“COVID-19: The Great Reset” by Klaus Schwab

Published in June 2020, the book reads like a series of twitter threads. The authors take every side of every issues.

• COVID will either increase, decrease or have no impact on inequality
• Countries that respond well to the pandemic will be better off but with higher government debt
• Countries that have done worse in containing the virus will be worse off except that there will be a reduction in labour availability, improving workers rights
• Automation and digitisation will be the future except that people have rediscovered their need for physical intimacy
• Climate change response will be hobbled by high government debt and low energy prices, and countries will use the green revolution as a stimulus package
• The arts will be destroyed by a reduction in funding and the need to remain safe but remember that Shakespeare wrote 4 plays while he was in lock-down
• Surveillance will be ubiquitous but calls for privacy is growing

The only area that the authors puts their foot down is on inflation. They see a lack of demand as being the reason that inflation will not be a likely outcome of COVID. I agree with that. In the triumvirate of demand, money supply and supply, the shortage is in demand so prices are not going to run rapidly up.

None of this feels wrong but it is catalogue rather than a direction. Here are my directions:

• We have seen sectors (arts, hospitality, tourism) be destroyed, down more than 90% but the impact on broader community of these events have been minimal. So the impact has been contained and concentrated – these sectors will take decades to return.
• Financial markets have responded to massive government support with excessive risk taking in high risk securities – moral hazard – but I don’t see that it will reverse in the near future because there is no where else to go for capital and returns.
• Governments have set the tone now that there is no bailout too big which is amazing.
• Global trade will return to previous levels – turns out that we can’t onshore manufacturing when there is no expertise or even the ability to construct required manufacturing machinery.
• Total Factor Productivity (growth in real output which is in excess of the growth in inputs such as labor and capital) will continue to fall due to tech – these monopoly companies don’t use their power to price but to dominate and distract. What we get done in a day without commuting is even less in a hyper tech/working from home world.

See how that goes.