Are You Ready For The New Normal?

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Remember the Good Old Days?

Remember the wildfires in Australia? It seems like a world away but that looked to be the defining event of 2020. But that only turned out to be the standout event of January as the Covid-19 Pandemic moved from China out into Europe and then the rest of the globe.

It may even now have become hard to remember a time before lockdown. Remember “before” when you were in serious debt but still able to earn money to pay your credit providers? How long ago that now seems. It is amazing how quickly things can change and what can quickly become normal.

‘It may even now have become hard to remember a time before lockdown’

2020 was already slated to be a tough year for South Africa economically. Government were desperately trying to find the political will to make the needed cuts to try to keep the Rand and local economy viable and struggling to do so in the wake of a decade of state capture and looting.

Then Covid-19 landed in SA and began to do its work and ‘Boom’ the world was suddenly very different.

Sudden Change

Covid-19 is without a doubt a historical world event that will forever change politics, economy and society in a variety of ways much like past world wars and the Spanish Flu of the last century.

It has been said that throughout history Pandemics open the doors for sweeping political decisions and social change. All major world events can do so actually. Take for example something from more recent history like September 11th. If you were some average Joe sitting at home relaxing in Iraq on 9/11 you had no idea that your world was about to change because of events unfolding on the other side of the world in the USA. Hang, a few months ago you had probably never heard of Wuhan, China. Now that name is etched into your brain, probably forever.

‘throughout history Pandemics open the doors for sweeping political decisions and social change’

In the wake of 9/11 the world changed as the USA used the events to motivate 2 wars (arguably 3) and massive changes to US civil rights (particularly regarding surveillance and prisoner rights).

Small Changes

As the levels of lockdown continue to fall and the spread of the virus finally begins to speed up in South Africa we have had to embrace new things as normal. It is now normal to have a stranger spray your hands with something at the entrance to their shop. In the past, if you saw a group of people wearing masks walking into a shop you would have feared a robbery. Now you are one of those people.

Even the way we regularly communicate has shifted again. We have all learned the value of having enough data to contact family and friends via Skype, Zoom, Whatsapp video or Google hangouts. Many of us have learnt to work from home while the kids run around screaming in the background and the cat tries to walk on your keyboard. It’s a brave new world. Your boss may never want you to come back to the office and take up expensive floor space (if you play your cards right).

Lockdown Fatigue

At first, half of us were too petrified to go anywhere or talk to anyone in case we got infected with the virus that seemed to be everywhere and on everything around us. For others, it was simply not even factored in as they went about their lives just ignoring it breaking every lockdown law without even realizing it.

Over time, however, it has come to dominate our every day as lockdown came into effect and disrupted our usual routines. And the novelty wore off quickly. More so for smokers and drinkers who found themselves cut off from their usual supply and started to get a bit cranky.

Having the kids home 24/7 also soon began to pale somewhat as those lovely angels slowly became tiny little demanding terrors who are always around demanding our time and energy. The mandatory nap time became the solace of parents across the country.

Financial and Social Change Is Coming

If last year you had been offered a 3 month unpaid holiday would you have taken it? Most families have been living from hand to mouth and relying more and more on credit to make ends meet. So missing a month of income would be impossible to imagine. South Africans have pretty much been addicted to credit use and have slowly been digging a deeper and deeper hole for themselves hoping no disaster would come their way and throw them under the bus.

Well, the bus has arrived in a big way and it came right from the Wuhan station.

‘South Africans have pretty much been addicted to credit use and have slowly been digging a deeper and deeper hole for themselves’

Pre Covid-19, around half of all credit users, were already over indebted, unable to pay all their debts properly each month and still care for their daily needs as a family. And that was when they were able to earn a full income each month.

Last year youth unemployment was around 50% with overall unemployment was sitting at +-27% %. Now that figure looks to shoot up to around 50% overall according to some. Millions of people will be getting retrenched and will be competing with each other for work in the months and years ahead.

Lockdown’s Effect

It was pretty sad to see that after an initial effort to help the homeless the police and state slowly seemed to give up on them and just began to let them do whatever they wanted while chasing rich old ladies taking their dogs for a walk outside of exercise time. Now this vulnerable community looks set to be one of the largest potential vectors for the virus.

While, at first, there had been a drop in crime when the lockdown first began, crooks too suddenly realized they needed to earn a living and being used to ignoring the law began stealing, bootlegging, looting and even murdering once again. Crime does pay but only if you go out and do the crime. The best part is now you get to wear a mask all the time and no one looks at you funny.

Covid-19 quickly made its way into the prison population and so efforts are underway to reduce the prison population (which government has to feed and house at huge costs). This follows global trends in regard to prisons.

Another big change that has hit the streets of South Africa is that the Army is now all over the place in cities across the land. While this has been common in many African states over the years, fear of coups and impacting on constitutional freedoms has kept SA from following suit till now. Normally it is only when the Army doesn’t get paid that problems break out.

An Economic Recession Reminiscent of 1930s

When the world doesn’t work for 2 or 3 months then what has been happening in households during the lockdown happens to countries. If citizens don’t work, they don’t pay tax and governments lose income. All the while governments are having to spend more than ever to try help protect citizens financially and medically.

This has led to countries plunging deeper into debt than ever before. Vulnerable economies have had to run hands outstretched for charity or loans becoming deeper indebted than ever before. Lending to countries can also be a form of global politics to exert control over new areas of the globe.

As the lockdown and Pandemic have hit sector after sector, firms are having to decide if they try to “power through” using their reserves or taking on more debt to survive or simply give up. Globally, we are seeing the death of countless small and medium businesses. They, in turn, can’t pay their creditors and suppliers and this knock on effect is causing a wave of retrenchments, business rescue applications and liquidations. And this is only the start of the knock on wave. It will amplify.

‘Globally, we are seeing the death of countless small and medium businesses.’

A similar situation existed in the 1930s that gave birth to countless mobile towns of people living in their cars or tents and queuing for food hand outs to try make it through each day. Property markets were glutted by bank repossessions and values dropped. The economy arguably took 15 – 25 years and a massive world war to recover.

Out With the Old – In With the New?

Pandemic have an interesting way of pushing the “fast forward” button on transformation. Whereas before would have taken years to debate, investigate and issue impact reports…now many massive changes are being done in a week or two.

This has happened politically but also in business. To contemplate having the whole firm working from home would have been too scary for many firms in the past. When the lockdown was announced this happened in only a few days for many firms.

‘Pandemic have an interesting way of pushing the “fast forward” button on transformation’

But not everything changes. The lockdown has exposed many social inequalities. It has shown how economically people are locked into unhealthy living standards and situations and has even exposed corporate greed. The question is: is this exposure going to change the way things get done. It only took a few whistle blowers to expose state capture and end a decade of hidden looting.

But the truth is that social inequalities exist worldwide and have been part of history ever since. Can the light being cast on these issues now create the political will to make changes? It has in the past, consider SA revolting from British rule, the rise of Mao in China or Hitler in Germany. Harsh economic times can usher in big change (not always for the good obviously).

Even now with the issuing of aid to people during lockdown SARS had to admit their computer system discriminates against foreign nationals (they are now fixing that). This discrimination is not uncommon on the streets where looting and the idea that foreigners are taking our jobs is commonly expressed. Sadly, in a post-Lockdown world as job competition increases this trend is likely to intensify.

A Changed World Economy

When you have less money then you spend less. Right now people are going to spend less – less on ‘nice to haves’ and more on food and necessities.

Businesses that have catered to the ‘nice to haves’ will still have clients but they are going to have to fight harder than ever to get that money into their shop as opposed to the one next door.

Online shopping and contactless delivery have shown themselves to be the big winner of the Covid-19 Pandemic. True, it has been coming for years but now entire swaths of the population who never did online shopping through an app or website are being forced to try it out and they will grow to love it. No travel to danger filled shops full of infected people. Easy browsing and comparative shopping done from the comfort of your couch in safety is hard to beat… even for people who like to touch stuff before they buy it.

Expect companies to have to get online to survive. Expect people to have to partner with delivery services and update their returns policies accordingly.

Shares in Zoom (conferencing software) went up 250% as the company took on hundreds of millions of new clients in just weeks. Suddenly, people who never even used Skype or Whatsapp video calls have been forced by circumstance to get online to work and socialize. The world will never be the same. In one day you can chat to people in Australia, clients in USA, colleagues in Cape Town and Durban and maybe even your mom somewhere in between.

‘Suddenly, people who never even used Skype or Whatsapp video calls have been forced by circumstance to get online to work and socialize’

Conferences will change, workplace meetings will change, even office space rentals will change as firms realize that they can have staff work from home or even overseas. Why drive around so much and use so much petrol when the world can come to you?

As this happens markets will shift:  Why have a laptop rather than a desktop computer if you will work from a home office anyway? You will need fibre and suddenly 5G starts to sound pretty good as all your entertainment begins to come at you through the internet. You may even realize that maybe you would actually be willing to pay top access services you never did in the past.

The demand for cheaper and widely available data will increase as everyone tries to get online. Those who don’t will get left behind. Even now people who go from door to door asking for work are hard pressed to compete with someone who can send their CV via email or whatsapp. Think of this situation magnified. This is the new normal.

We are being dragged into a brave new digital age and even your granny is being dragged along with you. Wait till she sends you her first meme.

 

Some Stuff Will Get More Expensive, Others Cheaper

We can expect the digital explosion to make many digital solutions cheaper as competition and usage expands.

In the past few years, the cost of funerals has been increasing by 12% annually. With the coming influx of funerals, it has been said that costs will actually drop. Many policies in the past catered for 150 guests at the funeral. Now some countries have limited that to 10 or 50 guests. Transmission threats are high at funerals. This should push costs down and insurance policies may adjust to cater for this.

Airlines have been devastated by the Pandemic. One day the bailouts for SAA may even end as the global travel and tourism industry will be one of the hardest hit. Prices will swing to reflect this. Smaller enterprises will be bought out by larger ones and larger ones will collapse under their own weight. In the past is has taken the air travel industry 5 years to approach profitability after similar situations.

The restaurant trade too will have to adapt or die. While getting something nice to eat that someone else has made will always be a winner, reduced finances and increased risk of transmission will continue to hit this industry even with deliveries and drive through being in operation. Who wants to go sit in a room full of strangers who will cough on you anyway?

To promote local trade and economic growth it is possible that worldwide we may see increased tariffs on imported goods making them less desirable in a move to promote buying locally. This can lead to short term booms in some industries.

We may find that the rich quickly move to online schooling because they have the means and the data and this becomes the preferred means of study. This may push prices down due to demand. International qualifications from international institutes may become the norm.

It is said that countries like the USA will now even allow online voting to take place. So, expect to be forced to have an online presence in the coming new normal. Finally Mark Zuckerberg and his friends will get to spy on you (let’s pretend they weren’t). Hopefully, you are interesting enough for him to care about.

‘If you thought that the pandemic would last for a few weeks and that lockdown would kill off the spread of the infections then sadly you are in for a rude awakening’

Welcome to the New Normal

Sushi harks back to a time when in Japan, as an entire country, food was hard to find and you had to make the most of limited resources. Centuries later the food is a hidden clue as to how the world can change when times are tough.

If you thought that the pandemic would last for a few weeks and that lockdown would kill off the spread of the infections then sadly you are in for a rude awakening. Some experts are saying that a viable treatment could easily take till 2021 to roll out across the globe. And that is not to say this would be a cure, only a treatment.

Efforts in this department are more widespread than ever though. There has, in the past, never been a significant financial incentive to develop a vaccine for any previous corona viruses (like SARS). This may be why one was never found for any of the other corona viruses. Let’s hope they find one soon.

Either way, it is clear that the threat of Covid-19 is here to stay. So, get used to wearing a mask and washing your hands like 2002’s hit TV show character Monk. This is the new normal.

As we are forced to fear each other and avoid each other we are all going to become more insular and isolated. This will change the way we think. We should expect depression and loneliness to become more rampant. And as people are becoming more insular, we too should expect countries and political groups to follow suit.

‘The “new” normal may sadly resemble the old normal in many ways’

The “new” normal may sadly resemble the old normal in many ways except perhaps in a mask but changes are coming. They cannot be avoided. Those who adapt the fastest will be the best equipped to earn a living and cope with the coming stresses that a global pandemic naturally creates.

Welcome to the new normal.

 

 

 

This article first appeared in the May 2020 issue of Debtfree Magazine

 

 

 

 

 

 

 

 

*Coronanvirus, covid-19 and SARS-CoV2 used interchangeably throughout.