ECONOMICS the real issue , which simply comes down to politics , not economics .
In 2020 , all governments faced an unprecedented event affecting the entire population of the planet Earth . What do you think we can learn from 2020 now and what needs to be done to minimize the impact of such large-scale disasters ?
I think the key issue is that decentralisation works , that you can ’ t run this coordinated massive response from a central level because it is in local areas where the virus hits ( and hits different areas differently ). Viruses are striking locally and there has to be a local capacity and ability to handle it , for each community , if it is going to lockdown or isolate , to have the ability to operate independently from the centre . A paper that I ’ ve just written with two Russian colleagues , just published in the journal Ecological Economics , looks at this in the context of Russia and how the environment and decentralisation helped the Russian environment get cleaner during COVID-19 , because now the policies are with the people who are the closest to it . The policies and responses were not being implemented from the Kremlin , but individually by each mayor of the cities or even private individuals . The same thing applies to health policies . Of course , you can say for something like a vaccine , a concerted effort is needed , a centralised push so we can get the vaccines out , which is important as well . However , we need to realise that we can ’ t just keep centralising everything . Decentralisation is necessary to build the resilience that can absorb a blow like a virus and then keep going .
What sectors of the economy have the pandemic caused the greatest damage and what tools can gradually affect the renewed growth of these sectors ?
Without a doubt , travel and hospitality have taken the greatest hit . My family and I flew from the UK to Switzerland and didn ’ t know if we were actually able to get out of the UK with its light switch lockdowns : “ We are locked down , no we ’ re not , yes we are , no we ’ re not .” We went through many hurdles in terms of paperwork and then when we got to Heathrow , it was a ghost town , the busiest airport in the world and very few people there . So even if you have proper documentation to travel , people are still going to be very wary of doing it in the future . Normally , I traveled a hundred thousand miles a year , but this was the first time I had travelled in a year . So , travel is definitely going to continue to be harmed .
Hospitality is the other one even though restaurants are being allowed to open . “ When are we going to go back ? Oh , I would like to catch dinner , go out to someplace ;” when will things actually be normal again . In terms of the ways we can support restaurants staying open , perhaps restaurants will need to have more outdoor seating or provide more social distancing inside , but they will need to focus on making money on quicker turnover , which means having many people come in and cycle out , so it may be very difficult for them . For the travel industry , they may need this shock to the system , to rethink business models and rethink pricing . Mainly because we have seen for far too long , especially in the United States , where I am from , the minute the airline industry suffers , any kind of recession or any kind of decline in numbers , they run to the government with their hat in hand and say : “ We need money , bail us out .” And we do , for some odd reason . I am sure it ’ s the same here in Switzerland and elsewhere in Europe . So , airlines really need to rethink their business models and maybe this will help with it . But I fear it is going to be more about just throwing cash at the problem .
What industries will change ?
Well , pharmaceuticals are going to be fantastic , I think . You see what everybody needs is a vaccine . But we ’ ve all been in our homes , we ’ ve all been wearing masks , so the common cold is down , flu is down , and we are not actually buying as much of our other pharmaceuticals , so this could be a counterbalancing trend . Retail in general is also trying to figure out how to roll with this massive disruption of the pandemic . Do we need to shift more online ? I mean , how many times have we ordered online since the pandemic began ? I think also the kinds of industries that really rely on international supply chains have held up very good during the pandemic , surprisingly well . But we may find impact that is in line with what I was saying about the centralisation ; you might find supply chains becoming more localised . “ What can I get here , in this country , what can I get locally ?” rather than necessarily going to China , going elsewhere . I think that will be consequences as well , and that will also cause disruption .
Taking into account your experience as the president of CASE – Centre for Social and Economic Research in Warsaw , Poland – let ’ s talk about milestones in the transition economy , which , as we think , will come in the coming years .
The “ transition economy ” as a concept still singles out very different countries a full 30 years after the fact . It ’ s like when I mentioned the former Soviet Union – you know , the Soviet Union has been gone as long as I have been an adult ( the USSR fell when I was 18 ). Of course , this was one of the brightest examples in the history of the world economy so far for improving economic outcomes . But all economies are transitioning , whether they are transitioning well or they are transitioning badly , which really depends on politicians .
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