Introduction: The new crown virus has swept the world, subverting the way national governance, economic operation and social interaction are carried out, and innovating people's inherent cognition. In this unprecedented crisis, the rift in human society has never been as clear as it is today, and the problems of social differentiation, lack of fairness, lack of cooperation, global governance and leadership failures are particularly obvious, and some people even use the "new crown era" as a new era to highlight the decisive impact of the new crown epidemic. In the midst of unknowns and fears, people can't help but ask: What will the future of human society look like after the epidemic? Where should the world go? In light of this, Klaus Schwab, founder of the World Economic Forum, together with Thierry Mallery, managing partner of the Monthly Barometer, duly delivered the book "The Post-PANDEMIC Era: The Great Revamp", which aims to guide the development path of countries, societies, businesses and individuals in the post-PANDEMIC era. This article is excerpted from the third chapter of the book, "The Reconstruction of Society" (with abridgements), focusing on the great shift in the economic management mechanism of Western countries.
[Text/ Klaus Schwab, Thierry Malere
Historically, pandemics have often been the most testing of the core systems of society.
The COVID-19 outbreak of 2020 is no exception. The disruptive impact of COVID-19 on society will continue for years, even generations. Among them, the most immediate and tangible impact is that many governments have been criticized and the public has become angry with some policymakers and politicians for their failure to adequately prepare for the COVID-19 pandemic.
As Henry Kissinger pointed out, "Nations are united and prosperous because people believe that the various branches of government can anticipate disasters, prevent their effects, and restore stability to the country." By the end of this COVID-19 pandemic, government agencies in many countries will be turned into losers in the eyes of the public."
This is especially true for rich countries, which have professional health systems and strong scientific and innovative capabilities, but compared with other countries, the management departments in these countries are so bad that the public will naturally question them. By failing to bring economic dividends and social benefits to the vast majority of citizens, the most core social structures and socio-economic systems in these countries may become the real "culprits" in the public mind.
We cannot yet accurately describe how the restructuring of societies will manifest itself in different countries, but some global frameworks are already emerging. First, the post-pandemic era will usher in a massive redistribution of wealth, enabling the transfer of wealth between the rich and the poor, and between capital and labor. Second, covid-19 may be sounding the death knell of neoliberalism.
The so-called neoliberalism encompasses a whole set of ideas and policies that generally advocate competition and ignore solidarity; emphasize creative destruction against government intervention; and promote economic growth and inhibit social welfare. Neoliberal doctrine has been in decline over the years, with a growing number of commentators, business leaders, and policymakers criticizing it as a "market fetishism," but it was the COVID-19 pandemic that dealt the theory a fatal blow. It is no coincidence that the United States and the United Kingdom have been the most enthusiastic about pursuing neoliberal policies over the past few years, and in this pandemic, these two countries have the highest number of deaths.
The Post-PANDEMIC Era: The Great Reconstruction
By Klaus Schwab Thierry Malleret
inequality
The frequent comparison of COVID-19 to a "powerful equalizer" is a serious misleading. The opposite is true. Whenever the pandemic goes, it will exacerbate already existing social inequalities. Therefore, whether from a medical, economic, sociological or psychological point of view, THE COVID-19 pandemic is not a "balancing force", but will actually "exacerbate the imbalance of income, wealth and opportunity".
Around the world, large numbers of people are economically and socially vulnerable, and to a very serious extent, especially in countries that lack social protection, inadequate social protection, or have weak family and social ties, and the COVID-19 pandemic has exposed all this.
Of course, this existed before the outbreak, but based on our observations of other global issues, the pandemic has amplified these problems, forcing us to recognize and acknowledge the magnitude of social inequality. Prior to this, the problem of social inequality had been left out in the cold by too many people for too long.
The first impact of the pandemic is that it sheds light on alarming social disparities and risks faced by different segments of society, amplifying the macro challenges posed by social inequality. During the lockdown, a general but thought-provoking tone emerged in many parts of the world. It describes a binary world in which upper- and middle-class people are able to telecommute and educate their children at home (including primary and secondary education, and the more remote the dwelling is considered safer), the working class cannot stay at home or supervise their children's studies, but has to work the front lines to save lives and economies, directly or indirectly– cleaning hospitals, manually checking out, transporting necessary supplies, keeping us safe, and so on.
In a highly developed service economy like the United States, about 1/3 of the work can be done at home or remotely, and there are large differences in income between industries. More than 75 percent of U.S. finance and insurance workers can telecommute, while in the food industry, fewer than 3 percent are able to telecommute and earn much lower incomes. At a time of strong spread (mid-April 2020), the vast majority of new cases and deaths underscore the fact that COVID-19 is by no means a "leveler" or "balancer" as many people said in the early days of the pandemic. Instead, the virus quickly launched a deadly attack on humans, and there was no fairness at all.
In the United States, the most common losses in the COVID-19 pandemic are vulnerable groups such as African Americans, low-income groups, and the homeless. In Michigan, blacks make up less than 15 percent of the population, but among those who die from complications of the coronavirus, blacks make up about 40 percent of the population.
The enormous impact of COVID-19 on the black community reflects the social injustices behind it. Like many other countries, African-American citizens in the United States are poorer, at higher risk of unemployment or underemployment, often substandard housing and living conditions, and more vulnerable to health problems such as obesity, heart disease or diabetes. For them, the new crown virus is naturally more deadly.
The second impact of the COVID-19 pandemic and subsequent lockdowns is that it exposes the deep disconnect between the nature and intrinsic value of the work humans do and their economic rewards. In other words, the people most needed by society receive the lowest economic returns.
A sobering fact is that nurses, cleaners, logistics drivers, food factory workers, caregivers and warehouse workers, among others, risk their lives to fight the pandemic, care for patients and keep the economy running, but they earn the lowest. In fact, they make a huge contribution to economic development and social welfare, but their value is far from recognized.
This is a global phenomenon, but it is particularly acute in Anglo-Saxon countries. In these countries, poverty is often accompanied by unemployment. These groups are not only the least paid for their jobs, but also the highest risk of unemployment. In the UK, for example, the majority (nearly 60%) of caregivers sign "gig contracts", which means that their hours are not guaranteed, so income is difficult to guarantee. Similarly, workers in food factories are usually temporary workers who do not enjoy the benefits of regular employees and do not have any social security. Logistics drivers are most often classified as freelancers, who are paid according to the number of deliveries they make, have no sick leave allowance, and do not have paid leave.
British director Ken Lodge portrays this poignant social reality in his latest film, Sorry, We Missed You. The film illustrates the extraordinary circumstances of life of these workers: whenever an misfortune strikes, they will collapse physically, psychologically and economically, and stress and anxiety will fill every aspect of their lives.
Screenshot of the movie "Sorry, We Missed You"
The return of the "big" government
Mithway and Adrian Wooldridge write: "Covid-19 has made governments important again, not just strong again, but vital again (companies that are invincible have laid down their legs and asked for help from the government). What really makes a big difference is whether your country can provide good health care, strong government agencies, and an effective fiscal system. The ability of the government to achieve good governance directly determines the life and death of people. ”
One of the biggest lessons we have learned from Europe and the United States over the past 500 years is that a severe crisis strengthens the power of nations. This has always been the case, and COVID-19 is no exception. Historians point out that since the 18th century, capitalist countries with increasing financial power have always had the need to wage wars, especially in distant countries that require the expansion of maritime power. For example, the Seven Years' War, which broke out in 1756-1763, was said to be the first truly global war in which all the great powers of Europe participated.
Since then, whenever there has been a major crisis, the power of the state has always been further strengthened, and taxation is often the first means at hand: "Taxation is an inherent and indispensable feature of sovereignty, and it is also the power of every independent government." "Some past cases have shown that after this epidemic, the tax rate will increase. As in the past, the social logic and political justification behind the tax rate increases stem from the argument that the country is at war (only this time facing an invisible enemy).
France's highest income tax rate was zero in 1914, and by the end of World War I, it had been raised to 50 percent a year later. In 1917, Canada introduced income tax for the first time as a temporary measure to finance the war. By the time of World War II, Canada had significantly raised its tax rates, imposing a uniform 20% surcharge on all income tax payers outside of businesses and introducing a high marginal tax rate (69 per cent). After the war, Canada's tax rate came down, but it was still much higher than it was before the war.
Also during World War II, income taxes in the United States changed from "class taxes" to "mass taxes," and the number of taxpayers increased from 7 million in 1940 to 42 million in 1945. The highest years for progressive taxes in U.S. history were 1944 and 1945, with a 94 percent tax rate on income exceeding $200,000 (equivalent to $2.4 million in 2009). Taxpayers in the scope of the levy denounced such a high tax rate as an act of "confiscation of property", but for the next 20 years, this tax rate has remained above 80%. After World War II, many other countries adopted similar, and often extreme, tax measures. During world war II, the uk's top income tax rate even reached a staggering 99.25%!
Sometimes, the state's sovereign power over taxation translates into tangible social gains in multiple areas, such as helping to build a social welfare system. However, these large-scale transitions to complete "new things" are basically aimed at responding to the threat of menacing external shocks or potential shocks. World War II, for example, led most European countries to establish life-long state welfare systems. The same was true of the Cold War, when the governments of capitalist countries were so worried about the outbreak of a communist uprising within them that they preemptively developed a state-led model of development. Under this model, state bureaucracies managed most sectors of the economy, from transportation to energy, and this continued until the 1970s.
The current situation is fundamentally different. In the Western world, the role of the state has continued to decline dramatically over the past few decades. But this time it is bound to change, because it is difficult for us to rely solely on market-based solutions to deal with the external shock of the scale of the NEW CROWN pandemic.
Almost overnight, COVID-19 has re-recognized the complex and delicate balance between the private and public spheres, and has tilted the balance in favor of the latter. It demonstrates the efficiency of social security and shows that it is not in the best interest of society to shift greater responsibilities such as health care and education to individuals and markets.
There is a view that governments can provide better public goods, and that runaway economic development without regulation can greatly undermine social welfare. A few years ago, this was a less acceptable idea, but now it has undergone a surprising transformation into a universal social view. On the dial, which measures the relationship between government and market, the pointer is already clearly pointed to the government side.
For the first time since Margaret Thatcher captured the zeitgeist of the times and declared that "there is no such thing as society," the government has the upper hand. Everything in the post-pandemic era has prompted us to rethink the role of government. According to economist Mariana Mazoukato, governments should not simply repair dysfunctional market mechanisms, but should "actively shape and shape the market environment for inclusive and sustainable economic growth." The government should also ensure that commercial partnerships involving government funds are for the benefit of the public interest and not for profit."
Changes in U.S. tax rates: Since 1954, the tax rates of the rich have fallen dramatically, while the lowest rates have not changed much, and even increased for a time
Future direction
How will the Government play its expanding role? An important condition for the "big" government is already in place, that is, the government has greatly strengthened its control over the economy with lightning speed. Public sector intervention in the economy is rapid and unprecedented.
In April 2020, when the COVID-19 pandemic began to sweep the world, governments announced trillions of dollars in economic stimulus packages, equivalent to eight or nine "Marshall Plans" at the same time, to support the basic needs of the poor, to do their best to maintain jobs, and to help businesses survive the pandemic. Central banks decided to cut interest rates and worked to provide sufficient liquidity; at the same time, government departments began to raise social welfare, pay cash directly, pay wages, suspend loan and mortgage repayments, and take many other countermeasures.
Only governments have the power, capacity, and influence to make decisions on such a large scale. Without government involvement, economic catastrophe and social collapse could have arrived.
Going forward, governments are likely to conclude, albeit with varying probabilities, that reforming some of the rules of the game and permanently strengthening the role of government is in the best interest of society as a whole. In the 1930s, it was through the strengthening of government responsibilities that the United States gradually resolved mass unemployment and economic insecurity. In the face of the current situation, similar courses of action may become a reality again for the foreseeable future. We'll talk about forms of strengthening government functions elsewhere in the book (such as the new social contract that we'll talk about in the next section), but here we can briefly outline some of the most striking points.
Develop and improve health care and unemployment insurance systems. In the Anglo-Saxon countries with the highest degree of marketization, social security systems must also be strengthened; various social security measures such as improving unemployment benefits and extending sick leave must be implemented to mitigate the impact of the impact and normalize it in the future. In many countries, the re-engagement of trade unions would accelerate the process. In this way, shareholder value will become a secondary consideration, giving way to stakeholder philosophy.
The trend of world financialization that has prevailed for many years is likely to be reversed. Especially in countries most affected by this trend, such as the United Kingdom and the United States, governments will be forced to rethink the many characteristics of this "financial obsession". They could take a wide range of measures, as appropriate, such as banning share repurchase regimes and prohibiting banks from encouraging borrowing and spending.
Public oversight of private enterprises should be strengthened, especially (but not limited to) those that benefit from public funds. Some countries have chosen to nationalize these enterprises, while others have chosen to take a stake in or provide them with loans.
Overall, regulation will be strengthened for many issues, such as worker safety or the fact that some goods can only be sourced domestically. With regard to social and environmental issues, the Government also held businesses accountable and asked them to participate in solving the problems. In addition, the government will encourage public-private partnerships to increase corporate involvement in mitigating global risks.
Regardless of the details, the role of the government will continue to strengthen, and as a result, it will have a significant impact on the way businesses operate. Business managers in all countries and industries around the world must adapt to varying degrees of government intervention. Research and development of global public goods such as health care and climate change solutions will be actively promoted. The tax rate will increase, especially for the privileged, because the government needs to be more resilient and wants to invest more. In response, Joseph Stiglitz made the following claims:
The first priority is... Provide more funding to the public sector, especially those in complex societies that specialize in preventing and controlling risks, as well as funding the advancement of scientific research and quality education to lay the foundation for future prosperity. In these areas, we can quickly create valuable job opportunities,
Including research positions, teaching positions, and operation management positions of related institutions. Even if we are able to overcome this crisis, we must also realize that there must be other crises lurking not far around us. We can't predict what the next crisis will look like, but it's certainly different from the previous one.
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