Merely a decade ago, we were barely recovering from the 2008 Financial Crisis. Most of the world was still reeling from the domino effect it sent across the world through the global financial system. Even countries that were not part of the globalized world of finance were impacted through the effects it had on trade and investment. Millions of jobs were lost in the rich, industrialised world and Davos Man was left wondering what went wrong with the low labour cost, high profit margins global business model of most multinationals.
2020 has been the year of the worst pandemic since the Black Death and the Spanish Flu. This time, the crisis has made its presence felt around the world through the global world of business, travel and people-to-people contact. Millions have died, millions of others continue to lose their jobs, several parts of economies have been stalled. It’s nothing like any recession the world has ever seen, and we are struggling to cope with the virus.
What strikes me as a common and yet surprising feature is that both times, the epicentres of the crises have been the fastest to recover. The US economy – especially its financial sector – recovered soon enough thanks to government and central bank intervention in 2008. There were many who castigated governments for helping to bail out big banks and big businesses, but the fact is that without banks back on their feet again, the world would have simply imploded.
In the case of Covid-19, China and especially Wuhan, the epicentre of the pandemic, were extremely quick to recover, despite reports that the Chinese government did its best to try and suppress news of the virus in its initial stages. Because it was one province and mainly one city that was infected, the Chinese government was able to concentrate all its efforts in locking down the entire province, preventing the virus from spreading through travel and people-to-people contact. As it has turned out so far, China is the only country to see economic growth this year.
In looking at the ways we respond to such crises, I am also struck by how we almost always hope for change in the status-quo. Most of the time, we are quick to diagnose the cause of the problems correctly, and we endeavour or at the very least hope to make changes in order to remedy the structural or underlying conditions. If the US and other Western governments and central banks hadn’t applied the immediate solution then, or if China hadn’t completely locked down its economy for two months, the world would have been in a much worse situation.
That said, I must say we don’t always follow through with the entire set of corrective measures that are required in their full capacity to make any real or enduring difference. Governments are responsible for this, but often fail to carry out the remedial steps either because of lack of funds, or because of other competing demands on their time and resources, or because it simply doesn’t suit their political prospects.
We ordinary citizens on the other hand are the ones always hoping for change. These can take many different forms, so let us examine a few:
The hope for a great leveller
At the time of the 2008 financial crisis and even today, it was obvious that there is an inherent problem with the way our economies work. The world has become more peaceful, people live longer and healthier lives, and more are out of poverty. Yet, we are caught in the most vicious and unequal class war ever, because what defines class differences are different today from what they were in Karl Marx’s time.
The eternal class struggle hasn’t gone away. It is access to better education and to technology that is fuelling the divides of today. That millions of workers in the US and in UK lost their jobs, was not due to globalisation alone. As I have been writing recently, most of the jobs were lost thanks to technology but politicians are loth to recognize it and do something about it. People hoped for change and voted for Trump and for Brexit under Boris Johnson.
That there is rising inequality of income and wealth is well-known, but most governments are reluctant to tackle it. Better education that prepares citizens for the new technological age that we are in now, as well as progressive taxation are what we need. Instead, even when there is so much money being pumped in by central banks and most of it is fuelling stock markets around the world, governments give tax breaks to corporations and the wealthy.
The search for authenticity
This is closer to my area of work, which is advertising and brand communications, where one hears this constant refrain. That millennials and gen Z want authenticity. I am not sure what that means, but part of it seems to be about the search for genuine benefits to consumers, and for companies to do good while making profits.
It is, of course, a reaction to the 2008 Financial Crisis, in which millennials suffered the most, as I have written previously on my blog. Unfortunately, most marketers have read this as a sign that millennials are against advertising, that the only way to win them over is to have a brand purpose, that too not a corporate initiative, but a marketing tool. Meanwhile, the craze for content creation goes on unabated, since millennials don’t want adverts.
My reading of the situation is that most consumers – not just millennials – are grappling with several crises, as well as with the huge role that tech is playing in their lives. Our media consumption habits have changed faster than our other consumption habits and patterns. It is the smartphone and digital media that has made advertising even more intrusive by “pushing” adverts to us, and it is no wonder that millennials – who live life on the smartphone 24×7 – are put off by it. It is also true that most digital advertising lacks compelling ideas, and are transactional in nature and I have been writing about this as well.
The real gainers from digital marketing, have not been companies and brands, nor consumers, but tech and social media giants. The debate on regulating them is still on.
The need for localized solutions
The reaction to both the financial crisis as well as to the coronavirus has been to stress on local solutions, not regional or global ones. This is understandable, since we are concerned most with what affects our lives and work and our immediate environment. However, as we have seen both these crises are global in nature and spread their effects throughout our economies in several ways.
The right solution to my mind would be a combination of local, regional and global solutions and ideas. For example, if the South East Asian region has recovered better from Covid-19 along with China, there is every reason to resume economic activity, trade and investment, as well as limited and essential travel.
Since the entire world is affected by these crises, this wouldn’t be the time to wall off countries, their people and products. Vaccine development is a global effort, with several companies announcing the roll-out of their Covid vaccines, and countries ought to ensure that everyone, especially the most vulnerable, has access to them.
What might work at the local level are highly localized lockdowns, provided supplies of goods and services are not affected. And the most important localized solution is how we prepare for such crises in future: improving our healthcare systems and access to them. This is only possible at the local level, but I doubt many governments will attempt it, once this crisis has blown over.
A desire for minimalism
Every now and then, particularly after a climate disaster hits us, we express the need to reduce our carbon footprint, cut back on consumption and reuse resources at our disposal as much as we can. Sometimes, this also takes the form of shunning overt opulence and embracing minimalism.
Covid-19 too has taught us that now is such a time. In fact, because it has reduced our social interactions to a minimum, it has automatically reduced our spending on indulgences and luxuries. Or has it? There are some of us who reflect on our contribution to the crisis and would prefer a cleaner and greener world, which we did have a chance to witness during the pandemic. Many would also like to reduce meat consumption for health and environmental reasons. But there are others who are insistent upon splurging with a vengeance, vowing that even the virus cannot hold them back. While that might be good for the economy right now, dining and entertainment in large gatherings, as well as travel are not desirable.
In India, we have the big fat wedding season right now, in addition to the festive season, and we can be sure to see ostentatious consumption on full display. It is believed that Delhi saw a spike in Covid cases during the festive season, thanks to social events as well as the paddy stubble burning that takes place in North India at this time of the year, which no government is able to stop.
Recent economic data too point to the fact that corporate lending has reduced significantly during the pandemic, while retail loans are on the rise.
Which brings me to a larger point regarding all our hopes for change: why is it that we never achieve the change we hope for?
Here, I am of the view that the middle class (in the British and Indian sense of the word, who comprise a country’s educated intelligentsia), which has traditionally always been the force of change, has become apathetic and indifferent to what goes on around us. Some of this might be because we are being lulled into a kind of consumption and success-fuelled stupor, quite happy to live with the status-quo. Equally, it could also be because our democratic institutions including the media and the judiciary are being undermined in most countries around the world. That is where we most need authenticity.
I am afraid that we are also losing our capacity for critical thinking. The middle class, which used to be the greatest driving force of economies, the biggest innovators and social reformers, the conscience-keepers of the country has capitulated. In most countries, it has joined forces with the ruling elite and sold its poor down the river.
Change is the only constant, said Heraclitus. We forget that it is not enough to hope for change. We have to act decisively to ensure it. There is the cautionary tale of the 1920s often referred to as the Roaring Twenties, characterized by economic boom, consumption at all-time highs, huge speculation and euphoria like the world had never seen, only to come crashing down in 1929. Many economists call it “irrational exuberance”.
Here’s hoping 2021 will be the year of change we need, and that the decade ahead will not be a repeat of the 1920s. A third crisis so close on the heels of two world-changing ones will be too much for us to handle.
The featured image at the start of the post is Newton by William Blake (1795), depicting Isaac Newton at the bottom of the sea, using a compass; Image: Wikimedia Commons.