“The Normal Economy Is Never Coming Back” by Adam Tooze, a British historian who is a Professor at Columbia University and Director of the European Institute.
The pandemic will worsen four preexisting conditions of the world economy.
The first of these conditions is secular stagnation. The combination of low productivity growth and low private investment returns will deepen as people become risk-averse and save more during pandemic.
The second condition is that rich countries (developed countries) and some other countries in resilience to crises will widen further.
Thirdly, the world will continue to be over-reliant on the U.S. dollar for financing and trade. Even while the United States becomes less attractive for investment, its attraction will increase relative to most other parts of the world. This will lead to ongoing dissatisfaction.
Finally, economic nationalism will increasingly lead governments to shut off their own economies from the rest of the world. Before the pandemic, we always turn to other countries if something happens to us. But now, when pandemic hits everywhere on the planet and borders suddenly do matter, as countries are sourcing medical equipment and other supplies, countries are going to “feed” themselves without the outside help. Coronavirus pandemic has been a powerful reminder that economic nationalism is increasing in each country and this will never produce complete autarky, or anything close to it, but it will reinforce the first two trends and increase resentment of the third. So long as this is the case, countries will have to strive for a better balance between taking advantage of globalization and a necessary degree of self-reliance.
During the lockdown, a lot of non-essential or small businesses were forced to close. Unfortunately, those low-waged, low-skilled jobs will not return with the eventual recovery. However, workers providing essential services such as policing, firefighting, health care, logistics, public transportation, and food will be in greater demand, creating new job opportunities and increasing the pressure to raise wages and improve benefits in these traditionally low-wage sectors.
The world will be different after the pandemic, and so will the global economy. There is no way for us to fix the economy to the original, but what we can do is to fight bravely against Covid-19 and attempt to suit within a new global economy.