It’s 2022, and the coronavirus has at long last been defeated. After a miserable year-and-a-half, alternating between lockdowns and new outbreaks, life can finally begin returning to normal.
But it will not be the old normal. It will be a new world, with a reshaped economy, much as war and depression reordered life for previous generations.
Thousands of stores and companies that were vulnerable before the virus arrived have disappeared. Dozens of colleges are shutting down, in the first wave of closures in the history of American higher education. People have also changed long-held patterns of behavior: Outdoor socializing is in, business trips are out.
And American politics — while still divided in many of the same ways it was before the virus — has entered a new era.
All of this, obviously, is conjecture. The future is unknowable. But the pandemic increasingly looks like one of the defining events of our time. The best-case scenarios are now out of reach, and the United States is suffering through a new virus surge that’s worse than in any other country.
With help from economists, politicians and business executives, I have tried to imagine what a post-Covid economy may look like. One message I heard is that the course of the virus itself will play the biggest role in the medium term. If scientific breakthroughs come quickly and the virus is largely defeated this year, there may not be many permanent changes to everyday life.
On the other hand, if a vaccine remains out of reach for years, the long-term changes could be truly profound. Any industry that depends on close human contact would be at risk.
Large swaths of the cruise-ship and theme-park industries might go away. So could many movie theaters and minor-league baseball teams. The long-predicted demise of the traditional department store would finally come to pass. Thousands of restaurants would be wiped out (even if they would eventually be replaced by different restaurants).
The changes that I’m imagining in this article are based on neither an unexpectedly fast or slow resolution, but instead on what many scientists consider the baseline. In this scenario, a vaccine will arrive sometime in 2021. Until then, the world will endure waves of sickness, death and uncertainty.
Before we get into the details, there is one more caveat worth mentioning: Many things will not change. That’s one of history’s lessons.
The financial crisis of 2007-9 didn’t cause Americans to sour on stocks, and it didn’t lead to an overhaul of Wall Street. The election of the first Black president didn’t usher in an era of racial conciliation. The 9/11 attacks didn’t make Americans unwilling to fly. The Vietnam War didn’t bring an end to extended foreign wars without a clear mission.
Yet if the pandemic really does shape life for the next year, it will probably be remembered as a more significant historical event than those precedents. It could easily be the most important global experience since World War II and the Great Depression. Events that hold the world’s attention for long stretches — and that alter the rhythms of everyday life — do tend to leave a legacy.
Weak companies will die
“It’s only when the tide goes out,” Warren Buffett likes to say, “that you learn who’s been swimming naked.”
His point is that companies with flawed business models can look healthy in good times. Out of habit, many customers continue to buy from them. But when the economy weakens, people have to make decisions about where to pull back. They often start with products and services that they find the least valuable or that they can replace with a cheaper alternative.
A downturn, says Emily Oster, a Brown University economist, “is an opportunity to revisit inefficiencies.” And the coronavirus is likely to cause a larger version of this phenomenon than a typical recession.
Local newspapers will be one casualty. They were already struggling, because Google, Facebook and Craigslist had taken away their main source of revenue: print advertising. Between 2008 and 2019, American newspapers eliminated about half of all newsroom jobs.
The virus has led to further declines in advertising and more job cuts — and could end up forcing dozens more papers to fold or become tiny shells of their old selves. If that happens, their cities will be left without perhaps the only major source of information about local politics, business, education and the like.
Traditional department stores are another example. In recent years, they have lost significant business to online retailers and quietly lost even more to big-box stores. Many Americans have decided they prefer either specialty stores (like Home Depot) or discount stores (like Costco) over the one-stop-shopping experience that Sears, Macy’s and J.C. Penney have long offered.
Now the virus has interrupted in-person shopping and caused many consumers to shift even more business online, to Amazon, Target and Walmart. “The retailers doing fair to poorly are absolutely not coming out of this,” said Mark Cohen, a former executive at Sears and Federated Department Stores who teaches at Columbia Business School. “Many, many of them are going to fail, have already failed or will fail when they reopen.”
If they do, they will create spillover victims — the hundreds of malls that rely on department stores for rent and foot traffic. The roughly 250 fancier malls around the country, like The Westchester in suburban New York and The Galleria in Houston, are likely to survive, Mr. Cohen predicted. Some will convert old stores into spaces for experiences, like dining, bowling, medical care or a golf driving range.
But many of the country’s remaining 1,100 or so traditional malls are at risk of failing. Even before the virus, Amazon turned two former malls near Cleveland into warehouses, a physical manifestation of changing shopping habits.
A third at-risk industry — higher education — is a bit different from the others, because it’s so heavily subsidized by the government. Yet dozens of colleges, both private and public, are facing real trouble.
College enrollment in the United States has been growing almost continually since the Civil War. It kept growing even after the baby boomers finished college, because a rising percentage of young people were enrolling. But the 150-plus-year boom appears to have ended about a decade ago. Undergraduate enrollment fell 8 percent between 2010 and 2018.
Why? Birthrates have fallen, and the percentage of young people going to college isn’t rising significantly anymore. The population trends are especially stark in the Northeast and Midwest, where many colleges are. Late last year, the Chronicle of Higher Education published a bracing report called, “The Looming Enrollment Crisis.”
The virus is exacerbating almost every problem that colleges faced. They have already lost revenue from summer school, food service, parking fees and more. Perhaps most significant, the recession is hammering state budgets, which will probably lead to future cuts in college funding.
The immediate question is whether colleges will be able to bring back students this fall, as administrators are desperately hoping. If they can’t, enrollment and tuition revenue are likely to drop sharply, creating existential crises for many less selective private colleges and smaller public universities.
Yuval Levin, a conservative policy expert and the founding editor of National Affairs, put it this way: “The top 20 schools are probably not going to change. But what is actually higher education — more than 4,000 universities — I think will change a lot.”
Of course, business failures can be healthy. They are part of the “creative destruction” that the economist Joseph Schumpeter famously described, allowing more efficient and innovative rivals to rise. The disappearance of many old department stores won’t be a tragedy if they are replaced by stores people prefer.
But some of the virus-related destruction will have damaging side effects. When local newspapers close, corruption and political polarization tend to rise, while voter turnout tends to fall, academic research has found. Cuts to higher-education budgets could make it even harder for poor and middle-class students to graduate.
“The biggest danger that we face as a sector,” Ted Mitchell, a former college president who now runs the American Council on Education, an industry group, told me, “is a loss of the gains we’ve made over the past 20 years in the access for first-generation and minority students.”
But it will not be the old normal. It will be a new world, with a reshaped economy, much as war and depression reordered life for previous generations.
Thousands of stores and companies that were vulnerable before the virus arrived have disappeared. Dozens of colleges are shutting down, in the first wave of closures in the history of American higher education. People have also changed long-held patterns of behavior: Outdoor socializing is in, business trips are out.And American politics — while still divided in many of the same ways it was before the virus — has entered a new era.
All of this, obviously, is conjecture. The future is unknowable. But the pandemic increasingly looks like one of the defining events of our time. The best-case scenarios are now out of reach, and the United States is suffering through a new virus surge that’s worse than in any other country.
With help from economists, politicians and business executives, I have tried to imagine what a post-Covid economy may look like. One message I heard is that the course of the virus itself will play the biggest role in the medium term. If scientific breakthroughs come quickly and the virus is largely defeated this year, there may not be many permanent changes to everyday life.
On the other hand, if a vaccine remains out of reach for years, the long-term changes could be truly profound. Any industry that depends on close human contact would be at risk.
Large swaths of the cruise-ship and theme-park industries might go away. So could many movie theaters and minor-league baseball teams. The long-predicted demise of the traditional department store would finally come to pass. Thousands of restaurants would be wiped out (even if they would eventually be replaced by different restaurants).
The changes that I’m imagining in this article are based on neither an unexpectedly fast or slow resolution, but instead on what many scientists consider the baseline. In this scenario, a vaccine will arrive sometime in 2021. Until then, the world will endure waves of sickness, death and uncertainty.
Before we get into the details, there is one more caveat worth mentioning: Many things will not change. That’s one of history’s lessons.
The financial crisis of 2007-9 didn’t cause Americans to sour on stocks, and it didn’t lead to an overhaul of Wall Street. The election of the first Black president didn’t usher in an era of racial conciliation. The 9/11 attacks didn’t make Americans unwilling to fly. The Vietnam War didn’t bring an end to extended foreign wars without a clear mission.
Yet if the pandemic really does shape life for the next year, it will probably be remembered as a more significant historical event than those precedents. It could easily be the most important global experience since World War II and the Great Depression. Events that hold the world’s attention for long stretches — and that alter the rhythms of everyday life — do tend to leave a legacy.
Weak companies will die
“It’s only when the tide goes out,” Warren Buffett likes to say, “that you learn who’s been swimming naked.”
His point is that companies with flawed business models can look healthy in good times. Out of habit, many customers continue to buy from them. But when the economy weakens, people have to make decisions about where to pull back. They often start with products and services that they find the least valuable or that they can replace with a cheaper alternative.
A downturn, says Emily Oster, a Brown University economist, “is an opportunity to revisit inefficiencies.” And the coronavirus is likely to cause a larger version of this phenomenon than a typical recession.
Local newspapers will be one casualty. They were already struggling, because Google, Facebook and Craigslist had taken away their main source of revenue: print advertising. Between 2008 and 2019, American newspapers eliminated about half of all newsroom jobs.
The virus has led to further declines in advertising and more job cuts — and could end up forcing dozens more papers to fold or become tiny shells of their old selves. If that happens, their cities will be left without perhaps the only major source of information about local politics, business, education and the like.
Traditional department stores are another example. In recent years, they have lost significant business to online retailers and quietly lost even more to big-box stores. Many Americans have decided they prefer either specialty stores (like Home Depot) or discount stores (like Costco) over the one-stop-shopping experience that Sears, Macy’s and J.C. Penney have long offered.
Now the virus has interrupted in-person shopping and caused many consumers to shift even more business online, to Amazon, Target and Walmart. “The retailers doing fair to poorly are absolutely not coming out of this,” said Mark Cohen, a former executive at Sears and Federated Department Stores who teaches at Columbia Business School. “Many, many of them are going to fail, have already failed or will fail when they reopen.”
If they do, they will create spillover victims — the hundreds of malls that rely on department stores for rent and foot traffic. The roughly 250 fancier malls around the country, like The Westchester in suburban New York and The Galleria in Houston, are likely to survive, Mr. Cohen predicted. Some will convert old stores into spaces for experiences, like dining, bowling, medical care or a golf driving range.
But many of the country’s remaining 1,100 or so traditional malls are at risk of failing. Even before the virus, Amazon turned two former malls near Cleveland into warehouses, a physical manifestation of changing shopping habits.
A third at-risk industry — higher education — is a bit different from the others, because it’s so heavily subsidized by the government. Yet dozens of colleges, both private and public, are facing real trouble.
College enrollment in the United States has been growing almost continually since the Civil War. It kept growing even after the baby boomers finished college, because a rising percentage of young people were enrolling. But the 150-plus-year boom appears to have ended about a decade ago. Undergraduate enrollment fell 8 percent between 2010 and 2018.
Why? Birthrates have fallen, and the percentage of young people going to college isn’t rising significantly anymore. The population trends are especially stark in the Northeast and Midwest, where many colleges are. Late last year, the Chronicle of Higher Education published a bracing report called, “The Looming Enrollment Crisis.”
The virus is exacerbating almost every problem that colleges faced. They have already lost revenue from summer school, food service, parking fees and more. Perhaps most significant, the recession is hammering state budgets, which will probably lead to future cuts in college funding.
The immediate question is whether colleges will be able to bring back students this fall, as administrators are desperately hoping. If they can’t, enrollment and tuition revenue are likely to drop sharply, creating existential crises for many less selective private colleges and smaller public universities.
Yuval Levin, a conservative policy expert and the founding editor of National Affairs, put it this way: “The top 20 schools are probably not going to change. But what is actually higher education — more than 4,000 universities — I think will change a lot.”
Of course, business failures can be healthy. They are part of the “creative destruction” that the economist Joseph Schumpeter famously described, allowing more efficient and innovative rivals to rise. The disappearance of many old department stores won’t be a tragedy if they are replaced by stores people prefer.
But some of the virus-related destruction will have damaging side effects. When local newspapers close, corruption and political polarization tend to rise, while voter turnout tends to fall, academic research has found. Cuts to higher-education budgets could make it even harder for poor and middle-class students to graduate.
“The biggest danger that we face as a sector,” Ted Mitchell, a former college president who now runs the American Council on Education, an industry group, told me, “is a loss of the gains we’ve made over the past 20 years in the access for first-generation and minority students.”
by David Leonhardt, NY Times | Read more:
Image: Illustration by Zak Tebbal; Photographs from Getty Images
[ed. I expect it to get a lot worse, but some efforts might help. For example, we might finally resolve our epidemic homelessness problem by repurposing malls and similar large facilities with on-site improvements: apartments, medical services, security, government offices, etc. (assuming a potential tidal wave of homelessness just around the corner); modernizing and improving our national infrastructure (roads and bridges and dams, electric grid, water and sewage facilities, broadband, rail, shoreline protection, parks, etc.) with a massive WPA type effort designed for the 21st century (and impending climate change), employing every class of expert and worker: engineers, construction companies, managers, laborers, planners, scientists, etc.); funding to keep our creative class alive, providing subsidies for a variety of artistic endeavors, with enough economic support to find expression in a variety of venues; affordable health care for all that's simple, straightforward and cost-efficient; a new political system that prioritizes constituent services and legal protection over corporate predation and economic inequality. Is this all possible? Yes. Is it likely? Nope. It would take a complete realignment of political thinking and will, and extraordinary leadership, the likes of which we've never seen in our lifetimes (even during FDR's time, and worse now because the forces preventing it have become so institutionalized). So, my feeling is, we're pretty much screwed. But that's to be expected at the end stages of empire.
See also: Naomi Klein: 'We must not return to the pre-Covid status quo, only worse (The Guardian).]
See also: Naomi Klein: 'We must not return to the pre-Covid status quo, only worse (The Guardian).]
