EDITORIAL: Business beyond Covid-19
Globalisation is not the only thing that will be changed and possibly killed by virus
In a recent editorial, The Economist, one of the world’s oldest and most respected business magazines, asked if Covid-19 has killed globalisation. If one removes the reference to the coronavirus, it’s a question that could have been asked at any point over the past five years.
The rise of populism worldwide — and antipathy towards migrants — are not new phenomena, and are probably lasting consequences of the previous financial crisis. In SA, we are not immune to that trend, with the current crisis emboldening politicians to loudly debate restrictions on work opportunities based on workers’ nationality.
In another editorial, Covid-19 could also be replaced by Donald Trump, Brexit or references to trade wars as dangers to the idea that a more integrated world is good for everyone. It’s an idea that has struggled for traction despite all the data showing that globalisation has been largely a force for good, whether it’s measured in absolute poverty levels or the number of children with access to formal education.
In the West, a long postwar period of greater prosperity suffered a body blow with the outbreak of the great financial crisis in 2008. The recession was followed by an era of austerity as governments heeded calls to tighten their belts in the wake of unprecedented spending and borrowing aimed at rescuing the banking system.
What seemed unfair was that billions of dollars were spent rescuing bankers while citizens paid the price with shrinking incomes and loosening of the social net.
Economic integration, assumed to be key to fighting poverty and a myriad of other problems worldwide, is being undermined at an unimaginable pace
That period itself was preceded by an era that at face value looked to be characterised by an impressive rise in living standards. If ever a case study was needed to show the shortcomings of GDP numbers and other conventional measures of wealth, the 1990s and the years leading up to the financial crisis a decade ago provide it.
While hindsight is a perfect science, most analysts will say that Britain’s vote in 2016 to leave the EU or Trump winning the US presidency due to an “America First” slogan, which would eventually cause the country to give up its global leadership role, should have been obvious.
So it is, with The Economist editorial. With aviation at a virtual halt and borders mostly closed, the answer almost seems too obvious. Economic integration, assumed to be key to fighting poverty and a myriad of other problems worldwide, is being undermined at an unimaginable pace. The World Trade Organisation expects trade to drop as much as 32% in 2020.
Noting that the numbers are looking “ugly”, the organisation wasn’t overly optimistic when looking further down the road, saying forecasts for an improvement in 2021 are less certain, depending on the duration of the outbreak and the effectiveness of policy responses. Trade of course is not the only marker of globalisation.
Globalisation isn’t the only thing that will be changed and possibly killed off by the virus. The Economist headline might as well have been about airlines, restaurants or theatre houses.
So it’s no wonder that world leaders in business, politics and society overall are having to think deeply about how the world will look like after Covid-19.
Some of the initial signs are not promising. With the virus perhaps the only one in living memory that has hit the entire world almost simultaneously, one might have hoped for a common, united front to fight it. The opposite seems true.
Tensions between the US and China, the world’s largest economies, have become worse not better. Even the race towards a vaccine has been politicised, with the US in March drawing ire after allegedly offering “large sums of money” to get exclusive access to a vaccine being developed by a company in that country.
It is in this context that Business Day, which came into being this month 35 years ago when SA’s future was anything but certain, has asked some of the country’s top business leaders to put their heads together and share their thoughts on what awaits their industries and the greater society after Covid-19.
It is fitting that Mark Cutifani, CEO of Anglo American — a company central to SA’s history over the past century, for better or worse — kicks off the series as we seek answers to what the future holds.