Post-virus everything is going to change. That’s the dominant view of national and international media. But how exactly do they see the future? This regular digest section gives some of their answers and views/Edited by George Hamilton
Special edition: INEQUALITY (May 6)
- When you see a bastion of privilege such as Eton wanting to get “on the right side of history” by helping poorer children, you realise that there is – at least as shown by the growing number of articles on the subject – a major debate going on about how we might tackle inequality post-virus. Also in this edition:
- The next pandemic: rising inequality
- Why traumatized economies and unequal societies could be fertile ground for populist politicians
- Younger workers will be scarred by the coronavirus crisis
- Unemployment as a teenager can scar you for life
- Virus has exposed UK’s imbalances
- Care home workers, shelf-stackers, nurses will want a better life post-virus. And Bojo knows he needs to deliver
- The next wave of coronavirus disruption? Automation
- The coming turmoil will be tough on the low paid and low skilled, and on older workers who don’t have years left to rethink their choices
- Global food glut sows seeds of doubt for farmers
- With shuttered restaurants creating massive oversupply, one knock-on effect may be higher prices in 2021
Eton’s £100 million plan to help poorer children
Private schools could find themselves on the wrong side of history if they did not help to close the educational gap between rich and poor, Simon Henderson, the headmaster of Eton, has said.
He was announcing plans for teenagers from the Midlands and the north to receive an Eton-style education as part of a £100 million investment to help disadvantaged youngsters.
Mr Henderson said the coronavirus pandemic was likely to be “a trigger for profound change” similar to the two world wars.
“Every institution will be judged by what they did during the pandemic. That’s particularly true in education where there’s no doubt that inequality is widening”, he added.
The school, which taught 20 prime ministers including Boris Johnson, is already involved in a selective state sixth form in east London.
Sixth-form ventures are driving up educational attainment across the capital. Their pupils, often from deprived areas, get a private-school style education and secure places at leading universities including Oxford and Cambridge. There are no notable equivalents in the north, despite a big attainment gap between north and south.
Eton is seeking partners from the state and private sector to join it in the venture. The sixth forms would be part of a five-year investment plan where the school will spend £100 million to help to redress the balance and support less advantaged children. The money will come from Eton’s charitable endowment and fundraising. The Times 2 May
The next pandemic: Rising inequality
Charlie Cooper: At every stage of the educational journey, the virus has hit, storing up potential problems — particularly for those already at a disadvantage.
Carl Cullinane of the UK’s Sutton Trust thinktank, said that pupils stepping up from primary education to secondary are at particular risk. That’s “one of the big periods where [inequalities] open up.” This year, it’s possible we could see pupils entering secondary school in September, “not having been in a school room since early March,” he added.
“It is potentially extremely damaging for, particularly, disadvantaged pupils who may not have had the support over those few months at home that other pupils might have had,” he said. “The scars of the current crisis are going to still be showing in the long term.”
Then there’s jobs. While well-paid employees in the financial sector can telework from home, factory-workers, waiters and receptionists can’t.
The pain is expected to be particularly keen in the service sector, as bars, cafes, restaurants, nightclubs and hotels are potentially forced to stay under lockdown long after restrictions on other sectors have eased.
Evidence from Sweden indicates that even where there is no enforced lockdown in place, people’s behaviour has still changed. “Restaurants and hotels that some of our businesses operate [in Sweden] are reporting that there is a sort of self-imposed social distancing going on by their consumers,” said the chief executive of UK Hospitality, Kate Nicholls. “The town and city center restaurants are by no means full, they’re operating at sub-50 percent.”
Health time bomb: The financial crash of the last decade — and the austerity that followed — contributed to a stalling in life expectancy improvements in the U.K., according to Michael Marmot, a professor of epidemiology at University College London, who tracked the negative effects.
“[With the virus] in the short term there will be increases in inequalities in social conditions, which will over time lead to inequalities in health.”
Compounding the problem will be the stored-up afflictions of millions of Europeans with underlying conditions — cancer, heart disease, diabetes and others — who have not received the diagnoses, treatments or surgery that they might have done because health systems have been consumed with the coronavirus response.
The immediate painful question is how long can the current, unprecedented state intervention in markets around Europe be maintained? With the state so heavily involved in the economy, at what point (and how) do governments start deciding which companies survive, and why?
If the hospitality sector, for instance, has to stay in deep freeze for months and months to come, or if ongoing border restrictions mean airlines can’t fly, how long can the taxpayer prop up businesses in these and other worst-hit sectors?
Marmot, the professor of epidemiology noted that after the financial crisis, governments argued they had no choice but to cut health and other basic services. “And what happened when the COVID-19 pandemic hit?” he said. “They threw all of that orthodoxy out of the window and said, ‘Whatever it takes.'”
“If you can do it in a pandemic you can do it for the profound problem of inequalities and resultant health inequalities in society,” he added.
Not only will demands on social support systems be greater — with millions more unemployed — there could also be increased pressure for well-funded public services, as people’s admiration for health workers’ efforts to combat the pandemic converts into political support for them to be fairly paid and resourced.
“How are these expectations going to be met,” he asked, in a likely context of widespread business failure, falling business revenues and therefore a significantly shrunken tax base?
How all this shapes politics in the months and years to come is perhaps the biggest and most consequential unknown. Traumatized economies and unequal societies in the past decade proved fertile ground for unforeseen political movements: Trump, Brexit, rising European populism.
Polling by Ifop, in France, already suggests that those who are finding lockdown the most challenging are the poorest. If there is an ever-widening divide between those who were pummeled by the pandemic, and those who (thanks to their economic security, or the nature of their work) were able to weather the blows, that will at some point find a political outlet. The only question is how strong will that reaction turns out to be. Politico 28 Apr
Younger workers will be scarred by the coronavirus crisis
David Blanchflower, a US-based labour market expert and former Bank of England rate-setter, says there are 775,000 UK people turning 21 this year, as well as 700,000 18 year olds. And as employers shun graduates in 2020, there will be twice as many going for the same positions next year.
The academic and his colleague David Bell carried out extensive research into the impact of wage scarring in the immediate aftermath of the financial crisis.
A spell of unemployment at 30 makes little long-term difference to your wage prospects, but at 18 or 21, the damage lasts a lifetime. It raises the chances of future spells of unemployment, and it also damages your earnings potential.
Says Blanchflower: “What are we going to do about the graduating class – or the non graduating class – of 2020? What about the kids sitting at home in their basements?” Daily Telegraph 29 Apr
Virus has exposed UK’s imbalances
Larry Elliott: As in the 1930s, a decade of austerity, of penny-pinching and cheeseparing has taken its toll. Then it was a shortage of Hurricanes and Spitfires; this time it was a lack of trained nurses, intensive care beds and ventilators.
Britain still has world-class manufacturers but they operate in only a small number of sectors. The aversion to anything resembling an industrial strategy has left the country highly exposed to long supply chains. Most of these terminate in China, which – as the NHS found when it took delivery of unusable ventilators – cannot always be relied upon.
Nor has the UK’s much-vaunted financial sector proved to be all that useful in a crisis. Despite government guarantees, the high street banks have been reluctant to lend, with the result that many businesses will not survive.
The same applies to the welfare safety net. Britain is a much richer and healthier country than it was 80 years ago, but poverty still kills. The Office for National Statistics data showing that the death rate in the most deprived parts of the Britain is double the rate in affluent areas tells its own story.
Bus drivers, supermarket shelf-stackers, care home workers, nurses are people who can’t do their jobs from home, but who are putting themselves at risk after having just suffered a decade of public sector pay freezes and stagnant living standards. They are unlikely to react well to any attempt by the government to reimpose austerity once the economy is out of quarantine. The lesson of Labour’s landslide election victory in 1945 is that voters will look back at the pre-crisis world and come to a simple conclusion: never again.
Johnson knows this, which is why he is saying that this time the government will look after the people who suffer and not just the banks. Making good on this pledge will take some doing, and means learning some lessons.
The first is that getting the right big picture, macro-economic structure, right is crucial. It is not, though, just a question of repudiating austerity and gunning for as much activity as possible: growing the economy has to be consistent with greening the economy.
The second lesson is a bigger state has to be a smarter state, and that requires ceding more power to a local level. Britain’s heavily centralised approach to Covid-19 testing has compared badly to Germany’s devolved model, for example.
A switched-on state would demand a price for the unprecedented amount of support it is providing. That might mean taking a stake in mid-sized manufacturing businesses, as the employers’ group Make UK has suggested. It would also mean bigger companies agreeing to put workers on boards, signing up to carbon-reduction targets or domiciling themselves in the UK for tax purposes. There should be no free lunches.
The Covid-19 pandemic has exposed the imbalances in modern Britain. It has highlighted the need for more community-based banks, for more investment in vocational education, for an industrial strategy that encompasses the everyday economy as well as trendy hi-tech sectors, and for a stronger social safety net. Above all, it has made the case for greater national self-sufficiency so that we will be more resilient next time. Observer 3 May
The next wave of coronavirus disruption?Automation
Gaby Hinsliff: Microsoft’s CEO, Satya Nadella, has said the software giant had seen “two years’ worth of digital transformation in two months” thanks to coronavirus shifting our lives abruptly online. Expect more big names to disappear from the physical high street (why mooch around shopping malls if you can’t even try things on, with changing rooms expected to stay shut even when fashion stores reopen, and beauty-counter testers a relic of our unhygienic past).
Bank branches were already closing in droves before the epidemic, but here is the perfect excuse to shut more. And that’s not all. The authors of an Oxford University study thought that by 2035 it would be possible to automate 86% of restaurant jobs, three-quarters of retail jobs, and 59% of recreation jobs. By unlucky coincidence, those are among the very industries hardest hit by an epidemic now demanding quantum leaps in efficiency if some companies are to avoid going under.
We know that social distancing will be in place until at least the end of the year, or maybe longer without a vaccine. When people can’t safely hotdesk, stand side by side on a production line, or even queue up for lunch together in the canteen, the only realistic way of operating many offices and factories will be with far fewer people moving around the same space.
For some, that might just mean more working from home. But how does, say, a fast-food restaurant kitchen churn out the same number of burgers with less than half the staff? The best employers will move heaven and earth to protect their people, but for some the obvious answer is automating, and slashing the wage bill.
What has saved many jobs until now is that new technology tends to be expensive and disruptive, annoying customers. But disruption is the new norm, and if lockdown has intensified a craving for human contact it’s also left both businesses and customers strapped for cash.
Online yoga at home can’t match the conviviality of a live class, but if it’s cheaper and safer than going to the gym, people might settle for it. The mass redundancies at British Airways, meanwhile, reflect the harsh reality that the days of middle managers hopping unthinkingly on a plane to Brussels or Frankfurt probably aren’t coming back.
Weeks of being forcibly grounded have taught companies that video meetings have their drawbacks, but they’re cheap by comparison. What could have been a gentle managed decline for aviation, driven by the climate crisis, now looks like more of a crash landing with knock-on consequences for others reliant on business travellers: hotel chains, cab drivers, expense-account dining. It has never just been about robots taking work from humans, but technology reinventing processes in ways that mean the work is no longer there to be done.
But the coming turmoil will be tough on the low paid and low skilled, on older workers who don’t have years left to rethink their choices, on people whose lives were already precarious and now will get more so. The economist Nouriel Roubini warns ominously of a new wave of automation “further fanning the flames of populism, nationalism and xenophobia” as wages are forced down all over again.
The idea that taxing our new tech overlords, and redistributing the money to support a happy life of leisure for all, will resolve all this is comforting but scarcely credible. A major rethink of tax and welfare systems will obviously be part of the answer. But a universal basic income can’t realistically be high enough to guarantee the good life for everyone, and lockdown has taught us there’s only so much sourdough most people can bake before starting to crave something real to do.
There are no easy answers here, only the grim certainty that if politicians don’t start grappling seriously with the question then once again they risk being overtaken by events. Britain planned for a pandemic like this for years, but still wasn’t ready for it. Don’t let the same be true of its aftermath. Guardian 30 Apr
Global food glut sows seeds of doubt for farmers
The sudden closure of the world’s restaurants, hotels and caterers has caused an unprecedented demand shock for farmers.
Whilst some of that demand has moved to retail, it is extremely hard to shift goods from one supply chain to another: restaurants want different (more expensive) cuts of meat to supermarket shoppers; high street shoppers do not buy 50kg sacks of potatoes. Above all, total demand has dropped. We buy cheaper food to eat at home, and eat more of it.
Leftovers do not go to waste. In America, 51c of every food dollar in 2019 was spent outside the home. Now that entire market, worth about $60bn (£47.5bn) each month, is trying to find a backdoor into the retail sector.
There is simply too much to go around. Oversupply is vast and the effect on prices dramatic. US prices for all commodities bar wheat and sorghum have decreased by between 15-45pc since January.
In the UK, British potato farmers are not alone in sitting on produce they cannot sell.
Demand for malting barley, for beer now undrunk in pubs, has dropped 500,000 tons; cider apple orders are down 35pc; the poultry market is reduced by 20pc; meanwhile hundreds of dairy farmers have already begun pouring milk away.
The irony is that it is a catastrophe made worse because farmers have had an excellent year. Around the world, bumper harvests have been gathered. Now there is nowhere for all that food to go. That leads to a second irony: too much food today may mean not enough tomorrow.
The destructive lack of demand in 2020, caused by the Covid-19 shutdown, could put some farmers out of business, and lead others to trim production. Then, in 2021, if demand rebounds, there may not be enough supply, causing the current glut and record low prices to be replaced by shortages and cost spikes.
From Delhi to California, Spain to Sweden, perishable goods face another difficulty: labour shortages. Phil Hambling, head of food and farming at the National Farmers Union estimates that the UK needs 70,000 or so seasonal workers to get in the fruit and veg harvest. In Italy, border closures have blocked the arrival of 200,000, according to Coldiretti, the national farmers’ association.
Such workers make up around 25pc of the agricultural workforce. In Spain the shortage is about 150,000. Everywhere, the solution is to ask local furloughed workers, or those on the dole, to take up the slack.
Cherry growers in Catalonia say one third of the crop will not be picked. The wild lingonberries and chanterelles in Scandinavian forests which are usually cropped by Asian migrants will this year likely go untouched.
In India migrant labourers were only given permission on April 20 to move between states to help with harvests, until then, millions of harvesters, usually young men, had been stranded in cities by the sudden lockdown without means of making a living.
A poll of 11,000 of them found 96pc had received none of the promised government assistance and were themselves starving. In Florida producers have literally just been ploughing up strawberries.
The production of perishable “produce crops” – lettuce, kale, broccoli – from California and Florida is expected to decrease by 20-23pc.
It’s not just movement of people. It’s movement of goods too.
Consolidation has seen just two or three nations dominate the export market in most food staples. The world’s two leading exporters corner 90pc of the market in palm oil exports; 80pc in soybean (for animal feed); 50pc in corn; and about 40pc in rice, wheat and barley.
That creates pinch points: Pacific ports for North American grain exports; New Orleans for soy and corn. 50pc of Brazil’s exports move through the port of Santos; 75pc of Argentina’s grain, meal and oil export occurs in a small area near Rosario in the south of the country.
The problems of labour and supply chain bottlenecks are combined in Malaysia and Indonesia – home to 90pc of the world’s export production of palm oil, used in all kinds of foods from crisps to ice cream.
However, there is, undoubtedly, an abundance of food in the world, notably the staples.
“If you look at the basics of rice, of wheat, which are basically the key food grains, we have enough,” says Stefan Vogel, head of agri commodity markets at the US-based Rabobank. “There is more production in the year 2019-20, right now, than demand. And the outlook for next year is that production will again exceed the demand.”
In the end, the key disrupter may be neither supply, nor demand, nor logistical – but political and economic.
From Imperial Rome to fin de régime France, leaders have always known the importance of keeping people fed. It is lost on few strongmen that the recent popular uprisings known as the Arab Spring had their origins in discontent over food prices.
The temptation remains, in such a fragile market, to play global power games with food. In Asia, China sits on more than 50pc of the world’s rice stocks, according to the US Department of Agriculture. Normally, it is not a big exporter. But should regional countries find themselves short, an opportunity could open up.
Trade wars have particular piquancy when food is at stake. One recent example was the decision by China, the world’s biggest importer, to stop buying soybean from America, and turn to the other great exporter Brazil – causing a slump in US soybean prices. Daily Telegraph 1 May
