its members are frustrated and dogged
by a nagging belief that the current system is fractured beyond
repair.

Youth activism is increasing worldwide,[74] being revolutionized

by social media that increases mobilization to an extent that would
have been impossible before.[75] It takes many different forms,
ranging from non-institutionalized political participation to
demonstrations and protests, and addresses issues as diverse as
climate change, economic reforms, gender equality and LGBTQ
rights. The young generation is firmly at the vanguard of social
change. There is little doubt that it will be the catalyst for change
and a source of critical momentum for the Great Reset.

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 1.4. Geopolitical reset
The connectivity between geopolitics and pandemics flows
both ways. On the one hand, the chaotic end of multilateralism, a
vacuum of global governance and the rise of various forms of
nationalism[76] make it more difficult to deal with the outbreak. The
coronavirus is spreading globally and sparing no one, while
simultaneously the geopolitical fault lines that divide societies spur
many leaders to focus on national responses – a situation that
constrains collective effectiveness and reduces the ability to
eradicate the pandemic. On the other hand, the pandemic is
clearly exacerbating and accelerating geopolitical trends that were
already apparent before the crisis erupted. What were they and
what is the current state of geopolitical affairs?

The late economist Jean-Pierre Lehmann (who taught at IMD

in Lausanne) summed up today’s situation with great perspicacity
when he said: “There is no new global order, just a chaotic
transition to uncertainty.” More recently, Kevin Rudd, President of
the Asia Society Policy Institute and former Australian Prime
Minister, expressed similar sentiments, worrying specifically about
the “coming post-COVID-19 anarchy”: “Various forms of rampant
nationalism are taking the place of order and cooperation. The
chaotic nature of national and global responses to the pandemic
thus stands as a warning of what could come on an even broader
scale.”[77] This has been years in the making with multiple causes
that intersect with each other, but the determining element of
geopolitical instability is the progressive rebalancing from the
West to the East – a transition that creates stresses and that, in
the process, also generates global disorder. This is captured in
the so-called Thucydides’ trap – the structural stress that
inevitably occurs when a rising power like China rivals a ruling
power like the US. This confrontation will be a source of global
messiness, disorder and uncertainty for years to come.
Irrespective of whether one “likes” the US or not, its progressive
disengagement (the equivalent of a “geopolitical taper”, as the
historian Niall Ferguson puts it) from the international scene is

79
bound to increase international volatility. More and more,
countries that tended to rely on global public goods provided by
the US “hegemon” (for sea lane security, the fight against
international terrorism, etc.) will now have to tend their own
backyards themselves. The 21st century will most likely be an era
devoid of an absolute hegemon during which no one power gains
absolute dominance – as a result, power and influence will be
redistributed chaotically and in some cases grudgingly.

In this messy new world defined by a shift towards multipolarity

and intense competition for influence, the conflicts or tensions will
no longer be driven by ideology (with the partial and limited
exception of radical Islam), but spurred by nationalism and the
competition for resources. If no one power can enforce order, our
world will suffer from a “global order deficit”. Unless individual
nations and international organizations succeed in finding
solutions to better collaborate at the global level, we risk entering
an “age of entropy” in which retrenchment, fragmentation, anger
and parochialism will increasingly define our global landscape,
making it less intelligible and more disorderly. The pandemic crisis
has both exposed and exacerbated this sad state of affairs. The
magnitude and consequence of the shock it has inflicted are such
that no extreme scenario can now be taken off the table. The
implosion of some failing states or petrostates, the possible
unravelling of the EU, a breakdown between China and the US
that leads to war: all these and many more have now become
plausible (albeit hopefully unlikely) scenarios.

In the following pages, we review four main issues that will

become more prevalent in the post-pandemic era and that
conflate with each other: the erosion of globalization, the absence
of global governance, the increasing rivalry between the US and
China, and the fate of fragile and failing states.

1.4.1. Globalization and nationalism

Globalization – an all-purpose word – is a broad and vague

notion that refers to the global exchange between nations of
goods, services, people, capital and now even data. It has

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succeeded in lifting hundreds of millions of people out of poverty
but, for quite a number of years now, it has been called into
question and even started to recede. As highlighted previously,
today’s world is more interconnected than it has ever been but, for
more than a decade, the economic and political impetus that
made the case for and supported the increase of globalization has
been on the wane. The global trade talks that started in the early
2000s failed to deliver an agreement, while during that same
period the political and societal backlash against globalization
relentlessly gained strength. As the social costs provoked by the
asymmetric effects of globalization rose (particularly in terms of
manufacturing unemployment in high-income countries), the risks
of financial globalization became ever-more apparent after the
Great Financial Crisis that began in 2008. Thus combined, they
triggered the rise of populist and right-wing parties around the
world (most notably in the West), which, when they come to
power, often retreat into nationalism and promote an isolationist
agenda – two notions antithetical to globalization.

The global economy is so intricately intertwined that it is

impossible to bring globalization to an end. However, it is possible
to slow it down and even to put it into reverse. We anticipate that
the pandemic will do just that. It has already re-erected borders
with a vengeance, reinforcing to an extreme trends that were
already in full glare before it erupted with full force in March 2020
(when it became a truly global pandemic, sparing no country),
such as tougher border controls (mainly because of fears about
immigration) and greater protectionism (mainly because of fears
about globalization). Tighter border controls for the purpose of
managing the progression of the pandemic make eminent sense,
but the risk that the revival of the nation state leads progressively
to much greater nationalism is real, a reality that the “globalization
trilemma” framework offered by Dani Rodrik captured. In the early
2010s, when globalization was becoming a sensitive political and
social issue, the Harvard economist explained why it would be the
inevitable casualty if nationalism rises. The trilemma suggests that
the three notions of economic globalization, political democracy
and the nation state are mutually irreconcilable, based on the logic

81
that only two can effectively co-exist at any given time.[78]
Democracy and national sovereignty are only compatible if
globalization is contained. By contrast, if both the nation state and
globalization flourish, then democracy becomes untenable. And
then, if both democracy and globalization expand, there is no
place for the nation state. Therefore, one can only ever choose
two out of the three – this is the essence of the trilemma. The
European Union has often been used as an example to illustrate
the pertinence of the conceptual framework offered by the
trilemma. Combining economic integration (a proxy for
globalization) with democracy implies that the important decisions
have to be made at a supranational level, which somehow
weakens the sovereignty of the nation state. In the current
environment, what the “political trilemma” framework suggests is
that globalization must necessarily be contained if we are not to
give up some national sovereignty or some democracy. Therefore,
the rise of nationalism makes the retreat of globalization inevitable
in most of the world – an impulse particularly notable in the West.
The vote for Brexit and the election of President Trump on a
protectionist platform are two momentous markers of the Western
backlash against globalization. Subsequent studies not only
validate Rodrik’s trilemma, but also show that the rejection of
globalization by voters is a rational response when the economy is
strong and inequality is high.[79]

The most visible form of progressive deglobalization will occur

at the heart of its “nuclear reactor”: the global supply chain that
has become emblematic of globalization. How and why will this
play out? The shortening or relocalization of supply chains will be
encouraged by: 1) businesses that see it as a risk mitigation
measure against supply chain disruption (the resilience versus
efficiency trade-off); and 2) political pressure from both the right
and the left. Since 2008, the drive towards greater localization has
been firmly on the political agenda in many countries (particularly
in the West), but it will now be accelerated in the post-pandemic
era. On the right, the pushback against globalization is driven by
protectionists and national-security hawks who were already
gathering force before the pandemic started. Now, they will create

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alliances and sometimes merge with other political forces that will
see the benefit of embracing an antiglobalization agenda. On the
left, activists and green parties that were already stigmatizing air
travel and asking for a rollback against globalization will be
emboldened by the positive effect the pandemic had on our
environment (far fewer carbon emissions, much less air and water
pollution). Even without pressure from the far right and the green
activists, many governments will realize that some situations of
trade dependency are no longer politically acceptable. How can
the US administration, for example, accept that 97% of antibiotics
supplied in the country come from China?[80]

This process of reversing globalization will not happen

overnight; shortening supply chains will be both very challenging
and very costly. For example, a thorough and all-encompassing
decoupling from China would require from companies making
such a move an investment of hundreds of billions of dollars in
newly located factories, and from governments equivalent
amounts to fund new infrastructure, like airports, transportation
links and housing, to serve the relocated supply chains.
Notwithstanding that the political desire for decoupling may in
some cases be stronger than the actual ability to do so, the
direction of the trend is nonetheless clear. The Japanese
government made this obvious when it set aside 243 billion of its
108 trillion Japanese yen rescue package to help Japanese
companies pull their operations out of China. On multiple
occasions, the US administration has hinted at similar measures.

The most likely outcome along the globalization–no

globalization continuum lies in an in-between solution:
regionalization. The success of the European Union as a free
trade area or the new Regional Comprehensive Economic
Partnership in Asia (a proposed free trade agreement among the
10 countries that compose ASEAN) are important illustrative
cases of how regionalization may well become a new watered-
down version of globalization. Even the three states that compose
North America now trade more with each other than with China or
Europe. As Parag Khanna points out: “Regionalism was clearly
overtaking globalism before the pandemic exposed the

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vulnerabilities of our long-distance interdependence”.[81] For
years, with the partial exception of direct trade between the US
and China, globalization (as measured by the exchange of goods)
was already becoming more intraregional than interregional. In the
early 1990s, North America absorbed 35% of East Asia’s exports,
while today this proportion is down to 20%, mainly because East
Asia’s share of exports to itself grows every year – a natural
situation as Asian countries move up the value chain, consuming
more of what they produce. In 2019, as the US and China
unleashed a trade war, US trade with Canada and Mexico rose
while falling with China. At the same time, China’s trade with
ASEAN rose for the first time to above $300 billion. In short,
deglobalization in the form of greater regionalization was already
happening.

COVID-19 will just accelerate this global divergence as North

America, Europe and Asia focus increasingly on regional self-
sufficiency rather than on the distant and intricate global supply
chains that formerly epitomized the essence of globalization. What
form might this take? It could resemble the sequence of events
that brought an earlier period of globalization to an end, but with a
regional twist. Antiglobalization was strong in the run-up to 1914
and up to 1918, then less so during the 1920s, but it reignited in
the 1930s as a result of the Great Depression, triggering an
increase in tariff and non-tariff barriers that destroyed many
businesses and inflicted much pain on the largest economies of
that time. The same could happen again, with a strong impulse to
reshore that spreads beyond healthcare and agriculture to include
large categories of non-strategic products. Both the far right and
the far left will take advantage of the crisis to promote a
protectionist agenda with higher barriers to the free flow of capital
goods and people. Several surveys conducted in the first few
months of 2020 revealed that international companies fear a
return and aggravation of protectionism in the US, not only on
trade, but also in cross-border mergers and acquisitions and
government procurement.[82] What happens in the US will
inevitably ricochet elsewhere, with other advanced economies
imposing more barriers to trade and investment, defying the

84
appeals from experts and international organizations to refrain
from protectionism.

This sombre scenario is not inevitable but, over the next few
years, we should expect the tensions between the forces of
nationalism and openness to play out across three critical
dimensions: 1) global institutions; 2) trade; and 3) capital flows.
Recently, global institutions and international organizations have
been either enfeebled, like the World Trade Organization or the
WHO, or not up to the task, the latter due more to being
“underfinanced and over-governed”[83] than to inherent
inadequacy.

Global trade, as we saw in the previous chapter, will almost

certainly contract as companies shorten their supply chain and
ensure that they no longer rely on a single country or business
abroad for critical parts and components. In the case of
particularly sensitive industries (like pharmaceuticals or healthcare
materials) and sectors considered to be of national-security
interest (like telecommunications or energy generation), there may
even be an ongoing process of de-integration. This is already
becoming a requirement in the US, and it would be surprising if
this attitude does not spread to other countries and other sectors.
Geopolitics is also inflicting some economic pain through the so-
called weaponization of trade, triggering fear among global
companies that they can no longer assume an orderly and
predictable resolution of trade conflicts through the international
rule of law.

As for international capital flows, it seems already evident that

national authorities and public defiance will constrain them. As
already shown by so many countries and regions as different as
Australia, India or the EU, protectionist considerations will become
ever-more present in the post-pandemic era. Measures will range
from national governments buying stakes in “strategic” companies
to prevent foreign takeovers or imposing diverse restrictions on
such takeovers, to foreign direct investment (FDI) being subjected
to government approval. It is telling that, in April 2020, the US

85
administration decided to block a publicly administered pension
fund from investing in China.

In the coming years, it seems inevitable that some

deglobalization will happen, spurred by the rise of nationalism and
greater international fragmentation. There is no point in trying to
restore the status quo ex ante (“hyper-globalization” has lost all its
political and social capital, and defending it is no longer politically
tenable), but it is important to limit the downside of a possible free
fall that would precipitate major economic damage and social
suffering. A hasty retreat from globalization would entail trade and
currency wars, damaging every country’s economy, provoking
social havoc and triggering ethno- or clan nationalism. The
establishment of a much more inclusive and equitable form of
globalization that makes it sustainable, both socially and
environmentally, is the only viable way to manage retreat. This
requires policy solutions addressed in the concluding chapter and
some form of effective global governance. Progress is indeed
possible in those global areas that have traditionally benefited
from international cooperation, like environmental agreements,
public health and tax havens.

This will only come about through improved global governance

– the most “natural” and effective mitigating factor against
protectionist tendencies. However, we do not yet know how its
framework will evolve in the foreseeable future. At the moment,
the signs are ominous that it is not going in the right direction.
There is no time to waste. If we do not improve the functioning
and legitimacy of our global institutions, the world will soon
become unmanageable and very dangerous. There cannot be a
lasting recovery without a global strategic framework of
governance.

1.4.2. Global governance

Global governance is commonly defined as the process of

cooperation among transnational actors aimed at providing
responses to global problems (those that affect more than one
state or region). It encompasses the totality of institutions,

86
policies, norms, procedures and initiatives through which nation
states try to bring more predictability and stability to their
responses to transnational challenges. This definition makes it
clear that any global effort on any global issue or concern is
bound to be toothless without the cooperation of national
governments and their ability to act and legislate to support their
aims. Nation states make global governance possible (one leads
the other), which is why the UN says that “effective global
governance can only be achieved with effective international
cooperation”.[84] The two notions of global governance and
international cooperation are so intertwined that it is nigh on
impossible for global governance to flourish in a divided world that
is retrenching and fragmenting. The more nationalism and
isolationism pervade the global polity, the greater the chance that
global governance loses its relevance and becomes ineffective.
Sadly, we are now at this critical juncture. Put bluntly, we live in a
world in which nobody is really in charge.

COVID-19 has reminded us that the biggest problems we face

are global in nature. Whether it’s pandemics, climate change,
terrorism or international trade, all are global issues that we can
only address, and whose risks can only be mitigated, in a
collective fashion. But the world has become, in the words of Ian
Bremmer, a G0 world, or worse, a G-minus-2 world (the US and
China), according to the Indian economist Arvind Subramanian[85]
(to account for the absence of leadership of the two giants by
opposition to the G7, the group of seven wealthiest nations – or
the G20 – the G7 plus 13 other significant countries and
organizations, which are supposed to lead). More and more often,
the big problems besetting us take place beyond the control of
even the most powerful nation states; the risks and issues to be
confronted are increasingly globalized, interdependent and
interconnected, while the global governance capacities to do so
are failing perilously, endangered by the resurgence of
nationalism. Such disconnect signifies not only that the most
critical global issues are being addressed in a highly fragmented,
thus inadequate, manner, but also that they are actually being
exacerbated by this failure to deal with them properly. Thus, far

87
from remaining constant (in terms of the risk they pose), they
inflate and end up increasing systemic fragility. This is shown in
figure 1; strong interconnections exist between global governance
failure, climate action failure, national government failure (with
which it has a self-reinforcing effect), social instability and of
course the ability to successfully deal with pandemics. In a
nutshell, global governance is at the nexus of all these other
issues. Therefore, the concern is that, without appropriate global
governance, we will become paralysed in our attempts to address
and respond to global challenges, particularly when there is such
a strong dissonance between short-term, domestic imperatives
and long-term, global challenges. This is a major worry,
considering that today there is no “committee to save the world”
(the expression was used more than 20 years ago, at the height of
the Asian financial crisis). Pursuing the argument further, one
could even claim that the “general institutional decay” that
Fukuyama describes in Political Order and Political Decay[86]
amplifies the problem of a world devoid of global governance. It
sets in motion a vicious cycle in which nation states deal poorly
with the major challenges that beset them, which then feeds into
the public’s distrust of the state, which in turn leads to the state’s
being starved of authority and resources, then leading to even
poorer performance and the inability or unwillingness to deal with
issues of global governance.

COVID-19 tells just such a story of failed global governance.

From the very beginning, a vacuum in global governance,
exacerbated by the strained relations between the US and China,
undermined international efforts to respond to the pandemic. At
the onset of the crisis, international cooperation was non-existent
or limited and, even during the period when it was needed the
most (in the acme of the crisis: during the second quarter of
2020), it remained conspicuous by its absence. Instead of
triggering a set of measures coordinated globally, COVID-19 led to
the opposite: a stream of border closures, restrictions in
international travel and trade introduced almost without any
coordination, the frequent interruption of medical supply
distribution and the ensuing competition for resources, particularly

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visible in various attempts by several nation states to source badly
needed medical equipment by any means possible. Even in the
EU, countries initially chose to go it alone, but that course of
action subsequently changed, with practical assistance between
member countries, an amended EU budget in support of
healthcare systems, and pooled research funds to develop
treatments and vaccines. (And there have now been ambitious
measures, which would have seemed unimaginable in the pre-
pandemic era, susceptible of pushing the EU towards further
integration, in particular a €750 billion recovery fund put forward
by the European Commission.) In a functioning global governance
framework, nations should have come together to fight a global
and coordinated “war” against the pandemic. Instead the “my
country first” response prevailed and severely impaired attempts
to contain the expansion of the first wave of the pandemic. It also
placed constraints on the availability of protective equipment and
treatment that in turn undermined the resilience of national
healthcare systems. Furthermore, this fragmented approach went
on to jeopardize attempts to coordinate exit policies aimed at
“restarting” the global economic engine. In the case of the
pandemic, in contrast with other recent global crises like 9/11 or
the financial crisis of 2008, the global governance system failed,
proving either non-existent or dysfunctional. The US went on to
withdraw funding from the WHO but, no matter the underlying
rationale of this decision, the fact remains that it is the only
organization capable of coordinating a global response to the
pandemic, which means that an albeit far from perfect WHO is
infinitely preferable to a non-existent one, an argument that Bill
Gates compellingly and succinctly made in a tweet: “Their work is
slowing the spread of COVID-19 and if that work is stopped no
other organization can replace them. The world needs @WHO
now more than ever.”

This failure is not the WHO’s fault. The UN agency is merely

the symptom, not the cause, of global governance failure. The
WHO’s deferential posture towards donor countries reflects its
complete dependence on states agreeing to cooperate with it. The
UN organization has no power to compel information sharing or

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enforce pandemic preparedness. Like other similar UN agencies,
for example on human rights or climate change, the WHO is
saddled with limited and dwindling resources: in 2018, it had an
annual budget of $4.2 billion, miniscule in comparison to any
health budget around the world. In addition, it is at the perpetual
mercy of member states and has effectively no tools at its disposal
to directly monitor outbreaks, coordinate pandemic planning or
ensure effective preparedness implementation at the country
level, let alone allocate resources to those countries most in need.
This dysfunctionality is symptomatic of a broken global
governance system, and the jury is out as to whether existing
global governance configurations like the UN and the WHO can
be repurposed to address today’s global risks. For the time being,
the bottom line is this: in the face of such a vacuum in global
governance, only nation states are cohesive enough to be
capable of taking collective decisions, but this model doesn’t work
in the case of world risks that require concerted global decisions.

The world will be a very dangerous place if we do not fix

multilateral institutions. Global coordination will be even more
necessary in the aftermath of the epidemiological crisis, for it is
inconceivable that the global economy could “restart” without
sustained international cooperation. Without it, we’ll be heading
towards “a poorer, meaner and smaller world”.[87]

1.4.3. The growing rivalry between China and the

US

In the post-pandemic era, COVID-19 might be remembered as

the turning point that ushered in a “new type of cold war”[88]
between China and the US (the two words “new type” matter
considerably: unlike the Soviet Union, China is not seeking to
impose its ideology around the world). Prior to the pandemic,
tensions between the two dominant powers were already building
up in many different domains (trade, property rights, military bases
in the South China Sea, and tech and investment in strategic
industries in particular), but after 40 years of strategic
engagement, the US and China now seem unable to bridge the

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ideological and political divides that separate them. Far from
uniting the two geopolitical giants, the pandemic did the exact
opposite by exacerbating their rivalry and intensifying competition
between them.

Most analysts would concur that, during the COVID-19 crisis,

the political and ideological fracture between the two giants grew.
According to Wang Jisi, a renowned Chinese scholar and Dean of
the School of International Studies at Peking University, the fallout
from the pandemic has pushed China–US relations to their worst
level since 1979, when formal ties were established. In his
opinion, the bilateral economic and technological decoupling is
“already irreversible”,[89] and it could go as far as the “global
system breaking into two parts” warns Wang Huiyao, President of
the Center for China and Globalization in Beijing.[90] Even public
figures have expressed publicly their concern. In an article
published in June 2020, Lee Hsien Loong, Prime Minister of
Singapore, warned against the perils of confrontation between the
US and China, which, in his own words: “raises profound
questions about Asia’s future and the shape of the emerging
international order”. He added that: “Southeast Asian countries,
including Singapore, are especially concerned, as they live at the
intersection of the interests of various major powers and must
avoid being caught in the middle or forced into invidious
choices.”[91]

Views, of course, differ radically on which country is “right” or

going to come out “on top” by benefiting from the perceived
weaknesses and fragilities of the other. But it is essential to
contextualize them. There isn’t a “right” view and a “wrong” view,
but different and often diverging interpretations that frequently
correlate with the origin, culture and personal history of those who
profess them. Pursuing further the “quantum world” metaphor
mentioned earlier, it could be inferred from quantum physic that
objective reality does not exist. We think that observation and
measurement define an “objective” opinion, but the micro-world of
atoms and particles (like the macro-world of geopolitics) is
governed by the strange rules of quantum mechanics in which two

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different observers are entitled to their own opinions (this is called
a “superposition”: “particles can be in several places or states at
once”).[92] In the world of international affairs, if two different
observers are entitled to their own opinions, that makes them
subjective, but no less real and no less valid. If an observer can
only make sense of the “reality” through different idiosyncratic
lenses, this forces us to rethink our notion of objectivity. It is
evident that the representation of reality depends on the position
of the observer. In that sense, a “Chinese” view and a “US” view
can co-exist, together with multiple other views along that
continuum – all of them real! To a considerable extent and for
understandable reasons, the Chinese view of the world and its
place in it is influenced by the humiliation suffered during the first
Opium War in 1840 and the subsequent invasion in 1900 when
the Eight Nation Alliance looted Beijing and other Chinese cities
before demanding compensation.[93] Conversely, how the US
views the world and its place in it is largely based on the values
and principles that have shaped American public life since the
country’s founding.[94] These have determined both its pre-
eminent world position and its unique attractiveness for many
immigrants for 250 years. The US perspective is also rooted in the
unrivalled dominance it has enjoyed over the rest of the world for
the past few decades and the inevitable doubts and insecurities
that come with a relative loss of absolute supremacy. For
understandable reasons, both China and the US have a rich
history (China’s goes back 5,000 years) of which they are proud,
leading them, as Kishore Mahbubani observed, to overestimate
their own strengths and underestimate the strengths of the other.

Vindicating the point above, all analysts and forecasters who

specialize in China, the US, or both, have access to more or less
the same data and information (now a global commodity), see,
hear and read more or less the same things, but sometimes reach
diametrically opposed conclusions. Some see the US as the
ultimate winner, others argue that China has already won, and a
third group states that there’ll be no winners. Let’s briefly review
each of their arguments in turn.

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 China as a winner

The argument of those who claim that the pandemic crisis has
benefited China while exposing the weaknesses of the US is
threefold.

1. It has made the American strength as the world’s most

prominent military power irrelevant in the face of an
invisible and microscopic enemy.
2. In the words of the American academic who coined the
expression, it hurt the US soft power because of “the
incompetence of its response”.[95] (An important caveat:
the issue of whether a public response to COVID-19 was
“competent” or “incompetent” has given rise to a myriad
of opinions and provoked much disagreement. Yet, it
remains difficult to pass judgement. In the US, for
example, the policy response was to a large extent the
responsibility of states and even cities. Hence, in effect,
there was no national US policy response as such. What
we are discussing here are subjective opinions that
shaped public attitudes.)
3. It has exposed aspects of American society that some
may find shocking, like the deep inequalities in the face
of the outbreak, the lack of universal medical coverage
and the issue of systemic racism raised by the Black
Lives Matter movement.

All these prompted Kishore Mahbubani, an influential analyst

of the rivalry that opposes the US and China,[96] to argue that
COVID-19 has reversed the roles of both countries in terms of
dealing with disasters and supporting others. While in the past the
US was always the first to arrive with aid where assistance was
needed (like on 26 December 2004 when a major tsunami hit
Indonesia), this role now belongs to China, he says. In March
2020, China sent to Italy 31 tons of medical equipment
(ventilators, masks and protective suits) that the EU could not
provide. In his opinion, the 6 billion people who compose “the rest
of the world” and live in 191 countries have already begun

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preparing themselves for the US–China geopolitical contest.
Mahbubani says that it is their choices that will determine who
wins the rivalry contest and that these will be based on “the cold
calculus of reason to work out cost–benefit analyses of what both
the U.S. and China have to offer them”.[97] Sentiments may not
play much of a role because all these countries will base their
choice on which, the US or China, will at the end of the day
improve their citizens’ living conditions, but a vast majority of them
do not want to be caught in a geopolitical zero-sum game and
would prefer to keep all their options open (i.e. not to be forced to
choose between the US and China). However, as the example of
Huawei has shown, even traditional US allies like France,
Germany and the UK are being pressured by the US to do so. The
decisions that countries make when facing such a stark choice will
ultimately determine who emerges as the winner in the growing
rivalry between the US and China.

The US as a winner

In the camp of America as the ultimate winner, arguments are

centred on the inherent strengths of the US as well as the
perceived structural weaknesses of China.

The “US as a winner” proponents think it is premature to call

for an abrupt end of US supremacy in the post-pandemic era and
offer the following argument: the country may be declining in
relative terms, but it is still a formidable hegemon in absolute
terms and continues to possess a considerable amount of soft
power; its appeal as a global destination may be waning
somehow, but it nonetheless remains strong as shown by the
success of American universities abroad and the appeal of its
cultural industry. In addition, the dollar’s domination as a global
currency used in trade and perceived as a safe haven remains
largely unchallenged for the moment. This translates into
considerable geopolitical power, enabling the US authorities to
exclude companies and even countries (like Iran or Venezuela)
from the dollar system. As we saw in the preceding chapter, this
may change in the future but, over the next few years, there is no
alternative to the world’s dominance of the US dollar. More

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fundamentally, proponents of US “irreducibility” will argue with
Ruchir Sharma that: “US economic supremacy has repeatedly
proved declinists wrong”.[98] They will also agree with Winston
Churchill, who once observed that the US has an innate capability
to learn from its mistakes when he remarked that the US always
did the right thing when all the alternatives have been exhausted.

Leaving aside the highly charged political argument

(democracy versus autocracy), those who believe that the US will
remain a “winner” for many more years also stress that China
faces its own headwinds on its path to global superpower status.
Those most frequently mentioned are the following: 1) it suffers
from a demographic disadvantage, with a fast-ageing population
and a working-age population that peaked in 2015; 2) its influence
in Asia is constrained by existing territorial disputes with Brunei,
India, Indonesia, Japan, Malaysia, the Philippines and Viet Nam;
and 3) it is highly energy-dependent.

No winner

What do those who claim that “the pandemic bodes ill for both
American and Chinese power – and for the global order” think?[99]
They argue that, like almost all other countries around the world,
both China and the US are certain to suffer massive economic
damage that will limit their capacity to extend their reach and
influence. China, whose trade sector represents more than a third
of total GDP, will find it difficult to launch a sustained economic
recovery when its large trading partners (like the US) are
drastically retrenching. As for the US, its over-indebtedness will
sooner or later constrain post-recovery spending, with the ever-
present risk that the current economic crisis metastasizes into a
systemic financial crisis.

Referring in the case of both countries to the economic hit and

domestic political difficulties, the doubters assert that both
countries are likely to emerge from this crisis significantly
diminished. “Neither a new Pax Sinica nor a renewed Pax
Americana will rise from the ruins. Rather, both powers will be
weakened, at home and abroad”.

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 An underlying reason for the “no winner” argument is an
intriguing idea put forward by several academics, most notably
Niall Ferguson. Essentially, it says that the corona crisis has
exposed the failure of superpowers like the US and China by
highlighting the success of small states. In the words of Ferguson:
“The real lesson here is not that the U.S. is finished and China is
going to be the dominant power of the 21st century. I think the
reality is that all the superpowers – the United States, the People's
Republic of China and the European Union – have been exposed
as highly dysfunctional.”[100] Being big, as the proponents of this
idea argue, entails diseconomies of scale: countries or empires
have grown so large as to reach a threshold beyond which they
cannot effectively govern themselves. This in turn is the reason
why small economies like Singapore, Iceland, South Korea and
Israel seem to have done better than the US in containing the
pandemic and dealing with it.

Predicting is a guessing game for fools. The simple truth is that

nobody can tell with any degree of reasonable confidence or
certainty how the rivalry between the US and China will evolve –
apart from saying that it will inevitably grow. The pandemic has
exacerbated the rivalry that opposes the incumbent and the
emerging power. The US has stumbled in the pandemic crisis and
its influence has waned. Meanwhile, China may be trying to
benefit from the crisis by expanding its reach abroad. We know
very little about what the future holds in terms of strategic
competition between China and the US. It will oscillate between
two extremes: a contained and manageable deterioration
tempered by business interests at one end of the spectrum, to
permanent and all-out hostility at the other.

1.4.4. Fragile and failing states

The boundaries between state fragility, a failing state and a

failed one are fluid and tenuous. In today’s complex and adaptive
world, the principle of non-linearity means that suddenly a fragile
state can turn into a failed state and that, conversely, a failed state
can see its situation improve with equal celerity thanks to the
intermediation of international organizations or even an infusion of

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foreign capital. In the coming years, as the pandemic inflicts
hardship globally, it is most likely that the dynamic will only go one
way for the world’s poorest and most fragile countries: from bad to
worse. In short, many states that exhibit characteristics of fragility
risk failing.

State fragility remains one of the most critical global

challenges, particularly prevalent in Africa. Its causes are multiple
and intertwined; they range from economic disparity, social issues,
political corruption and inefficiencies, to external or internal
conflicts and natural disasters. Today, it is estimated that around
1.8-2 billion people lived in fragile states, a number that will
certainly increase in the post-pandemic era because fragile
countries are particularly vulnerable to an outbreak of COVID-19.
[101] The very essence of their fragility – weak state capacity and

the associated inability to ensure the fundamental functions of

basic public services and security – makes them less able to cope
with the virus. The situation is even worse in failing and failed
states that are almost always victims of extreme poverty and
fractious violence and, as such, can barely or no longer perform
basic public functions like education, security or governance.
Within their power vacuum, helpless people fall victim to
competing factions and crime, often compelling the UN or a
neighbouring state (not always well intentioned) to intervene to
prevent a humanitarian disaster. For many such states, the
pandemic will be the exogenous shock that forces them to fail and
fall even further.

For all these reasons, it is almost a tautology to state that the

damage inflicted by the pandemic to fragile and failing states will
be much deeper and longer-lasting than in the richer and most
developed economies. It will devastate some of the world’s most
vulnerable communities. In many cases, economic disaster will
trigger some form of political instability and outbreaks of violence
because the world’s poorest countries will suffer from two
predicaments: first, the breakdown in trade and supply chains
caused by the pandemic will provoke immediate devastation like
no remittances or increased hunger; and, second, further down
the line, they will endure a prolonged and severe loss of

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employment and income. This is the reason why the global
outbreak has such potential to wreak havoc in the world’s poorest
countries. It is there that economic decline will have an even more
immediate effect on societies. Across large swathes of sub-
Saharan Africa, in particular, but also in parts of Asia and Latin
America, millions depend on a meagre daily income to feed their
families. Any lockdown or health crisis caused by the coronavirus
could rapidly create widespread desperation and disorder,
potentially triggering massive unrest with global knock-on effects.
The implications will be particularly damaging for all those
countries caught in the midst of a conflict. For them, the pandemic
will inevitably disrupt humanitarian assistance and aid flows. It will
also limit peace operations and postpone diplomatic efforts to
bring the conflicts to an end.

Geopolitical shocks have a propensity to take observers by

surprise, with ripple and knock-on effects that create second-,
third- and more-order consequences, but currently where are the
risks most apparent?

All commodity-countries are at risk (Norway and a few others

do not qualify). At the time of writing, they are being hit particularly
hard by the collapse in energy and commodity prices that are
exacerbating the problems posed by the pandemic and all the
other issues with which they conflate (unemployment, inflation,
inadequate health systems and, of course, poverty). For rich and
relatively developed energy-dependent economies like the
Russian Federation and Saudi Arabia, the collapse of oil prices
“only” represents a considerable economic blow, putting strained
budgets and foreign exchange reserves under strain, and posing
acute medium- and long-term risks. But for lower-income
countries like South Sudan where oil accounts for the quasi
totality of exports (99%), the blow could simply be devastating.
This is true for many other fragile commodity countries. Outright
collapse is not an outlandish scenario for petrostates like Ecuador
or Venezuela, where the virus could overwhelm the countries’ few
functioning hospitals very quickly. Meanwhile in Iran, US sanctions
are compounding the problems associated with the high rate of
COVID-19 infection.

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 Particularly at risk now are many countries in the Middle East
and Maghreb, where the economic pain was increasingly
apparent before the pandemic and with restless, youthful
populations and rampant unemployment. The triple blow of
COVID-19, the collapse in oil prices (for some) and the freeze in
tourism (a vital source of employment and foreign currency
earnings) could trigger a wave of massive anti-government
demonstrations reminiscent of the Arab Spring in 2011. In an
ominous sign, at the end of April 2020 and in the midst of the
lockdown, riots over joblessness concerns and soaring poverty
took place in Lebanon.

The pandemic has brought the issue of food security back with
a vengeance, and in many countries it could entail a humanitarian
and food crisis catastrophe. Officials from the UN Food and
Agriculture Organization predict that the number of people
suffering from acute food insecurity could double in 2020 to 265
million. The combination of movement and trade restrictions
caused by the pandemic with an increase in unemployment and
limited or no access to food could trigger large-scale social unrest
followed by mass movements of migration and refugees. In fragile
and failing states, the pandemic exacerbates existing food
shortages through barriers to trade and disruption in global food
supply chains. It does so to such a considerable extent that on 21
April 2020, David Beasley, Executive Director of the UN World
Food Programme, warned the UN Security Council that “multiple
famines of biblical proportions” had become possible in about
three dozen countries, most notably Yemen, Congo, Afghanistan,
Venezuela, Ethiopia, South Sudan, Syria, Sudan, Nigeria and
Haiti.

In the poorest countries of the world, the lockdowns and the

economic recession happening in high-income countries will
trigger major income losses for the working poor and all those
who depend on them. The decrease in overseas remittances that
account for such a large proportion of GDP (more than 30%) in
some countries like Nepal, Tonga or Somalia is a case in point. It
will inflict a devastating shock to their economies with dramatic
social implications. According to the World Bank, the impact of

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lockdowns and the ensuing economic “hibernation” that happened
in so many countries around the world will cause a 20% decline in
remittance to low- and middle-income countries, from a $554
billion last year to $445 billion in 2020.[102] In larger countries like
Egypt, India, Pakistan, Nigeria and the Philippines, for which
remittances are a crucial source of external financing, this will
create a lot of hardship and render their economic, social and
political situation even more fragile, with the very real possibility of
destabilization. Then, there is tourism, one of the hardest-hit
industries from the pandemic, which is an economic lifeline for
many poor nations. In countries like Ethiopia where tourism
revenues account for almost half (47%) of total exports, the
corresponding loss of income and employment will inflict
considerable economic and social pain. The same goes for the
Maldives, Cambodia and several others.

Then, there are all the conflict zones where many armed
groups are thinking about how to use the excuse of the pandemic
to move their agenda forward (like in Afghanistan where the
Taliban is asking that its prisoners be released from jail, or in
Somalia where the al-Shabaab group presents COVID-19 as an
attempt to destabilize them). The global ceasefire plea made on
23 March 2020 by the UN secretary-general has fallen on deaf
ears. Of 43 countries with at least 50 reported events of organized
violence in 2020, only 10 responded positively (most often with
simple statements of support but no commitment to action).
Among the other 31 countries with ongoing conflicts, the actors
failed not only to take steps to meet the call, but many actually
increased the level of organized violence.[103] The early hopes
that concerns with the pandemic and the ensuing health
emergency might curb long-running conflicts and catalyse peace
negotiations have evaporated. This is yet another example of the
pandemic not only failing to arrest a troubling or dangerous trend
but in fact accelerating it.

Wealthier countries ignore the tragedy unfolding in fragile and

failing countries at their peril. In one way or another, risks will
reverberate through greater instability or even chaos. One of the
most obvious knock-on effects for the richer parts of the world of

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economic misery, discontent and hunger in the most fragile and
poorest states will consist in a new wave of mass migration in its
direction, like those that occurred in Europe in 2016.

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 1.5. Environmental reset
At first glance, the pandemic and the environment might seem
to be only distantly related cousins; but they are much closer and
more intertwined than we think. Both have and will continue to
interact in unpredictable and distinctive ways, ranging from the
part played by diminished biodiversity in the behaviour of
infectious diseases to the effect that COVID-19 might have on
climate change, thus illustrating the perilously subtle balance and
complex interactions between humankind and nature.

Furthermore, in global risk terms, it is with climate change and

ecosystem collapse (the two key environmental risks) that the
pandemic most easily equates. The three represent, by nature
and to varying degrees, existential threats to humankind, and we
could argue that COVID-19 has already given us a glimpse, or
foretaste, of what a full-fledged climate crisis and ecosystem
collapse could entail from an economic perspective: combined
demand and supply shocks, and disruption to trade and supply
chains with ripple and knock-on effects that amplify risks (and in
some cases opportunities) in the other macro categories:
geopolitics, societal issues and technology. If climate change,
ecosystem collapse and pandemics look so similar as global risks,
how do they really compare? They possess many common
attributes while displaying strong dissimilarities.

The five main shared attributes are: 1) they are known (i.e.
white swan) systemic risks that propagate very fast in our
interconnected world and, in so doing, amplify other risks from
different categories; 2) they are non-linear, meaning that beyond a
certain threshold, or tipping point, they can exercise catastrophic
effects (like “superspreading” in a particular location and then
overwhelming the capabilities of the health system in the case of
the pandemic); 3) the probabilities and distribution of their impacts
are very hard, if not impossible, to measure – they are constantly
shifting and having to be reconsidered under revised
assumptions, which in turn makes them extremely difficult to
manage from a policy perspective; 4) they are global in nature and

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therefore can only be properly addressed in a globally coordinated
fashion; and 5) they affect disproportionately the already most
vulnerable countries and segments of the population.

And what are their dissimilarities? There are several, most of

which are of a conceptual and methodological nature (like a
pandemic being a contagion risk while climate change and
ecosystem collapse are accumulation risks), but the two that
matter the most are: 1) the time-horizon difference (it has a critical
bearing on policies and mitigating actions); and 2) the causality
problem (it makes public acceptance of the mitigation strategies
more difficult):

1. Pandemics are a quasi-instantaneous risk, whose

imminence and danger are visible to all. An outbreak
threatens our survival – as individuals or a species – and
we therefore respond immediately and with determination
when faced with the risk. By contrast, climate change and
nature loss are gradual and cumulative, with effects that
are discernible mostly in the medium and long term (and
despite more and more climate related and “exceptional”
nature loss events, there are still significant numbers who
remain unconvinced of the immediacy of the climate crisis).
This crucial difference between the respective time-
horizons of a pandemic and that of climate change and
nature loss means that a pandemic risk requires immediate
action that will be followed by a rapid result, while climate
change and nature loss also require immediate action, but
the result (or “future reward”, in the jargon of economists)
will only follow with a certain time lag. Mark Carney, former
Governor of the Bank of England who is now the UN
Special Envoy for Climate Action and Finance, has
observed that this problem of time asynchronicity
generates a “tragedy of the horizon”: contrary to immediate
and observable risks, climate change risks may seem
distant (in terms of time and geography), in which case
they will not be responded to with the gravity they deserve
and demand. As an example, the material risk that global
warming and rising waters pose for a physical asset (like a

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 beachside holiday resort) or a company (like a hotel group)
will not necessarily be considered as material by investors
and will therefore not be priced in by the markets.

2. The causality problem is easy to grasp, as are the reasons

that make respective policies so much more difficult to
implement. In the case of the pandemic, the causation link
between the virus and the disease is obvious: SARS-CoV-
2 causes COVID-19. Apart from a handful of conspiracy
theorists, nobody will dispute that. In the case of
environmental risks, it is much more difficult to attribute
direct causality to a specific event. Often, scientists cannot
point to a direct link of causation between climate change
and a specific weather event (like a drought or the severity
of a hurricane). Similarly, they don’t always agree about
how a specific human activity affects particular species
facing extinction. This makes it incredibly more difficult to
mitigate climate change and nature loss risks. While for a
pandemic, a majority of citizens will tend to agree with the
necessity to impose coercive measures, they will resist
constraining policies in the case of environmental risks
where the evidence can be disputed. A more fundamental
reason also exists: fighting a pandemic does not require a
substantial change of the underlying socio-economic model
and of our consumption habits. Fighting environmental
risks does.

1.5.1. Coronavirus and the environment

1.5.1.1. Nature and zoonotic diseases

Zoonotic diseases are those that spread from animals to

humans. Most experts and conservationists agree that they have
drastically increased in recent years, particularly because of
deforestation (a phenomenon also linked to an increase in carbon
dioxide emissions), which augments the risk of close human–
animal interaction and contamination. For many years,
researchers thought that natural environments like tropical forests
and their rich wildlife represented a threat to humans because this

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is where the pathogens and viruses at the origin of new diseases
in humans such as dengue, Ebola and HIV could be found. Today,
we know this is wrong because the causation goes the other way.
As David Quammen, author of Spillover: Animal Infections and the
Next Human Pandemic, argues: “We invade tropical forests and
other wild landscapes, which harbor so many species of animals
and plants – and within those creatures, so many unknown
viruses. We cut the trees; we kill the animals or cage them and
send them to markets. We disrupt ecosystems, and we shake
viruses loose from their natural hosts. When that happens, they
need a new host. Often, we are it.”[104] By now, an increasing
number of scientists have shown that it is in fact the destruction of
biodiversity caused by humans that is the source of new viruses
like COVID-19. These researchers have coalesced around the
new discipline of “planetary health” that studies the subtle and
complex connections that exist between the well-being of humans,
other living species and entire ecosystems, and their findings
have made it clear that the destruction of biodiversity will increase
the number of pandemics.

In a recent letter to the US Congress, 100 wildlife and

environmental groups estimate that zoonotic diseases have
quadrupled over the past 50 years.[105] Since 1970, land-use
changes have had the largest relative negative impact on nature
(and in the process caused a quarter of man-made emissions).
Agriculture alone covers more than one-third of the terrestrial land
surface and is the economic activity that disrupts nature the most.
A recent academic review concludes that agriculture drivers are
associated with more than 50% of zoonotic diseases.[106] As
human activities like agriculture (with many others like mining,
logging or tourism) encroach on natural ecosystems, they break
down the barriers between human populations and animals,
creating the conditions for infectious diseases to emerge by
spilling from animals to humans. The loss of animals’ natural
habitat and the wildlife trade are particularly relevant because
when animals known as being linked to particular diseases (like
bats and pangolins with the coronavirus) are taken out of the wild
and moved into cities, a wildlife disease reservoir is simply

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transported into a densely populated area. This is what might
have happened at the market in Wuhan where the novel
coronavirus is believed to have originated (the Chinese authorities
have since permanently banned wildlife trade and consumption).
Nowadays, most scientists would agree that the greater
population growth is, the more we disturb the environment, the
more intensive farming becomes without adequate biosecurity, the
higher the risk of new epidemics. The key antidote currently
available to us to contain the progression of zoonotic diseases is
the respect and preservation of the natural environment and the
active protection of biodiversity. To do this effectively, it will be
incumbent on us all to rethink our relationship with nature and
question why we have become so alienated from it. In the
concluding chapter, we offer specific recommendations on the
form that a “nature-friendly” recovery may take.

1.5.1.2. Air pollution and pandemic risk

It’s been known for years that air pollution, largely caused by
emissions that also contribute to global warming, is a silent killer,
linked to various health conditions, ranging from diabetes and
cancer to cardiovascular and respiratory diseases. According to
the WHO, 90% of the world’s population breathes air that fails to
meet its safety guidelines, causing the premature death of 7
million people each year and prompting the organization to qualify
air pollution as a “public-health emergency”.

We now know that air pollution worsens the impact of any

particular coronavirus (not only the current SARS-CoV-2) on our
health. As early as 2003, a study published in the midst of the
SARS epidemic suggested that air pollution might explain the
variation in the level of lethality,[107] making it clear for the first time
that the greater the level of air pollution, the greater the likelihood
of death from the disease caused by a coronavirus. Since then, a
growing body of research has shown how a lifetime of breathing
dirtier air can make people more susceptible to the coronavirus. In
the US, a recent medical paper concluded that those regions with
more polluted air will experience higher risks of death from
COVID-19, showing that US counties with higher pollution levels

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will suffer higher numbers of hospitalizations and numbers of
deaths.[108] A consensus has formed in the medical and public
community that there is a synergistic effect between air pollution
exposure and the possible occurrence of COVID-19, and a worse
outcome when the virus does strike. The research, still embryonic
but expanding fast, hasn’t proved yet that a link of causation
exists, but it unambiguously exposes a strong correlation between
air pollution and the spread of the coronavirus and its severity. It
seems that air pollution in general, and the concentration of
particulate matter in particular, impair the airways – the lungs’ first
line of defence – meaning that people (irrespective of their age)
who live in highly polluted cities will face a greater risk of catching
COVID-19 and dying from it. This may explain why people in
Lombardy (one of Europe’s most polluted regions) who had
contracted the virus were shown to be twice as likely to die from
COVID-19 than people almost anywhere else in Italy.

1.5.1.3. Lockdown and carbon emissions

It is too early to define the amount by which global carbon

dioxide emissions will fall in 2020, but the International Energy
Agency (IEA) estimates in its Global Energy Review 2020 that
they will fall by 8%.[109] Even though this figure would correspond
to the largest annual reduction on record, it is still miniscule
compared to the size of the problem and it remains inferior to the
annual reduction in emissions of 7.6% over the next decade that
the UN thinks is necessary to hold the global rise in temperatures
below 1.5°C.[110]

Considering the severity of the lockdowns, the 8% figure looks

rather disappointing. It seems to suggest that small individual
actions (consuming much less, not using our cars and not flying)
are of little significance when compared to the size of emissions
generated by electricity, agriculture and industry, the “big-ticket
emitters” that continued to operate during the lockdowns (with the
partial exception of some industries). What it also reveals is that
the biggest “offenders” in terms of carbon emissions aren’t always
those often perceived as the obvious culprits. A recent
sustainability report shows that the total carbon emissions

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generated by the electricity production required to power our
electronic devices and transmit their data are roughly equivalent
to that of the global airline industry.[111] The conclusion? Even
unprecedented and draconian lockdowns with a third of the world
population confined to their homes for more than a month came
nowhere near to being a viable decarbonization strategy because,
even so, the world economy kept emitting large amounts of
carbon dioxide. What then might such a strategy look like? The
considerable size and scope of the challenge can only be
addressed by a combination of: 1) a radical and major systemic
change in how we produce the energy we need to function; and 2)
structural changes in our consumption behaviour. If, in the post-
pandemic era, we decide to resume our lives just as before (by
driving the same cars, by flying to the same destinations, by
eating the same things, by heating our house the same way, and
so on), the COVID-19 crisis will have gone to waste as far as
climate policies are concerned. Conversely, if some of the habits
we were forced to adopt during the pandemic translate into
structural changes in behaviour, the climate outcome might be
different. Commuting less, working remotely a bit more, bicycling
and walking instead of driving to keep the air of our cities as clean
as it was during the lockdowns, vacationing nearer to home: all
these, if aggregated at scale, could lead to a sustained reduction
in carbon emissions. This brings us to the all-important question of
whether the pandemic will eventually exercise a positive or
negative effect on climate change policies.

1.5.2. Impact of the pandemic on climate change

and other environmental policies

The pandemic is destined to dominate the policy landscape for

years, with the serious risk that it could overshadow
environmental concerns. In a telling anecdote, the convention
centre in Glasgow where the UN COP-26 Climate Summit should
have taken place in November 2020 was converted in April into a
hospital for COVID-19 patients. Already, climate negotiations have
been delayed and policy initiatives postponed, nourishing the
narrative that, for a long while, governmental leaders will only be

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paying attention to the multifaceted range of immediate problems
created by the pandemic crisis. Another narrative has also
emerged, elaborated by some national leaders, senior business
executives and prominent opinion-makers. It runs along these
lines that the COVID-19 crisis cannot go to waste and that now is
the time to enact sustainable environmental policies.

In reality, what happens with the fight against climate change

in the post-pandemic era could go in two opposite directions. The
first corresponds to the narrative above: the economic
consequences of the pandemic are so painful, difficult to address
and complex to implement that most governments around the
world may decide to “temporarily” put aside concerns about global
warming to focus on the economic recovery. If such is the case,
policy decisions will support and stimulate fossil-fuel heavy and
carbon-emitting industries by subsidizing them. They will also roll
back stringent environmental standards seen as a stumbling block
on the road to rapid economic recovery and will encourage
companies and consumers to produce and consume as much
“stuff” as possible. The second is spurred by a different narrative,
in which businesses and governments are emboldened by a new
social conscience among large segments of the general
population that life can be different, and is pushed by activists: the
moment must be seized to take advantage of this unique window
of opportunity to redesign a more sustainable economy for the
greater good of our societies.

Let’s examine both divergent possible outcomes in more

detail. Needless to say, they are country and region (EU)
dependent. No two countries will adopt the same policies nor
move at the same speed but, ultimately, they should all embrace
the direction of the less carbon-intensive trend.

Three key reasons could explain why this is not a given and
why the focus on the environment could fade when the pandemic
starts retreating:

1. Governments could decide that it is in the best collective

interest to pursue growth at “any cost” in order to cushion

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 the impact on unemployment.

2. Companies will be under such pressure to increase

revenues that sustainability in general and climate
considerations in particular will become secondary.

3. Low oil prices (if sustained, which is likely) could

encourage both consumers and businesses to rely even
more on carbon-intensive energy.

These three reasons are cogent enough to make them

compelling, but there are others that might just succeed in
pushing the trend in the other direction. Four in particular could
succeed in making the world cleaner and more sustainable:

1. Enlightened leadership. Some leaders and decision-

makers who were already at the forefront of the fight
against climate change may want to take advantage of the
shock inflicted by the pandemic to implement long-lasting
and wider environmental changes. They will, in effect,
make “good use” of the pandemic by not letting the crisis
go to waste. The exhortation of different leaders ranging
from HRH the Prince of Wales to Andrew Cuomo to “build it
back better” goes in that direction. So does a dual
declaration made by the IEA with Dan Jørgensen, Minister
for Climate, Energy and Utilities of Denmark, suggesting
that clean energy transitions could help kick-start
economies: “Around the world, leaders are getting ready
now, drawing up massive economic stimulus packages.
Some of these plans will provide short-term boosts, others
will shape infrastructure for decades to come. We believe
that by making clean energy an integral part of their plans,
governments can deliver jobs and economic growth while
also ensuring that their energy systems are modernised,
more resilient and less polluting.”[112] Governments led by
enlightened leaders will make their stimulus packages
conditional upon green commitments. They will, for
example, provide more generous financial conditions for
companies with low-carbon business models.

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2. Risk-awareness. The pandemic played the role of a great
“risk-awakening”, making us much more aware of the risks
we collectively face and reminding us that our world is
tightly interconnected. COVID-19 made it clear that we
ignore science and expertise at our peril, and that the
consequences of our collective actions can be
considerable. Hopefully, some of these lessons that offer
us a better understanding of what an existential risk really
means and entails will now be transferred to climate risks.
As Nicholas Stern, Chair of the Grantham Research
Institute on Climate Change and the Environment, stated:
“What we have seen from all of this, is that we can make
changes (…). We have to recognise there will be other
pandemics and be better prepared. [But] we must also
recognise that climate change is a deeper and bigger
threat that doesn’t go away, and is just as urgent.”[113]
Having worried for months about the pandemic and its
effect on our lungs, we’ll become obsessed about clean air;
during the lockdowns, a significant number of us saw and
smelled for ourselves the benefits of reduced air pollution,
possibly prompting a collective realization that we just have
a few years to address the worst consequences of global
warming and climate change. If this is the case, societal
(collective and individual) changes will follow.

3. Change in behaviour. As a consequence of the point

above, societal attitudes and demands may evolve towards
greater sustainability to a greater degree than commonly
assumed. Our consumption patterns changed dramatically
during the lockdowns by forcing us to focus on the
essential and giving us no choice but to adopt “greener
living”. This may last, prompting us to disregard everything
that we do not really need, and putting into motion a
virtuous circle for the environment. Likewise, we may
decide that working from home (when possible) is good for
both the environment and our individual well-being
(commuting is a “destroyer” of well-being – the longer it is,
the more detrimental it becomes to our physical and mental

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 health). These structural changes in how we work,
consume and invest may take a little while before they
become widespread enough to make a real difference but,
as we argued before, what matters is the direction and the
strength of the trend. The poet and philosopher Lao Tzu
was right in saying: “A journey of a thousand miles begins
with a single step.” We are just at the beginning of a long
and painful recovery and, for many of us, thinking about
sustainability may seem like a luxury but when things start
to improve we’ll collectively remember that a relation of
causality exists between air pollution and COVID-19. Then
sustainability will cease to be secondary and climate
change (so closely correlated with air pollution) will move to
the forefront of our preoccupations. What social scientists
call “behavioural contagion” (the way in which attitudes,
ideas and behaviour spread throughout the population)
might then work its magic!

4. Activism. Some analysts ventured that the pandemic

would provoke the obsolescence of activism, but the exact
opposite may well prove to be true. According to a group of
American and European academics, the coronavirus has
emboldened the motivation for change and triggered new
tools and strategies in terms of social activism. Over the
course of just several weeks, this group of researchers
collected data on various forms of social activism and
identified almost 100 distinct methods of non-violent action,
including physical, virtual and hybrid actions. Their
conclusion: “Emergencies often prove to be the forge in
which new ideas and opportunities are hammered out.
While it is impossible to predict what the long-term effects
of such growing skill and awareness may be, it’s clear that
people power has not diminished. Instead, movements
around the world are adapting to remote organizing,
building their bases, sharpening their messaging, and
planning strategies for what comes next”.[114] If their
assessment is correct, social activism, repressed by
necessity during the lockdowns and their various measures

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 of physical and social distancing, may re-emerge with
renewed vigour once the periods of confinement are over.
Emboldened by what they saw during the lockdowns (no
air pollution), climate activists will redouble their efforts,
imposing further pressure on companies and investors. As
we will see in Chapter 2, investors’ activism will also be a
force to be reckoned with. It will strengthen the cause of
social activists by adding an extra and powerful dimension
to it. Let’s imagine the following situation to illustrate the
point: a group of green activists could demonstrate in front
of a coal-fired power plant to demand greater enforcement
of pollution regulations, while a group of investors does the
same in the boardroom by depriving the plant access to
capital.

Across the four reasons, scattered factual evidence gives us

hope that the green trend will eventually prevail. It comes from
different domains but converges towards the conclusion that the
future could be greener than we commonly assume. To
corroborate this conviction, four observations intersect with the
four reasons provided:

1. In June 2020, BP, one of the world’s oil and gas

“supermajors”, slashed the value of its assets by $17.5
billion, having come to the conclusion that the pandemic
will accelerate a global shift towards cleaner forms of
energy. Other energy companies are about to make a
similar move.[115] In the same spirit, major global
companies like Microsoft have committed to becoming
carbon negative by 2030.

2. The European Green Deal launched by the European

Commission is a massive endeavour and the most tangible
manifestation yet of public authorities deciding not to let the
COVID-19 crisis go to waste.[116] The plan commits €1
trillion for lowering emissions and investing in the circular
economy, with the aim of making the EU the first carbon-
neutral continent by 2050 (in terms of net emissions) and
decoupling economic growth from resource use.

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 3. Various international surveys show that a large majority of
citizens around the world want the economic recovery from
the corona crisis to prioritize climate change.[117] In the
countries that compose the G20, a sizeable majority of
65% of citizens support a green recovery.[118]

4. Some cities like Seoul are furthering their commitment to

climate and environment policies by implementing their
own “Green New Deal”, framed as one way to mitigate the
pandemic fallout.[119]

The direction of the trend is clear but, ultimately, systemic

change will come from policy-makers and business leaders willing
to take advantage of COVID stimulus packages to kick-start the
nature-positive economy. This will not only be about public
investments. The key to crowding private capital into new sources
of nature-positive economic value will be to shift key policy levers
and public finance incentives as part of a wider economic reset.
There is a strong case for acting more forcefully on spatial
planning and land-use regulations, public finance and subsidy
reform, innovation policies that help to drive expansion and
deployment in addition to R&D, blended finance and better
measurement of natural capital as a key economic asset. Many
governments are starting to act, but much more is needed to tip
the system towards a nature-positive new norm and make a
majority of people all over the world realize this is not only an
imperious necessity but also a considerable opportunity. A policy
paper prepared by Systemiq in collaboration with the World
Economic Forum[120] estimates that building the nature-positive
economy could represent more than $10 trillion per year by 2030
– in terms of new economic opportunities as well as avoided
economic costs. In the short term, deploying around $250 billion
of stimulus funding could generate up to 37 million nature-positive
jobs in a highly cost-effective manner. Resetting the environment
should not be seen as a cost, but rather as an investment that will
generate economic activity and employment opportunities.

Hopefully, the threat from COVID-19 won’t last. One day, it will
be behind us. By contrast, the threat from climate change and its

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associated extreme weather events will be with us for the
foreseeable future and beyond. The climate risk is unfolding more
slowly than the pandemic did, but it will have even more severe
consequences. To a great extent, its severity will depend on the
policy response to the pandemic. Every measure destined to
revive economic activity will have an immediate effect on how we
live, but will also have an impact on carbon emissions that will in
turn have an environmental impact across the globe and
measured across generations. As we’ve argued in this book,
these choices are ours to make.

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 1.6. Technological reset
When it was published in 2016, The Fourth Industrial
Revolution made the case that “Technology and digitization will
revolutionize everything, making the overused and often ill-used
adage ‘this time is different’ apt. Simply put, major technological
innovations are on the brink of fueling momentous change
throughout the world.”[121] In the four short years since,
technological progress has moved impressively fast. AI is now all
around us, from drones and voice recognition to virtual assistants
and translation software. Our mobile devices have become a
permanent and integral part of our personal and professional
lives, helping us on many different fronts, anticipating our needs,
listening to us and locating us, even when not asked to do so…
Automation and robots are reconfiguring the way businesses
operate with staggering speed and returns on scale inconceivable
just a few years ago. Innovation in genetics, with synthetic biology
now on the horizon, is also exciting, paving the way for
developments in healthcare that are groundbreaking.
Biotechnology still falls short of stopping, let alone preventing, a
disease outbreak, but recent innovations have allowed the
identification and sequencing of the coronavirus’ genome much
faster than in the past, as well as the elaboration of more effective
diagnostics. In addition, the most recent biotechnology techniques
using RNA and DNA platforms make it possible to develop
vaccines faster than ever. They might also help with the
development of new bioengineered treatments.

To sum up, the speed and breadth of the Fourth Industrial

Revolution have been and continue to be remarkable. This
chapter argues that the pandemic will accelerate innovation even
more, catalysing technological changes already under way
(comparable to the exacerbation effect it has had on other
underlying global and domestic issues) and “turbocharging” any
digital business or the digital dimension of any business. It will
also accentuate one of the greatest societal and individual
challenges posed by tech: privacy. We will see how contact

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tracing has an unequalled capacity and a quasi-essential place in
the armoury needed to combat COVID-19, while at the same time
being positioned to become an enabler of mass surveillance.

1.6.1. Accelerating the digital transformation

With the pandemic, the “digital transformation” that so many
analysts have been referring to for years, without being exactly
sure what it meant, has found its catalyst. One major effect of
confinement will be the expansion and progression of the digital
world in a decisive and often permanent manner. This is
noticeable not only in its most mundane and anecdotal aspects
(more online conversations, more streaming to entertain, more
digital content in general), but also in terms of forcing more
profound changes in how companies operate, something that is
explored in more depth in the next chapter. In April 2020, several
tech leaders observed how quickly and radically the necessities
created by the health crisis had precipitated the adoption of a wide
range of technologies. In the space of just one month, it appeared
that many companies in terms of tech take-up fast-forwarded by
several years. For the digitally savvy, this meant good things,
while, for the others, a very poor outlook (sometimes
catastrophically so). Satya Nadella, CEO of Microsoft, observed
that social- and physical-distancing requirements created “a
remote everything”, bringing forward the adoption of a wide range
of technologies by two years, while Sundar Pichai, Google’s CEO,
marvelled at the impressive leap in digital activity, forecasting a
“significant and lasting” effect on sectors as different as online
work, education, shopping, medicine and entertainment.[122]

1.6.1.1. The consumer

During the lockdowns, many consumers previously reluctant to

rely too heavily on digital applications and services were forced to
change their habits almost overnight: watching movies online
instead of going to the cinema, having meals delivered instead of
going out to restaurants, talking to friends remotely instead of
meeting them in the flesh, talking to colleagues on a screen
instead of chit-chatting at the coffee machine, exercising online

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instead of going to the gym, and so on. Thus, almost instantly,
most things became “e-things”: e-learning, e-commerce, e-
gaming, e-books, e-attendance. Some of the old habits will
certainly return (the joy and pleasure of personal contacts can’t be
matched – we are social animals after all!), but many of the tech
behaviours that we were forced to adopt during confinement will
through familiarity become more natural. As social and physical
distancing persist, relying more on digital platforms to
communicate, or work, or seek advice, or order something will,
little by little, gain ground on formerly ingrained habits. In addition,
the pros and cons of online versus offline will be under constant
scrutiny through a variety of lenses. If health considerations
become paramount, we may decide, for example, that a cycling
class in front of a screen at home doesn’t match the conviviality
and fun of doing it with a group in a live class but is in fact safer
(and cheaper!). The same reasoning applies to many different
domains like flying to a meeting (Zoom is safer, cheaper, greener
and much more convenient), driving to a distant family gathering
for the weekend (the WhatsApp family group is not as fun but,
again, safer, cheaper and greener) or even attending an academic
course (not as fulfilling, but cheaper and more convenient).

1.6.1.2. The regulator

This transition towards more digital “of everything” in our
professional and personal lives will also be supported and
accelerated by regulators. To date governments have often
slowed the pace of adoption of new technologies by lengthy
ponderings about what the best regulatory framework should look
like but, as the example of telemedicine and drone delivery is now
showing, a dramatic acceleration forced by necessity is possible.
During the lockdowns, a quasi-global relaxation of regulations that
had previously hampered progress in domains where the
technology had been available for years suddenly happened
because there was no better or other choice available. What was
until recently unthinkable suddenly became possible, and we can
be certain that neither those patients who experienced how easy
and convenient telemedicine was nor the regulators who made it

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possible will want to see it go into reverse. New regulations will
stay in place. In the same vein, a similar story is unfolding in the
US with the Federal Aviation Authority, but also in other countries,
related to fast-tracking regulation pertaining to drone delivery. The
current imperative to propel, no matter what, the “contactless
economy” and the subsequent willingness of regulators to speed it
up means that there are no holds barred. What is true for until-
recently sensitive domains like telemedicine and drone delivery is
also true for more mundane and well-covered regulatory fields,
like mobile payments. Just to provide a banal example, in the
midst of the lockdown (in April 2020), European banking
regulators decided to increase the amount that shoppers could
pay using their mobile devices while also reducing the
authentication requirements that made it previously difficult to
make payments using platforms like PayPal or Venmo. Such
moves will only accelerate the digital “prevalence” in our daily
lives, albeit not without contingent cybersecurity issues.

1.6.1.3. The firm

In one form or another, social- and physical-distancing

measures are likely to persist after the pandemic itself subsides,
justifying the decision in many companies from different industries
to accelerate automation. After a while, the enduring concerns
about technological unemployment will recede as societies
emphasize the need to restructure the workplace in a way that
minimizes close human contact. Indeed, automation technologies
are particularly well suited to a world in which human beings can’t
get too close to each other or are willing to reduce their
interactions. Our lingering and possibly lasting fear of being
infected with a virus (COVID-19 or another) will thus speed the
relentless march of automation, particularly in the fields most
susceptible to automation. In 2016, two academics from Oxford
University came to the conclusion that up to 86% of jobs in
restaurants, 75% of jobs in retail and 59% of jobs in entertainment
could be automatized by 2035.[123] These three industries are
among those the hardest hit by the pandemic and in which
automating for reasons of hygiene and cleanliness will be a

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necessity that in turn will further accelerate the transition towards
more tech and more digital. There is an additional phenomenon
set to support the expansion of automation: when “economic
distancing” might follow social distancing. As countries turn inward
and global companies shorten their super-efficient but highly
fragile supply chains, automation and robots that enable more
local production, while keeping costs down, will be in great
demand.

The process of automation was set in motion many years ago,

but the critical issue once again relates to the accelerating pace of
change and transition: the pandemic will fast-forward the adoption
of automation in the workplace and the introduction of more robots
in our personal and professional lives. From the onset of the
lockdowns, it became apparent that robots and AI were a “natural”
alternative when human labour was not available. Furthermore,
they were used whenever possible to reduce the health risks to
human employees. At a time when physical distancing became an
obligation, robots were deployed in places as different as
warehouses, supermarkets and hospitals in a broad range of
activities, from shelf scanning (an area in which AI has made
tremendous forays) to cleaning and of course robotic delivery – a
soon-to-be important component of healthcare supply chains that
will in turn lead to the “contactless” delivery of groceries and other
essentials. As for many other technologies that were on the
distant horizon in terms of adoption (like telemedicine),
businesses, consumers and public authorities are now rushing to
turbocharge the speed of adoption. In cities as varied as
Hangzhou, Washington DC and Tel Aviv, efforts are under way to
move from pilot programmes to large-scale operations capable of
putting an army of delivery robots on the road and in the air.
Chinese e-commerce giants like Alibaba and jd.com are confident
that, in the coming 12-18 months, autonomous delivery could
become widespread in China – much earlier than anticipated prior
to the pandemic.

Maximum attention is often focused on industrial robots as

they are the most visible face of automation, but radical
acceleration is also coming in workplace automation via software

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and machine learning. So-called Robotic Process Automation
(RPA) makes businesses more efficient by installing computer
software that rivals and replaces the actions of a human worker.
This can take multiple forms, ranging from Microsoft’s finance
group consolidating and simplifying disparate reports, tools and
content into an automated, role-based personalized portal, to an
oil company installing software that sends pictures of a pipeline to
an AI engine, to compare the pictures with an existing database
and alert the relevant employees to potential problems. In all
cases, RPA helps to reduce the time spent compiling and
validating data, and therefore cuts costs (at the expense of a likely
increase in unemployment, as mentioned in the “Economic reset”
section). During the peak of the pandemic, RPA won its spurs by
proving its efficiency at handling surges in volume; thus ratified, in
the post-pandemic era the process will be rolled out and fast-
tracked. Two examples prove this point. RPA solutions helped
some hospitals to disseminate COVID-19 test results, saving
nurses as much as three hours’ work per day. In a similar vein, an
AI digital device normally used to respond to customer requests
online was adapted to help medical digital platforms screen
patients online for COVID-19 symptoms. For all these reasons,
Bain & Company (a consultancy) estimates that the number of
companies implementing this automation of business processes
will double over the next two years, a timeline that the pandemic
may shorten still further.[124]

1.6.2. Contact tracing, contact tracking and

surveillance

An important lesson can be learned from the countries that

were more effective in dealing with the pandemic (in particular
Asian nations): technology in general and digital in particular help.
Successful contact tracing proved to be a key component of a
successful strategy against COVID-19. While lockdowns are
effective at reducing the reproduction rate of the coronavirus, they
don’t eliminate the threat posed by the pandemic. In addition, they
come at injuriously high economic and societal cost. It will be very
hard to fight COVID-19 without an effective treatment or a vaccine

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and, until then, the most effective way to curtail or stop
transmission of the virus is by widespread testing followed by the
isolation of cases, contact tracing and the quarantine of contacts
exposed to the people infected. As we will see below, in this
process technology can be a formidable shortcut, allowing public-
health officials to identify infected people very rapidly, thus
containing an outbreak before it starts to spread.

Contact tracing and tracking are therefore essential

components of our public-health response to COVID-19. Both
terms are often used interchangeably, yet they have slightly
different meanings. A tracking app gains insights in real time by,
for example, determining a person’s current location through
geodata via GPS coordinates or radio cell location. By contrast,
tracing consists in gaining insights in retrospect, like identifying
physical contacts between people using Bluetooth. Neither offer a
miracle solution that can stop in its entirety the spread of the
pandemic, but they make it possible to almost immediately sound
the alarm, permitting early intervention, thus limiting or containing
the outbreak, particularly when it occurs in superspreading
environments (like a community or family gathering). For reasons
of convenience and ease of reading, we’ll merge the two and will
use them interchangeably (as articles in the press often do).

The most effective form of tracking or tracing is obviously the

one powered by technology: it not only allows backtracking all the
contacts with whom the user of a mobile phone has been in touch,
but also tracking the user’s real-time movements, which in turn
affords the possibility to better enforce a lockdown and to warn
other mobile users in the proximity of the carrier that they have
been exposed to someone infected.

It comes as no surprise that digital tracing has become one of

the most sensitive issues in terms of public health, raising acute
concerns about privacy around the world. In the early phases of
the pandemic, many countries (mostly in East Asia but also others
like Israel) decided to implement digital tracing under different
forms. They shifted from the retroactive tracing of chains of past
contagion to the real-time tracking of movements in order to

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confine a person infected by COVID-19 and to enforce
subsequent quarantines or partial lockdowns. From the outset,
China, Hong Kong SAR and South Korea implemented coercive
and intrusive measures of digital tracing. They took the decision to
track individuals without their consent, through their mobile and
credit card data, and even employed video surveillance (in South
Korea). In addition, some economies required the mandatory
wearing of electronic bracelets for travel arrivals and people in
quarantine (in Hong Kong SAR) to alert those individuals
susceptible of being infected. Others opted for “middle-ground”
solutions, where individuals placed in quarantine are equipped
with a mobile phone to monitor their location and be publicly
identified should they breach the rules.

The digital tracing solution most lauded and talked about was
the TraceTogether app run by Singapore’s Ministry of Health. It
seems to offer the “ideal” balance between efficiency and privacy
concerns by keeping user data on the phone rather than on a
server, and by assigning the login anonymously. The contact
detection only works with the latest versions of Bluetooth (an
obvious limitation in many less digitally advanced countries where
a large percentage of mobiles do not have sufficient Bluetooth
capability for effective detection). Bluetooth identifies the user’s
physical contacts with another user of the application accurately to
within about two metres and, if a risk of COVID-19 transmission is
incurred, the app will warn the contact, at which point the
transmission of stored data to the ministry of health becomes
mandatory (but the contact’s anonymity is maintained).
TraceTogether is therefore non-intrusive in terms of privacy, and
its code, available in open source, makes it usable by any country
anywhere in the world, yet privacy advocates object that there are
still risks. If the entire population of a country downloaded the
application, and if there were a sharp increase in COVID-19
infections, then the app could end up identifying most citizens.
Cyber intrusions, issues of trust in the operator of the system and
the timing of data retention pose additional privacy concerns.

Other options exist. These are mainly related to the availability

of open and verifiable source codes, and to guarantees pertaining

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to data supervision and the length of conservation. Common
standards and norms could be adopted, particularly in the EU
where many citizens fear that the pandemic will force a trade-off
between privacy and health. But as Margrethe Vestager, the EU
Commissioner for Competition, observed:

I think that is a false dilemma, because you can do so

many things with technology that are not invasive of your
privacy. I think that, very often, when people say it’s only
doable in one way, it’s because they want the data for their
own purposes. We have made a set of guidelines, and with
member states we have translated that into a toolbox, so that
you can do a voluntary app with decentralized storage, with
Bluetooth technology. You can use technology to track the
virus, but you can still give people the freedom of choice, and,
in doing that, people trust that the technology is for virus
tracking and not for any other purposes. I think it is essential
that we show that we really mean it when we say that you
should be able to trust technology when you use it, that this is
not a start of a new era of surveillance. This is for virus
tracking, and this can help us open our societies.[125]

Again, we want to emphasize that this is a fast-moving and

highly volatile situation. The announcement made in April by
Apple and Google that they are collaborating to develop an app
that health officials could use to reverse-engineer the movements
and connections of a person infected by the virus points to a
possible way out for societies most concerned about data privacy
and that fear digital surveillance above anything else. The person
who carries the mobile would have to voluntarily download the
app and would have to agree to share the data, and the two
companies made it clear that their technology would not be
provided to public-health agencies that do not abide by their
privacy guidelines. But voluntary contact-tracing apps have a
problem: they do preserve the privacy of their users but are only
effective when the level of participation is sufficiently high – a
collective-action problem that underlines once again the
profoundly interconnected nature of modern life beneath the
individualist façade of rights and contractual obligations. No

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voluntary contract-tracing app will work if people are unwilling to
provide their own personal data to the governmental agency that
monitors the system; if any individual refuses to download the app
(and therefore to withhold information about a possible infection,
movements and contacts), everyone will be adversely affected. In
the end, citizens will only use the app if they regard it as
trustworthy, which is itself dependent upon trust in the government
and public authorities. At the end of June 2020, the experience
with tracing apps was recent and mixed. Fewer than 30 countries
had put them in place.[126] In Europe, some countries like
Germany and Italy rolled out apps based on the system
developed by Apple and Google, while other countries, like
France, decided to develop their own app, raising issues of
interoperability. In general, technical problems and concerns with
privacy seemed to affect the app’s use and rate of adoption. Just
to offer some examples: the UK, following technical glitches and
criticism from privacy activists, made a U-turn and decided to
replace its domestically-developed contact-tracing app with the
model offered by Apple and Google. Norway suspended the use
of its app due to privacy concerns while, in France, just three
weeks after being launched, the StopCovid app had simply failed
to take off, with a very low rate of adoption (1.9 million people)
followed by frequent decisions to uninstall it.

Today, about 5.2 billion smartphones exist in the world, each

with the potential to help identify who is infected, where and often
by whom. This unprecedented opportunity may explain why
different surveys conducted in the US and Europe during their
lockdowns indicated that a growing number of citizens seemed to
favour smartphone tracking from public authorities (within very
specific boundaries). But as always, the devil is in the detail of the
policy and its execution. Questions like whether the digital tracking
should be mandatory or voluntary, whether the data should be
collected on an anonymized or personal basis and whether the
information should be collected privately or publicly disclosed
contain many different shades of black and white, making it
exceedingly difficult to agree upon a unified model of digital
tracing in a collective fashion. All these questions, and the unease

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they can provoke, were exacerbated by the rise of corporations
tracking employees’ health that emerged in the early phases of
national reopenings. They will continuously grow in relevance as
the corona pandemic lingers on and fears about other possible
pandemics surface.

As the coronavirus crisis recedes and people start returning to

the workplace, the corporate move will be towards greater
surveillance; for better or for worse, companies will be watching
and sometimes recording what their workforce does. The trend
could take many different forms, from measuring body
temperatures with thermal cameras to monitoring via an app how
employees comply with social distancing. This is bound to raise
profound regulatory and privacy issues, which many companies
will reject by arguing that, unless they increase digital
surveillance, they won’t be able to reopen and function without
risking new infections (and being, in some cases, liable). They will
cite health and safety as justification for increased surveillance.

The perennial concern expressed by legislators, academics

and trade unionists is that the surveillance tools are likely to
remain in place after the crisis and even when a vaccine is finally
found, simply because employers don’t have any incentive to
remove a surveillance system once it’s been installed, particularly
if one of the indirect benefits of surveillance is to check on
employees’ productivity.

This is what happened after the terrorist attacks of 11

September 2001. All around the world, new security measures like
employing widespread cameras, requiring electronic ID cards and
logging employees or visitors in and out became the norm. At that
time, these measures were deemed extreme, but today they are
used everywhere and considered “normal”. An increasing number
of analysts, policy-makers and security specialists fear the same
will now happen with the tech solutions put into place to contain
the pandemic. They foresee a dystopian world ahead of us.

1.6.3. The risk of dystopia

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 Now that information and communication technologies
permeate almost every aspect of our lives and forms of social
participation, any digital experience that we have can be turned
into a “product” destined to monitor and anticipate our behaviour.
The risk of possible dystopia stems from this observation. Over
the past few years, it has nourished countless works of arts,
ranging from novels like The Handmaid’s Tale to the TV series
“Black Mirror”. In academia, it finds its expression in the research
undertaken by scholars like Shoshana Zuboff. Her book
Surveillance Capitalism warns about customers being reinvented
as data sources, with “surveillance capitalism” transforming our
economy, politics, society and our own lives by producing deeply
anti-democratic asymmetries of knowledge and the power that
accrues to knowledge.

Over the coming months and years, the trade-off between

public-health benefits and loss of privacy will be carefully weighed,
becoming the topic of many animated conversations and heated
debates. Most people, fearful of the danger posed by COVID-19,
will ask: Isn’t it foolish not to leverage the power of technology to
come to our rescue when we are victims of an outbreak and
facing a life-or-death kind of situation? They will then be willing to
give up a lot of privacy and will agree that in such circumstances
public power can rightfully override individual rights. Then, when
the crisis is over, some may realize that their country has
suddenly been transformed into a place where they no longer
wish to live. This thought process is nothing new. Over the last
few years, both governments and firms have been using
increasingly sophisticated technologies to monitor and sometimes
manipulate citizens and employees; if we are not vigilant, warn the
privacy advocates, the pandemic will mark an important
watershed in the history of surveillance.[127] The argument put
forward by those who above all fear the grip of technology on
personal freedom is plain and simple: in the name of public health,
some elements of personal privacy will be abandoned for the
benefit of containing an epidemic, just as the terrorist attacks of
9/11 triggered greater and permanent security in the name of
protecting public safety. Then, without realizing it, we will fall

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victims of new surveillance powers that will never recede and that
could be repurposed as a political means for more sinister ends.

As the last few pages have exposed beyond a reasonable

doubt, the pandemic could open an era of active health
surveillance made possible by location-detecting smartphones,
facial-recognition cameras and other technologies that identify
sources of infection and track the spread of a disease in quasi real
time.

Despite all the precautions certain countries take to control the

power of tech and limit surveillance (others are not so concerned),
some thinkers worry about how some of the quick choices we
make today will influence our societies for years to come. The
historian Yuval Noah Harari is one of them. In a recent article, he
argues that we’ll have a fundamental choice to make between
totalitarian surveillance and citizen empowerment. It’s worth
exposing his argument in detail:

Surveillance technology is developing at breakneck

speed, and what seemed science-fiction 10 years ago is
today old news. As a thought experiment, consider a
hypothetical government that demands that every citizen
wears a biometric bracelet that monitors body temperature
and heart-rate 24 hours a day. The resulting data is hoarded
and analysed by government algorithms. The algorithms will
know that you are sick even before you know it, and they will
also know where you have been, and who you have met. The
chains of infection could be drastically shortened, and even
cut altogether. Such a system could arguably stop the
epidemic in its tracks within days. Sounds wonderful, right?
The downside is, of course, that this would give legitimacy to
a terrifying new surveillance system. If you know, for
example, that I clicked on a Fox News link rather than a CNN
link, that can teach you something about my political views
and perhaps even my personality. But if you can monitor what
happens to my body temperature, blood pressure and heart-
rate as I watch the video clip, you can learn what makes me
laugh, what makes me cry, and what makes me really, really

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 angry. It is crucial to remember that anger, joy, boredom and
love are biological phenomena just like fever and a cough.
The same technology that identifies coughs could also
identify laughs. If corporations and governments start
harvesting our biometric data en masse, they can get to know
us far better than we know ourselves, and they can then not
just predict our feelings but also manipulate our feelings and
sell us anything they want — be it a product or a politician.
Biometric monitoring would make Cambridge Analytica’s data
hacking tactics look like something from the Stone Age.
Imagine North Korea in 2030, when every citizen has to wear
a biometric bracelet 24 hours a day. If you listen to a speech
by the Great Leader and the bracelet picks up the tell-tale
signs of anger, you are done for.[128]

We will have been warned! Some social commentators like

Evgeny Morozov go even further, convinced that the pandemic
heralds a dark future of techno-totalitarian state surveillance. His
argument, premised upon the concept of “technological
solutionism” put forward in a book written in 2012, posits that the
tech “solutions” offered to contain the pandemic will necessarily
take the surveillance state to the next level. He sees evidence of
this in two distinct strands of “solutionism” in government
responses to the pandemic that he has identified. On the one
hand, there are “progressive solutionists” who believe that the
appropriate exposure through an app to the right information
about infection could make people behave in the public interest.
On the other hand, there are “punitive solutionists” determined to
use the vast digital surveillance infrastructure to curb our daily
activities and punish any transgressions. What Morozov perceives
as the greatest and ultimate danger to our political systems and
liberties is that the “successful” example of tech in monitoring and
containing the pandemic will then “entrench the solutionist toolkit
as the default option for addressing all other existential problems
– from inequality to climate change. After all, it is much easier to
deploy solutionist tech to influence individual behaviour than it is
to ask difficult political questions about the root causes of these
crises”.[129]

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 ****

Spinoza, the 17th century philosopher who resisted oppressive

authority all his life, famously said: “Fear cannot be without hope
nor hope without fear.” This is a good guiding principle to conclude
this chapter, along with the thought that nothing is inevitable and
that we must be symmetrically aware of both good and bad
outcomes. Dystopian scenarios are not a fatality. It is true that in
the post-pandemic era, personal health and well-being will
become a much greater priority for society, which is why the genie
of tech surveillance will not be put back into the bottle. But it is for
those who govern and each of us personally to control and
harness the benefits of technology without sacrificing our
individual and collective values and freedoms.

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 2. MICRO RESET (INDUSTRY AND
BUSINESS)

At the micro level, that of industries and companies, the Great

Reset will entail a long and complex series of changes and
adaptation. When confronted with it, some industry leaders and
senior executives may be tempted to equate reset with restart,
hoping to go back to the old normal and restore what worked in
the past: traditions, tested procedures and familiar ways of doing
things – in short, a return to business as usual. This won’t happen
because it can’t happen. For the most part “business as usual”
died from (or at the very least was infected by) COVID-19. Some
industries have been devastated by the economic hibernation
triggered by the lockdowns and social-distancing measures.
Others will have a hard time recovering lost revenues before
navigating an ever-narrower path to profitability caused by the
economic recession engulfing the world. However, for the majority
of businesses stepping into the post-coronavirus future, the key
issue will be to find the apposite balance between what functioned
before and what is needed now to prosper in the new normal. For
these companies, the pandemic is a unique opportunity to rethink
their organization and enact positive, sustainable and lasting
change.

What will define the new normal of a post-coronavirus

business landscape? How will companies be able to find the best
possible equilibrium between past success and the fundamentals
now needed to succeed in the post-pandemic era? The response
is obviously dependent upon and specific to each industry and the
severity with which it was hit by the pandemic. In the post-COVID-
19 era, apart from those few sectors in which companies will
benefit on average from strong tailwinds (most notably tech,
health and wellness), the journey will be challenging and
sometimes treacherous. For some, like entertainment, travel or
hospitality, a return to a pre-pandemic environment is

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unimaginable in the foreseeable future (and maybe never in some
cases…). For others, namely manufacturing or food, it is more
about finding ways to adjust to the shock and capitalize on some
new trends (like digital) to thrive in the post-pandemic era. Size
also makes a difference. The difficulties tend to be greater for
small businesses that, on average, operate on smaller cash
reserves and thinner profit margins than large companies. Moving
forward, most of them will be dealing with cost–revenue ratios that
put them at a disadvantage compared to bigger rivals. But being
small can offer some advantages in today’s world where flexibility
and celerity can make all the difference in terms of adaptation.
Being nimble is easier for a small structure than for an industrial
behemoth.

All this said, and irrespective of their industry and the specific
situation they find themselves in, almost every single company
decision-maker around the world will face similar issues and will
have to respond to some common questions and challenges. The
most obvious ones are the following:

1. Shall I encourage remote working for those who can do

it (about 30% of the total workforce in the US)?
2. Will I reduce air travel in my business, and how many
face-to-face meetings can I meaningfully replace by
virtual interactions?
3. How can I transform the business and our decision-
making process to become more agile and to move
faster and more decisively?
4. How can I accelerate the digitization and adoption
of digital solutions?

The macro reset discussed in Chapter 1 will translate into a

myriad of micro consequences at the industry and company level.
We review below some of these main trends before turning to the
issue of who are the “winners and losers” from the pandemic and
its effects on specific industries.

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 2.1. Micro trends
We are still in the early days of the post-pandemic era, but
powerful new or accelerating trends are already at work. For some
industries, these will prove a boon, for others a major challenge.
However, across all sectors, it will be up to each company to
make the most of these new trends by adapting with celerity and
decisiveness. The businesses that prove the most agile and
flexible will be those that emerge stronger.

2.1.1. Acceleration of digitization

In the pre-pandemic era, the buzz of “digital transformation”
was the mantra of most boards and executive committees. Digital
was “key”, it had to be “resolutely” implemented and was seen as
a “precondition to success”! Since then, in the space of just a few
months, the mantra has become a must – even, in the case of
some companies, a question of life or death. This is explicable
and understandable. During confinement, we depended entirely
on the Net for most things: from work and education to
socialization. It is the online services that allowed us to keep a
semblance of normalcy, and it is only natural that “online” should
be the largest beneficiary of the pandemic, giving a tremendous
boost to technologies and processes that enable us to do things
remotely: universal broadband internet, mobile and remote
payments, and workable e-government services, among others.
As a direct consequence, businesses that were already operating
online are bound to benefit from a lasting competitive advantage.
As more and diverse things and services are brought to us via our
mobiles and computers, companies in sectors as disparate as e-
commerce, contactless operations, digital content, robots and
drone deliveries (to name just a few) will thrive. It is not by
accident that firms like Alibaba, Amazon, Netflix or Zoom emerged
as “winners” from the lockdowns.

By and large, the consumer sector moved first and fastest.

From the necessary contactless experience imposed upon many
food and retail companies during the lockdowns to the virtual

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show rooms in the manufacturing industry allowing clients to
browse and choose the products they like best, most business-to-
consumer companies rapidly understood the need to offer their
clients a “beginning-to-end” digital journey.

As some lockdowns came to an end and certain economies

crept back to life, similar opportunities emerged in business-to-
business applications, particularly in manufacturing where
physical-distancing rules had to be put into place at short notice
often in challenging environments (e.g. on assembly lines). As a
direct result, the IoT made impressive inroads. Some companies
that had been slow in the recent pre-lockdown past to adopt IoT
are now embracing it en masse with the specific objective of doing
as many things as possible remotely. Equipment maintenance,
management inventory, supplier relations or safety strategies: all
of these different activities can now be performed (to a large
extent) via a computer. IoT offers companies not only the means
to execute and uphold social-distancing rules, but also to reduce
costs and implement more agile operations.

During the peak of the pandemic, O2O – online to offline –

gained major traction, highlighting the importance of having both
an online and offline presence, and opening the door (or perhaps
even the floodgates) to eversion. This phenomenon of blurring the
distinction between online and offline as identified by the famous
science fiction writer William Gibson who stated “Our world is
everting”[130] with the cyberspace relentlessly opening out has
emerged as one of the most potent trends of the post-COVID-19
era. The pandemic crisis accelerated this phenomenon of
eversion because it both forced and encouraged us towards a
digital, “weightless” world faster than ever, as more and more
economic activity had no choice but to take place digitally:
education, consulting, publishing and many others. We could go
as far as to say that, for a little while, teleportation supplanted
transportation: most executive committee meetings, board
meetings, team meetings, brainstorm exercises and other forms of
personal or social interaction had to take place remotely. This new
reality is captured in the market capitalization of Zoom (the
videoconferencing company) that skyrocketed to $70 billion in

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June 2020, higher (at that time) than that of any US airline.
Concurrently, large online companies like Amazon and Alibaba
expanded decisively in the O2O business, particularly in food
retailing and logistics.

Trends like telemedicine or remote working that expanded

extensively during the confinement are unlikely to retreat – for
them there will be no return to the status quo that prevailed prior
to the pandemic. Telemedicine, in particular, will benefit
considerably. For obvious reasons, healthcare is one of the most
heavily regulated industries in the world, a fact that inevitably
slows the pace of innovation. But the necessity to address the
pandemic with any means available (plus, during the outbreak, the
need to protect health workers by allowing them to work remotely)
removed some of the regulatory and legislative impediments
related to the adoption of telemedicine. In the future, it is certain
that more medical care will be delivered remotely. It will in turn
accelerate the trend towards more wearable and at-home
diagnostics, like smart toilets capable of tracking health data and
performing health analyses. Equally, the pandemic may prove to
be a boon for online education. In Asia, the shift to online
education has been particularly notable, with a sharp increase in
students’ digital enrolments, much higher valuation for online
education businesses and more capital available for “ed-tech”
start-ups. The flipside of this particular coin will be an increase in
pressure on institutions offering more traditional methods of
education to validate their worth and justify their fees (as we
expand upon a little later).

The speed of expansion has been nothing short of

breathtaking. “In Britain, less than 1 percent of initial medical
consultations took place via video link in 2019; under lockdown,
100 percent are occurring remotely. In another example, a leading
US retailer in 2019 wanted to launch a curbside-delivery business;
its plan envisaged taking 18 months. During the lockdown, it went
live in less than a week – allowing it to serve its customers while
maintaining the livelihoods of its workforce. Online banking
interactions have risen to 90 percent during the crisis, from 10
percent, with no drop-off in quality and an increase in compliance

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while providing a customer experience that isn’t just about online
banking.”[131] Similar examples abound.

The social mitigation response to the pandemic and the

physical-distancing measures imposed during the confinement will
also result in e-commerce emerging as an ever-more powerful
industry trend. Consumers need products and, if they can’t shop,
they will inevitably resort to purchasing them online. As the habit
kicks in, people who had never shopped online before will become
comfortable with doing so, while people who were part-time online
shoppers before will presumably rely on it more. This was made
evident during the lockdowns. In the US, Amazon and Walmart
hired a combined 250,000 workers to keep up with the increase in
demand and built massive infrastructure to deliver online. This
accelerating growth of e-commerce means that the giants of the
online retail industry are likely to emerge from the crisis even
stronger than they were in the pre-pandemic era. There are
always two sides to a story: as the habit of shopping online
becomes more prevalent, it will depress bricks-and-mortar (high
street and mall) retail still further – a phenomenon explored in
more detail in the next sections.

2.1.2. Resilient supply chains

The very nature of global supply chains and their innate

fragility means that arguments about shortening them have been
brewing for years. They tend to be intricate and complex to
manage. They are also difficult to monitor in terms of compliance
with environmental standards and labour laws, potentially
exposing companies to reputation risk and damage to their
brands. In light of this troubled past, the pandemic has placed the
last nail in the coffin of the principle that companies should
optimize supply chains based on individual component costs and
depending on a single supply source for critical materials,
summed up as favouring efficiency over resilience. In the post-
pandemic era, it is “end-to-end value optimization”, an idea that
includes both resilience and efficiency alongside cost, that will
prevail. It is epitomized in the formula that “just-in-case” will
eventually replace “just-in-time”.

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 The shocks to global supply chains analysed in the macro
section will affect global businesses and smaller companies alike.
But what does “just-in-case” mean in practice? The model of
globalization developed at the end of the last century, conceived
and constructed by global manufacturing companies that were on
the prowl for cheap labour, products and components, has found
its limits. It fragmented international production into ever-more
intricate bits and pieces and resulted in a system run on a just-in-
time basis that has proven to be extremely lean and efficient, but
also exceedingly complex and, as such, very vulnerable
(complexity brings fragility and often results in instability).
Simplification is therefore the antidote, which should in turn
generate more resilience. This means that the “global value
chains” that represent roughly three-quarters of all global trade will
inevitably decline. This decline will be compounded by the new
reality that companies dependent upon complex just-in-time
supply chains can no longer take it for granted that tariff
commitments enshrined by the World Trade Organization will
protect them from a sudden surge in protectionism somewhere.
As a result, they will be forced to prepare accordingly by reducing
or localizing their supply chain, and elaborating alternative
production or procurement plans to guard against a prolonged
disruption. Every business whose profitability is contingent upon
the principle of just-in-time global supply chain will have to rethink
how it operates and probably sacrifice the idea of maximizing
efficiency and profits for the sake of “supply security” and
resilience. Resilience will therefore become the primary
consideration for any business serious about hedging against
disruption – be it disruption to a particular supplier, to a possible
change in trade policy or to a particular country or region. In
practice, this will force companies to diversify their supplier base,
even at the cost of holding inventories and building in redundancy.
It will also compel these companies to ensure that the same is
true within their own supply chain: they will assess resilience
along their entire supply chain, all the way down to their ultimate
supplier and, possibly, even the suppliers of their suppliers. The
costs of production will inevitably rise, but this will be the price to
pay for building resilience. At first glance, the industries that will

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be the most affected because they will be the first to shift
production patterns are automotive, electronics and industrial
machinery.

2.1.3. Governments and business

For all the reasons expanded upon in the first chapter, COVID-
19 has rewritten many of the rules of the game between the public
and private sectors. In the post-pandemic era, business will be
subject to much greater government interference than in the past.
The benevolent (or otherwise) greater intrusion of governments in
the life of companies and the conduct of their business will be
country- and industry-dependent, therefore taking many different
guises. Outlined below are three notable forms of impact that will
emerge with force in the early months of the post-pandemic
period: conditional bailouts, public procurement and labour market
regulations.

For a start, all the stimulus packages being put together in

Western economies to support ailing industries and individual
companies will have covenants constraining in particular the
borrowers’ ability to fire employees, buy back shares and pay
executive bonuses. In the same vein, governments (encouraged,
supported and sometimes “pushed” by activists and public
sentiments) will target suspiciously low corporate tax bills and
generously high executive rewards. They will show little patience
for senior executives and investors who push companies to spend
more on buy-backs, minimize their tax payments and pay huge
dividends. US airlines, pilloried for seeking government
assistance, having recently and consistently used large amounts
of company cash to pay shareholder dividends, are a prime
example of how this change in public attitude will be enacted by
governments. In addition, in the coming months and years, a
“regime change” might occur when policy-makers take on a
substantial portion of private-sector default risk. When this
happens, governments will want something in return. Germany’s
bailout of Lufthansa epitomizes this sort of situation: the
government injected liquidity into the national carrier, but only on

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the condition that the company constrains executive pay
(including stock options) and commits to not paying dividends.

Better alignment between public policy and corporate planning

will be a particular focus of attention in terms of greater
government interference. The scramble for ventilators during the
peak of the pandemic epitomizes why. In 2010 in the US, 40,000
ventilators had been ordered through a government contract but
were never delivered, largely explaining the country’s shortage
that became so apparent in March 2020. What led to this situation
of scarcity? In 2012, the original company that had won the bid
was bought (in somewhat dubious and obscure circumstances) by
a much larger manufacturer (a publicly traded company also
producing ventilators): it later emerged that the purchasing
company wanted to prevent the original bidder from building a
cheaper ventilator that would have undermined the profitability of
its own business. This company dragged its feet before eventually
cancelling the contract and ultimately being acquired by a rival.
None of the 40,000 ventilators were ever delivered to the US
government.[132] It is unlikely that this sort of situation will reoccur
in the post-pandemic era, as public authorities will think twice
about outsourcing projects that have critical public-health
implications (or indeed critical public implications, security or
otherwise) to private companies. The bottom line: the
maximization of profit and the short-termism that often goes with it
is rarely or, at least, not always consistent with the public goal of
preparing for a future crisis.

Around the world, the pressure to improve the social protection

and salary level of low-paid employees will increase. Most likely, in
our post-pandemic world increases in the minimum wage will
become a central issue that will be addressed via the greater
regulation of minimum standards and a more thorough
enforcement of the rules that already exist. Most probably,
companies will have to pay higher taxes and various forms of
government funding (like services for social care). The gig
economy will feel the impact of such a policy more than any other
sector. Prior to the pandemic, it was already in the cross hairs of
government scrutiny. In the post-pandemic era, for reasons

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related to the redefinition of the social contract, this scrutiny will
intensify. Companies that rely on gig workers to operate will also
feel the effect of more government interference, possibly even to a
degree capable of undermining their financial viability. As the
pandemic will radically alter social and political attitudes towards
gig workers, governments will force those companies that employ
them to offer proper contracts with benefits such as social
insurance and health coverage. The labour issue will loom large
for them and, if they have to employ gig workers as normal
employees, they will cease to be profitable. Their raison d’être
might even vanish.

2.1.4. Stakeholder capitalism and ESG

Over the past 10 years or so, the fundamental changes that
have taken place in each of the five macro categories reviewed in
Chapter 1 have profoundly altered the environment in which
companies operate. They have made stakeholder capitalism and
environmental, social and governance (ESG) considerations
increasingly relevant to sustainable value creation (ESG can be
considered as the yardstick for stakeholder capitalism).

The pandemic struck at a time when many different issues,

ranging from climate change activism and rising inequalities to
gender diversity and #MeToo scandals, had already begun to
raise awareness and heighten the criticality of stakeholder
capitalism and ESG considerations in today’s interdependent
world. Whether espoused openly or not, nobody would now deny
that companies’ fundamental purpose can no longer simply be the
unbridle pursuit of financial profit; it is now incumbent upon them
to serve all their stakeholders, not only those who hold shares.
This is corroborated by early anecdotal evidence pointing to an
even more positive outlook for ESG in the post-pandemic era.
This can be explained on three fronts:

1. The crisis will have created, or reinforced, an acute sense

of responsibility and urgency on most issues pertaining to
ESG strategies – the most important being climate change.
But others, such as consumer behaviour, the future of work

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 and mobility, and supply-chain responsibility, will move to
the forefront of the investment process and will become an
integral component of due diligence.

2. The pandemic leaves no doubt in boardrooms that the

absence of ESG considerations has the potential to
destroy substantial value and even threaten the viability of
a business. ESG will therefore become more fully
integrated and internalized into the core strategy and
governance of a company. It will also alter the way in which
investors assess corporate governance. Tax records,
dividend payments and remunerations will become
increasingly scrutinized for fear of incurring a reputational
cost when a problem arises or is made public.

3. Fostering employee and community goodwill will be key to

enhancing a brand’s reputation. More and more,
companies will have to prove that they treat their workers
well, by welcoming improved labour practices and paying
attention to health and safety as well as well-being in the
workplace. Companies will not necessarily adhere to these
measures because they are genuinely “good”, but rather
because the “price” of not doing so will be too high in terms
of the wrath of activists, both activist investors and social
activists.

The conviction that ESG strategies benefited from the

pandemic and are most likely to benefit further is corroborated by
various surveys and reports. Early data shows that the
sustainability sector outperformed conventional funds during the
first quarter of 2020. According to Morningstar, which compared
first-quarter returns for more than 200 sustainability equity funds
and exchange traded funds, the sustainable funds performed
better by one percentage point or two, on a relative basis. A report
from BlackRock offers further evidence that companies with strong
ESG ratings outperformed their peers during the pandemic.[133]
Several analysts suggested that this outperformance might simply
have reflected the reduced exposure to fossil fuels of ESG funds
and strategies, but BlackRock asserts that ESG compliant

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companies (another way to say that they adhere to the principle of
stakeholder capitalism) tend to be more resilient because of their
holistic understanding of risk management. It seems that the more
susceptible the world becomes to a broad set of macro risks and
issues, the greater the necessity to embrace stakeholder
capitalism and ESG strategies.

The debate between those who believe that stakeholder

capitalism will be sacrificed on the altar of the recovery and those
who argue that it is now time to “build back better” is far from
resolved. For every Michael O’Leary (the CEO of Ryanair) who
thinks that COVID-19 will put ESG considerations “on the back
burner for a few years”, there is a Brian Chesky (CEO of Airbnb)
who is committed to transforming his business into a “stakeholder
company”.[134] However, irrespective of anybody’s opinion about
the merits of stakeholder capitalism and ESG strategies and their
future role in the post-pandemic era, activism will make a
difference by reinforcing the trend. Social activists and many
activist investors will scrutinize closely how companies behaved
during the pandemic crisis. It is likely that the markets or the
consumers, or both, will punish those companies that performed
poorly on social issues. An essay co-written in April 2020 by Leo
Strine, an influential judge in corporate America, hammers home
this point about a necessary change in corporate governance:
“We are again paying the price for a corporate governance system
that lacks focus on financial soundness, sustainable wealth
creation and the fair treatment of workers. For too long, the stock
market’s power over our economy has grown at the expense of
other stakeholders, particularly workers. Although overall wealth
has grown, it has done so in a skewed way that is unfair to the
bulk of the American workers who are primarily responsible for
that increase. The shift toward satisfying insatiable stock market
demands has also led to increasing levels of corporate debt and
economic risk”.[135]

For activists, the decency exhibited (or not) by companies

during the crisis will be paramount. Businesses will be judged for
years to come by their actions – critically not just in a narrow
commercial sense but viewed through a broader social lens. Few

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will forget, for example, that over the past 10 years, US airlines
spent 96% of their cash flow on share buy-backs  and that, in
March 2020, EasyJet paid a £174 million dividend pay-out to its
shareholders (including £60 million to its founder).[136]

The activism to which companies may now be subjected is

going beyond the traditional confines of social activism (by
outsiders) and investor activism; with employee activism, it is
expanding internally. In May 2020, just as the epicentre of the
pandemic was moving from the US to Latin America, Google
employees, emboldened by a report published by Greenpeace,
succeeded in convincing the company to no longer build custom
AI and machine learning algorithms for upstream extraction in the
oil and gas industry.[137]. Several such examples in the recent past
illustrate rising employee activism, ranging from environmental
issues to social and inclusivity concerns. They provide a telling
example of how different types of activists are learning to work
together to further the goals to achieve a more sustainable future.

Concomitantly, a sharp increase has taken place in the oldest

form of activism: industrial action. In the US in particular, while
many white-collar workers were riding out the pandemic while
working from home, many low-wage essential workers “out in the
trenches” who had no choice but to go to work staged a wave of
walkouts, strikes and protests.[138] As issues of worker safety, pay
and benefits become more central, the agenda of stakeholder
capitalism will gain in relevance and strength.

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 2.2. Industry reset
As a result of the lockdowns, the pandemic had immediate
effect on every possible industry around the world. This impact is
ongoing and will continue to be felt in the coming years. As global
supply chains are reconfigured, as consumer demands change,
as governments intervene more, as market conditions evolve and
as technology disrupts, companies will be forced to continuously
adapt and reinvent themselves. The purpose of this section is not
to offer a precise account of how each particular industry might
evolve, but rather to illustrate with impressionist brush strokes
how some of the main features and trends associated with the
pandemic will impact specific industries.

2.2.1. Social interaction and de-densification

Effects on travel and tourism, hospitality, entertainment, retail,
aerospace and even the automotive industry

The ways in which consumers interact with each other as well

as what and how they consume have been significantly affected
by the pandemic. Consequently, the ensuing reset in different
industries will vary fundamentally depending on the nature of the
economic transaction involved. In those industries where
consumers transact socially and in person, the first months and
possibly years of the post-pandemic era will be much tougher than
for those where the transaction can be at a greater physical
distance or even virtual. In modern economies, a large amount of
what we consume happens through social interaction: travel and
vacations, bars and restaurants, sporting events and retail,
cinemas and theatres, concerts and festivals, conventions and
conferences, museums and libraries, education: they all
correspond to social forms of consumption that represent a
significant portion of total economic activity and employment
(services represent about 80% of total jobs in the US, most of
which are “social” by nature). They cannot take place in the virtual
world or, when they can, only in a truncated and often suboptimal
form (like a live orchestra performance on a screen). Industries
that have social interaction at their core have been hit the hardest

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by the lockdowns. Among them are many sectors that add up to a
very significant proportion of total economic activity and
employment: travel and tourism, leisure, sport, events and
entertainment. For months and possibly years, they will be forced
to operate at reduced capacity, hit by the double whammy of fears
about the virus restraining consumption and the imposition of
regulations aimed at countering these fears by creating more
physical space between consumers. Public pressure for physical
distancing will endure until a vaccine is developed and
commercialized at scale (which, again, according to most experts,
is most unlikely to happen before the first or second quarter of
2021 at the earliest). In the intervening period, it is likely that
people may travel much less for both vacation and/or business,
they may go less frequently to restaurants, cinemas and theatres,
and may decide that it is safer to buy online rather than physically
go to the shops. For these fundamental reasons, the industries hit
the hardest by the pandemic will also be the slowest to recover.
Hotels, restaurants, airlines, shops and cultural venues in
particular will be forced to make expensive alterations in the way
they deliver their offerings in order to adapt to a post-pandemic
new normal that will demand the implementation of drastic
changes involving introducing extra space, regular cleaning,
protections for staff and technology that limits customers’
interactions with workers.

In many of these industries, but particularly in hospitality and

retail, small businesses will suffer disproportionately, having to
walk a very fine line between surviving the closures imposed by
the lockdowns (or sharply reduced business) and bankruptcy.
Operating at reduced capacity with even tighter margins means
that many will not survive. The fallout from their failure will have
hard-felt ramifications both for national economies and local
communities. Small businesses are the main engine of
employment growth and account in most advanced economies for
half of all private-sector jobs. If significant numbers of them go to
the wall, if there are fewer shops, restaurants and bars in a
particular neighbourhood, the whole community will be impacted
as unemployment rises and demand dries up, setting in motion a

145
vicious and downward spiral and affecting ever greater numbers
of small businesses in a particular community. The ripples will
eventually spread beyond the confines of the local community,
affecting, albeit hopefully to a lesser extent, other more distant
areas. The highly interdependent and interconnected nature of
today’s economy, industries and businesses, comparable to the
dynamic linking the macro categories, means that each has a
rapid knock-on effect on the others in a myriad of different
manners. Take restaurants. This sector of activity has been hit by
the pandemic to such a dramatic extent that it is not even sure
how the restaurant business will ever come back. As one
restaurateur put it: “I, like hundreds of other chefs across the city
and thousands around the country, am now staring down the
question of what our restaurants, our careers, our lives, might look
like if we can even get them back.”[139] In France and the UK,
several industry voices estimate that up to 75% of independent
restaurants might not survive the lockdowns and subsequent
social-distancing measures. The large chains and fast-food giants
will. This in turn suggests that big businesses will get bigger while
the smallest shrink or disappear. A large restaurant chain, for
example, has a better chance of staying operational as it benefits
from more resources and, ultimately, less competition in the wake
of bankruptcies among smaller outfits. The small restaurants that
survive the crisis will have to reinvent themselves entirely. In the
meantime, in the cases of those that close their doors forever, the
closure will impact not only the restaurant and its immediate staff
but also all the businesses that operate in its orbit: the suppliers,
the farmers and the truck drivers.

At the other end of the size spectrum, some very large

companies will fall victim to the same predicament as the very
small ones. Airline companies, in particular, will face similar
constraints in terms of consumer demand and social-distancing
rules. The three-month shutdown has left carriers around the
world with a cataclysmic situation of virtually zero revenues and
the prospect of tens of thousands of job cuts. British Airways, for
one, has announced that it will cut up to 30% of its current
workforce of 42,000 employees. At the time of writing (mid-June

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2020), the restart may be just about to begin. It will prove
extremely challenging, with a recovery expected to take years.
The improvement will begin in leisure travel, with corporate travel
to follow. However, as discussed in the next section, consumption
habits may change permanently. If many businesses decide to
travel less to reduce costs and to replace physical meetings by
virtual ones whenever possible, the impact on the recovery and
ultimate profitability of airlines may be dramatic and lasting. Prior
to the pandemic, corporate travel accounted for 30% of airline
volumes but 50% of revenues (thanks to higher priced seats and
last-minute bookings). In the future, this is set to change, making
the profitability outcome of some individual airlines highly
uncertain, and forcing the entire industry to reconsider the long-
term structure of the global aviation market.

When assessing the ultimate effect on a particular industry, the

complete chain of consequences needs to take into account what
happens in adjacent industries, whose fate largely depends on
what happens in the one upstream, or “at the top”. To illustrate
this, we take a brief look at three industries that entirely depend
on the aviation sector: airports (infrastructure and retail), planes
(aerospace) and car rentals (automotive).

Airports face the same challenges as airlines: the less people

fly, the less they transit via airports. This in turn affects the level of
consumption in the various shops and restaurants that make up
the ecosystem of all international airports throughout the world.
Furthermore, the experience of airports in a post-COVID-19 world,
involving longer waiting times, highly restricted or even no hand
luggage and other potentially inconvenient social-distancing
measures, could erode the consumer desire to travel by air for
pleasure and leisure. Various trade associations warn that the
implementation of social-distancing policies would not only limit
airport capacity to 20-40% but would also likely render the whole
experience so disagreeable as to become a deterrent.

Dramatically affected by the lockdowns, airlines began to

cancel or defer orders for new aircraft and to change their choice
of particular model, in so doing severely impacting the aerospace

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industry. As a direct consequence and for the foreseeable future,
the major civil aircraft assembly plants will operate at reduced
capacity, with cascading effects on the entirety of their value chain
and supplier network. In the longer term, changes in demand by
airline companies that re-evaluate their needs will lead to a
complete reassessment of the production of civilian aircraft. This
makes the defence aerospace sector an exception and a relatively
safe haven. For nation states, the uncertain geopolitical outlook
makes it imperative to maintain orders and procurement, but
cash-constrained governments will demand better payment terms.

Like airports, car rental companies depend almost entirely on

aviation volumes. Hertz, a highly indebted company with a fleet of
700,000 cars overwhelmingly idled during the lockdowns, filed for
bankruptcy in May. Like for so many companies, COVID-19
proved to be the proverbial last straw.

2.2.2. Behavioural changes – permanent vs

transient
Effects on retail, real estate and education

Some behavioural changes observed during the lockdowns

are unlikely to be entirely reversed in the post-pandemic era and
some may even become permanent. How exactly this will play out
remains very uncertain. A few consumption patterns may revert to
long-term trend lines (comparable to air travel after 9/11), albeit at
an altered pace. Others will undoubtedly accelerate, like online
services. Some may be postponed, like buying a car, while new
permanent patterns of consumption may emerge, like purchases
associated with greener mobility.

Much of this is still unknown. During the lockdowns, a lot of

consumers were forced to learn to do things for themselves (bake
their bread, cook from scratch, cut their own hair, etc.) and felt the
need to spend cautiously. How entrenched will these new habits
and forms of “do it yourself” and auto-consumption become in the
post-pandemic era? The same could apply to students who in
some countries pay exorbitant fees for higher education. After a

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trimester spent watching their professors on their screens, will
they start questioning the high cost of education?

To grasp the extreme complexity and uncertainty of this

evolution in consumer behaviour, let us revert to the example of
online shopping versus in-person retail. As stated, it is very likely
that bricks-and-mortar stores will lose out severely in favour of
online shopping. Consumers may be willing to pay a bit extra to
have heavy and bulky products, like bottles and household goods,
delivered to them. Supermarket retail space will therefore shrink,
coming to resemble convenience stores where shoppers go to
buy relatively small quantities of specific food products. But it
could also be the case that less money will be spent in
restaurants, suggesting that in places where a high percentage of
people’s food budget traditionally went to restaurants (60% in New
York City for example), these funds could be diverted to and
benefit urban supermarkets as city dwellers rediscover the
pleasure of cooking at home. The same phenomenon may
happen with the entertainment business. The pandemic may
increase our anxiety about sitting in an enclosed space with
complete strangers, and many people may decide that staying
home to watch the latest movie or opera is the wisest option. Such
a decision will benefit local supermarkets to the detriment of bars
and restaurants (although the option of online takeout meal
delivery services could be a lifeline for the latter). There were
numerous examples of this happening in an ad hoc fashion in
cities across the world during lockdowns. Could it perhaps
become an important element of some restaurants’ new post-
COVID-19 business-survival plan? There are other first-round
effects that are much easier to anticipate. Cleanliness is one of
them. The pandemic will certainly heighten our focus on hygiene.
A new obsession with cleanliness will particularly entail the
creation of new forms of packaging. We will be encouraged not to
touch the products we buy. Simple pleasures like smelling a melon
or squeezing a fruit will be frowned upon and may even become a
thing of the past.

A single attitudinal change will have many different

ramifications, each having a particular effect on one specific

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industry, but in the end impacting many different industries
through ripple effects. The following figure illustrates this point for
just one change: spending more time at home:

150
 Figure 2: Potential implications of spending more time at
home

Source: Reeves, Martin, et al., “Sensing and Shaping the Post-COVID Era”, BCG
Henderson Institute, 3 April 2020, https://www.bcg.com/publications/2020/8-ways-
companies-can-shape-reality-post-covid-19.aspx

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 The heated debate over whether (or to what extent) we will
work remotely in the future, and as a result spend more time at
home, has been taking place since the pandemic started. Some
analysts argue that the fundamental appeal of cities (particularly
the largest ones) as vibrant centres of economic activity, social life
and creativity will endure. Others fear that the coronavirus has
triggered a fundamental shift in attitudes. They claim that COVID-
19 has been an inflection point and predict that, all around the
world, urbanites of all ages who are confronted with the
shortcomings of city pollution and undersized, overpriced
accommodation will decide to move to places with more greenery,
more space, less pollution and lower prices. It is too early to tell
which camp will be proven right, but it is certain that even a
relatively small percentage of people moving away from the
biggest hubs (like New York, Hong Kong SAR, London or
Singapore) would exercise an outsized effect on many diverse
industries (profits are always made at the margin). Nowhere is this
reality more apparent than in the real estate industry and, in
particular, in commercial real estate.

The commercial real estate industry is an essential driver of

global growth. Its total market value exceeds that of all stocks and
bonds combined globally. Prior to the pandemic crisis, it was
already suffering from an excess of supply. If the emergency
practice of working remotely becomes an established and
widespread habit, it is hard to imagine what companies (if any) will
absorb this oversupply by rushing to lease excess office space.
Perhaps there will be few investments funds ready to do so, but
they will be the exception, suggesting that commercial real estate
still has much further to fall. The pandemic will do to commercial
real estate what it has done to so many other issues (both macro
and micro): it will accelerate and amplify the pre-existing trend.
The combination of an increase in the number of “zombie”
companies (those that use debt to finance more debt and that
have not generated enough cash over the past few years to cover
their interest costs) going bankrupt and an increase in the number
of people working remotely means that there will be far fewer
tenants to rent empty office buildings. Property developers (for the

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most part highly leveraged themselves) will then start
experiencing a wave of bankruptcies, with the largest and
systemically important ones having to be bailed out by their
respective governments. In many prime cities around the world,
property prices will therefore fall over a long period of time,
puncturing the global real estate bubble that had been years in the
making. To some extent, the same logic applies to residential real
estate in large cities. If the trend of working remotely takes off, the
combination of commuting not being a consideration any longer
and the absence of job growth means that the younger generation
will no longer chose to afford residential renting or buying in
expensive cities. Inevitably, prices will then fall. In addition, many
will have realized that working from home is more climate-friendly
and less stressful than having to commute to an office.

The possibility of working remotely means that the biggest

hubs that have benefited from higher economic growth than other
cities or regions in their vicinity may start losing workers to the
next tier of rising cities. This phenomenon could in turn create a
wave of rising-star cities or regions attracting people looking for a
better quality of life thanks to more space at more affordable
prices.

Notwithstanding all the above, perhaps the notion of

widespread remote working becoming the norm is too far-fetched
to happen in any meaningful manner. Haven’t we so often heard
that optimizing “knowledge work” (in reality the simplest sector to
go remote) depends on carefully designed office environments?
The technology industry that has resisted such a move for so long
by massively investing in sophisticated campuses is now
changing its mind in light of the lockdown experience. Twitter was
the first company to commit to remote work. In May, Jack Dorsey,
its CEO, informed employees that many of them would be allowed
to work from home even after the COVID-19 pandemic subsides,
in other words – permanently. Other tech companies like Google
and Facebook have also committed to allowing their staff to
continue working remotely at least through the end of 2020.
Anecdotal evidence suggests that other global firms from various
industries will make similar decisions, letting part of their staff work

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remotely part of the time. The pandemic has made possible
something that seemed unimaginable on such a scale just a few
months ago.

Could something similar, and equally disruptive, happen with

higher education? Might it be possible to imagine a world in which
far fewer students will receive their education on a campus? In
May or June of 2020, in the midst of lockdowns, students were
forced to study and graduate remotely, many wondering at the
end of the term if they will physically return to their campus in
September. At the same time, universities started to slash their
budgets, pondering what this unprecedented situation might entail
for their business model. Should they go online or should they
not? In the pre-pandemic era, most universities offered some
courses online but always refrained from fully embracing online
education. The most renowned universities refused to offer virtual
degrees, fearful that this might dilute their exclusive offering, make
some of their faculty redundant and even threaten the very
existence of the physical campus. In the post-pandemic era, this
will change. Most universities – particularly the expensive ones in
the Anglo-Saxon world – will have to alter their business model or
go bankrupt because COVID-19 has made it obsolete. If online
teaching were to continue in September (and possibly beyond),
many students would not tolerate paying the same high tuition for
virtual education, demanding a reduction in fees or deferring their
enrolment. In addition, many potential students would question the
pertinence of disbursing prohibitive costs for higher education in a
world marred by high levels of unemployment. A potential solution
could lie in a hybrid model. Universities would then massively
expand online education while maintaining an on-campus
presence for a different population of students. In a few instances,
this has already been done with success, notably at Georgia Tech
for an online master’s degree in Computer Science.[140] By going
down this hybrid route, universities would expand access while
reducing costs. The question, though, is whether this hybrid model
is scalable and reproducible for universities that do not have the
resources to invest in technology and in an exclusive library of
top-notch content. But the hybrid character of online education

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can also take a different form, by combining in-person and online
study within one curriculum through online chats and the use of
apps for tutoring and other forms of support and help. This has the
advantage of streamlining the learning experience, but the
disadvantage of erasing a large aspect of social life and personal
interactions on a campus. In the summer of 2020, the direction of
the trend seems clear: the world of education, like for so many
other industries, will become partly virtual.

2.2.3. Resilience
Effects on big tech, health and well-being, banking and
insurance, the automotive industry, electricity

During the pandemic, the quality of resilience, or the ability to

thrive in difficult circumstances, gained “must have” appeal, and
became the go-to buzzword – everywhere! Understandably. For
those fortunate enough to find themselves in industries “naturally”
resilient to the pandemic, the crisis was not only more bearable,
but even a source of profitable opportunities at a time of distress
for the majority. Three industries in particular will flourish (in
aggregate) in the post-pandemic era: big tech, health and
wellness. In other industries that have been hit hard by the crisis,
proving resilient is what will make the difference between
bouncing back from the COVID-19 sudden exogenous shock or
falling victim to it. The banking, insurance and automotive sectors
are three different examples of industries that have to build
greater resilience to pass through the deep and prolonged
recession caused by the health crisis.

By and large, big tech was the resilient industry par

excellence, for it emerged from this period of radical change as
the biggest beneficiary. During the pandemic, as companies and
their customers alike were forced to go digital, accelerate online
plans, take up new networking tools and start working from home,
tech became an absolute necessity, even among traditionally
reluctant customers. For this reason, the combined market value
of the leading tech companies hit record after record during the
lockdowns, even rising back above levels before the outbreak
started. For reasons expanded on elsewhere in this book, this

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phenomenon is unlikely to abate any time soon, quite the
opposite.

Resilience like all good practice begins at home with us, so we

can fairly assume that, in the post-pandemic era, we will become
collectively more aware of the importance of our own physical and
mental resilience. The desire, driven by greater necessity, to feel
physically and mentally well and the need to strengthen our
immune system mean that well-being and those sectors of the
wellness industry positioned to help deliver them will emerge as
strong winners. Also, the role of public health will evolve and
expand. Well-being has to be addressed holistically; we cannot be
individually well in a world that is unwell. Therefore, planetary care
will be as important as personal care, an equivalence that strongly
supports the promotion of principles we previously discussed, like
stakeholder capitalism, the circular economy and ESG strategies.
At the company level where the health effects of environmental
degradation are increasingly clear, issues like air pollution, water
management and respect for biodiversity will become paramount.
Being “clean” will be an industry imperative as well as an
imperious necessity imposed by the consumer.

Like for any other industry, digital will play a significant role in
shaping the future of wellness. The combination of AI, the IoT and
sensors and wearable technology will produce new insights into
personal well-being. They will monitor how we are and feel, and
will progressively blur the boundaries between public healthcare
systems and personalized health creation systems – a distinction
that will eventually break down. Streams of data in many separate
domains ranging from our environments to our personal
conditions will give us much greater control over our own health
and well-being. In the post-COVID-19 world, precise information
on our carbon footprints, our impact on biodiversity, on the toxicity
of all the ingredients we consume and the environments or spatial
contexts in which we evolve will generate significant progress in
terms of our awareness of collective and individual well-being.
Industries will have to take note.

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 The collective quest for resilience also favours the sports
industry, closely related to well-being. As it is now well understood
that physical activity greatly contributes to health, sport will be
increasingly recognized as a low-cost tool for a healthier society.
Therefore, governments will encourage their practice,
acknowledging the added benefit that sports constitute one of the
best tools available for inclusivity and social integration. For a
while, social distancing may constrain the practice of certain
sports, which will in turn benefit the ever-more powerful expansion
of e-sports. Tech and digital are never far away!

Four industries that have been grappling with a host of

particular challenges posed by the pandemic crisis illustrate the
diverse nature of resilience. In banking, it is about being prepared
for the digital transformation. In insurance, it is about being
prepared for the litigations that are coming. In automotive, it is
about being prepared for the coming shortening of supply chains.
In the electricity sector, it is about being prepared for the inevitable
energy transition. The challenges are the same within each
industry, and only the most resilient and better prepared
companies within each will be capable of “engineering” a
successful outcome.

Because of the nature of their activity when an economic crisis

happens, banks tend to find themselves in the epicentre of the
storm. With COVID-19, the risk doubled in intensity. First, banks
have to prepare for the possibility that the consumer liquidity crisis
morphs into a major corporate solvency crisis, in which case their
resilience will be severely tested. Second, they have to adjust to
the way in which the pandemic is challenging traditional banking
habits, a different form of resilience that requires further capacities
of adaptation. The first risk belongs to the category of “traditional”
financial risks for which banks have had years to prepare. It is
being dealt with through capital and liquidity buffers that have to
be robust enough to withstand a major shock. In the case of the
COVID-19 crisis, the test of resilience will come when the volume
of non-performing loans starts rising. The situation is entirely
different for the second category of risks. Almost overnight, retail,
commercial and investment banks were faced with an (often)

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unexpected situation of having to move online. The impossibility to
meet colleagues, clients or fellow traders in person, the necessity
to use contactless payment and the exhortation from regulators to
use online banking and online trading in conditions of remote
working all meant that the entire banking industry had to move
towards digital banking at the stroke of a pen. COVID-19 has
forced all the banks to accelerate a digital transformation that is
now here to stay and that has intensified cybersecurity risks
(which could in turn raise systemic stability implications if they are
not properly mitigated). Those that have lagged behind and
missed the high-speed digital train will find it very hard to adapt
and to survive.

In the insurance industry, many different COVID-19 related

claims have been made under various types of household and
commercial insurance, which include commercial property and
business interruption, travel, life, health and liability (like workers’
compensation and employment practices liability). The pandemic
poses a particular risk to the insurance industry because its
existence and functioning are based upon the principle of risk
diversification, which was effectively suppressed when
governments decided to impose a lockdown. For this reason,
hundreds of thousands of businesses around the world have been
unable to successfully file claims and are either facing months (if
not years) of litigation, or ruin. In May 2020, the insurance industry
estimated that the pandemic could potentially cost more than
$200 billion, making it one of the most expensive events in the
history of the insurance industry (the cost will rise if the lockdowns
go beyond the period under consideration when the forecast was
made). For the insurance industry, the post-COVID-19 challenge
consists in meeting the evolving protection needs of its customers
by building greater resilience to a broad range of potentially
“uninsurable” catastrophic shocks like pandemics, extreme
weather events, cyberattacks and terrorism. It has to do so while
navigating an environment of exceedingly low interest rates while
preparing for anticipated litigation and the possibility of
unprecedented claims and losses.

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 In the last few years, the automotive industry has been
engulfed in a rising storm of challenges, ranging from trade and
geopolitical uncertainty, declining sales and CO2 penalties to fast-
changing customer demand and the multifaceted nature of the
rising competition in mobility (electric vehicles, autonomous cars,
shared mobility). The pandemic has exacerbated these
challenges by adding to the considerable uncertainty the industry
is facing, in particular with respect to supply chains. In the early
stages of the outbreak, the shortage of Chinese components had
a detrimental impact on global automotive production. In the
coming months and years, the industry will have to rethink its
whole organization and ways of operating against the backdrop of
reduced supply chains and a likely drop in vehicle sales.

Throughout the successive stages of the pandemic, and in

particular during the lockdowns, the electricity sector played an
essential role in allowing most of the world to carry on digitally, the
hospitals to run and all essential industries to operate normally.
Despite the considerable challenges posed by cyberthreats and
changes in demand patterns, electricity held on, proving its
resilience to shocks. Moving forward, the electricity sector has to
embrace the challenge of accelerating its energy transition. The
combination of investments in progressive energy infrastructure
(like in renewables, hydrogen pipelines and electric vehicle
charging networks) and industrial cluster redevelopment (like the
electrification of the energy required for chemical production) has
the potential to support the economic recovery (by creating
employment and economic activity) while increasing the overall
resilience of the energy sector in terms of clean energy
production.

*****

The micro reset will force every company in every industry to

experiment new ways of doing business, working and operating.
Those tempted to revert to the old way of doing things will fail.
Those that adapt with agility and imagination will eventually turn
the COVID-19 crisis to their advantage.

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 3. INDIVIDUAL RESET

Like for macro and micro effects, the pandemic will have
profound and diverse consequences for all of us as individuals.
For many, it has already been life-shattering. To date, COVID-19
has forced a majority of people the world over to self-isolate from
families and friends, has thrown into complete disarray personal
and professional plans, and has deeply undermined their sense of
economic and sometimes psychological and physical security. We
have all been reminded of our innate human fragility, our frailties
and our flaws. This realization combined with the stress
engendered by the lockdowns and the concurrent deep sense of
uncertainty about what is coming next could, albeit surreptitiously,
change us and the way we relate to other people and to our world.
For some, what starts as a change may end up as an individual
reset.

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 3.1. Redefining our humanness
3.1.1. The better angels in our nature… or not
Psychologists point out that the pandemic, like most
transformative events, has the ability to bring out the best and the
worst in us. Angels or devils: what is the evidence so far?

At first glance, it seems the pandemic may have brought

people together. In March 2020, images from Italy, the country hit
hardest at that time, conveyed the impression that the collective
“war effort” was one of the only unexpected upsides of the
COVID-19 catastrophe that was engulfing the country. As the
whole population went into lockdown at home, innumerable
examples showed that, as a result, people not only had more time
for each other but also seemed to be kinder to one another. The
outlets for this enhanced collective sensitivity ranged from famous
opera singers performing for their neighbours from their balcony,
to a nightly ritual of the population singing health workers' praises
(a phenomenon that extended to almost the whole of Europe) plus
diverse acts of mutual help and support for those in need. Italy in
a sense led the way, and since, throughout the period of
confinement and throughout the world, there have been
comparable widespread examples of remarkable, personal and
social solidarity. Everywhere, simple acts of kindness, generosity
and altruism appear to be becoming the norm. In terms of what
we value, the notions of cooperation, communitarian ideas, the
sacrifice of self-interest for the common good and caring came to
the fore. Conversely, manifestations of individual power, popularity
and prestige were frowned upon, even eclipsing the appeal of the
“rich and famous” that faded as the pandemic progressed. One
commentator observed that the coronavirus had the effect of
swiftly “dismantling the cult of celebrity” – a key feature of our
modernity – noting: “The dream of class mobility dissipates when
society locks down, the economy stalls, the death count mounts
and everyone’s future is frozen inside their own crowded
apartment or palatial mansion. The difference between the two
has never been more obvious.”[141] A variety of such observations

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have prompted not only social commentators but also the general
public itself to ponder whether the pandemic succeeded in
bringing the best out of us and in so doing triggering a search for
higher meaning. Many questions came to mind, like: Might the
pandemic give birth to better selves and to a better world? Will it
be followed by a shift of values? Will we become more willing to
nurture our human bonds and more intentional about maintaining
our social connections? Simply put: will we become more caring
and compassionate?

If history is any guide, natural disasters, like hurricanes and

earthquakes, bring people together, while pandemics do the
opposite: they drive them apart. The reason could be the
following: confronted with a sudden, violent and often brief natural
disaster, populations bond together and tend to recover relatively
fast. By contrast, pandemics are longer-lasting, prolonged events
that often elicit ongoing feelings of distrust (vis-à-vis others)
rooted in a primal fear of dying. Psychologically, the most
important consequence of the pandemic is to generate a
phenomenal amount of uncertainty that often becomes a source
of angst. We do not know what tomorrow will bring (Will there be
another wave of COVID-19? Will it affect people I love? Will I keep
my job?) and such a lack of surety makes us uneasy and troubled.
As human beings, we crave certainty, hence the need for
“cognitive closure”, anything that can help erase the uncertainty
and ambiguity that paralyse our ability to function “normally”. In
the context of a pandemic, the risks are complex, difficult to grasp
and largely unknown. Thus confronted, we are more likely to
retrench rather than look to the needs of others as tends to
happen with sudden natural (or not) disasters (and in fact contrary
to the prevailing first impressions conveyed by the media). This in
turn becomes a profound source of shame, a key sentiment that
drives people’s attitudes and reactions during pandemics. Shame
is a moral emotion that equates with feeling bad: an
uncomfortable sentiment that mixes regret, self-hate and a vague
sense of “dishonour” of not doing the “right” thing. Shame has
been described and analysed in countless novels and literary
texts written about historical outbreaks. It can take forms as

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radical and horrendous as parents abandoning their children to
their fate. At the beginning of The Decameron, a series of novellas
that tell the tale of a group of men and women sheltered in a villa
as the Black Death ravaged Florence in 1348, Boccaccio writes
that: “fathers and mothers were found to abandon their own
children, untended, unvisited, to their fate”. In the same vein,
numerous literary accounts of past pandemics, from Defoe’s A
Journal of The Plague Year to Manzoni’s’ The Betrothed, relate
how, so often, fear of death ends up overriding all other human
emotions. In every situation, individuals are forced to make
decisions about saving their own lives that result in profound
shame because of the selfishness of their ultimate choice.
Thankfully, there are always exceptions, as we saw most
poignantly during COVID-19, such as among the nurses and
doctors whose multiple acts of compassion and courage on so
many occasions went well beyond the call of their professional
duty. But they seem to be just that – exceptions! In The Great
Influenza,[142] a book that analyses the Spanish flu’s effects on the
US at the end of World War I, the historian John Barry recounts
that health workers could not find enough volunteers to help. The
more virulent the flu became, the less people were willing to
volunteer. The collective sense of shame that ensued might be
one of the reasons why our general knowledge about the 1918-
1919 pandemic is so scant, despite the fact that, in the US alone,
it killed 12 times more people than the war itself. This, perhaps,
also explains why to date so few books or plays have been written
about it.

Psychologists tell us that cognitive closure often calls for black-

and-white thinking and simplistic solutions[143] – a terrain
propitious for conspiracy theories and the propagation of rumours,
fake news, mistruths and other pernicious ideas. In such a
context, we look for leadership, authority and clarity, meaning that
the question as to whom we trust (within our immediate
community and among our leaders) becomes critical. In
consequence, so too does the countervailing issue of whom we
distrust. In conditions of stress, the appeal of cohesion and unity
increases, which leads us to coalesce around our clan or our

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group, and to generally become more sociable within it, but not
behind it. It seems only natural that our sense of vulnerability and
fragility increases, as does our dependence on those around us,
as for a baby or a frail person. Our attachment to those close to us
strengthens, with a renewed sense of appreciation for all those we
love: family and friends. But there is a darker side to this. It also
triggers a rise in patriotic and nationalist sentiments, with troubling
religious and ethnic considerations also coming into the picture. In
the end, this toxic mix gets the worst of us as a social group.
Orhan Pamuk (the Turkish author who was awarded the Nobel
Prize in Literature in 2006 and whose latest novel, Nights of
Plague, is due to be published at the end of 2020) recounts how
people have always responded to epidemics by spreading
rumours and false information and portraying the disease as
foreign and brought in with malicious intent. This attitude leads us
to look for a scapegoat – the commonality of all outbreaks
throughout history – and is the reason why “unexpected and
uncontrollable outbursts of violence, hearsay, panic and rebellion
are common in accounts of plague epidemics from the
Renaissance on”.[144] Pamuk adds: “The history and literature of
plagues shows us that the intensity of the suffering, of the fear of
death, of the metaphysical dread, and of the sense of the uncanny
experienced by the stricken populace will also determine the
depth of their anger and political discontent.”

The COVID-19 pandemic has unequivocally shown us all that

we live in a world that is interconnected and yet largely bereft of
solidarity between nations and often even within nations.
Throughout the periods of confinement, remarkable examples of
personal solidarity have surfaced, along with counterexamples of
selfish behaviour. At the global level, the virtue of helping each
other has been conspicuous by its absence – this despite the
anthropological evidence that what sets us apart as humans is the
ability to cooperate with each other and form in the process
something bigger and greater than ourselves. Will COVID-19
result in people withdrawing into themselves, or will it nourish their
innate sense of empathy and collaboration, encouraging them
towards greater solidarity? The examples of previous pandemics

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are not very encouraging, but this time there is a fundamental
difference: we are all collectively aware that without greater
collaboration, we will be unable to address the global challenges
that we collectively face. Put in the simplest possible terms: if, as
human beings, we do not collaborate to confront our existential
challenges (the environment and the global governance free fall,
among others), we are doomed. Thus, we have no choice but to
summon up the better angels of our nature.

3.1.2. Moral choices

The pandemic has forced all of us, citizens and policy-makers

alike, willingly or not, to enter into a philosophical debate about
how to maximize the common good in the least damaging way
possible. First and foremost, it prompted us to think more deeply
about what the common good really means. Common good is that
which benefits society as a whole, but how do we decide
collectively what is best for us as a community? Is it about
preserving GDP growth and economic activity at any cost to try to
prevent unemployment rising? Is it about caring for the most
fragile members of our community and making sacrifices for one
another? Is it something in between and, if it is, what trade-offs
are involved? Some schools of philosophical thought, like
libertarianism (for which individual freedom matters the most) and
utilitarianism (for which the pursuit of the best outcome for the
greatest number makes more sense) may even dispute that the
common good is a cause worth pursuing, but can conflicts
between competing moral theories be resolved? The pandemic
brought them to a boil, with furious arguments between opposing
camps. Many decisions framed as “cold” and rational, driven
exclusively by economic, political and social considerations, are in
fact deeply influenced by moral philosophy – the endeavour to find
a theory that is capable of explaining what we should do. Actually,
almost every single decision related to how best to deal with the
pandemic could be reframed as an ethical choice, reflecting that,
in almost all instances, human practices labour under moral
considerations. Shall I give to those who have nothing and show
empathy to those whose opinion differs from mine? Is it all right to

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lie to the public for some greater good? Is it acceptable not to help
my neighbours who are infected with COVID-19? Shall I lay off a
number of employees in the hope of keeping my business afloat
for the others? Is it okay to escape to my holiday home for my
own enhanced safety and comfort or should I offer it to someone
whose need exceeds mine? Shall I ignore the confinement order
to assist a friend or family member? Every single decision, big or
small, has an ethical component, and the way in which we
respond to all these questions is what eventually enables us to
aspire to a better life.

Like all notions of moral philosophy, the idea of common good

is elusive and contestable. Since the pandemic started, it has
provoked furious debates about whether to use a utilitarian
calculus when trying to tame the pandemic or to stick to the
sacrosanct principle of sanctity of life.

Nothing crystallizes the issue of ethical choice more than the

debate that raged during the initial lockdowns about the trade-off
between public health and the hit to growth. As we said earlier,
almost all economists have debunked the myth that sacrificing a
few lives will save the economy but, irrespective of these experts’
judgement, the debate and arguments went on. In the US in
particular but not exclusively, some policy-makers took the line
that it was justifiable to value the economy over life, endorsing a
policy choice that would have been unimaginable in Asia or
Europe, where such pronouncements would have been
tantamount to committing political suicide. (This realization
probably explains UK Prime Minister Johnson’s hasty retreat from
an initial policy advocating herd immunity, often portrayed by
experts and the media as an example of social Darwinism). The
prioritization of business over life has a long tradition, running
from the merchants of Siena during the Great Plague to those of
Hamburg who tried to conceal the cholera outbreak of 1892.
However, it seems almost incongruous that it would remain alive
today, with all the medical knowledge and scientific data we have
at our disposal. The argument put forward by some groups like
“Americans for Prosperity” is that recessions kill people. This,
while undoubtedly true, is a fact that is itself rooted in policy

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choices informed by ethical considerations. In the US, recessions
do indeed kill a lot of people because the absence or limited
nature of any social safety net makes them life-threatening. How?
When people lose their jobs with no state support and no health
insurance, they tend to “die of despair” through suicides, drug
overdoses and alcoholism, as shown and extensively analysed by
Anne Case and Angus Deaton.[145] Economic recessions also
provoke deaths outside of the US, but policy choices in terms of
health insurance and worker protection can ensure that there are
considerably fewer. This is ultimately a moral choice about
whether to prioritize the qualities of individualism or those that
favour the destiny of the community. It is an individual as well as a
collective choice (that can be expressed through elections), but
the example of the pandemic shows that highly individualistic
societies are not very good at expressing solidarity.[146]

In the immediate post-pandemic era, following the first wave in

early 2020 and at a time when many economies around the world
are sliding into deep recessions, the perspective of more severe
lockdowns seems politically inconceivable. Even the richest
countries cannot “afford” to endure a lockdown indefinitely, not
even a year or so. The consequences, particularly in terms of
unemployment, would be horrific, resulting in a dramatic fallout for
society’s poorest, and individual well-being in general. As the
economist and philosopher Amartya Sen put it: “The presence of
disease kills people, and the absence of livelihood also kills
people.”[147] Therefore, now that testing and contact-tracing
capacities are widely available, many individual and collective
decisions will of necessity involve complex cost–benefit analyses
and even sometimes a “cruel” utilitarian calculus. Every policy
decision will become an exceedingly delicate compromise
between saving as many lives as possible and permitting the
economy to run as fully as possible. Bioethicists and moral
philosophers often argue among themselves about counting life
years lost or saved rather than just the number of deaths that
occurred or that could have been avoided. Peter Singer, a
professor of bioethics and author of The Life You Can Save, is a
prominent voice among those who adhere to the theory that we

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should take into account the number of life years lost, not just the
number of lives lost. He gives the following example: in Italy, the
average age of those dying of COVID-19 is almost 80 years,
which could prompt us to ask the following question: how many
years of life were lost in Italy, considering that many of the people
who died from the virus were not only elderly but also had
underlying medical conditions? Some economists roughly
estimate that Italians lost perhaps an average of three years of
life, a very different outcome as compared to the 40 or 60 years of
life lost when numerous young people perish as the result of war.
[148]

The purpose of this example is this: today, almost everyone

the world over has an opinion as to whether the lockdown in her
or his country was too severe or not severe enough, whether it
should have been shortened or extended, whether it was
appropriately put into place or not, whether it was properly
enforced or not, often framing the issue as an “objective fact”. In
reality, all these judgements and pronouncements that we
constantly make are determined by underlying ethical
considerations that are eminently personal. Simply put, what we
expose as facts or opinions are moral choices that the pandemic
has laid bare. They are made in the name of what we think is right
or wrong and therefore define us as who we are. Just one simple
example to illustrate the point: the WHO and most national health
authorities recommend that we wear a mask in public. What has
been framed as an epidemiological necessity and an easy risk-
mitigating measure has turned into a political battlefield. In the US
and, also, but less so, in a few other countries, the decision to
wear a mask or not has become politically charged since it is
considered as an infringement to personal freedom. But behind
the political declaration, refusing to wear a mask in public is a
moral choice, as indeed is the decision to wear one. Does this tell
us something about the moral principles that underpin our choices
and decisions? Probably yes.

The pandemic also compelled us to (re)consider the critical

importance of fairness, a highly subjective notion, yet essential to
societal harmony. Taking fairness into consideration reminds us

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that some of the most basic assumptions we make in economics
have a moral element embedded in them. Should, for example,
fairness or justice be considered when looking at the laws of
supply and demand? And what does the response tell us about
ourselves? This quintessential moral issue came to the fore during
the most acute phase of the pandemic in early 2020 when
shortages of some basic necessities (like oil and toilet paper) and
critical supplies for dealing with COVID-19 (like masks and
ventilators) started to occur. What was the right response? Let the
laws of supply and demand work their magic so that prices rise
high enough and clear the market? Or, rather, regulate demand or
even prices for a little while? In a famous paper written in 1986,
Daniel Kahneman and Richard Thaler (who were subsequently
awarded the Nobel Prize in Economics) explored this issue and
concluded that rising prices in an emergency is simply
unacceptable from a societal standpoint because it will be
perceived as unfair. Some economists may argue that higher
prices triggered by supply and demand are effective in so far as
they discourage panic buying, but most people would consider
this is an issue that has little to do with economics and more to do
with a sentiment of fairness, hence of moral judgement. Most
companies understand this: raising the price of a good that is
needed in an extreme situation like a pandemic, particularly if it is
a mask or hand sanitizer, is not only offensive but flies in the face
of what is considered morally and socially acceptable. For this
reason, Amazon prohibited price gouging on its site, and large
retail chains responded to the shortages not by raising the price of
the goods but by limiting the quantity that each customer could
buy.

It is hard to tell whether these moral considerations constitute

a reset, and whether they will have a long-lasting, post-
coronavirus effect on our attitudes and behaviours. At the very
least, we could assume that we are now more individually aware
of the fact that our decisions are infused with values and informed
by moral choices. It might follow that, if (but it is a big “if”) in the
future we abandon the posture of self-interest that pollutes so
many of our social interactions, we may be able to pay more

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attention to issues like inclusivity and fairness. Oscar Wilde had
already highlighted this problem in 1892 when depicting a cynic as
“a man who knows the price of everything and the value of
nothing”.

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 3.2. Mental health and well-being
For years now, an epidemic of mental health has engulfed
much of the world. The pandemic has already made it worse and
will continue to do so. Most psychologists (and certainly all those
we talked to) seem to concur with the judgement expressed in
May 2020 by one of their peers: “The pandemic has had a
devastating effect on mental health.”[149]

Unlike physical illness, people with mental health issues often

have wounds that are invisible to a non-professional’s naked eye.
Yet, in the past decade, mental health specialists report an
explosion of mental health problems ranging from depression and
suicide to psychosis and addictive disorders. In 2017, an
estimated 350 million people around the globe were suffering from
depression. At that time, the WHO predicted that depression
would become the second main cause of disease burden globally
by 2020 and that it would overtake ischemic heart disease as the
leading cause of disease burden by 2030. In the US, the CDC
estimated in 2017 that depression affected more than 26% of
adults. Approximately 1 in 20 report moderate to severe
symptoms. At that time, it also predicted that 25% of American
adults would suffer from mental illness during the year and almost
50% would develop at least one mental illness during their
lifetime.[150] Similar figures (but maybe not as severe) and trends
exist in most countries around the world. In the workplace, the
issue of mental health has become one of the big elephants in the
corporate room. The epidemic of work-related stress, depression
and anxiety seems to be continuously getting worse. As a
revealing example, in 2017-2018 in the UK, stress, depression
and anxiety accounted for more than half (57%) of total working
days lost due to ill health.[151]

For many people, traversing the COVID-19 pandemic will be

defined as living a personal trauma. The scars inflicted may last
for years. To start with, in the early months of the outbreak, it was
all too easy to fall victim to the biases of availability and salience.
These two mental shortcuts caused us to obsess and ruminate

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about the pandemic and its dangers (availability makes us rely on
immediate examples that come to mind when evaluating
something and salience predisposes us to focus on things that are
more prominent or emotionally striking). For months, COVID-19
became almost the only news, news that was inevitably almost
exclusively bad. Relentless reports of deaths, infectious cases
and all the other things that might go wrong, together with
emotionally charged images, allowed our collective imaginations
to run riot in terms of worry about ourselves and our closest loved
ones. Such an alarming atmosphere had disastrous effects on our
mental well-being. Furthermore, media-amplified anxiety can be
very contagious. All this fed into a reality that for so many
amounted to personal tragedy, whether defined by the economic
impact of income loss and job losses and/or the emotional impact
of domestic violence, acute isolation and loneliness or the inability
to properly grieve for deceased loved ones.

Humans are inherently social beings. Companionship and

social interactions are a vital component of our humanness. If
deprived of them, we find our lives turned upside down. Social
relations are, to a significant extent, obliterated by confinement
measures and physical or social distancing and, in the case of the
COVID-19 lockdowns, this occurred at a time of heightened
anxiety when we needed them most. Rituals that are inherent to
our human condition – handshakes, hugs, kisses and many others
– were suppressed. Loneliness and isolation resulted. For now,
we know neither whether nor when we might return completely to
our old way of life. At any stage of the pandemic, but particularly
towards the end of lockdowns, mental discomfort remains a risk,
even after the period of acute stress has passed, something that
psychologists have called the “third-quarter phenomenon”[152] in
reference to people who live in isolation for a protracted period of
time (like polar explorers or astronauts): they tend to experience
problems and tensions towards the end of their mission. Like
these people, but on a planetary scale, our collective sense of
mental well-being has taken a very severe knock. Having dealt
with the first wave, we are now anticipating another that may or
may not come, and this toxic emotional mix risks producing a

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collective state of anguish. The inability to make plans or engage
in specific activities that used to be intrinsic parts of our normal life
and vital sources of pleasure (like visiting family and friends
abroad, planning ahead for the next term at university, applying for
a new job) has the potential to leave us confused and
demoralized. For many people, the strains and stresses of the
immediate dilemmas that followed the end of lockdowns will last
for months. Is it safe to go on public transport? Is it too risky to go
to a favourite restaurant? Is it appropriate to visit this elderly family
member or friend? For a long time to come, these very banal
decisions will be tainted with a sense of dread – particularly for
those who are vulnerable because of their age or health condition.

At the time of writing (June 2020), the impact of the pandemic

in terms of mental health cannot be quantified or assessed in a
generalized way, but the broad contours are known. In a nutshell:
1) individuals with pre-existing mental health conditions like
depression will increasingly suffer from anxiety disorders; 2)
social-distancing measures, even after they’ve been rolled back,
will have worsened mental health issues; 3) in many families, the
loss of income consecutive to unemployment will plunge people
into the “death of despair” phenomenon; 4) domestic violence and
abuse, particularly against women and children, will increase as
long as the pandemic endures; and 5) “vulnerable” people and
children – those in care, the socio-economically disadvantaged
and the disabled in need of an above-average level of support –
will be particularly at risk of increased mental distress. Let us
review below some of these in greater detail.

For many, an explosion of mental problems occurred during

the first months of the pandemic and will continue to progress in
the post-pandemic era. In March 2020 (at the onset of the
pandemic), a group of researchers published a study in The
Lancet that found that confinement measures produced a range of
severe mental health outcomes, such as trauma, confusion and
anger.[153] Although avoiding the most severe mental health
issues, a large portion of the world population is bound to have
suffered stress to various degrees. First and foremost, it is among
those already prone to mental health issues that the challenges

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inherent in the response to the coronavirus (lockdowns, isolation,
anguish) will be exacerbated. Some will weather the storm, but for
certain individuals, a diagnostic of depression or anxiety could
escalate into an acute clinical episode. There are also significant
numbers of people who for the first time presented symptoms of
serious mood disorder like mania, signs of depression and various
psychotic experiences. These were all triggered by events directly
or indirectly associated with the pandemic and the lockdowns,
such as isolation and loneliness, fear of catching the disease,
losing a job, bereavement and concerns about family members
and friends. In May 2020, the National Health Service England’s
clinical director for mental health told a Parliamentary committee
that the “demand for mental healthcare would increase
‘significantly’ once the lockdown ended and would see people
needing treatment for trauma for years to come”.[154] There is no
reason to believe that the situation will be very different
elsewhere.

Domestic violence has risen during the pandemic. It remains

difficult to measure the precise increase because of the high
number of cases that remain unreported, but it is nonetheless
clear that the rise in incidences was fuelled by a combination of
anxiety and economic uncertainty. With the lockdowns, all the
requisite ingredients for an increase in domestic violence
coalesced: isolation from friends, family and employment, the
occasion for constant surveillance by and physical proximity to an
abusive partner (often themselves under more stress), and limited
or no options for escape. The conditions of lockdown magnified
existing abusive behaviours, leaving little or no respite for victims
and their children outside of the home. Projections from the United
Nations Population Fund indicate that if domestic violence
increases by 20% during periods of lockdown, there would be an
additional 15 million cases of intimate partner violence in 2020 for
an average lockdown duration of three months, 31 million cases
for an average lockdown of six months, 45 million for an average
lockdown of nine months, and 61 million if the average lockdown
period were to last one year. These are global projections,
inclusive of all 193 UN Member States, and represent the high

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levels of underreporting characteristic of gender-based violence.
All told, they total an additional 15 million cases of gender-based
violence for every three months a lockdown continues.[155] It is
hard to predict how domestic violence will evolve in the post-
pandemic era. Conditions of hardship will make it more likely, but
much will depend on how individual countries control the two
pathways through which domestic violence occurs: 1) the
reduction in prevention and protection efforts, social services and
care; and 2) the concomitant increase in the incidence of violence.

This sub-chapter concludes with a point that may seem

anecdotal but that has gained some relevance in an era of
relentless online meetings that could expand in the foreseeable
future: are video conversations and mental well-being bad
bedfellows? During the lockdowns, video conversations were for
many a personal and professional lifesaver, allowing us to
maintain human connections, long-distance relationships and
connections with our colleagues. But they have also generated a
phenomenon of mental exhaustion, popularized as “Zoom
fatigue”: a condition that applies to the use of any video interface.
During the lockdowns, screens and videos were so widely
solicited for communication purposes that this equated to a new
social experiment conducted at scale. The conclusion: our brains
find it difficult and sometimes unsettling to conduct virtual
interactions especially if and when such interactions account for
the quasi-totality of our professional and personal exchanges. We
are social animals for whom the many minor and often nonverbal
cues that normally occur during physical social interactions are
vital in terms of communication and mutual understanding. When
we talk to someone in the flesh, we don’t only concentrate on the
words they are saying but also focus on a multitude of infra-
language signals that help us make sense of the exchange we are
having: is the lower body of the person facing us or turned away?
What are their hands doing? What’s the tone of their general body
language? How is the person breathing? A video conversation
makes the interpretation of these nonverbal cues charged with
subtle meaning impossible, and it forces us to concentrate
exclusively on words and facial expressions sometimes altered by

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the quality of the video. On a virtual conversation, we have
nothing other than intense, prolonged eye contact, which can
easily become intimidating or even threatening, particularly when
a hierarchical relationship exists. This problem is magnified by the
“gallery” view, when the central vision of our brains risks being
challenged by the sheer number of people on view. There is a
threshold beyond which we cannot decode so many people at
once. Psychologists have a word for this: “continuous partial
attention”. It is as if our brain were trying to multitask, in vain of
course. At the end of the call, the constant search for nonverbal
cues that cannot be found simply overwhelms our brain. We get
the feeling of being drained of energy and left with a sense of
profound dissatisfaction. This in turn negatively affects our sense
of mental well-being.

The impact of the COVID-19 has given rise to a wider and

deeper array of mental health problems affecting greater numbers
of the population, many of whom might have been spared in the
immediate future had it not been for the pandemic. Viewed in
these terms, the coronavirus has reinforced not reset mental
health issues. However, what the pandemic has achieved with
respect to mental health, as in so many other domains, is the
acceleration of a pre-existing trend; with this has come heightened
public awareness of the severity of the problem. Mental health,
the most significant single factor affecting people’s level of
satisfaction with their lives,[156] was already on the radar screen of
policy-makers. In the post-pandemic era, these issues may now
be given the priority they deserve. This indeed would constitute a
vital reset.

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 3.3. Changing priorities
Much has already been written about the way in which the
pandemic might change us –how we think about things and how
we do things. Yet, we are still in the very early days (we don’t even
know yet whether the pandemic is behind us) and, in the absence
of data and research, all conjectures about our future selves are
highly speculative. Nonetheless, we can foresee some possible
changes that dovetail with the macro and micro issues reviewed in
this book. COVID-19 may compel us to address our inner
problems in ways we would not have previously considered. We
may start asking ourselves some fundamental questions that
would never have arisen without the crisis and the lockdowns, and
by doing so reset our mental map.

Existential crises like the pandemic confront us with our own

fears and anxieties and afford great opportunities for
introspection. They force us to ask the questions that truly matter
and can also make us more creative in our response. History
shows that new forms of individual and collective organization
often emerge after economic and social depressions. We have
already provided examples of past pandemics that radically
changed the course of history. In times of adversity, innovation
often thrives – necessity has long been recognized as the mother
of invention. This may prove to be particularly true for the COVID-
19 pandemic that forced many of us to slow down and gave us
more time to reflect, away from the pace and frenzy of our
“normal” world (with the very significant exception, of course, of
the dozens of millions of heroic workers in healthcare, grocery
stores and supermarkets, and parents with young children or
people caring for elderly or handicapped relatives needing
constant attention). Offering as it did the gifts of more time, greater
stillness, more solitude (even if an excess of the latter sometimes
resulted in loneliness), the pandemic provided an opportunity to
think more deeply about who we are, what really matters and what
we want, both as individuals and as a society. This period of
enforced collective reflection could give rise to a change in
behaviour that will in turn trigger a more profound reconsideration

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of our beliefs and convictions. This could result in a shift in our
priorities that would in turn affect our approach to many aspects of
our everyday lives: how we socialize, take care of our family
members and friends, exercise, manage our health, shop,
educate our children, and even how we see our position in the
world. Increasingly, obvious questions may come to the fore, like:
Do we know what is important? Are we too selfish and
overfocused on ourselves? Do we give too great a priority and
excessive time to our career? Are we slaves to consumerism? In
the post-pandemic era, thanks to the pause for thought it offered
some of us, our responses may well have evolved as compared to
what our pre-pandemic selves might have answered.

Let us consider, in an arbitrary and non-exclusive fashion,

some of these potential changes whose likelihood of occurrence,
it seems to us, even if not very high, is nonetheless greater than
commonly assumed.

3.3.1. Creativity

It may be a cliché to say that “what doesn’t kill us makes us

stronger”, but Friedrich Nietzsche had a point. Not everybody who
survives a pandemic emerges from it stronger, far from it.
However, a few individuals do, with actions and achievements that
may sound marginal at the time but with hindsight are seen to
have made a tremendous impact. Being creatively minded helps.
So does being in the right place (like the right industry) at the right
time. There is little doubt, for example, that in the next few years
we will witness an explosion of creativity among start-ups and new
ventures in the digital and biotechnological spaces. The pandemic
has blown following winds into the sails of both, suggesting that
we will see a good deal of progress and much innovation on the
part of the most creative and original individuals in these sectors.
The most gifted entrepreneurs will have a field day!

The same may well happen in the realms of science and the
arts. Illustrious past episodes corroborate that creative characters
thrive in lockdown. Isaac Newton, for one, flourished during the
plague. When Cambridge University had to shut down in the

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summer of 1665 after an outbreak, Newton went back to his family
home in Lincolnshire where he stayed for more than a year.
During this period of forced isolation described as annus mirabilis
(a “remarkable year”), he had an outpouring of creative energy
that formed the foundation for his theories of gravity and optics
and, in particular, the development of the inverse-square law of
gravitation (there was an apple tree beside the house and the idea
came to him as he compared the fall of an apple to the motion of
the orbital moon).[157]

A similar principle of creativity under duress applies to

literature and is at the origin of some of the most famous literary
works in the Western world. Scholars argue that the closure of
theatres in London forced by the plague of 1593 helped
Shakespeare turn to poetry. This is when he published “Venus
and Adonis”, a popular narrative poem in which the goddess
implores a kiss from a boy “to drive infection from the dangerous
year”. A few years later, at the beginning of the 17th century,
theatres in London were more often closed than open because of
the bubonic plague. An official rule stipulated that theatre
performances would have to be cancelled when the deaths
caused by the plague exceeded 30 people per week. In 1606,
Shakespeare was very prolific precisely because theatres were
closed by the epidemic and his troupe couldn’t play. In just one
year he wrote “King Lear”, “Macbeth” and “Antony and Cleopatra”.
[158] The Russian author Alexander Pushkin had a similar
experience. In 1830, following a cholera epidemic that had
reached Nizhny Novgorod, he found himself in lockdown in a
provincial estate. Suddenly, after years of personal turmoil, he felt
relieved, free and happy. The three months he spent in quarantine
were the most creative and productive of his life. He finished
Eugene Onegin – his masterpiece – and wrote a series of
sketches, one of which was called “A Feast During the Plague”.

We cite these historical examples of flourishing personal

creativity in some of our greatest artists during a plague or
pandemic not to minimize or distract from the catastrophic
financial impact that the COVID-19 crisis is having on the world of
culture and entertainment, but instead to provide a glimmer of

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hope and a source of inspiration. Creativity is at its most abundant
in the cultural and artistic sectors of our societies and history has
shown that this very creativity can prove a major source of
resilience.

A multitude of such examples exist. This is an unusual form of

reset, but it should not surprise us. When devastating things
happen, creativity and ingenuity often thrive.

3.3.2. Time

In Joshua Ferris’ novel (2007) Then We Came to the End, one

character observes: “Some days felt longer than other days.
Some days felt like two whole days.” This happened on a
worldwide scale as a result of the pandemic: it altered our sense
of time. In the midst of their respective lockdowns, many people
made reference to the fact that the days in confinement seemed
to last an eternity, and yet the weeks went by surprisingly fast.
With, again, the fundamental exception of those who were in the
“trenches” (all the essential workers we have already mentioned),
many people in lockdown felt the sameness of the days, with
every day similar to the previous and to the next, and barely any
distinction between the working days and the weekend. It is as if
time had become amorphous and undifferentiated, with all the
markers and normal divisions gone. In a fundamentally different
context but within a similar type of experience, prisoners who face
the harshest and most radical form of confinement confirm this.
“The days drag and then you wake up and a month has passed
and you think, ‘Where the hell has that gone?’” Victor Serge, a
Russian revolutionary who was repeatedly jailed, said the same:
“There are swift hours and very long seconds.”[159] Could these
observations compel some of us to reconsider our relationship
with time, to better recognize how precious it is and not let it slip
by unnoticed? We live in an era of extreme velocity, where
everything goes much faster than ever because technology has
created a culture of immediacy. In this “real-time” society where
everything is needed and wanted right away, we constantly feel
pressed for time and have the nagging feeling that the pace of life
is ever increasing. Might the experience of the lockdowns alter

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this? Could we experience at our own individual level the
equivalent of what “just-in-time” supply chains will do in the post-
pandemic era – a suppression of time acceleration for the benefit
of greater resilience and peace of mind? Might the need to
become more psychologically resilient force us to slow down and
become more mindful of the passing time? Maybe. This could be
one of the unexpected upsides of COVID-19 and the lockdowns. It
made us more aware and sensitive about the great markers of
time: the precious moments spent with friends and our families,
the seasons and nature, the myriads of small things that require a
bit of time (like talking to a stranger, listening to a bird or admiring
a piece of art) but that contribute to well-being. The reset: in the
post-pandemic era, we might have a different appreciation of time,
pursuing it for greater happiness.[160]

3.3.3. Consumption

Ever since the pandemic took hold, many column inches and
analyses have been dedicated to the impact that COVID-19 will
have on our consumption patterns. A substantial number of them
state that in the post-pandemic era, we will become more
conscious of the consequences of our choices and habits and will
decide to repress some forms of consumption. At the other end of
the spectrum, a few analysts forecast “revenge consumption”,
taking the form of a surge in spending after the lockdowns end,
predicting a strong revival of our animal spirits and a return to the
situation that prevailed before the pandemic. Revenge
consumption hasn’t happened yet. Maybe it won’t happen at all if
a sentiment of self-restraint kicks in first.

The underlying argument supporting this hypothesis is the one

to which we referred in the chapter on the environmental reset:
the pandemic has acted as a dramatic eye-opener to the public at
large on the severity of the risks related to environmental
degradation and climate change.

Heightened awareness of and acute concerns about inequality,

combined with the realization that the threat of social unrest is
real, immediate and on our doorstep, might have the same effect.

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When a tipping point is reached, extreme inequality begins to
erode the social contract and increasingly results in antisocial
(even criminal) behaviour often directed at property. In response,
consumption patterns must be seen to be changing. How might
this play out? Conspicuous consumption could fall from favour.
Having the latest, most up-to-date model of whatever will no
longer be a sign of status but will be thought of as, at best, out of
touch, and, at worst, downright obscene. Positional signalling will
be turned upside down. Projecting a message about oneself
through a purchase and flaunting expensive “stuff” may simply
become passé. Put in simple terms, in a post-pandemic world
beset by unemployment, insufferable inequalities and angst about
the environment, the ostentatious display of wealth will no longer
be acceptable.

The way forward may be inspired by the example of Japan

together with a few other countries. Economists constantly worry
about the possible Japanification of the world (to which we
referred in the macro section), but there is a much more positive
Japanification story that gives us a sense of where we may want
to go with respect to consumption. Japan possesses two
distinctive features that are intertwined: it has one of the lowest
levels of inequality among high-income countries, and it has since
the burst of the speculative bubble in the late 1980s had a lower
level of conspicuous consumption that sets it apart. Today, the
positive value of minimalism (made viral by the Marie Kondo
series), the lifelong pursuit of finding meaning and purpose in life
(ikigai) and the importance of nature and the practice of forest
bathing (shirin-yoku) are being emulated in many parts of the
world, even though they all espouse a relatively more “frugal”
Japanese lifestyle as compared to more consumerist societies. A
similar phenomenon can be observed in Nordic countries, where
conspicuous consumption is frowned upon and repressed. But
none of this makes them less happy, quite the opposite.[161] As
psychologists and behavioural economists keep reminding us,
overconsumption does not equate to happiness. This might be
another personal reset: the understanding that conspicuous
consumption or excessive consumption of any kind is neither

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good for us nor for our planet, and the subsequent realization that
a sense of personal fulfilment and satisfaction need not be reliant
on relentless consumption – perhaps quite the opposite.

3.3.4. Nature and well-being

The pandemic has proven to be a real-time exercise in how to

manage our anxiety and fears during a period of extraordinary
confusion and uncertainty. One clear message has emerged from
this: nature is a formidable antidote to many of today’s ills. Recent
and abundant research explains incontrovertibly why it is so.
Neuroscientists, psychologists, medical doctors, biologists and
microbiologists, specialists of physical performance, economists,
social scientists: all in their respective fields can now explain why
nature makes us feel good, how it eases physical and
psychological pain and why it is associated with so many benefits
in terms of physical and mental well-being. Conversely, they can
also show why being separated from nature in all its richness and
variety – wildlife, trees, animals and plants – negatively affects our
minds, our bodies, our emotional lives and our mental health.[162]

COVID-19 and the health authorities’ constant reminders to

walk or exercise every day to keep in shape place these
considerations front and centre. So did the myriads of individual
testimonies during the lockdowns, showing how much people in
cities were longing for greenery: a forest, a park, a garden or just
a tree. Even in the countries with the strictest lockdown regimes
like France, health authorities insisted on the need to spend some
time outside every day. In the post-pandemic era, far fewer people
will ignore the centrality and the essential role of nature in their
lives. The pandemic made this awareness possible at scale (since
now almost everybody in the world knows about this). This will
create more profound and personal connections at an individual
level with the macro points we made earlier about the
preservation of our ecosystems and the need to produce and
consume in ways that are respectful of the environment. We now
know that without access to nature and all it has to offer in terms
of biodiversity, our potential for physical and mental well-being is
gravely impaired.

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 Throughout the pandemic, we were reminded that rules of
social distancing, hand washing and mask wearing (plus self-
isolation for the most vulnerable people) are the standard tools to
protect ourselves from COVID-19. Yet, two other essential factors
that are strongly contingent upon our exposure to nature also play
a vital role in our physical resilience to the virus: immunity and
inflammation. Both contribute to protecting us, but immunity
decreases with age, while inflammation increases. To improve our
chances of resisting the virus, immunity must be boosted and
inflammation suppressed. What part does nature play in this
scenario? She is the leading lady, the science now tells us! The
low-level of constant inflammation experienced by our bodies
leads to all sorts of diseases and disorders, ranging from
cardiovascular conditions to depression and reduced immune
capabilities. This residual inflammation is more prevalent among
people who live in cities, urban environments and industrialized
areas. It is now established that a lack of connection with nature is
a contributing factor to greater inflammation, with studies showing
that just two hours spent in a forest can alleviate inflammation by
lowering cytokine levels (a marker of inflammation).[163]

All this boils down to lifestyle choices: not only the time we
spend in nature, but also what we eat, how we sleep, how much
we exercise. These are choices that point to an encouraging
observation: age does not have to be a fatality. Ample research
shows that together with nature, diet and physical exercise can
slow, even sometimes reverse, our biological decline. There is
nothing fatalistic about it! Exercise, nature, unprocessed food…
They all have the dual benefit of improving immunity and
suppressing inflammation.[164] This dovetails with the point we just
made about consumption habits. It would be surprising if all this
newly found evidence does not lead to greater awareness about
responsible consumption. At the very least, the direction of the
trend – less depredation, more sustainability – seems clear.

The reset for individuals: the pandemic has drawn our

attention to the importance of nature. Going forward, paying more
attention to our natural assets will progressively become
paramount.

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 CONCLUSION

In June 2020, barely six months since the pandemic started,

the world is in a different place. Within this short time frame,
COVID-19 has both triggered momentous changes and magnified
the fault lines that already beset our economies and societies.
Rising inequalities, a widespread sense of unfairness, deepening
geopolitical divides, political polarization, rising public deficits and
high levels of debt, ineffective or non-existent global governance,
excessive financialization, environmental degradation: these are
some of the major challenges that existed before the pandemic.
The corona crisis has exacerbated them all. Could the COVID-19
debacle be the lightning before the thunder? Could it have the
force to ignite a series of profound changes? We cannot know
what the world will be like in 10 months’ time, even less what it will
resemble in 10 years from now, but what we do know is that
unless we do something to reset today’s world, tomorrow’s will be
profoundly stricken. In Gabriel Garcia Marquez’s Chronicle of a
Death Foretold, an entire village foresees a looming catastrophe,
and yet none of the villagers seem able or willing to act to prevent
it, until it’s too late. We do not want to be that village. To avoid
such a fate, without delay we need to set in motion the Great
Reset. This is not a “nice-to-have” but an absolute necessity.
Failing to address and fix the deep-rooted ills of our societies and
economies could heighten the risk that, as throughout history,
ultimately a reset will be imposed by violent shocks like conflicts
and even revolutions. It is incumbent upon us to take the bull by
the horns. The pandemic gives us this chance: it “represents a
rare but narrow window of opportunity to reflect, reimagine and
reset our world”.[165]

The deep crisis provoked by the pandemic has given us plenty

of opportunities to reflect on how our economies and societies
work and the ways in which they don’t. The verdict seems clear:
we need to change; we should change. But can we? Will we learn

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from the mistakes we made in the past? Will the pandemic open
the door to a better future? Will we get our global house in order?
Simply put, will we put into motion the Great Reset? Resetting is
an ambitious task, perhaps too ambitious, but we have no choice
but to try our utmost to achieve it. It’s about making the world less
divisive, less polluting, less destructive, more inclusive, more
equitable and fairer than we left it in the pre-pandemic era. Doing
nothing, or too little, is to sleepwalk towards ever-more social
inequality, economic imbalances, injustice and environmental
degradation. Failing to act would equate to letting our world
become meaner, more divided, more dangerous, more selfish and
simply unbearable for large segments of the globe’s population.
To do nothing is not a viable option.

That said, the Great Reset is far from a done deal. Some may
resist the necessity to engage in it, fearful of the magnitude of the
task and hopeful that the sense of urgency will subside and the
situation will soon get back to “normal”. The argument for passivity
goes like this: we have been through similar shocks – pandemics,
harsh recessions, geopolitical divides and social tensions – before
and we will get through them again. As always, societies will
rebuild, and so will our economies. Life goes on! The rationale for
not resetting is also predicated on the conviction that the state of
the world is not that bad and that we just need to fix a few things
around the edges to make it better. It is true that the state of the
world today is on average considerably better than in the past. We
must acknowledge that, as human beings, we never had it so
good. Almost all the key indicators that measure our collective
welfare (like the number of people living in poverty or dying in
conflicts, the GDP per capita, life expectancy or literacy rates, and
even the number of deaths caused by pandemics) have been
continuously improving over pas centuries, impressively so in the
last few decades. But they have been improving “on average” – a
statistical reality that is meaningless for those who feel (and so
often are) excluded. Therefore, the conviction that today’s world is
better than it has ever been, while correct, cannot serve as an
excuse for taking comfort in the status quo and failing to fix the
many ills that continue to afflict it.

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 The tragic death of George Floyd (an African American killed
by a police officer in May 2020) vividly illustrates this point. It was
the first domino or the last straw that marked a momentous tipping
point at which an accumulated and profound sentiment of
unfairness felt by the US African-American community finally
exploded into massive protests. Would pointing out to them that
on “average” their lot is better today than in the past have
appeased their anger? Of course not! What matters to African
Americans is their situation today, not how much their condition
has “improved” compared to 150 years ago when many of their
ancestors lived in slavery (it was abolished in the US in 1865), or
even 50 years ago when marrying a white American was illegal
(interracial marriage only became legal in all states in 1967). Two
points are pertinent to the Great Reset in this: 1) our human
actions and reactions are not rooted in statistical data but are
determined instead by emotions and sentiments – narratives drive
our behaviour; and 2) as our human condition improves, our
standards of living increase and so do our expectations for a
better and fairer life.

In that sense, the widespread social protests that took place in

June 2020 reflect the urgent necessity to embark on the Great
Reset. By connecting an epidemiological risk (COVID-19) with a
societal risk (protests), they made it clear that, in today’s world, it
is the systemic connectivity between risks, issues, challenges and
also opportunities that matters and determines the future. In the
first months of the pandemic, public attention has understandably
been focused on the epidemiological and health effects of COVID-
19. But, moving forward, the most consequential problems lie in
the concatenation of the economic, geopolitical, societal,
environmental and technological risks that will ensue from the
pandemic, and their ongoing impact on companies and
individuals.

There is no denying that the COVID-19 virus has more often

than not been a personal catastrophe for the millions infected by
it, and for their families and communities. However, at a global
level, if viewed in terms of the percentage of the global population
effected, the corona crisis is (so far) one of the least deadly

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pandemics the world has experience over the last 2000 years. In
all likelihood, unless the pandemic evolves in an unforeseen way,
the consequences of COVID-19 in terms of health and mortality
will be mild compared to previous pandemics. At the end of June
2020 (at a time when the outbreak is still raging in Latin America,
South Asia and much of the US), COVID-19 has killed less than
0.006% of the world population. To put this low figure into context
in terms of lethality, the Spanish flu killed 2.7% of the world’s
population and HIV/AIDS 0.6% (from 1981 to today). The Plague
of Justinian from its onset in 541 until it finally disappeared in 750
killed almost one-third of the population of Byzantium according to
various estimates, and the Black Death (1347-1351) is considered
to have killed between 30% and 40% of the world population at
the time. The corona pandemic is different. It does not constitute
an existential threat, or a shock that will leave its imprint on the
world’s population for decades. However, it does entail worrisome
perspectives for all the reasons already mentioned; in today’s
interdependent world, risks conflate with each other, amplifying
their reciprocal effects and magnifying their consequences. Much
of what’s coming is unknown, but we can be sure of the following:
in the post-pandemic world, questions of fairness will come to the
fore, ranging from stagnating real incomes for a vast majority to
the redefinition of our social contracts. Similarly, deep concerns
about the environment or questions about how technology can be
deployed and governed for the benefit of society will force their
way onto the political agenda. All these issues predated the
pandemic, but COVID-19 has both laid them bare for all to see
and amplified them. The direction of the trends hasn’t changed
but, in the wake of COVID-19, it got a lot faster.

The absolute prerequisite for a proper reset is greater

collaboration and cooperation within and between countries.
Cooperation – a “supremely human cognitive ability” that put our
species on its unique and extraordinary trajectory – can be
summed up as “shared intentionality” to act together towards a
common goal.[166] We simply cannot progress without it. Will the
post-pandemic era be characterized by more or less cooperation?
A very real risk exists that tomorrow the world will be even more

188
divided, nationalistic and prone to conflicts than it is today. Many
of the trends reviewed in the macro section suggest that, moving
into the future, our world will be less open and less cooperative
than before the pandemic. But an alternative scenario is possible,
one in which collective action within communities and greater
collaboration between nations enable a more rapid and peaceful
exit from the corona crisis. As economies restart, there is an
opportunity to embed greater societal equality and sustainability
into the recovery, accelerating rather than delaying progress
towards the 2030 Sustainable Development Goals and unleashing
a new era of prosperity.[167] What could make this possible and
raise the probability odds in favour of such an outcome?

Seeing the failures and fault lines in the cruel light of day cast
by the corona crisis may compel us to act faster by replacing
failed ideas, institutions, processes and rules with new ones better
suited to current and future needs. This is the essence of the
Great Reset. Could the globally shared experience of the
pandemic help alleviate some of the problems we faced as the
crisis started? Can a better society emerge from the lockdowns?
Amartya Sen, laureate of the Nobel Prize in Economics, thinks so,
believing that: “The need to act together can certainly generate an
appreciation of the constructive role of public action,”[168] citing as
proof some examples like World War II having made people
realize the importance of international cooperation, and
convincing countries like the UK of the benefit of better-shared
food and healthcare (and the eventual creation of the welfare
state). Jared Diamond, the author of Upheaval: How Nations
Cope with Crisis and Change, is of a similar opinion, hoping that
the corona crisis will compel us to address four existential risks
that we collectively face: 1) nuclear threats; 2) climate change; 3)
the unsustainable use of essential resources like forests, seafood,
topsoil and fresh water; and 4) the consequences of the enormous
differences in standards of living between the world’s peoples:
“Strange as it may seem, the successful resolution of the
pandemic crisis may motivate us to deal with those bigger issues
that we have until now balked at confronting. If the pandemic does
at last prepare us to deal with those existential threats, there may

189
be a silver lining to the virus’s black cloud. Among the virus’s
consequences, it could prove to be the biggest, the most lasting –
and our great cause for hope”.[169]

These expressions of individual hope are supported by a

multitude of surveys concluding that we collectively desire
change. They range from a poll in the UK showing that a majority
of people want to fundamentally alter the economy as it recovers,
in contrast to one-fourth wanting it to return to how it was,[170] to
international surveys finding that a large majority of citizens
around the world want the economic recovery from the corona
crisis to prioritize climate change[171] and to support a green
recovery.[172] Worldwide, movements demanding a “better future”
and calling for a shift to an economic system that prioritizes our
collective well-being over mere GDP growth are proliferating.

*****

We are now at a crossroads. One path will take us to a better

world: more inclusive, more equitable and more respectful of
Mother Nature. The other will take us to a world that resembles
the one we just left behind – but worse and constantly dogged by
nasty surprises. We must therefore get it right. The looming
challenges could be more consequential than we have until now
chosen to imagine, but our capacity to reset could also be greater
than we had previously dared to hope.

190
 ACKNOWLEDGEMENTS

The authors would like to thank Mary Anne Malleret for her
invaluable contribution to the manuscript and for greatly
enhancing its overall style, thanks to her “pen”, and Hilde Schwab,
for acting as a critical reader. They would also like to thank
Camille Martin at Monthly Barometer for providing research
assistance, and Fabienne Stassen, who edited the book diligently
and with an eye for detail, despite obvious time constraints.
Thanks also go to the many colleagues at the World Economic
Forum who advised on, read, reviewed, formatted, designed,
published and promoted this book. They include colleagues in the
San Francisco, New York, Geneva, Beijing and Tokyo offices, and
specialists in economics, society, technology, public health and
public policy. Special thanks go out to Kelly Ommundsen and
Peter Vanham in the Chairman’s Office. Finally, the feedback that
came in from Forum constituents from all over the world and from
people with very different backgrounds helped make this book
what it hopefully is: a timely, well-balanced and informative book
on the most important public-health challenge in a century that the
world continues to face, and ways to address it and alleviate its
impact going forward.

Klaus Schwab and Thierry Malleret

Geneva, July 2020

191
 ENDNOTES

[1] Snowden, Frank, Epidemics and Society: From the Black

Death to the Present, Yale University Press, 2019.
[2] Tuchman, Barbara, A Distant Mirror – The Calamitous 14th
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March 2020, https://www.project-
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covid19-pandemic-by-javier-solana-2020-03.
[4] Camus, Albert, The Plague, Stuart Gilbert translation, Alfred

A. Knopf, Inc., 1948, p. 80.

[5] Mahbubani, Kishore, The Great Convergence: Asia, the
West, and the Logic of One World, PublicAffairs, Perseus Books
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[6] World Economic Forum, The Global Risks Report 2020,
Insight Report, 15th Edition,
http://www3.weforum.org/docs/WEF_Global_Risk_Report_2020.p
df.
[7] Wharton University of Pennsylvania, Risk Management and

Decision Processes Center, “The Ostrich Paradox: Why We

Underprepare for Disasters”, Issue Brief, May 2018,
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content/uploads/2019/03/Ostrich-Paradox-issue-brief.pdf.
[8] Wagenaar, William A. and Sabato D. Sagaria,
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[9] CDC, “2019-2020 U.S. Flu Season: Preliminary Burden

Estimates”, https://www.cdc.gov/flu/about/burden/preliminary-in-
season-estimates.htm
[10] Johns Hopkins University & Medicine, Coronavirus
Resource Center, “COVID-19 Dashboard by the Center for

192
Systems Science and Engineering (CSSE) at Johns Hopkins
University (JHU)”, 24 June 2020.
[11] Simon, Herbert, “The Architecture of Complexity”,

Proceedings of the American Philosophical Society, vol. 106, no.

6, 1962, pp. 467-482.
[12] Malleret, Thierry, Disequilibrium: A World Out of Kilter,
BookBaby, 2012.
[13] Contrary to white-swan events, which are certain, black-
swan events are very rare, hard to predict (non-probabilistic) and
have outsized consequences. They are called “black swans” in
reference to the fact that such swans were presumed not to exist
until Dutch explorers discovered them in Western Australia at the
end of the 17th century.
[14] Webb, Richard, “Quantum physics”, New Scientist, n.d.,

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[15] Project Gutenberg, “A Journal of the Plague Year by Daniel
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[17] Schama, Simon, “Plague time: Simon Schama on what

history tells us”, Financial Times, 10 April 2020,

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fcd274e920ca.
[18] Jordà, Òscar, Sanjay R. Singh and Alan M. Taylor, “Longer-
Run Economic Consequences of Pandemics”, Federal Reserve
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[19] Bloomberg, “Coronavirus Is Likely to Become a Seasonal
Infection Like the Flu, Top Chinese Scientists Warn”, Time, 28
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[20] Kristof, Nicholas, “Let’s Remember That the Coronavirus Is
Still a Mystery”, The New York Times, 20 May 2020,
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193
 [21] Draulans, Dirk, “‘Finally, a virus got me.’ Scientist who
fought Ebola and HIV reflects on facing death from COVID-19”,
Science, 8 May 2020,
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19#.
[22] Moore, Kristine, et al., COVID-19: The CIDRAP Viewpoint,
Center for Infectious Disease Research and Policy (CIDRAP),
2020,
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[23] Cherukupalli, Rajeev and Tom Frieden, “Only Saving Lives
Will Save Livelihoods”, Foreign Affairs, 13 May 2020,
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13/only-saving-lives-will-save-livelihoods.
[24] Badger, Emily and Alicia Parlapiano, “Government Orders
Alone Didn’t Close the Economy. They Probably Can’t Reopen It”,
The New York Times, 9 May 2020 update,
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government-orders.html.
[25] Wighton, Kate, “Lockdown and school closures in Europe
may have prevented 3.1m deaths”, Imperial College London, 8
June 2020, https://www.imperial.ac.uk/news/198074/lockdown-
school-closures-europe-have-prevented.
[26] Hsiang, Solomon, et al., “The effect of large-scale anti-
contagion policies on the COVID-19 pandemic”, Nature, 8 June
2020, https://www.nature.com/articles/s41586-020-2404-8.
[27] Goodman, Peter S., “ Why the Global Recession Could
Last a Long Time”, The New York Times, 1 April 2020,
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[28] Organisation for Economic Co-operation and Development
(OECD), “Evaluating the initial impact ofCOVID-19 containment
measures on economic activity”, 10 June 2020, https://read.oecd-
ilibrary.org/view/?ref=126_126496-
evgsi2gmqj&title=Evaluating_the_initial_impact_of_COVID-
19_containment_measures_on_economic_activity.

194
 [29] CPB Netherlands Bureau for Economic Policy Analysis,
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[30] International Monetary Fund, “World Economic Outlook
Update”, June 2020,
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[31] Politi, James, “What to know about America’s newly

unemployed”, Financial Times, 21 May 2020,

https://www.ft.com/content/5924441b-1cb6-4fbd-891b-
0afb07e163d7.
[32] Frey, Carl Benedikt, “Covid-19 will only increase

automation anxiety”, Financial Times, 21 April 2020,

https://www.ft.com/content/817228a2-82e1-11ea-b6e9-
a94cffd1d9bf.
[33] Jaimovich, Nir and Henry E. Siu, “Job Polarization and
Jobless Recoveries”, National Bureau of Economic Research
(NBER), Working Paper 18334, November 2018 revision,
https://www.nber.org/papers/w18334.pdf.
[34] Coyle, Diane and Benjamin Mitra-Khan, “Making the Future

Count”, mimeo, 2017.

[35] Boffey, Daniel, “Amsterdam to embrace 'doughnut' model

to mend post-coronavirus economy”, The Guardian, 8 April 2020,

https://www.theguardian.com/world/2020/apr/08/amsterdam-
doughnut-model-mend-post-coronavirus-economy.
[36] Banerjee, Abhijit V. and Esther Duflo, Good Economics for
Hard Times, PublicAffairs, 2019.
[37] Ibid.
[38] Commission on Growth and Development, The Growth
Report: Strategies for Sustained Growth and Inclusive
Development, World Bank, 2008; Hallward-Driemeier, Mary and
Gaurav Nayyar, Trouble in the Making? The Future of
Manufacturing-Led Development, World Bank Group, 2018.
[39] Ellen MacArthur Foundation, “What is a circular
economy?”, 2017,

195
https://www.ellenmacarthurfoundation.org/circular-
economy/concept.
[40] As proven by the Platform for Accelerating the Circular

Economy (PACE), see https://pacecircular.org.

[41] International Trade Union Confederation (ITCU), “Investing
in the Care Economy: A Pathway to Growth”, 8 March 2016,
https://www.ituc-csi.org/investing-in-the-care-economy-a.
[42] Cassidy, John, “Can We Have Prosperity Without

Growth?”, The New Yorker, 3 February 2020,

https://www.newyorker.com/magazine/2020/02/10/can-we-have-
prosperity-without-growth.
[43] Degrowth, “Degrowth: New Roots for the Economy”, 2020,

https://www.degrowth.info/en/open-letter.
[44] McAfee, Andrew, More from Less, Simon & Schuster, Inc.,
2019.
[45] Blanchard, Olivier, “Designing the fiscal response to the

COVID-19 pandemic”, Peterson Institute for International

Economics (PIIE), Briefing 20-1, 8 April 2020.
[46] Reinhart, Carmen M. and Kenneth Rogoff, “The
Coronavirus Debt Threat”, The Wall Street Journal, 26 March
2020, https://www.wsj.com/articles/the-coronavirus-debt-threat-
11585262515.
[47] Reinhart, Carmen M., “This Time Truly Is Different”, Project
Syndicate, 23 March 2020, https://www.project-
syndicate.org/commentary/covid19-crisis-has-no-economic-
precedent-by-carmen-reinhart-2020-03.
[48] Saez, Emmanuel and Gabriel Zucman, “Keeping Business

Alive: The Government Will Pay”, 16 March 2020 revision,

http://gabriel-zucman.eu/files/coronavirus2.pdf.
[49] Effective deep negative interest rates would have to be

supported with measures to prevent financial firms from hoarding

cash, see Rogoff, Kenneth, “The Case for Deeply Negative
Interest Rates”, Project Syndicate, 4 May 2020,
https://www.project-syndicate.org/commentary/advanced-
economies-need-deeply-negative-interest-rates-by-kenneth-
rogoff-2020-05.
[50] Blanchard, Olivier, “Is there deflation or inflation in our
future?”, VOX, 24 April 2020, https://voxeu.org/article/there-

196
deflation-or-inflation-our-future.
[51] Sharma, Ruchir, “Elizabeth Warren and Donald Trump Are

Wrong About the Same Thing”, The New York Times, 24 June
2019, https://www.nytimes.com/2019/06/24/opinion/elizabeth-
warren-donald-trump-dollar-devalue.html.
[52] Kumar, Aditi and Eric Rosenbach, “Could China’s Digital

Currency Unseat the Dollar?”, Foreign Affairs, 20 May 2020,

https://www.foreignaffairs.com/articles/china/2020-05-20/could-
chinas-digital-currency-unseat-dollar.
[53] Paulson Jr., Henry M., “The Future of the Dollar”, Foreign
Affairs, 19 May 2020, https://www.foreignaffairs.com/articles/2020-
05-19/future-dollar.
[54] Eichengreen, Barry, Arnaud Mehl and Livia Chiţu, “Mars or
Mercury? The geopolitics of international currency choice”, VOX,
2 January 2018, https://voxeu.org/article/geopolitics-international-
currency-choice.
[55] Kissinger, Henry A., “The Coronavirus Pandemic Will

Forever Alter the World Order”, The Wall Street Journal, 3 April
2020, https://www.wsj.com/articles/the-coronavirus-pandemic-will-
forever-alter-the-world-order-11585953005.
[56] The expression has been used, and also debunked,

repeatedly. For a specific example, see Jones, Owen,

“Coronavirus is not some great leveller: it is exacerbating
inequality right now”, The Guardian, 9 April 2020,
https://www.theguardian.com/commentisfree/2020/apr/09/coronavi
rus-inequality-managers-zoom-cleaners-offices.
[57] El-Erian, Mohamed A. and Michael Spence, “The Great
Unequalizer”, Foreign Affairs, 1 June 2020,
https://www.foreignaffairs.com/articles/united-states/2020-06-
01/great-unequalizer.
[58] Dingel, Jonathan I. and Brent Neiman, “How Many Jobs

Can be Done at Home?”, Becker Friedman institute, White Paper,

June 2020, https://bfi.uchicago.edu/wp-
content/uploads/BFI_White-Paper_Dingel_Neiman_3.2020.pdf.
[59] Deaton, Angus, “We may not all be equal in the eyes of
coronavirus”, Financial Times, 5 April 2020,
https://www.ft.com/content/0c8bbe82-6dff-11ea-89df-
41bea055720b.

197
 [60] Milanovic, Branko, “The Real Pandemic Danger Is Social
Collapse”, Foreign Affairs, 19 March 2020,
https://www.foreignaffairs.com/articles/2020-03-19/real-pandemic-
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[61] According to the Global Protest Tracker of the Carnegie
Endowment for International Peace,
https://carnegieendowment.org/publications/interactive/protest-
tracker.
[62] Milne, Richard, “Coronavirus ‘medicine’ could trigger social
breakdown”, Financial Times, 26 March 2020,
https://www.ft.com/content/3b8ec9fe-6eb8-11ea-89df-
41bea055720b.
[63] Long, Heather and Andrew Van Dam, “The black-white

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Post, 4 June 2020,
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[64] McAdam, Doug, “Recruitment to High-Risk Activism: The

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[66] Knoeller, Herman, “The Power to Tax”, Marquette Law
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Pandemic’s Economic Crisis”, The New York Review of Books, 8

198
April 2020, https://www.nybooks.com/daily/2020/04/08/a-lasting-
remedy-for-the-covid-19-pandemics-economic-crisis.
[70] This is shown in particular in the annual Edelman Trust
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[71] Two prominent examples emanate from the International
Panel on Social Progress, Rethinking Society for the 21st
Century, 2018,
https://www.cambridge.org/gb/academic/subjects/politics-
international-relations/political-economy/rethinking-society-21st-
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Bank, Toward a New Social Contract, 2019,
https://openknowledge.worldbank.org/bitstream/handle/10986/303
93/9781464813535.pdf.
[72] Kissinger, Henry A., “The Coronavirus Pandemic Will
Forever Alter the World Order”, The Wall Street Journal, 3 April
2020 https://www.wsj.com/articles/the-coronavirus-pandemic-will-
forever-alter-the-world-order-11585953005.
[73] Hu, Katherine, “‘I Just Don’t Think We Have the Luxury to
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https://www.nytimes.com/2020/03/24/opinion/coronavirus-
recession-gen-z.html.
[74] McNulty, Jennifer, “Youth activism is on the rise around the
globe, and adults should pay attention, says author”, UC Santa
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[75] As an example, in September 2019, more than 4 million

young people demonstrated simultaneously in 150 countries to

demand urgent action on climate change; see Sengupta, Somini,
“Protesting Climate Change, Young People Take to Streets in a
Global Strike”, The New York Times, 20 September 2019,
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[76] For a discussion of current forms of nationalism, see

Wimmer, Andreas, “Why Nationalism Works”, Foreign Affairs,

March/April 2019,
https://www.foreignaffairs.com/articles/world/2019-02-12/why-
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199
 [77] Rudd, Kevin, “The Coming Post-COVID Anarchy”, Foreign
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[78] Rodrik, Dani, The Globalization Paradox, Oxford University
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[79] Pastor, Lubos and Pietro Veronesi, “A rational backlash
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[80] Huang, Yanzhong, “U.S. Dependence on Pharmaceutical
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[81] Khanna, Parag, “Post-pandemic: welcome to the multi-

speed world of regional disparities”, Global Geneva, 26 April

2020, https://www.global-geneva.com/post-pandemic-welcome-to-
the-multi-speed-world-of-regional-disparities.
[82] Global Business Alliance, “Inbound Investment Survey”,

May 2020,
https://globalbusiness.org/dmfile/GlobalBusinessAlliance_Inbound
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[83] Paulson, Henry, “Save globalisation to secure the future”,
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[84] United Nations, Department of Economic and Social Affairs
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[85] Subramanian, Arvind, “The Threat of Enfeebled Great
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 [87] Shivshankar Menon, a former Indian national security
adviser, quoted in Crabtree, James, “How coronavirus exposed
the collapse of global leadership”, Nikkei Asian Review, 15 April
2020, https://asia.nikkei.com/Spotlight/Cover-Story/How-
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[88] Cabestan, Jean-Pierre, “China’s Battle with Coronavirus:
Possible Geopolitical Gains and Real Challenges”, Aljazeera
Centre for Studies, 19 April 2020,
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coronavirus-possible-geopolitical-gains-and-real-challenges.
[89] Anderlini, Jamil, “Why China is losing the coronavirus
narrative”, Financial Times, 19 April 2020,
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[90] Kynge, James, Katrina Manson and James Politi, “US and
China: edging towards a new type of cold war?”, Financial Times,
8 May 2020, https://www.ft.com/content/fe59abf8-cbb8-4931-
b224-56030586fb9a.
[91] Lee Hsien Loong, “The Endangered Asian Century”,
Foreign Affairs, July/August 2020,
https://www.foreignaffairs.com/articles/asia/2020-06-04/lee-hsien-
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[92] Fedrizzi, Alessandro and Massimiliano Proietti, “Quantum
physics: our study suggests objective reality doesn’t exist”, The
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[93] Jiaming, Li, “Every move to stigmatize China evokes our
historical memory”, Global Times, 19 April 2020,
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[94] Bill of Rights Institute, “Founding Principles and Virtues”,

n.d., https://billofrightsinstitute.org/founding-documents/founding-
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[95] Nye Jr, Joseph S., “No, the Coronavirus Will Not Change
the Global Order”, Foreign Policy,16 April 2020,
https://foreignpolicy.com/2020/04/16/coronavirus-pandemic-china-
united-states-power-competition

201
 [96] Mahbubani’s latest book, Has China Won? The Chinese
Challenge to American Primacy, PublicAffairs, came out in March
2020, in the midst of the health crisis.
[97] Mahbubani, Kishore, “How China could win over the post-

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210
Table of Contents
INTRODUCTION
1. MACRO RESET
1.1. Conceptual framework – Three defining
characteristics of today’s world
1.1.1. Interdependence
1.1.2. Velocity
1.1.3. Complexity
1.2. Economic reset
1.2.1. The economics of COVID-19
1.2.1.1. Uncertainty
1.2.1.2. The economic fallacy of sacrificing a few lives to
save growth
1.2.2. Growth and employment
1.2.2.1. Economic growth
1.2.2.2. Employment
1.2.2.3. What future growth could look like
1.2.3. Fiscal and monetary policies
1.2.3.1. Deflation or inflation?
1.2.3.2. The fate of the US dollar
1.3. Societal reset
1.3.1. Inequalities
1.3.2. Social unrest
1.3.3. The return of “big” government
1.3.4. The social contract
1.4. Geopolitical reset
1.4.1. Globalization and nationalism
1.4.2. Global governance
1.4.3. The growing rivalry between China and the US
1.4.4. Fragile and failing states
1.5. Environmental reset
1.5.1. Coronavirus and the environment
1.5.1.1. Nature and zoonotic diseases
1.5.1.2. Air pollution and pandemic risk
1.5.1.3. Lockdown and carbon emissions

211
 1.5.2. Impact of the pandemic on climate change and
other environmental policies
1.6. Technological reset
1.6.1. Accelerating the digital transformation
1.6.1.1. The consumer
1.6.1.2. The regulator
1.6.1.3. The firm
1.6.2. Contact tracing, contact tracking and surveillance
1.6.3. The risk of dystopia
2. MICRO RESET (INDUSTRY AND BUSINESS)
2.1. Micro trends
2.1.1. Acceleration of digitization
2.1.2. Resilient supply chains
2.1.3. Governments and business
2.1.4. Stakeholder capitalism and ESG
2.2. Industry reset
2.2.1. Social interaction and de-densification
2.2.2. Behavioural changes – permanent vs transient
2.2.3. Resilience
3. INDIVIDUAL RESET
3.1. Redefining our humanness
3.1.1. The better angels in our nature… or not
3.1.2. Moral choices
3.2. Mental health and well-being
3.3. Changing priorities
3.3.1. Creativity
3.3.2. Time
3.3.3. Consumption
3.3.4. Nature and well-being
CONCLUSION
ENDNOTES

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