If we had Leaders...

The current global pandemic has revealed many truths about the structures and norms governing humanity. This has led to the following aspirational charter, signed by leaders representing 80% of the world’s population, 80% of its financial assets and 80% of its weapon power.

The pandemic has demonstrated the scale of the challenge represented by global heating, and the need for radical solutions implemented quickly under a global remit.

It has also demonstrated the bankruptcy of all current systems of government. The nation state as a dominant unit is revealed as too small a unit for some critical challenges and too large a unit for others. An acceptable set of human rights would be universally achievable within one generation were nation states not to inhibit progress. All human beings should have an adequate nutritious basic diet, affordable basic health care, housing which is secure, heated and not overcrowded and lifetime education.

Specifically, the prevalent western model is susceptible to capture by special interests, inadequate provision for many citizens and breakdown of civic responsibility. The Chinese model systematically oppresses minorities and hoards information and power within an elite. The Russian and African models have yet more glaring defects, starting with endemic corruption. While all current models are bankrupt, ample good practices exist to turbocharge human progress.

The signatories of this charter believe positive drivers for human progress include science, open debate, inclusivity, freedom of expression, property rights, justice, globalisation, trade, competition, technology and automation. Apart from unhealthy competition between nations, two other related factors have undermined human progress. The first factor is the reliance on an out dated employment model. The second is the level of return on capital demanded by unrestrained markets. Correcting these two flaws also requires global agreement.

Humans in developed nations (and within a generation, developing ones too) no longer need to toil for an employer, at least for so many hours per week or years per lifetime. Currently this false assumption dominates corporate practices and welfare policies, squeezing out progress, for example via automation, and limiting the civic potential of citizens. The 6% real return on capital squeezes competition and labour and encourages greed, dishonesty and risk. 

To successfully redirect global resources to this new paradigm requires accepting one further fact. War and its threat are uniquely destructive and almost never an appropriate response to disputes. Weapons should be progressively pooled between nations and gradually eliminated.

Taken together, these aspirations and acceptance of drivers and inhibitors of progress lead us to a series of commitments. The current crisis demands urgency and creates opportunities. Budgets must be redrawn, new revenue sources discovered, new employment models introduced, and renewed communities envisaged.

Firstly, all so-called defence expenditure will would pooled and wound down. National procurement budgets will be reduced by 25% per annum, and 50% of all new assets will be surrendered to international bodies. Personnel and maintenance budgets will be reduced by 10% per annum, and 20% of assets per annum will be surrendered to international bodies.

Secondly, a global carbon tax will be introduced, with 50% of the proceeds pooled globally. Part of the global proceeds will be used to fund renewable infrastructure and decommission existing carbon intensive infrastructure.

Thirdly, a global “Tobin” tax on financial transactions will be introduced, all pooled into a global fund. The goals of the fund will be to achieve the human rights, with a bias towards developing nations, but also to reduce corruption and avoidance. Most fiscal matters will remain national or local concerns, but international harmonisation agreements will eliminate loopholes and devices.

Fourthly, nations and localities are committed to phase in funded Reimbursement For Care (RFC) , as a positive refinement to Universal Basic Income. Reimbursable care includes childcare and elderly or disabled care, and need be policed only lightly. A typical adult will be expected to claim 30 hours per week, and this should be sufficient to fund a minimal lifestyle with all human rights, subsidised where required. Those without family members to care for should support other civic needs such as nursing homes.

Citizens can choose to enhance their incomes via paid employment, investment or entrepreneurship. Sales tax will be eliminated on essentials but increased for discretionary purchases. With this overall monetary regime and appropriate competition-promoting regulation, it is anticipated that corporations can aim for a return of around 3% real or more if GDP growth is higher. Some transitional payments will be required, for example for underfunded pensions.

Fifthly and finally, we will make decisive steps towards the goal of universal freedom of human movement within a generation. This will require phased introduction, and be accompanied by transfer payments between nations and obligations loans for those moving between nations.

These steps will require most nations to both pool sovereignty and to devolve responsibilities downwards. Existing international bodies will require new charters, and new bodies must be created. Governance structures should be equitable based on population and financial contributions, and be set up in ways that are easily adapted over time.

Within nations, the bulk of implementation will lie within communities, since the administration of RFC and associated initiatives should be at a local level. Localities will have discretion as to how to specialise, though a share of funds will also be pooled so that that budgets can be higher for communities of greater historical deprivation. Cities will be supported via national and global funds to accelerate development in required needs such as automated mass transit, provision of affordable housing and repurposing of retail and office spaces towards specialised senior accommodation and to arts and leisure.

Implementation of all these actions will be aggressive, with tracking of targets, but also phased and rapid adaptability based on learning. The elements of the program are self-reinforcing, and failure in one area will jeopardise other target, so transparent program management at all governmental levels will be critical.

As humanity, we have a unique opportunity to effect a step change in human welfare. We can end war, ensure a survival planet, ensure efficient and equitable financial structures, end fixed employment and implement free movement, all within one generation.

Watch those Prices soar

The other day, while standing for two hours in line outside my local Trader Joe’s supermarket, I was reminded of a business trip to Moscow in 1993..

I’d just started one of my favourite jobs with Shell, as retail advisor for central and eastern Europe. I had a big say in deciding which of the newly liberated countries Shell should build petrol stations in, when and how. The job had everything: one huge benefit was that we could attract the very best talent, some of the smartest people I ever worked with. But the best part of all was being one of the first Brits to see the wonders of Prague and Budapest and the other great capitals.

During the trip to Moscow, a frighteningly lawless place at the time, everybody was persuading me to approve a retail business there. Retail would be the flagship for the new entity there, and even the bosses in London wanted the legacy of Shell stations in Moscow. To bolster their case they drove me around the city to see the stations already there, pitifully few, mostly dilapidated, and all with long lines of cars outside waiting to be served.

Back in the office, some rare inspiration enabled me to make a very perceptive remark. Ah, I said, I did see a lot of cars on the way in. But I prefer to count them on their way out. All the sycophants thought I had made a joke and laughed, but I was not joking. Yes, there was massive pent up demand in Moscow. But the real issue were supply bottlenecks. Most of stations only had one pump open, and often ran out of stock even so. On the way in there was indeed a flood, but on the way out a mere trickle. And the income derives from those making their way out. The supply bottlenecks came from the only refinery and the control of the mafia. Why did we as Shell think we could defeat those forces when obviously nobody else could? It was ten years before Shell opened a station in Moscow, and I believe lives as well as money was saved as a result.

Back to Trader Joe’s, we are all tempted to look at the lines, observe higher prices than we are used to, and accuse them of gouging. But look more carefully. The line is because they only allow fifty into the store at once, and various other costly social distancing stipulations. At the cashier and on the way out, there are fewer transactions than before the pandemic. They are not gouging; in fact they are suffering.

Further, fair play to Trader Joe’s, one of the other skills I picked up in my commercial career is to know a well-run store when I see one. Trader Joe’s on Metropolitan Avenue is a very well-run store.

As we emerge from the pandemic, all businesses will have to change. Demand will be sluggish, then surge, then settle, perhaps at a lower level than before because people have less money in their pockets and Amazon will have eaten all the cake. Supply will ramp up slowly, and fixed costs will be higher, at least until commercial rents collapse. What does all this mean for which businesses will survive and for prices?

When social distancing does not fundamentally altered supply, the new equilibrium might arise close to the old one. The sectors that will change the most are those where we all used to pack into tight spaces. Among others, these are restaurants, airplanes, theatres and events.

It is a gross simplification, but it is fair to argue that there are two types of restaurants that used to make money. You have the posh places with the brands and the cachet, where very few clients all pay a small fortune. And there are the places where each client offers only a small margin but the place turns over four sittings per night.

The first group might even thrive after the pandemic. They have plenty of space, and established brands and will have less competition: we won’t treat ourselves as often as earlier, but we’ll go up market when we do. The second group are in trouble, because the basis of the model, packing us through, can’t work when we need more separation. Many will go under. But some will succeed, and they will gravitate towards their posh peers: they will put up their prices. Because there will be less competition, we’ll pay anyway, as long as the quality is good.

We will have to get used a world where those luxuries that we enjoyed tightly packed with us will be less available, less frequent and much more expensive. It will feed inequality, because much of the poor will be completely priced out, and because those same poorer people are the ones who won’t get their jobs back as these sectors consolidate.

What can we do? Not much. Governments will soon realise that there are better things to do with our taxpayer dollars than propping up zombie restaurants. Arts and culture will have to rely even more on wealthy donors. The ugly oligopoly of airlines in the US will get even uglier.

We have one immediate recourse, if we want to keep our favourite local restaurant in business. Uber eats and Doordash are currently pulling the same parasitic trick on restaurants that Ticketmaster and Stubhub did to events. I do everything I can to boycott those bastards, always buying directly at the box office whenever I can. That is easy for restaurants, we can just order directly rather than through the middleman. Restaurants need our help, and that is something we can do.

We can also pause before we condemn Trader Joe’s and their ilk. Some are gouging for sure, and some of our local stores are treating their staff very badly. But we should understand that in many cases, despite appearances, their costs have gone up while their volume has gone down, so increasing prices is not an unreasonable reaction.

Next time you are standing in line at the supermarket, placing a direct order with your local restaurant, remember Moscow. Could the customers on the way out, not the way in.   

The Trend Accelerator

One way to think of the world after Coronavirus is to consider trends that were playing out before. In most cases, I believe the virus will accelerate the trend, because it reduces the forces that used to slow the trend down. Then, depending on whether the trend itself has the full support of society or whether it was just something society tolerated, we will either come out of this with the trend reinforced, or the trend itself will crash into a wall.

An easy example is retail, the way we shop. For years, online retail has been chipping away at bricks and mortar retail. There are solid reasons for that: why go out and queue to park and hack through people to find something that might be out of stock, when a few clicks does the trick. The trend was held back by a couple of factors. Consumers had to build trust in the new method, especially for items like groceries where they liked to observe and feel the goods. Some were slower adopters of anything digital. And the bricks and mortar retailers, despite weakening financial positions, tried anything to keep their loyal customers, via coupons and experiences and pleading to landlords and local authorities to save jobs.

All of this is blown away by Coronavirus. Slow adapters and sceptics have been forced online and like it, even if online providers have struggled to deliver their usual brilliant service. The financial resources offline are being destroyed weekly, and local authorities will also be broke and hardly prioritise keeping moribund institutions open. It is game over. Amazon has won, and the longer this goes on and the further it spreads into the developing world, the win will become global. Amazon would have won anyway, but now they will win more quickly.

Education is another area. The trend to online learning was slow before Coronavirus, held back by habits, poor childcare and entrenched teachers unions. But online learning is wonderful when used in the right places. It has limited use in elementary schools or arts courses, but our son is a civil engineering undergraduate and he has hardly blinked an eye, and nor have his professors. After the virus, courses like his will have a heavy remote component, because everybody wins that way. High schools will also take advantage and improve as a result, because some teachers will have been convinced and authorities will be desperate to save money too.

We might also see a wonderful side effect in the area of childcare provision. Dad’s stuck at home suddenly appreciate the importance of childcare, and those dads include bosses of firms. Those same firms will institute much more home working after the virus, another smart trend that previously had tradition holding it back. So who will look after the young kids? The bosses will finally vote for quality affordable provision by the state, and even insist carers (and teachers) are paid as fairer wage. Working hours and school hours will be better coordinated and staggered to make commutes easier. Scandinavia, here we come.

What about those commutes? This one is more complicated. The clear trend before the virus was towards Uber: more people are living in cities and avoiding the costs of private cars. The special factor here is public mass transit, which will be avoided by many for a while as unsafe. I have heard of people planning to buy cars after the virus precisely to avoid public transit. That will be sad, but some good things may come out of it in the end.

Perhaps the roads will be even more clogged because more people will want to drive. Toll pricing, another trend, will accelerate to dampen this and raise much needed cash. Uber will emerge stronger but will have to raise prices to cover cash shortfalls and maintain investors. So maybe there might be a breakthrough for unmanned vehicles: Uber will want it, authorities will want it and consumers will want it too, and the technology is not far away. We might even see the Holy Grail on this one, unmanned public mass transit, like mini personal taxi pods operating between hubs. That would be wonderful.

In health care, lower ranking staff will be more highly valued, forcing hospitals and the state to stump up higher wages, which may lead to elimination of waste: telemedicine is an obvious opportunity here, and society may also start to question investing thousands in expensive operations for folk in their nineties. In the US, there is sure to be clamour for a state provided health insurance, even if it may still be too early for Medicare for all.

It is likely that climate change might have greater public urgency after the virus, as people feel less invincible and strongman deniers are revealed for what they are. We will still be reluctant to pay, but the energy industry might bail us out. Few politicians will risk coal subsidies and Coronavirus may be Armageddon for oil (I personally hope not for their pension funds though). It will take a while because of the oil glut, but once the dearth of new investments clears that out the energy profile will change.

Gig work will only grow; one sad reason is that employers will be desperate to take back staff on more favourable terms to them, such as contractors. Total employment will also struggle to recover, because firms will bring forward automation and because of the weakness in labour intensive sectors like retail and hospitality. Inequality could get a lot worse, but perhaps governments will fear social unrest and take the chance for radical action. Perhaps the US will create a better safety net, and things like universal basic income may have their day. Might we even see shorter working weeks?

Then we have international trends. One trend before the virus was the collapse of cooperation between nations. So far we have seen no signs of any reversal of that trend, but optimists can hope that it might come, especially if this goes on a long time, a perhaps if there is a triumph of cooperation in finding a vaccine. At least this is one trend that shouldn’t accelerate, though the despots are doing what they can to blame foreigners and consolidate power.

Then we have China versus the USA, a relationship that has been turning ugly for several years but where China has been clearly winning. Again, it looks like the trend will accelerate. First in, first out is always the best option in these situations and China is in a strong position just now. The world will be less willing to toe the line of the US after the pandemic, because practicality will trump ideology, even if US credibility is not totally shot. But the anti-globalisation movement will win for a while at least, because nations will be nervous about fragile supply chains and dependence on others. Sadly, we might even see the acceleration of a bi-polar world, with a US-led and a China-led realm for many sectors. Don’t bet on the US-led one winning very often.

It gives me comfort to note that most of accelerated trends will help humanity, even if there will be losers and bumps in the roads. But the list screams another thought in my head. If we didn’t already think the 2020 presidential election was important, we certainly should now. Most of the good outcomes feel much more credible without the disinfector in chief in office.