Starting in 2019, the world moved from the pre-coronavirus (COVID-19) period into the COVID-19 period. Everywhere clusters of people were becoming infected with COVID-19 and many deaths were occurring. Countries did their best to control the pandemic by urging their people to wear a mask, wash their hands frequently, avoid touching their faces and keeping at a social distance from others. These steps would help flatten the infection curve and save lives.
People are hoping to arrive at a post-COVID period when they no longer have to worry about infection and death. That will happen when the COVID-19 is gone or a vaccine has become widely available. Post-COVID is when people no longer have to restrict their activities and they can return their life to the old normal.
The COVID period itself will move through three stages: a lock-down period, a reopening period, and a period of economic recovery.
This article will highlight the main features of each stage, and also examine whether we return to the old normal or move into a new normal.
The Lock-down Period
The great majority of nations that were struck with COVID infections and deaths turned to lock-down solutions. China imposed a total lock-down in Wuhan where the infections were first detected. Wuhan citizens couldn’t leave the city, nor could new people enter the city. Everyone was required to 'tay-at-home.' Stores and factories closed down. Only essential services and production were allowed. Hospitals, police forces and fire stations had to continue operating. But schools, churches, museums and most other organised sectors had to close down.
This was a period when communities attached more importance to saving lives than to saving jobs. More precisely, it was about saving the lives of older people, especially persons with illnesses or disabilities. These persons were especially vulnerable to coronavirus. The coronavirus did not appear to inflict harm on children, teens, college students or healthy adults under the age of 50.
This led some people to oppose the lock-down. Resisters felt that COVID would primarily hurt those who would die soon anyways. If they would normally die in a year or two, protestors asked why close down the whole economy? However, recent research estimated that Covid on average cut short the lives of older people by 11 years, not 1 or 2 years.
Still the resistance argued that a lock-down “destroyed” so many “lives” of healthy people. School age children would be deprived of a good classroom education and interaction.
Online education would be a poor substitute for classroom education. The new generation would be more poorly educated and take poorer paying jobs and lead to more unfulfilled or damaged lives.
High school and college graduates wouldn’t find jobs and would waste their best years vegetating at home. Many healthy and ambitious adults would be forced to stay home and defer their lifelong dreams.
The totality of the lock-down varied from place to place. Citizens were urged everywhere to practise hygiene: wear masks, practise social distancing, avoid shaking hands, avoid working near others in a poorly ventilated room, and visit a doctor or hospital if they had flu-like symptoms. The degree of lock-down enforcement varied considerably.
Some places let individual citizens decide whether to wear a mask or meet with more than 10 persons. Other places would fine or jail those who engaged in officially disapproved practices.
One country—Sweden—decided against imposing a lock-down. The Swedish government might have thought that saving the economy for the great majority was more important than saving the lives of some older persons. The Swedish government might have seen the Swedish people as healthier than people in other countries and would have fewer deaths.
Swedish citizens went about their normal work and play. They ate in their restaurants, attended their museums and cultural performances, and traveled more freely within Sweden.
The result: Sweden’s death rate was noticeably higher per million than in its neighboring locked-down Scandinavian countries. This was Sweden’s tradeoff: more deaths but an open and operating economy.
The Reopening Period
Normally, a lock-down was to last until better testing, tracing, and treatment were available and hopefully a safe vaccine would appear. The local government’s main concern was that its medical system could handle the number of infected citizens. No one wanted infected citizens to die because of a lack of beds, staff and equipment (like ventilators) to save them. So the key was to flatten the inflection curve so that infected persons could be served well by the available medical capacity.
At the same time, the pressure for a 'return to normalcy' kept growing. Many citizens found it increasingly hard to live day to day in a sheltered situation. They found it frightening to be without work, to apply for unemployment insurance, to face mounting bills, to obtain their needed groceries and other services. Physical health was one problem and mental health was a growing problem.
In the US, President Donald Trump announced on 15th April that the lock-down would be extended until 30 April 2020 and then be reconsidered. The plan stipulated that no state should open up until it had a minimum of two weeks of declining case numbers. This meant that most of the country would be open from mid-June to mid-September. However, a few weeks later, Trump reversed himself and said the country needed to open sooner.
The economy was suffering. The US GDP had contracted at a rate of 4.8 percent in the first quarter of 2020. The unemployment rate in April 2020 rose to 22 million people. He implied that the US economy could be permanently damaged if the economy was not reopened. He said that Wisconsin, Minneapolis and Virginia should be “liberated.”
This gave heart to lock-down resistance groups and they got better organized. Several reacted defiantly that their freedom is threatened. Several armed men appeared at the State Capital of Michigan demanding that Democratic Governor Gretchen Whitmer cancel the lock-down rules. President Trump chose not to comment. He seemed to encourage protestors to press for ending the lockout. His decision seemed to be (1) that he is the leader and (2) and that his winning the second term depended on restarting the economy’s growth.
Reopening is not a one-step process from everything closed to everything opened. Instead, each community (city, town) must decide on its readiness and what should be opened first, then next, and then next again. Each city or town would also be affected by the State’s and nation’s policies on reopening.
Among the first industries to reopen are:
1. Restaurants and bars
2. Shopping stores for clothing, hardware, etc.
All these businesses are encouraged to provide safe conditions upon reopening. Many restaurants plan to provide fewer, more spaced tables. Churches and museums plan to mark their floors with points where people should sit or stand for safe spacing. All the employees should wear masks if possible and wash their hands frequently.
The next industry to open would be personal services. Barber shops, hair salons, tattoo shops, and bowling alleys all involve closer person-to-person interaction. Given that some asymptotic persons would have Covid and not know it for 14 days means that germs can be passed on to many customers during personal service. The financial performance of these services would depend on how many customers have the confidence to show up. As long as infection rates continue or rise, many people will avoid personal services and manage their own grooming services personally or through family members.
A city might use a 'traffic light' approach to indicate how severe COVID-19 is in different locations. 'Red' parts of the city or region might face continued lock-down. 'Green' areas would have looser restrictions. This system is used by France. France collects data and evaluates the number of new cases, hospital capacity and local testing capacity to modify which areas are red or green.
Returning to Economic Growth
The speed of returning to economic growth will depend upon a number of factors.
First, we need to acknowledge that thousands of businesses have closed down permanently. Many restaurants, clothing stores and other businesses will never reopen. Their owners couldn’t raise enough money to pay their bills and keep their staffs. They either declared bankruptcy or just closed their doors. Meanwhile other businesses that survived will open gradually. And some brave entrepreneurs will appear and open new restaurants, clothing stores and other businesses where there is a need and opportunity, but this will take some time.
Second, some major industries will take a long time to re-attract customers. One is the tourist and hospitality industry. A long time will pass before enough people feel confident to book vacations and buy plane tickets. They will avoid flying to vacation areas where medical care is not readily available. They will be unsure of hotel rooms and their cleanliness and use of disinfectants. Some individuals and families are buying recreational vehicles (RVs) so they can travel at a lower cost without booking hotel rooms.
Some major durable goods producers (cars, refrigerators and large appliances, etc) may be slow in starting up production. Their very long supply chains might be missing key components.
These companies might try to source more domestically the components they need. They also are unsure about how much demand they will face. Car manufacturers, for example, worry about young people in large cities choosing not to own a car but to use shared services like Uber and Lift. Auto companies don’t know how many car buyers will want electric cars as opposed to fuel-dependent vehicles. They don’t know how many employees will start preferring working at home rather than in an office. Doing work at home will also hurt real estate owners because the demand for office space will fall.
The economic recovery rate will depend on the rate at which the government agrees to print and distribute trillions of dollars to suffering families, credit-needing small businesses, large corporations facing mounting losses, and states needing fast injections of cash. If government is willing to continue deficit financing, the rate of economic recovery will be faster.
A Return to the Old Normal or a New Normal?
Most people are yearning for a return to the old normal. They want their old job back or a better one. They want to drive to their office rather than work at home. They are ready to travel to their customers, suppliers or distributors.
They want to attend the big annual conventions of their industry, such as the restaurant association or the travel association. After work, they can go to a bar or restaurant with their colleagues. On weekends, they can take their kids to a baseball or football game.
They can look forward to gatherings with friends and neighbors during national holidays like Halloween, Christmas, and Mother’s Day.
Many people, however, will realize that the old normal had a lot of problems. The medical system and the cost of pharmaceuticals are very expensive. Our medical system wasn’t able to prevent 90,000 deaths. This terrible performance opened our eyes to some deep faults in our economic and social systems.
There will be a clamor for reforms in our economic, political and social systems that reduce or eliminate the weaknesses of the old normal. We can be guided by the thought:
“If we want things to stay as they are, things will have to change.” (from Giuseppe Tomasi di Lamedusa’s book The Leopard)
Here are the areas where change is necessary or desirable.
1. The country needs to drastically improve its healthcare system. It has not yet established healthcare as a right of all citizens. Health care, hospitals and pharmaceticals are too expensive. Some areas in the country have poor health care coverage. The government should offer Medicare and Medicaid even if it is parked next to existing systems offered by companies to their employees.
2. The country needs to do a better job of managing retirement and nursing homes and our prison system. There is not enough coverage and assistance for people who retire and need the services of a retirement or nursing home. Our prisons are overcrowded and we need to release many who were imprisoned in the war against drugs. Infections can spread easily and quickly among populations who live closely together and are in other people’s hands.
3. The country would benefit from a system where more employees can choose to work at home instead of all work taking place in offices. Companies need to review whether certain business tasks can be conducted at home using modern means of communication (Zoom, etc.) More people working at home would reduce traffic congestion and lost time traveling to and from work, Companies could reduce the cost of their real estate bill with smaller and fewer offices. Working at home might lead to better management of children and family life.
4. The country needs to operate a more helpful system of public assistance. Many people are poor, many go hungry, and many income earners are not paid a living wage and have to borrow every week to have enough money to get the things they need. The country needs to organize a better system of food banks, soup kitchens and food stamps so no one goes hungry.
5. The country needs to improve its education system. Many students pass through the system without acquiring needed skills. Better quality education is needed in our poor neighborhoods. The country also needs more affordable college and technical schools.
6. The government needs to provide more job stimulus through public works and infrastructure rebuilding.
7. The government needs to finance its budget through raising the top income tax rates and possibly passing a wealth tax.
8. The government has to act more positively to curb pollution and the problem of overheating the earth through the country’s overreliance on fossil fuels. More reliance must be put on solar, wind and other sources of energy.
9. The government in partnership with industry must upgrade fiber broadcast networks and lower bandwidth cost to facilitate digitalisation.
All of these points deserve public discussion and legislative action. If none of these leads to new legislation, we will return to the old normal and once again be unprepared to handle similar crises to COVID and other major upheavals.
If more of us want the country to deliver a better life to more of its citizens, we need to hammer out a new normal.
(Dr Philip Kotler is the SC Johnson & Son Distinguished Professor of International Marketing at the Northwestern University Kellogg Graduate School of Management in Chicago. He is hailed by Management Centre Europe as "the world's foremost expert on the strategic practice of marketing.")