At the current moment, the entire ship of our economy is shifting with a concerning tilt. While stock numbers are looking good and the damage in some sectors/regions are not as bad as expected damage goes straight to the foundation. Jobs losses across the world have been cushioned by government action and increases in unemployment benefits across the board. This has been paired with government assistance to firms that have managed to prevent a shrinking amount from going bust. These so called Zombie business’s continue to grow with an unknown amount of individuals and money living in a government subsided market that is alternate to reality.
Zombie Firms Hide Real Demand
The capitalist global market has done wonders for problems of supply and demand from the 19th and 20th century. Yet this has gone hand in hand with being able to know future demand and match that with very close supply. This falls apart if the information that is gathered is flawed or unable to be gathered. Planning for the future has gotten easier for many firms, and this has seen the growth in the just in time shipping. Yet with the government keeping many businesses afloat that will later collapse, it was becoming next to impossible to work out what should be stored for the future.
This paired with uncertainty with the lockdowns makes it a nightmare for short and even longterm planning. While the health situation is changing the lack of set policy for containment makes it hard to know what will be allowed at what times. In most countries, there is not a published level of action and it seems elected officials are more then willing to slam down restrictions if the case numbers are seen to be increasing. Increased uncertainty is a risk that increases the cost to do business and slows down crucial systems within our nations.
Globalized Trade Starting To Burn
Since the collapse of the Cold War the systems that had been assumed to always continue have started to come under serious threat. Recently the UK has signalled that is willing to walk away from the EU without a deal, an outcome that would see the already hurting EU economy hurt even more. China and Australia are getting into a serious trade war with the potential of the basic supply line that powers a decent amount of Chinese industry being hurt. South American economies along with African are also coming under heavy strain due to outcomes of the virus and also the general disruption of the status quo.
It also seems that many governments are focused on plans that will boost national consumption and not rely on foreigners or their money. While the EU is starting to work on some policy for the tourism focused nations the cooperation between the member nations has been limited. Between nations that are no closely linked and the lack of interest in working together only grows. With this focus on nations doing more for themselves this could see the global trade network break down or become much more limited then what has been seen since the end of World War 2. Yet this could be changing with some of the most powerful institutions working out how to change the economic system to release many nations from debt and the consequences of economic choices.
Long Tail From Actions Taken
As talked about before the changes that are being made at the moment are going to have a lasting impact. Yet we are only at the start of the changes that are occurring due to Covid19 lockdown. Firms that have started to do changes will not see results for quite some time. Government actions and the consequences of them are also not able to be seen. All of these changes are pending results but more choices are being made before we even know what the end results will happen. We can hope that the right amount of care is being taken and that data will be collected quickly for us to correct any mistakes that have been made in the rush. However, admitting mistakes in the very political landscapes is something that many governments are not going to want to admit. No matter what the cost of lies becomes.
Some of the outcomes are not things that we could be able to see at the current moment. This is like the outcomes of the French Revolution during the Terror or the lasting results of World War 2. Many groups have been looking for the right moments to push large changes in our systems and our way of life and this has offered the perfect moment. We need to be very alert to those who would use the current crisis and the lack of plans for the future to make a case for something that will cause even more harm then what the virus will do.