We just weren’t ready…
One of the reasons coronavirus has had such a big impact on the economy and our social lives was a lack of preparation. PricewaterhouseCoopers writes:
Most companies already have business continuity plans, but those may not fully address the fast-moving and unknown variables of an outbreak like COVID-19. Typical contingency plans are intended to ensure operational effectiveness following events like natural disasters, cyber incidents, and power outages, among others. They don’t generally take into account the widespread quarantines, extended school closures, and added travel restrictions that may occur in the case of a global health emergency.
This is, of course, a message governments and businesses generally want to sweep under the rug. That’s because they don’t want you to ask what else they aren’t prepared for. Nevertheless, it’s most likely they will be prepared for the next global viral pandemic — overly prepared.
Take a minute to remember back to the immediate weeks, months, and years following 9/11…
I’m sure you remember it. People became deeply fearful and absolutely freaked out over security.
Americans became so fearful of terrorism after 9/11 that Generation Z (people born approximately from 1997–2012) has been dubbed “Generation Fear” by multiple writers.
As a result, governments and businesses spent trillions on new security and counterterrorism measures in the aftermath — often on measures that, even at the time, seemed like an overreaction. These large concrete flowerpots in front of Baltimore’s World Trade Center, meant to stop a vehicle from driving into the building, are just one simple relic of those days:
I don’t think you’ll find much disagreement that terrorism and the fear of terrorism absolutely changed America forever — at least for the entire lives of everyone reading this today.
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And I don’t think you’ll find much disagreement that coronavirus will have just as deep an impact, albeit an impact affecting different parts of life.
Moreover, I think we should expect an overresponse from government and businesses in the next few years similar to the overresponse following 9/11. In fact, an overresponse is exactly what U.S. officials are calling for. In an interview with WebMD last month, Robert Redfield, director of the CDC, said:
I think many people may not realize CDC is the background funding for the public health infrastructure of every city and every state in this nation. We need to overinvest. Get overprepared. I will say that — that in four or five decades of investment when this — when the big one came. And this is not a minor one. This is the greatest public health crisis that hit this nation in a century. That we were underprepared. And we need to owe it to our children and grandchildren that this nation is never underprepared again for a public health crisis.
This overresponse is really part of what people are calling the “new normal.” But one investor sees a more specific trend emerging — one he calls “the most powerful and tectonic wealth-creating event since WWII.”
Bull and Bust Investment Director Christian DeHaemer sees a full-fledged “Technology Reset” in the wake of COVID-19. DeHaemer says:
Following the coronavirus, a new crop of tech companies will be leading the world with a Tech Reset, making traditional ways of doing things obsolete. And in doing that, they’re creating brand-new markets forecast to be [worth] over $100 trillion.
Some of this “reset” might include the death of retail stores. Brick-and-mortar stores have been disappearing as e-commerce has grown substantially over the past few years. But COVID-19 could be the nail in the coffin for brick and mortar.
Circling back around to Baltimore again, Barnes & Noble closed its iconic Inner Harbor location in the city three weeks ago. Other major retailers such as Best Buy and GameStop are also planning to close (or have already closed) retail locations elsewhere.
Another part of DeHaemer’s Tech Reset is the death of cash. Physical cash has long been criticized for being a vehicle that spreads germs and bacteria. COVID-19 has already prompted many retailers to refuse to accept cash as payment. And new payment technologies such as tap and go seem like an inevitable future.
DeHaemer’s Tech Reset is much bigger than I can fully go into with the time I have here. But if you’d like to check out his entire premise, take a few minutes to check out this video where he explains his Tech Reset in detail.
Until next time,
Luke Burgess
As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bull and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.
