Since the COVID-19 or Corona virus infection is becoming a global risk and more and more voices are being heard in the light of current global events, I have decided to share my 2 cents on the topic. This post is written from the following personal perspective of my situation: business owner and managing director – involved in 3 companies and several businesses (a few of them newly also corona related – 1 & 2, 3 and 4 coming this week), investor & trader on the global (currency & stock) markets, someone living in Germany and Slovenia and frequently travelling the world and a person with many acquaintances in the pharma and healthcare businesses. But most of all, someone who likes to think in a broader sense about what kind of impact a global pandemic will bring to the modern global society.
Those of you who know me well, know that I have been saying for some time now that the state of peace and well-being that we have been experiencing (especially in Europe) in the last years is something without precedent. In European history this is the first time we have peace and economic well-being for such a long period of time and it was in my opinion closely related to the economic stagnation of European economy. As a consumer you can only buy that many TV´s, couches, cars, computers and phones, after that it starts to get old. Because of that I was sceptical of the possibility of further economic growth, as all new developments are focused on the digital and services with a very low (my personal view) probability of finding or developing enough demand to be sold en masse to the average European consumer (who also is pretty worn out due to the high costs of living and slow growth of wages). But this article is not about what I have just written so far, however, it is closely related to the positions on the global markets and economies and, as I will try to explain in this post, that is extremely connected with what we will be experiencing in the following months, most probably years.
My final point was always saying that today globalization is either going to bring all nations closer together or push us farther apart. On one side we have the unprecedented ability to travel the world, meet and experience other countries, mix with other ethnicities and maybe even fall in love and start a family half a world apart. Through social media and internet people on the other side of the planet have faces, we can talk with them, interact and by taking a flight even meet them the next day. Amazing, right? The other side of the coin – the more you stir, the more entropy that will cause – I like looking at that as making a bowl of cereal. If you just pour yoghurt on it, it will take time to soak in, if you mix it however, you create a special little chaos, but after that the soaking will happen much faster and more consistent. I think we are in that chaos phase right now – we in Europe are faced with the impact of refugees from destabilized countries, hoping to find a human-worthy opportunity for a normal life. Everyone wants the best for themselves, we all want to go to sleep with a roof over our head, drinkable water, access to food, electricity, internet and so forth. But what is good for someone else is not necessarily good for us, if you step on my toes I will react. That I have been noticing in Germany as well as in Slovenia – we are selective. We don’t just accept and integrate, we push back, even though we would probably do the same in a similar situation. Today we are faced with a new situation – full isolation (for most people), because we fear for our lives. Or do we?
The coronavirus, I agree, is a serious matter. Mostly because flattening the curve is critical to enabling the people who need medical attention access to proper medical care (for European standards, of course). Most of us are not at a high risk even if (and when) we contract the virus. We have had the flu for an extremely long time and we are used to it. AIDS was new to humans in the 1980s, today people infected live normal lives and can also have interactions with others without infecting them, pharmaceuticals are an amazing thing and progress in the healthcare sector is amazing. The more important battle may come when known bacteria becomes resistant to publicly accessible antibiotics as there is yet substantial progress to be made in that field. However, things that are being done in gene therapy treatments, biological medications, etc. are amazing. I am certain that once it becomes economically viable our technical capabilities to combat the symptoms and causes will be accessible throughout the western world. So yes, stopping the aggressive spread caused through interaction with others is good for managing the panic and I do agree for the next few weeks reducing or cancelling events and mass gatherings makes sense and we should do it. The sooner we do it, the less it will impact the economy long term. And the economy is what worries me, each week of scare and irrational behaviour means months of economic downturn. The worst, however, what we may get out of this pandemic, is a change in the consumer mindset. That will most probably happen if the countermeasures will continue and tighten, then more people will be scared, believe in fake information and false claims which may lead to a change in the general mindset of people. This may mean many industrial & services businesses will die out, which will cause the turning of the massive economic recession wheel, turning that will not be easy to stop.
Our company in Slovenia implemented home office work for all employees. The company here in Germany – half of our employees are in home office. Not because of their so choosing, but because of circumstances – kindergartens are closed, so will be schools, there is no availability of help – parents are older, so there is a substantial risk for them if they would contract the coronavirus, child care services are not available, they are either overbooked, or completely cancelled. So parents have to stay at home. We all know that productivity will fall, as children, especially really young ones, need active attention. How this will reflect on the business is a good question. In some industries everything stopped. If you know people in event organization, gastronomy, travel, tourism, hotels and related industries (i.e. machine suppliers for bars, etc.) – ask around, you will see for them the business stopped. And it does not seem to be looking bright in the coming months. There are large numbers of people dependent on these industries and that is only the beginning. The impact will be felt throughout the market. The stock market knows that and even though we have experienced the worst crashes since the 1987 crash, I believe there is more of it to come. This downturn will not be fixed in months, it will take years.
As mentioned, the longer this lasts, the higher the chance of a new mindset being established. Although I see many positive points, as for example reduction in pollution and human impact (less transportation, less manufacturing, less energy expenditures), more social interaction in extended families and close environment, stronger bonds between people, there are also strong negative points as well.
Dolphins are once again seen at the pier in Trieste due to the absence of ship traffic.
A change in the mindset might bring us closer together in our tight social groups, but it will push us further apart globally again. Countries will have grown apart once more and the global society will take a step back again, which I find is a relevant setback in pursuing what we might be able to achieve as a global society with common goals. Impact to economy will bring more unemployment and the requirement to implement new social systems to keep the peace – as long as people have food, safety, water and a roof over their head – they will remain placid, once that is gone it can be days if not hours when everything goes crazy. In the last few days stories were shared with me of events where people threatened people in supermarkets with guns for bottled water (!) – such events transpire due to panic short term (even without an actual resource shortage present), long term – look at Europe’s borders – failed states or rather failed economies cause massive movements. And as said before, the more you stir, the more entropy you create. This may create more economical migrations, create more hate for different nations, religions, cultures or races. So many negatives which will most probably outweigh the positives.
All in all – hopefully the preventive measures will not be required much longer for the general population and they will be over soon enough that we may start with “business as usual”. If the spread would continue too fast we will be faced with mass panic, if the time to stabilize the spread will be too long, the economy will break down even more. There is no win-win, there is just a milder lose-lose situation waiting. As in any aftermath some industries will thrive, but the general population will have it worse off. In the closing words I turn to you with the following appeal – follow the official guidelines, you will at some point in your life most probably come in contact with the corona virus, the same as you did with the flu. You will most probably survive and your immune system will defeat it on its own, the chance is extremely high, even too high to really worry about it. Do not fall for the panic, do not trust panicked news or what you read online from tabloids, unvalidated sources with no expertise. I am noticing more and more of that online, and as we all know, repeat something long enough, it will become the truth.
Do not, again, fall for that. It is difficult, even as a very well informed person, with information from the “front-line” with corona, first hand insight into economical situation (from my businesses), first hand experience from 2 countries simultaneously, am starting to get worried, which is not good. That is a natural response, nobody wants to be at risk, but it is the wrong response and it will cost us dearly. What will happen if our supermarkets will be closed for longer periods of time, do we even know how to go by with the basics anymore? The calmer we behave, the lower the chance of such a situation will be.
The better we follow the rules and guidelines, the sooner this will be under control, then we will need to worry about fixing the economy once again. Hopefully for the better, but quite honestly, probably for the worse. More people will be impacted by automation, which will probably thrive and we will need to find ways to mitigate that, maybe universal income will be a sensible solution. We shall see and only time will tell, but what I do know for certain, things will never be quite the same again.
Looking forward to your comments below (please keep a proper respectable level of communication).
You forgot one thing: Smart people gain time to write smart articles and others gain time to read them. May corona be a chance for us all to lean back, reflect and slow down everything a bit…. good thoughts dude! I agree 100%….