Viruses do not differentiate between rich and poor. How will the Covid-19 pandemic impact our daily lives and the battle against inequality? How might the future of healthcare look like?
Society: How will we live tomorrow?
Beyond the major challenges the corona crisis poses for politicians and policymakers all over the world, it is a major test for society. The way we used to live our lives changed from one day to the next, as lockdowns started to spread from country to country. Most of us were forced to stay at home, unable to meet family and friends, unable to go to work. What does this mean for the future, for our private life as well as our working life? Will we enjoy ourselves less, go less to restaurants and cinemas? Will working from home become the new normal? Most likely not. We are one of the most social species and our connections are important to our well-being and our health. We are dependent on social en-gagement and we are suffering from social distancing, one way or the other. Nevertheless, some things are likely to stick.
When it comes to our private lives, most of us are eager to be out again, to be back in bars, cafes and restaurants. How fast this will happen very much depends on our own personality. Those who are very risk averse, will likely avoid going out for longer, while those who are less risk averse, will do so more quickly. A recent survey in the United States showed that between 40% and 60% of respondents would feel comfortable going to a restaurant, a shopping mall or the movies within the next six months, if they were allowed to. Between 20% and 30% believe it would take them more than six months. And between 20% and 40% do not have an opinion, reflecting a high degree of uncertainty about how and when they would be willing to return to normal life. That said, some of us will also have realised how cosy and snug our homes are and that we do not necessarily need to be out to enjoy ourselves.
Work-wise, we will enjoy greater flexibility in the future and work-from-home will be more common. This will allow employees to avoid packed trains and jammed streets on days when no meetings requiring physical presence are scheduled. It will also allow employees to be less caught in ‘activity-seeking’ behaviour, which happens in the office from time to time. Work-from-home will also allow families to manage their tasks in a more efficient way, if physical presence in the office is not required on a day-to-day basis, leading to less stress. However, employees have also seen that work-from-home blurs the boundaries between private life and work life, which, on a permanent basis, makes it less appealing to many. Work-from-home may thus lead to both a better and a worse work-life balance, which is why we do not believe it will become the new normal, leading to empty offices in city centres. From an employer’s perspective, however, offering a well-rounded and well-functioning work-from-home solution will likely be more important than ever to attract top talent.
Overall, we believe that due to the experience with Covid-19, some of us will show greater gratitude for the little things in life – a beer with a colleague, a nice dinner with friends, a chat with the neighbour, we have got to know better during the crisis. We even might live and consume a little more consciously, realising how little it takes to completely turn our lives upside down.
Inequality: Unmasking a need for change?
Viruses do not differentiate between rich and poor. But the gap between rich and poor is crucial for the extent of the damage a pandemic leaves behind. The corona crisis highlights inequality in an unprecedented way. The laying bare of inequality-related issues offers an opportunity for policymakers to address them and shape societies that are more robust against future pandemics.
Factors related to poverty facilitate the spreading of a pandemic. Meanwhile, wealth often defines the access to and quality of healthcare. Informal work and living conditions can considerably facilitate the transmission of diseases. People relying on current income from informal work, due to lack of private wealth accumulation or social safety nets, often have no other option than to continue working, risking exposure to infection and contributing to a quicker and broader spread. Informal living conditions have similar effects: lack of space impairs social distancing and under-supply of clean water impedes necessary hygiene. By improving working and living conditions, authorities have a powerful option to increase the population’s resilience against future pandemics. However, the economic fallout of the current crisis could exhaust financial measures needed to tackle these issues.
Unequal access to healthcare risks undermining social cohesion. The Covid-19 crisis could increase the willingness to improve national healthcare systems and reduce the entry barriers for poorer people. Healthcare has lately climbed the ladder of political preferences of US voters and could become a decisive factor in this year’s presidential election. However, health crises also make voters susceptible to nationalistic populism, which could let governments direct fewer funds to international cooperation and more towards domestic economies. It is, however, highly questionable whether populist policies benefit lower-income segments and reduce inequalities. In fact, such measures tend to aggravate international inequalities and pave the way for worse consequences, such as social unrest, immigration waves, room for corruption and organised criminality, and lower thresholds for armed conflicts.
How will the recent emergency measures of central banks affect inequality? Ultra-expansive, unconventional monetary policy during the 2008/09 recession were often criticised as being for the rich, keeping asset valuations afloat, but depriving the poor of an interest income on savings. Contrary to widespread belief, research shows that inequality was not aggravated by the unconventional monetary policies over the past decade. Although traditional inequality measures indicate for some countries a widening of income inequality since the financial crisis, monetary policy contributed more to the average income growth of the lowest-in-come classes than for the highest ones. Maintaining economic stability enabled a period of unprecedented job creation, ultimately benefiting the poorer. Therefore, a renewed period of ultra-expansive monetary policy need not exacerbate inequality.
It has become clear that in order to be better prepared for future pandemics, it is essential to reduce inequalities by improving working and living conditions and to lower the access barriers to adequate medical treatment. In this regard, reducing inequalities is the starting point and not the end goal.
Healthcare: How to make the system more resilient?
The outbreak of the coronavirus has undoubtedly exposed the woeful shortcomings of some healthcare systems in developed and developing countries alike. Nevertheless, the pandemic should serve as a wake-up call for all to better prepare for the adverse impact of future infectious threats, as vulnerabilities in our healthcare systems and inequalities in access to health services due to ever-spiralling medical costs have been revealed. For instance, Americans incur a disproportionate amount of expenditure on their health relative to their wealth. But despite the higher spending, roughly 28 million Americans do not have healthcare insurance at all and nearly 90% of those who do, are underinsured. Some of them might even be forced to go to work despite being sick.
It is therefore in this context that corona crisis will inevitably prompt authorities and healthcare organisations to re-examine the robustness of their national healthcare systems. Put simply, the extent of the outbreak will hasten the further digital transformation of healthcare to improve patient care due to the rising demand for greater adoption of digital health technologies, which should free up capacities at clinics and hospitals. An example lies in the field of telemedicine. Specifically, online medical consultation became a popular source of healthcare advice among Chinese consumers during the outbreak.
Furthermore, the knowledge gained from the Covid-19 research could pave the way for more study into gene-based therapies and other health technologies to combat present and future health threats. Not only will this research help the world deal with the present pandemic, but it could also herald an era of tailored treatments for other diseases like cancer, Alzheimer’s and diabetes depending on the patient’s DNA composition. All in all, the pandemic should further foster a long-term transformation of the healthcare industry, rendering it more resilient and more efficient for humankind.
The world after the corona crisis
The Julius Baer ’The world after the corona crisis’ report provides brief answers to big questions in the areas economics, politics, globalisation, society, inequality, healthcare, ethics, digitalisation and investing.
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