The New York Times has a great article from David Leonhart where he tries to predict what life in 2022, a scant 18 months from now, will look like in America. He assumes no vaccine arrives this year, and that we continue to see waves of outbreaks and lockdowns.
From a business perspective, he talks about which business models will likely prove less than resilient in weathering the storm. Some likely casualties are those who were already vulnerable businesses…newspapers losing advertisers, traditional department stores (Eatons, Zellers, K-Mart, WoolCo, Target have all bit the dust in Canada long ago) losing out to Walmart and Amazon, and malls closing when they lose their department store anchors.
While universities in Canada are unlikely to fail, the same budget pressures are hitting them as they are in the U.S. — enrolment stability, cancelled summer programs, residence and food service fees gone, parking revenue gone, and provincial and federal budgets are taking huge beatings. I follow Alex Usher on Twitter, and he has been actively watching which universities are planning for full virtual classes in September and which ones were hoping for some sort of mid-semester return.
I was a bit surprised Leonhart uses such pedantic examples and doesn’t spend more time on the hardest-hit sectors like health in general, agriculture and food processing, aviation and tourism, and restaurants. He notes in the intro that they may disappear, but there are entire sectors that present far more disruption to human life than the loss of paper newspapers, loss of department stores and malls, or disruption in higher education options.
In the area of habits, Leonhart identifies the importance for white-collar workers that working from home, working remotely in general, has been successful, and I couldn’t agree more. Education from home is less successful, but I love the quote from Microsoft:
As Satya Nadella, Microsoft’s chief executive, said this spring, “We’ve seen two years’ worth of digital transformation in two months.”
Where I work in government, we have accelerated our IT plans by 2-3 years for some major projects. Things that would normally have started in 2022 or 2023 and likely would have taken 1-2 years? They’re already 50% implemented or more. Doubling bandwidth, new platforms for collaboration, massive increase in mobile infrastructure for workers with huge increases in laptop deployments. We’re one department, in one government, in one country, and we literally have bought thousands of new laptops to get people connected from home. How are manufacturers keeping up with IT demand? The short answer in some cases is that they are not keeping up. If you were looking for video cameras in the first few weeks of WFH, they were scarcer than bread yeast. Months later, stocks are returning but only because everyone already has a webcam somewhere in their digital ecosystem. Many are just using their phones. I stopped by one of the computer stores last week, and some of their shelves are looking pretty empty, particularly for larger monitors. Not enough to declare a shortage, although again, that’s partly as they’ve restocked.
I’m less enamored of Leonhart’s predictions for the US political realm, not with a fall election hanging in the balance. Trying to do similar predictions for Canada without a set election date is probably equally useless. The Liberals are in a minority situation, and will likely to continue to be, as long as the NDP keeps getting what they want on various files. But they can only go to that well so many times before the Liberals can’t afford it, and the alliance / coalition / politician’s agreement falls apart. Just as with Leonhart’s opening question — how long does this last? — the political outcomes will be shaped by the health outcomes. Where I find Leonhart’s rationale lacking when he argues for sweeping roles for government in the U.S. if Biden wins is in the reality he talked about for higher education. Government budgets are taking a sh**-kicking and while they can literally print money, at some point, the bill comes due. Spending at current levels is not even remotely sustainable. And if you want to spend your way out of a recession / depression, eventually you also have to make serious cuts to government either during or afterwards.
Nevertheless, I hope there are more prediction articles I like these. If we crowd-source a couple of thousand of them, we might even approximate a forecast or come up with a to do list for contingency planners.