Thoughts: How the world will change after Covid-19

It is getting increasingly clear that the Covid-19 may not be just a single event. Therefore, it is time to think about how the world will change after Covid-19. Of course, it's unclear how the world is going to change, because it's based on a few phenomena and imagination.

Furthermore, it is only burdensome for Korea to officially reveal the contents of such assumptions, not wishful remarks, in times of crisis like this. Of course, we don't have to make an official statement because it's not clear yet. However, I would like to summarize the following notes for investors, or just citizens like myself who are engaged in economic activities.

Before we begin, I want to summarize the assumptions for the following. If these assumptions are wrong, they may also be wrong about what will happen next. So before you read, see if you agree with the following Prerequisites.

Prerequisite 1. This crisis will be a full swing effort to address problems that had already been recognized before Covid-19 (growth rate stagnation, monetary policy omnipotence, polarization, over leverage, economic growth omnipotence, environmental problems, aging, etc.).

Prerequisite 2. Epidemic diseases like Covid-19 will occur periodically over the next few years, and as long as human and physical exchanges like this expand, it will become routine for the rapid spread of these outbreaks around the world.

Prerequisite 3. Infectious diseases like Covid-19 can only be delayed or impossible to fully respond to the rate of diffusion or mutation occurring. In the end, you'll take for granted a certain degree of damage caused by Covid-19, just as you drive despite the risk of a car accident.

Prerequisite 4. People will adapt quickly to a changed world, and the technology or industry needed in the process will develop faster than ever before. On the other hand, areas that have not adapted will be driven out that quickly.

So, based on this premise, I'm going to organize my thoughts on how the world is going to change economically.

Change1. Global supply chain due to economic logic will collapse and the economic block phenomenon will accelerate as consumers and producers get closer. 3D printers to overcome high labor costs in consumer areas, collaborative robots produced with humans, and artificial intelligence will be all the more advanced.

On the other hand, as global trade shrinks, areas and industries that have benefited from the global division will be rapidly declining. The collapse of shipbuilding, aviation and related traditional manufacturing industries based on such trade will fast underway. In the process, the ability to consume and technology within the country will more important than the ability itself to produce. Companies operating around the world will also be forced to establish production hubs for each country.

Change 2. Since the 2008 financial crisis, monetary policy omnipotentism has lost its usefulness, and differentiation is strengthened according to each country's fiscal policy and growth potential. Monetary policy is likely to change in a way that directly supports the government's fiscal policy by buying government bonds. And the gap between the global monetary and non-global monetary countries, including key currencies, which do not have any major problems even after such monetary and fiscal policy will be widened. The difference between countries that can put in large-scale fiscal policy that are not heavily dependent on fiscal deficits and other countries which are not capable will also diverge.

There will also be different countries that have different capabilities. A country superior to fiscal policy and growth capacity maintains a steady low interest rate and a strong stimulus currency, while a country that does not otherwise may face a rise in its own interest rates and chronic pressure on its currency to impose taxes.

Change3. The need for safety and family grows, and There will be a contrast between the industries that are related to it and those that are not. On a national level, domestic production of weapons, medical devices, medicine, and food will be mandatory. And individuals will increase spending on housing, surveillance equipment, security, and inspection systems related to personal safety. In the process, spending on families and pet animals can increase, and devices that grow or produce food directly within the family can have an opportunity.

In the process, the role of the state can be expanded or reduced depending on its historical traditions and culture. In a country like the United States, each person's safety can be expanded to a private or private organization, and in an authoritarian country like China, it could be seen as a way for the public to tolerate more state power. In areas where the state does not guarantee the safety of their people, private gangs can be commercialized, and the existing areas of military agencies can be further activated. In the process, the gun, drone, robot, and A.I. industries can develop.

Change 4. The radius of people's behavior is localized rather than globalized. As people's global movement is significantly reduced, and the majority of people's physical behavioral boundaries are smaller than before, related industries can suffer. Hotels, airlines, and travel industries built on the premise that people move around the world can slow down in the long term. 

These changes can be self-evolving due to the spread of periodic diseases, or they can be forced to stop people from entering other areas in order to minimize conflicts within the country in the developed world. And the influx of such people can extend not only to immigration but also to tourism.

It will be very difficult to immigrate to an advanced countries. In addition, certain national citizenship is likely to be recognized as a privilege. In the process, patriotism in certain areas can be quickly weakened.

Change 5. The global supply chain collapse and shrinking people's movements will slow down the global economic growth rate. In the process, the wasteful elements maintained on the basis of high growth will be reduced and you will be used to material-low growth. Therefore, the fall-down of traditional industries such as steel, petrochemical and cement, which were taken for granted under the economic growth in the past, will be accelerated even more.

As global economic growth slows, advanced countries with lower growth limits and advanced online virtual technologies that can significantly increase consumers will see higher growth rates than traditional manufacturing, midsize and developing contries.

Change 6. Online virtual world technologies will become more and more advanced. In terms of various online artificial intelligence systems that support telework or call centers on a business basis, devices that support video and game streaming or virtual reality will become more advanced.

Especially in terms of education, the development of this technology is likely to accelerate, where people around the world have direct access to advanced and high-quality education, leading to the collapse of the existing education system. This means the emergence of a more enhanced generation than today's millennium generation, where the body is in local, but where we think, consume, and leverage capital as a global mind.

In particular, fewer direct trips abroad will make virtual reality more advanced and 5G, VA/VR, and A.I. technologies more active.

Change 7. Global movement of money and information that people and materials do not need to travel directly is more likely to expand. The development of online artificial intelligence technology will expand this movement faster and the traditional barriers that prevent it will collapse quickly.

Now people will deviate from the idea of national patriotism and invest their information and money lavishly in areas backed by the highest quality information and financial systems. Apart from localization on the physical side, the globalization of mind and capital movements is likely to expand further. This separation will be made possible by the development of technologies that support it.

In the process, the polarization between those countries, regions, businesses, that capable and those that do not, will expand.