- A Great Reset requires improving global multilateral cooperation and aligning both the recovery of our economies and priorities of societies.
- Unemployment related to the pandemic means we risk increased inequality, hitting the weakest hardest.
- We should be careful that we don’t postpone actions to combat climate change.
- The focus should shift from short-term and profit-only to longer-term, incorporating value creation for people and the planet.
In a matter of weeks, the coronavirus took over our healthcare systems, our economies, and even our societies and lives. It has impacted nearly everyone on the globe. It is a crisis unlike any other, which requires a response like no other. A balanced and inclusive response that makes our economies and societies future-proof. We need a Great Reset, not just a restart or a reboot. Here’s why.
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Although some have been warning us, like Bill Gates in his 2015 TED Talk, we were unprepared. Unfortunately, it often takes a tragedy to respond in a coordinated, decisive way; just like my country, the Netherlands, experienced in 1953 when the dykes broke
Even when the virus was spreading in China, we didn’t see it coming. Neither when it hit Asia, and subsequently Italy. At that moment, we still felt reasonably safe in the rest of Europe or the US. But it turned out to impact all of us, now also Latin America and Africa. We went into lockdown to contain the spread of the virus within the capacity of our healthcare systems. We succeeded in many cases, but at a substantial economic, societal, and personal cost. With the help of distancing, protection measures, testing, and tracing, we are easing lockdowns while working hard on vaccines and treatments.
And then? Back to January 2020? When all was still “normal and good?” No! We need a Great Reset. That should be our response to coming back better from COVID-19. It requires improving global multilateral cooperation and aligning both the recovery of our economies and priorities of societies. For the Great Reset to succeed, we have to change the way we do business and manage health, nature, the environment, and societal issues at the same time.
Despite the unprecedented impact and global spread, there was little cooperation between countries. In many aspects, it was everyone for themselves when buying ventilators, face masks, tests, and more. As healthcare for governments is a domestic issue, countries didn’t explore multilateral joint approaches and solutions. Let’s hope this was not the litmus test for other cross-border crises like climate change. Only via collaboration between countries, can we address such issues.
The virus hit when many countries around the globe were already demonstrating nationalistic sympathies, by looking at their interests first, often driven by the feeling of several who experienced, or felt left out of the benefits of globalization. However, “withdrawing behind the dykes” is not the solution.
We know that the world will spend trillions of dollars on repairing our economies from this disaster through debt relief programmes, income support programmes, fiscal stimuli, and other interventions. It would be a wasted opportunity to then only focus on a restart, as we have fundamental issues in our society, our economy, and our environment and society to address as well. We should have more ambition than to go back to the pre-COVID days. Part of these trillions has to go to reset and reform our societies, instead of simply restart.
Of course, that doesn’t mean that no money should be spent on a restart. If we can’t partly get back to normal, we won’t have the income streams to make any reforms. Three areas are key:
First: inequality. Billions of people around the globe and many countries have benefited from globalization. But not all people in all countries and not all countries either. Globalization brought prosperity and further inequality at the same moment. Due to unemployment, we risk increased inequality within countries, hitting the weakest the hardest. But there is also a risk of inequality growing between countries. Despite much progress, the developing world can be hit harder by COVID-19 than the developed world. And a later, or more limited, access to vaccines would exacerbate this problem.
For the economic response, we can find inspiration in the Marshall Plan, which was developed by the United States nearly 75 years ago in the wake of World War II. Not as a favour to Europe, but to help the continent recover, after they – together with the Canadians and British – liberated Europe. We can learn from the leadership shown in that period, and the will to create multilateralism; after all, the United Nations was founded.
There is something similar we in the West can now do for developing countries, especially in Africa. To increase resilience, help the recovery, and ensure people have an economic future, we must invest. These investments, not aid, should be directed towards increasing self-sufficiency through improved food systems, climate resilience, better infrastructure, and more innovation, perhaps with the help of innovative financing mechanisms and through temporarily uncoupling the development aid budget from GDP in developed nations.
Second: climate change. We should be careful that we don’t postpone actions to combat climate change. Unlike COVID-19, we can’t say in a few years that we didn’t see climate change coming. The Paris treaty has demonstrated that at least we were aware. The critical question now is how we can take more and faster action with more emphasis on sustainability and circularity.
Third: a change in capitalism. The focus should shift from short-term and profit-only to longer-term, incorporating value creation for people and the planet, moving from shareholder value to stakeholder interests. With the economy in a recession, it is tempting to look at short-term profits by declaring cash as king and postponing investments. That applies to both countries and companies. However, it would be wise if countries would spend on rebuilding the economy and investing in new technologies to stimulate the Fourth Industrial Revolution, investing in a better future. Long-term investments are needed, from companies too. It requires leadership and guts as there will be many temptations to focus on in the short term. Our longer-term economic strategy should remain anchored in addressing the Sustainable Development Goals (SDGs), and we should not lose sight of those.
What is the World Economic Forum doing to manage emerging risks from COVID-19?
The first global pandemic in more than 100 years, COVID-19 has spread throughout the world at an unprecedented speed. At the time of writing, 4.5 million cases have been confirmed and more than 300,000 people have died due to the virus.
As countries seek to recover, some of the more long-term economic, business, environmental, societal and technological challenges and opportunities are just beginning to become visible.
To help all stakeholders – communities, governments, businesses and individuals understand the emerging risks and follow-on effects generated by the impact of the coronavirus pandemic, the World Economic Forum, in collaboration with Marsh and McLennan and Zurich Insurance Group, has launched its COVID-19 Risks Outlook: A Preliminary Mapping and its Implications - a companion for decision-makers, building on the Forum’s annual Global Risks Report.
Companies are invited to join the Forum’s work to help manage the identified emerging risks of COVID-19 across industries to shape a better future. Read the full COVID-19 Risks Outlook: A Preliminary Mapping and its Implications report here, and our impact story with further information.
All this needs collaboration between all stakeholders as companies, governments, and civil society can’t do this alone. If we want to create the Great Reset, we have to collaborate. For the World Economic Forum, there will be an essential role to bring all stakeholders together in Davos in January 2021. With the will for multilateralism, with the desire for global cooperation, we can work out – together – what the Great Reset will look like and how we can make it a reality. It should address inequality and climate change with an economic system that focuses on the long-term benefit for all stakeholders. Then we have a reset, not “just” a restart. Because going back to our old way of doing business is no longer an option.