Leading economists’ recommendations for business support during COVID-19
As governments around the world are coming to terms with the dire consequences of the COVID-19 pandemic, policymakers are looking for expert advice on how to mitigate the health and economic shocks their citizens must face.
With impressive speed, the Centre for Economic Policy Research (CEPR) and VoxEU responded to this demand by releasing a comprehensive e-book titledMitigating the COVID Economic Crisis: Act Fast and Do Whatever It Takes. Edited by Richard Baldwin and Beatrice Weder di Mauro, the volume aims ‘to collect the thinking of leading economists on what is to be done’.
In this post, we collect insights from the book which we hope will be particularly useful for policy makers designing crisis support for businesses, and small and medium-sized enterprises (SMEs) in particular, during this time.
The economic problems could persist well after the pandemic is contained
In the absence of an adequate policy response, temporary disruptions can have permanent effects, warn Christian Odendahl and John Springford:
‘A wave of bankruptcies would leave permanent scars on the economy if firms that would have been successful go under. There would be scarring effects on the future wages of unemployed workers and firm specific knowledge would be lost, dampening the level of output in the future.’
Nothing less than a bazooka
According to Pinelopi Goldberg, the tools of monetary policy are limited at this point and aggressive fiscal measures, especially to support SMEs, are inevitable. However, many of the usual policy measures are unavailable at this time: ‘social consumption’, which brings people together physically, should not be stimulated, and classical investment programmes’ time horizons are far too long to make an effective contribution (Bofinger, Dullien, Felbermayr, Fuest, Hüther, Südekum and Weder di Mauro).
Luis Garicano reckons that the adequate solution would involve a Europe-wide programme with the level of ambition of the German “bazooka”, a package that involves guarantees, credit lines, and working capital loans as well as massive tax cuts and the activation of Germany’s short-term employment protection programme.
Help businesses by helping people
We could not agree more with Pierre-Olivier Gourinchas’ point: ‘A modern economy is a complex web of interconnected parties: employees, firms, suppliers, consumers, banks and financial intermediaries… Everyone is someone else’s employee, customer, lender, etc’.
Beyond the very obvious fairness, equity and solidarity consideration, policies that smooth the dent in household consumption and reduce people’s uncertainty about their future income also limit the drop in the demand for businesses’ output and thus help avoid bankruptcies.
In Italy, the wage supplementation fund was broadened to provide income support to laid off workers.
In Shanghai, enterprises that did not lay off employees could deduct social insurance payments and receive subsidies for employee on-the-job training.
The South Korean government proposed to help low-income households with living expenses, consumption vouchers and childcare allowances.
Singapore introduced a care and support package of S$1.6 billion (£940 million), providing one-off cash payments to every Singaporean aged 21 or higher.
Recognising that precarious employees on temporary or zero hour contracts and the self-employed will be the worst hit, Christian Odendahl and John Springford call for quick and unbureaucratic support to these groups, possibly in the form of a coronavirus basic income.
Go beyond loans
Assistance to businesses will require the most creativity, acknowledges Jason Furman, who served as President Obama’s chief economist. To help firms resume their activity soon after the pandemic-related restrictions are lifted, we need to keep them out of bankruptcy while ensuring that they can continue employing people.
Singapore’s Stabilisation and Support package, described in detail by Danny Quah, provides an innovative example. It involves:
A jobs support scheme: the government pays 8% of the wages of local workers for three months, up to a set monthly cap;
A wage credit scheme: the government cofunds wage increases of approximately 30% for Singaporean employees, up to a set gross monthly wage;
The above-mentioned care and support package of one-off cash payments;
Corporate income tax rebates of up to 25% of total tax payable in 2020;
Faster write-down for investment incurred in 2021;
Government co-financing of working capital loans;
Increased flexibility in rental payments for commercial enterprises on government properties;
And retraining and re-skilling programmes in tourism, transport and other affected sectors.
Digital solutions can help with many of the pandemic-induced challenges: online shopping can mitigate losses in brick-and-mortar shops, telecommuting might allow employees to continue working even when self-isolating, and fintech applications can reduce the operational volatility and improve the survival rate of SMEs. However, as Shang-Jin Wei emphasises, this requires a broad reach of internet access, widespread acceptance of digital payments by merchants and households, and an efficient and inexpensive delivery system. Ramping up capacity in these areas should thus be a key policy priority, especially in Europe. In addition, ‘SMEs should also be incentivised and supported to improve their digitalisation so they can better take advantage of internet-based financial platforms to resolve their financing difficulties’, recommend Yi Huang, Chen Lin, Pengfei Wang and Zhiwei Xu.
Tailor the response to the sector
China’s example demonstrates that the crisis affects businesses differently depending on the sector they operate in. Due to movement restrictions during the crisis, service industries such as hotels and restaurants, and labour-intensive manufacturing industries have been severely affected (Yi Huang, Chen Lin, Pengfei Wang and Zhiwei Xu). Even between these sectors, we may expect differences in post-crisis recovery: manufacturing will probably experience a sharp rebound while the services sector may struggle for a longer period of time. As Christian Odendahl and John Springford put it: ‘If consumers planned to buy a new pair of spectacles but could not buy them when supply was disrupted, they are likely to do so once the epidemic is over. Consumers will not, however, make up for the meals out that they would have eaten while they were isolating themselves.’
Protect vulnerable small businesses
Small and informal enterprises are more vulnerable to the crisis as they tend to have limited financial, managerial and information resources, and they are also less likely to be able to respond to the crisis with technological solutions such as teleworking, warns Ugo Panizza. Even the comprehensive support package offered by the German government does not necessarily help the self-employed and owners of smaller companies. For these people, there is no automatic stabilisation mechanism available such as unemployment benefit or reduced-time work. As mentioned before, the solution could be short-term and administratively simple aid, either in the form of direct transfers or interest-free loans with very long maturities (Bofinger, Dullien, Felbermayr, Fuest, Hüther, Südekum and Weder di Mauro).
Cut the red tape
Many experts emphasise how crucial it is to provide support quickly and with as little bureaucratic burden as possible. A cautionary tale comes from South Korea’s ‘emergency management’ fund for small business owners worth $1.4 trillion won (£960 million). According to Inkyo Cheong, the evaluation criteria for the funds are very strict and the procedure for preparing an application, the evaluation of the application and the confirmation of a guarantee may take more than two months, followed by another week to actually receive the funds. Unsurprisingly, only 4% of the government budget has been dispersed to date. To avoid such outcomes, agencies delivering the programmes need to ensure that support is not just made available, but can be used in a timely fashion by businesses.
Enlist the private sector
This recommendation also comes from Jason Furman, who points out that ‘the private sector has an existing infrastructure, can be nimble, and can form a diversification of the response’. For instance, private sector innovation and loans can be critical to the disaster response, but require additional incentives or guarantees from the government. Yi Huang, Chen Lin, Pengfei Wang and Zhiwei Xu provide an excellent example from China, where the Alibaba Group is leveraging its technology and experience with the 2003 SARS crisis to support SMEs through cloud computing, IT and QR health coding systems, as well as AI virus diagnosis and communications. The company’s Ant Financial and its virtual bank MYbank are working with other financial institutions in China to provide financial support to around 10 million micro-and-small enterprises.
Our bite-sized recommendations certainly cannot do justice to summarise the 227-page book. For those who have more time, we highly recommend reading Chapter 9 (Saving China from the coronavirus and economic meltdown: Experiences and lessons by Yi Huang, Chen Lin, Pengfei Wang and Zhiwei Xu) for its excellent case study of how the outbreak has affected SMEs, and Chapter 21 (Protecting people now, helping the economy rebound later by Jason Furman) for specific and practical policy recommendations.
The book’s subtitle, Act Fast and Do Whatever It Takes, provides a great guiding principle for designing the appropriate policy response. When it comes to implementing these policies, we urge government agencies to be as agile, flexible and evidence-driven as possible. An experimental mindset that involves setting out testable hypotheses, collecting data, evaluating progress, building on lessons learned and changing course if needed remains as relevant as ever, and we continue to offer our support and share insights with our policy partners and the public.
5 ways coronavirus could help humanity survive the ecological crisis
This pandemic is a further wake up call things need to radically change and many of the emergency measures help the planet too
The human tragedy of the coronavirus is immense. So far over 3,000 have died and more than 90,000 have been infected globally and millions have been affected. Whilst infectious disease has always been a part of the human experience, the expansion of industrial civilisation has inexorably amplified the risk of new diseases.
Uncontrolled industrial expansion also dangerously heats the planet and drives the collapse of ecosystems worldwide. Experts like Professor Jem Bendell and philosopher Rupert Read have argued that societal collapse is near inevitable and that up to 6 billion people could die. Dr Nafeez Ahmed argues the collapse of civilisation may have already begun. That human civilisation itself is at risk is an increasingly accepted reality of our times. More than 11,000 scientists from 153 countries have declared a climate emergency warning – “chain reactions could cause significant disruptions to ecosystems, society, and economies, potentially making large areas of Earth uninhabitable”
Coronavirus is both a symptom of the problematic globalised economy and an important signal that things need to change. Emergency short-term measures to contain the virus also have a positive impact on decimated global ecosystems. Crisis can be an opportunity and adopting some of these measures in perpetuity could help to avert the worst case runaway climate scenarios and help to maintain the planetary conditions that humanity is adapted to.
1. Demonstrating a less industrial future is feasible
Currently, a slowing economy is a lower-carbon economy. In China, coronavirus has slowed industrial production, prompted longer holidays and the introduction of travel restrictions, all of which result in lower CO2 emissions: China’s emissions alone are down by a quarter or 100 million metric tons. The decrease in output mean less material being shipped across the world, and less disposable products ending up in landfill.
The sort of precipitous and unmanaged decline coronavirus has forced on global economies can devastate people’s livelihoods and living standards. However it is possible to implement such measures in a steady way, and forge societies less dependent on industrial production that not only protect livelihoods but simultaneously increase citizens’ well-being. This is what economists and sustainability experts call degrowth: a ‘phase of planned and equitable economic contraction in the richest nations eventually reaching a steady state that operates within Earth’s biophysical limits.’
While coronavirus has resulted in a very sudden scale down in industrial production due to a public health emergency, living through this spasm may allow citizens to imagine, and policy-makers to plan, how it is possible to live differently in response to the ecological emergency. Reducing economic activity and industrial output is a means to enable global ecosystems to regenerate.
Nasa images show China pollution clear amid slowdown
2. Driving a massive contraction in demand for cruises and aviation
With the Diamond Princess now as synonymous with the virus as Wuhan province, the last place people are dreaming of being right now is on a cruise ship, bookings for the $45 billion a year cruise industry are down 40%.
Each day one cruise ship can release as much pollution as one million cars
Cruise ships emit extreme pollution in some of the world’s most beloved and fragile ecosystems such as the arctic, caribbean and Galapagos Islands. Burning the world’s dirtiest oil (bunker fuel) they pollute the air and cause sickness among coastline communities. The European fleet of the world’s single biggest cruise company, Carnival Corporation, creates more air pollution than all of Europe’s cars.
Until these giant corporations address their impacts a drop in bookings for this monstrously polluting sector can only be a good thing for planet earth.
Similarly, air travel is down due to coronavirus, declining for the first time since 2009 with an estimated cost to airlines in excess of $29 billion in revenue this year. Campaigners have been calling for limits to air travel for years highlighting the sector’s massive and increasing climate impact. It seems that the coronavirus is driving the sort of reduction in air travel that lawmakers and the industry itself have thus far failed to enforce. In the face of a climate emergency and political dithering an overall reduction in unnecessary travel could promote shifts to the enhanced local economies that may help avoid the most dangerous runaway climate models.
3. Shifting towards more resilient local economies
More and more of us live in cities and eat food that has been industrially-produced elsewhere and trucked, flown or shipped in using fossil fuels. Intensive food production and perpetual long distance shipping makes the spread of disease more likely. Furthermore, the loss of nature and spread of monocultures enable “disease pathogens to thrive.” A shock such as coronavirus or surges in oil price reveals just how precarious the globalised economy on which many of us depend is. For example, if fuel supplies are interrupted, London will run out of food within days. Tim Lang, a Professor of Food Policy says, “It is all on the motorway. We have a just-in-time system of food.”
Community gardens, like this one in San Francisco, can help achieve sufficiency. Kevin Krejci/Wikimedia Commons
Massively boosting local food production slashes fossil-fuel emissions and reduces our dependence on this complex and precarious flow of global trade. What’s more, it will make us radically happier too. Our current economic system, which maximises how much we all work and consume, has failed to translate into a rise in wellbeing: instead it has created a raft of new afflictions, running from obesity and eating disorders through to depression and a suicide epidemic in young men.
A future sustainable society would mean most of us working and commuting less, being more involved in our local communities and growing food near to where we live, with more time with our friends and families—all things found to increase human happiness. Helena Norberg-Hodge the director and founder of Local Futures said –
“By shifting towards more localised, diversified food economies around the world, we’d not only reduce the risk of diseases infecting our food supply, but we’d also keep more wealth within communities instead of siphoning it away to multinational corporations. We’d be providing livelihoods for people who are getting squeezed out of jobs by the mania for mechanising and centralising food production. And we’d be pushing back against the climate crisis as well, by reducing the need for fossil fuel-powered global supply chains to get our monocrops from place to place. Local food economies are a win-win from every angle.”
4. Ending the trade in wild animals
The calamitous decline of wild species is at least as great a threat to human survival as the climate emergency. Every species that goes extinct is an irreplaceable loss. In January this year, China banned the wildlife trade nationwide in markets, supermarkets, restaurants, and e-commerce platforms due to the coronavirus outbreak. In a joint statement, the country’s market watchdog, agricultural ministry, and forestry bureau also said any places that breed wildlife should be isolated, and the transportation of wildlife should be banned.
It is widely reported that the outbreak of Covid-19 may have started in a wild animal market in Wuhan. Pangolins, in particular, have been proposed as a possible host of the virus before it jumped to people via bats. Pangolins or scaly anteaters are extraordinary animals – the only mammals with scales. They are also the most trafficked creatures in the world mainly for use in Chinese traditional medicine. As with the rhino horn, their scales are believed to have medicinal properties. They don’t. Banning the wildlife trade could put a brake on the relentless and pointless persecution of these animals allowing them to recover from the brink of extinction.
5. Highlighting the horrors of factory farming
Factory farms, which raise billions of animals per year in squalid, cramped and unhygienic conditions, are ideal breeding grounds for infectious diseases. The deadly 2009 swine flu pandemic sprang out of a massive pig farm in Veracruz, Mexico, where hundreds of pigs died in an outbreak that eventually moved into people.
Mandy Carter, Global Senior Campaign Manager at Compassion in World Farming, said: “Intensively farmed animals live in crowded, barren conditions deprived of even the most basic natural behaviours. Given the number of animals involved and their lifelong suffering, factory farming is one of the biggest causes of animal cruelty on the planet. And not only does it harm animals – it hurts the natural world and us too.”
Cage farming is a nightmare we can end. Join the campaign today
Wendy Orent, the author of “Plague: The Mysterious Past and Terrifying Future of the World’s Most Dangerous Disease” writes –
“If we want to forestall the evolution of ever-newer, and possibly deadlier, human-adapted viruses, live animal markets must be permanently shut down… until factory farms housing millions of animals are eliminated, until we take the inevitable logic of disease evolution into account, novel, and potentially deadly, human diseases will continue to arise. Again. And again. And again.”
Factory farmed animals are fed feed grown in the habitats of the world’s last wild animals such as the Amazon rainforest. Factory farming animals is increasingly seen by scientists, health experts and ethical commentators as an abomination that has to be stopped.
The future is a new relationship with food and farming
The best way to prevent pandemics and avoid the scale human suffering we are seeing unfold in the world due to coronavirus is not self-isolation, handwashing or facemasks, but the jettisoning of our moribund economic, food and transport systems, and replacing them with structures that put nature and planet first. A world where factory farming and wildlife trade is outlawed. Where economic growth is not pursued at all costs, where our capacity to feed ourselves from one day to the next is in our own hands, rather than those of gigantically polluting multinational corporations.
Coronavirus and the ecological crisis are linked symptoms of an unjust and unsustainable global system. Steps we can take to prevent another coronavirus spreading are the same steps we need to take to tackle the ecological emergency: to live more locally, with due respect for our biosphere’s limits and reverence for the precious wild creatures within it. Overall, this virus may be an important signal that human health cannot be treated independently from the health of the natural world; the two are inextricably linked.
Human civilisation can protect itself from future shocks and become more resilient by shifting to become more in tune with the natural world it is a part of. Degrowing the global economy, regenerating natural systems and ending the systematic mistreatment of animals are key.
Could the global outreach of Covid-19 lead to the next major shock to the Global System? This was the question I asked myself in January while observing the developments as regards the Covid-19 outbreak in Wuhan, China. Later on, I published an article claiming that the disruption of the global supply chains due to the outbreak of Covid-19 is to be seen as the canary in the Global System mine.
Furthermore, I stressed that the markets had not anticipated the long-term disruptions of global supply chains, nor had they priced the real stress on the globalized networks as well as on the global flows of goods, people and services prior to the global outreach of the Covid-19. I concluded in mid-February that the Covid-19 pandemic would further aggravate the ongoing economic slowdown and trade stagnation and might even result in a yet unprecedented major shock to the Global System.
What happened next?
First, the Coronavirus has spread much quicker to other parts of the world than any government had anticipated or prepared for. Meanwhile, most of the seriously affected countries have introduced very restrictive measures to slow down any further Covid-19 spread. These measures and actions are well documented and data is available on the Internet. I will particularly focus on the concrete effects on the Global System as outlined in my article from February.
First, it is important to emphasize that the Global System was already put under pressure due to the systemic decoupling between the USA and China as well as cyclical processes such as an ongoing global economic slowdown, trade stagnation, and liquidity crisis prior to Covid-19 crisis. Systemic risks show multiplicative dynamics that are often ignored or misunderstood due to their higher-order effects. Against this background, the Covid-19 became an accelerator of the sum of various minor shocks to the system and thus the global virus outreach exemplified another systemic risk emerging from the interconnectedness of the Global System.
“Unlike 2007/08, this is not a financial implosion that threatens the economy and society. It is not a shock from within the economy that threatens the stability of the financial system. It is a devastating shock to people’s health that threatens their livelihoods, the businesses in which they work and invest savings, the wider economy, and therefore the financial system. Weaknesses in the financial system are exacerbating the potential feedback loops, which risk deepening the downturn and impeding eventual economic recovery.”
“As we resign ourselves to the inevitability of a large and broad-based shock to global growth, the key issue is whether we can avoid a traditional and longer-lasting recession event.”
Other key financial institutions presented even grimmer prognoses for the second quarter of 2020 and pointed to global recession trends. Deutsche Bank assessed the situation as follows:
“substantially exceed anything previously recorded going back to at least World War II.”
Federal Reserve Bank of St. Louis President James Bullard even outlined an unprecedented 50% decline in the US GDP. It is obviously no longer about the confirmation of the global recession prognoses that were made prior to the Covid-19 crisis. We are potentially sliding into a global depression in a much more interconnected Global System than during the Great Financial Crisis 2007/08, let alone the Great Depression in 1929. In fact, Nouriel Rubini referred to these forecasts as “depression growth rates”.
“In the face of the most serious global health crisis in more than a century, fiscal and monetary policy makers around the world will have to pull out all the stops to prevent what currently looks like an inevitable recession from turning into a depression,” according to Joachim Fels of Pacific Investment Management Co.
The global financial and economic system witnessed coordinated monetary stimulus and bold fiscal responses by the Central Banks and the Governments of the developed economies on both sides of the Atlantic that were not seen before. The European response came from both layers — the institutional (ECB) and the national (the member states). The European Central Bank (ECB) launched a Pandemic Emergency Purchase €750bn ($820bn) package to mitigate the Covid-19 shock. The president of the ECB even stressed that there were no limits to the ECB commitment to the Euro. The European Commission announced further €37bn under its regional funding programmes to combat the impact of the pandemic. The major European economies disclosed massive financial packages too (Germany — €500 billion, the UK — £350 billion, France — €345 billion, just to name a few).
At the same time, the Federal Reserve cut interest rates to almost zero and launched a $700bn stimulus program. Furthermore, the Federal Reserve announced the establishment of temporary U.S. dollar liquidity arrangements (swap lines) with other central banks — the Reserve Bank of Australia, the Banco Central do Brasil, the Danmarks Nationalbank (Denmark), the Bank of Korea, the Banco de Mexico, the Norges Bank (Norway), the Reserve Bank of New Zealand, the Monetary Authority of Singapore, and the Sveriges Riksbank (Sweden). Finally, the Federal Reserve even pledged asset purchases with no limit to support the markets as part of a massive new package. This was described as “QE infinity” territory and it remains to be seen whether other Central Banks will follow suit with their QE programs.
One conclusion that may be drawn from this first stage of unprecedented measures and actions is that it is not about the Too Big To Fail (TBTF) banks this time but the Too Many To Failsmall businesses, entrepreneurs, working-class and middle-class people, who will be the target of the bailout programmes first and foremost.
We are just at the beginning of the greatest uncertainty in the last hundred years cycle, particularly as regards the future of the Global System coupled with potential major shocks to its main socio-economic systems due to the unforeseen disruptions and cascading effects within the interconnected networks, occurring with much higher speed and greater scale than any government or institution could respond to.
To conclude with the final statement by The Systemic Risk Council:
“If things deteriorate a lot more, whether quickly or slowly, governments may find themselves facing the question, not seen outside major wars, of whether to steer the economy’s production priorities, whether to support household spending with subsidies and welfare payments much higher than in normal circumstances, and whether to fund themselves via their jurisdiction’s monetary authority. Obviously the threshold for steps of that kind should be very high given the interference with normal freedoms and constraints. But governments should be conducting contingency planning to think through the issues in advance rather than, however remote it seems, being overtaken by events.” (SRC, 19. March 2020).
My main long-term Global System scenarios remain as follows: 1) either a “violent” systemic decoupling encompassing all socio-economic systems (currency, trade, financial, diplomatic, etc. networks) or a systemic co-existence between US-led and China-led blocs in the long run. But this will be the topic of another input.
Velina is Head of Institute at the Austrian Institute for European and Security Policy (AIES) in Vienna.
It goes without saying that the mess our world is in right now is one of our own making. We all knew this would happen one day and there have been a plethora of data-backed warning interventions, like the oneBill Gates brilliantly pitched in at TED in 2015. Yet, with very few exceptions, near to zero effort has been made globally to effectively mitigate this risk. What. A. Shame!
Although I am a Medical Doctor, I am not one of the millions of self-proclaimed internet virology experts, or other COVID-19 nut-cases — I’d like to focus on verified, available evidence, and try to figure out some lessons we can all learn in the face of this global uncertainty. If air travel has become this safe today, it is mainly due to the fact the industry has effectively implemented the lessons learned from blackboxes and crash investigations.
I’m henceforth leaving a blackbox here, so maybe one day, our kids will avoid making the same mistakes. So far, in this current saga, only very few nations like Singapore and Hong Kong have effectively implemented their lessons-learned from the previous SARS wave that hit them. But as the global health system has crashed on us everywhere else today, I would like to offer five elements of reflection and a question for discussion and future reference:
A- Five Lessons:
Lesson #1: Despite the distances separating countries and continents, we remain heavily interdependent. However, the balance between the individualism of certain nations and common international good is increasingly tipping toward the former. As Prakash Sethi put it so beautifully in his 2003 book: ‘The economic and sociopolitical problems of the twenty-first century will be largely connected with the interdependent nature of the world and its people, a world in which individual goodwill is not possible without thought for the common good’.
Lesson #2: The Public Health interests of Nations are NOT mutually exclusive. In fact, in the face of public health threats, the health interests of one nation shall be aligned with that of all other nations. By effectively mitigating these risks for their populations, Nations are by default protecting one-another too. The WHO guidelines in this regard have always been quite comprehensive and clear. A few nations implemented them. Many ignored them. Some are still pointing fingers.
Lesson #3:In the case of an epidemic, our whole human race is as protected as our dumbest proxy (including so-called ‘political leaders’). Therefore, the consumption of medical information should be factual, not emotional: stick to verified health experts’ facts, not politicians’ blabber or your next of kin’s stupid post. In times of a public healthcare crisis, only read and listen to the official experts recommendations through their official channels. Learning this lesson or not is a matter of life and death.
As the internet has unfortunately become a garbage bin of ignorant content, the sources replicating that garbage have become contaminated. For the record: social media are not official sources of information until you check on the authenticity of the real source of publication. Unfortunately, through these channels, ignorance is spreading as fast at the virus itself, and you don’t want to take any advice based on ignorant people’s opinions either, because it makes you ignorant yourself.
There’s a reason why medicine is a science where uninformed individual opinions have no place. If you struggle to get access to reliable evidence-based sources of information, I’m suggesting some for you at the end of this article.
Lesson #4:The tax imposed on the global economic activities by a globally very poor health disaster preparedness is quite high. As we can observe, the wealth of nations is linear to the health of their populations. Adding insult to injury, the next silent healthcare killer wave is already hitting the shores via obesity and smoking and there’s a very little window to act. Back in 2015, I have publisheda paper on this topicurging responsible governments for action.
If we ignore this crucial relationship between population health and economy, and do not urgently capitalise on the visit our microscopic ‘Corona’ Nemesis to drive sweeping societal changes, then why bother about the climate altogether?
Lesson #5:Short-termism kills: A message to all apprentice politicians out there: long-term planning means a plan that spans longer than one electoral cycle, and in public healthcare, these plans are altruistic by nature. Both concepts of altruism and long-termism are something most politicians are paid to not understand.
Also, unlike building new hospitals for the communities, preventive medicine policies are not as sexy because laymen are unable to appreciate them at face value. But now, look back! If they were implemented, don’t you think those policies might have saved more lives and economies than all hospital beds and medical resources the world is unable to mobilise right now?
B- The Big Question:
In the past 2 weeks I have been approached by at least three instances to help put together an effective track-and-trace software solution to tackle the current pandemic problem in a more timely fashion. The common denominator of these solutions is a question to all of us: How much private information are we individually willing to make public, for the sake of enhancing public health and safety?
All your contact details, your last location and related time stamp, the identity of people you had physical contact with in that particular location, etc. — There’s no silver-lining, and there lies the whole complexity of public healthcare and safety.
Finally, as promised, here are some free evidence-based and regularly updated scientific resources on COVID-19:
These are THE references and fact-checkpoints for 99% of the stuff you read out there on COVID-19. If the information you read or heard is not in one of these links, then it’s likely to be fake and it’s your responsibility to help redress it.
A crisis is always an opportunity, and I love the entrepreneurship spirit before a crisis, disruptors become lifesavers and visionaries, but there are also poachers and crows, who wish to see a world where banning human interaction and working remotely forever, become a norm.
As you already noticed, the coronavirus crisis brings a new dynamic on how to make business. Remote solutions are popping up and Businesses are moving online: Educators, Managers, Doctors, etc….
Zoom, Google Hangout, Skype, Facebook Live, etc, etc, etc… are at their maximum capacity. And more are joining the “remote” fever.
No more waking up, dressing up, dealing with grumpy faces in the subway or bus. No more morning bad jokes, gossips and complaints at the office. Aleluya!
When 70% of people hate their job, it is obvious the option of remote work sounds a dream coming true…. till the chains of the routine traps you again.
Like Yoga was never mean to break the chains of your mind, trapped in a purposeless job of a broken economy, why then you think Zoom will replace a meaningless career or job?
Is remote work a real solution?
The tech world already declared war to humans a long time ago:
3. Uber Eats plans for replacing your hungry with gluttony.
4. Netflix plans for stoping you queuing at the cinema.
Edtech is already worth 43 USD Billions, and indeed they offer quality and affordable knowledge, but Education? With up to 80% dropouts in online courses, it seems the education is becoming a “drug” product for personal branding addicts rather than an added-value experience for your professional and personal development.
During times of pandemic, a face-to-face ban is capitalised by techno-anxious *I would add a facepalm here, but I’ve been advised against it*
When the crisis is over and the time to return to the office comes: the post homework depression might hit hard, and we should all no blame our workplace for that, instead we should rethink the purpose of our skills in the economy and wonder if we really do well to the planet and to ourselves.
Remote work is not a panacea, and this vision is shared by thousands: ONLINE CAN NEVER REPLACE HUMAN INTERACTION.
Yes, digital tools are great for collaboration and learning, but they will never provide you with authenticity, empathy, moral imagination, satisfaction and real systemic thinking through direct contact with real people, their struggles, their dreams, our planet, its beautiful nature and moreover its complexity.
Online tools provide with a great opportunity, but also with a trap of automatizing and disconnecting ourselves from others. Go 100% remote will not change the fact you hate your job. Do not get into the trap of “online” will save the world. Instead…
It´s time to defend our humanity, heal ourselves from our excesses and restore our relationship with our mother earth.
The day to defend humanity has finally arrived, time to re-build social contracts, reprioritise our values, and understand the fragility of our systems and our planetary boundaries.
There is a lot of disruption needed in the real world:
1. To move to a circular economy, we need to go out and talk to our farmers. 2. To build peace and justice, we need to go out and bring people together, listen and understand their pains. 3. To end poverty, we need to build alternative social systems and stop asking billionaires for charity. 4. To achieve sustainable development goals, We need to reconcile ourselves with our planet.
Our mother earth is shouting out for change and we need to listen.
Let´s be honest, no everyone will survive the coronavirus crisis …. buuuut what it doesn´t kill you make you stronger. Here 5 lessons (or changes needed) for your business model to thrive this crisis.
1. Variable Vs Fixed Cost.
Do you remember that last part of your business model canvas? Yes, that one in the left lower corner. Yes, you and everyone ignored it.
Well, finally you are paying attention to this super important base of your business: COST STRUCTURE.
You are not struggling cause the lack of income, you struggle due to your bills are piling up and you won’t have money to pay them.
Dividing your cost structure between Variable vs Fixed Cost will allow you to leverage fairly the operation of your business according to the market conditions.
Paying so much on a fancy office when your clients rarely visit you? Time to work from a co-working space.
2. Revenue Streams.
Everyone wants to hunt the big fish, everyone wants Steve Jobs and Elon Musk in the portfolio of clients, it seems sometimes a “status quo” than a real business model.
Let me ask you, do you have a revenue stream or revenue streamS? Do your income generators have you back?
I know, it sounds easier than it is, however, having the power to develop at least 2 income generators from the same or different activities is a life-vest during shaky moments.
E.j. If you sell a hand cream (luxury product), you can also sell a disinfectant soap (they are running out now from the stores). DIVERSIFY your income, and prioritise a cash flow activity.
3. Running a business is not always about making money.
It is about providing value, and when your functional value proposition runs out (better process, cheaper, higher quality) due to market uncertainty, your emotional value proposition will stand out.
How is your brand making feel your customers when purchasing your product/service? Do they connect with your why? Your client’s loyalty will be challenged the following days and their feeling of belongingness will decide your survival.
4. Time to re-arrange partnerships.
If you are relying on your partners to keep your business floating during this crisis, it is time to rearrange and rethink your partners.
Like clients, partners need also qualification:
Are they providing you with a better value proposition? Are they reducing your cost structure? Are they providing you with valuable communication and distribution channels?
If the answer is NO. You need to stop collecting logos on your website and collect real value.
5. Are you enjoying this moment? If your answer is no, time to say goodbye.
If you are not enjoying this challenge, if you don´t feel excited about the opportunities ahead, leave this business immediately. If you blame the coronavirus for your business failure and collapse, it is time to abandon it. The coronavirus crisis gives you an excellent opportunity to close down and Start Doing What You Love.
Is it time to re-arrange your Business Model? Let me help you out to survive the coronavirus crisis.
20 years as an entrepreneur and 10 as a social entrepreneur working for social entrepreneurs and impact-driven businesses is kind of good skill at this moment, huh?
😀 Download my Social Business Canvas for FREE HERE, and work from home. Or…
😍 Have a 1 hour 1:1 consulting session with me for only €150,
What Can the Events Industry Learn From the Coronavirus Crisis?
The global health emergency presents an opportunity for us to rethink the industry’s messaging around the importance of face-to-face meetings.
Over the last few months, the meetings industry has been impacted by a global health issue which has had the power to cancel massive events such as the Mobile World Congress Barcelona and has left people around the world questioning their interest in attending events.
While many of us may be hoping that an increased understanding or containment of coronavirus will mean a back-to-normal approach to face-to-face meetings, it is worth asking the question: Could coronavirus be the first of several sustainability issues the event industry faces in 2020?
There are many definitions of the term sustainability — confusingly, many dictionaries offer separate definitions of economic and environmental sustainability. Coronavirus will likely be one of many economic sustainability threats our industry faces in the near future.
So, can we learn something from the industry’s response to coronavirus that will help us as we face similar challenges down the road related to climate change (flooding, rising sea levels, food scarcity, etc.)?
Time is of the essence when responding to crises. A study released in the European Journal of Social Psychology in 2009 concluded it takes 66 days for a new behavior to become a norm. Based on government reactions to coronavirus around the world, it would seem that the next 66 days are likely to bring further regulations designed to stop large gatherings.
As travel regulations increase and panic spreads, could it become the norm for people to want to meet via technology during this uncertain time rather than face-to-face?
Only time will tell, but as Winston Churchill once said, “Never let a good crisis go to waste.” So, what can event professionals learn from the challenges we are currently facing? Is there any action we could be taking as an industry to help communicate the importance of meeting face-to-face and ensure that event attendees understand why health risks are taken and carbon footprints are made?
If there is one obvious lesson to be taken from the last few months, it is that choosing to attend events is an emotional decision made by each attendee. As an event professional passionate about the potential of face-to-face collaboration, I often forget that most people take time to consider why they should attend an event.
But I was reminded of this last December, when I had a fascinating conversation with a journalist who told me his 8-year-old son had cried the night before he left for a trip. The reason for the tears? The son knew his father was going to be flying the next day and didn’t want to see him polluting the planet.
The coronavirus is another emotional reason why average event attendees and their families could have concerns about meeting face-to-face. But the current crisis also presents an opportunity for the events industry to reevaluate its messaging.
For too long, we have been relying on an “economic impact” narrative to justify meetings. It is becoming clear that coronavirus and sustainability concerns, coupled with the next generation’s tech-savvy ways and demand for ethical choices means it is time to revisit this messaging.
As an industry, are we telling the story of the importance of meeting in a way in which Gen Z will understand? (Remember, their ethical and transparency values means the traditional, economic-impact messaging won’t necessarily connect with them.) Are we ready as an industry to tell a story beyond this?
The second obvious lesson to be taken from the coronavirus outbreak is that the World Health Organization’s guidelines on large gatherings are being used globally. In times of unexpected crises, governments and businesses around the world often look to organizations such as the United Nations for guidance. This presents an opportunity for the events industry.
Since 2017, Positive Impact Events has had a number of memorandums of understanding with different United Nations bodies, including the United Nations Framework Convention on Climate Change. One of our responsibilities within this memorandum of understanding is to encourage event industry alignment with UNFCCC work (e.g., getting feedback from the industry on measurement tools).
Another responsibility is to collaborate, so UNFCCC are able to focus more on the event industry; the fact of the matter is that governments focus on tourism — so the UN has a mandate to act on tourism, not events.
Seeing the use of the WHO guidelines is an example of what could happen to our industry as climate change issues increase. It likely won’t matter what guidelines we produce as an industry via our associations because businesses and governments don’t know our industry associations; they know the United Nations.
So, it’s in our industry’s best interest to create a strategic relationship with the UN and work together to address major issues, reaching beyond individual associations or experts to develop guidelines.
There’s no better time to start than right now — 2020 is the 75th anniversary of the United Nations. To mark this, the UN is delivering a year-long initiative which they describe as “the largest, most inclusive conversation on the role of global cooperation in building a better future for all.” The UN75 initiative will spark dialogues throughout 2020 in diverse settings across the world.
Any event professional reading the outline of that campaign will see it as a direct reflection of our job description — bringing people together for a global, inclusive conversation.
So how will we use 2020 to align with this major UN campaign and raise the profile of events? Will we start using language and context that businesses and governments will understand?
Will we tell a story of how events can be used to provide education and inspiration, which is vital to achieving the United Nations Sustainable Development Goals? Or will we continue to talk only about economic impact and assume that people will continue to meet face-to-face simply because they always have in the past?
If this has inspired you to act — which is the purpose of “Better Meetings, Better Future,” the Positive Impact Events and Northstar Meetings Group initiative — please sign up to become a Positive Impact Events ambassador and use your voice to champion a more sustainable event industry. If you do, we will send you materials at least four times a year. Consider also asking your peers, clients or associations how they are communicating the role of events to create a more sustainable world that works for everyone.
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