Just behind the human tragedies and anxieties, the economic fallout of the COVID-19 pandemic is on everyone’s mind. Two recent interviews — one on “Recode/Decode” with Social Capital CEO Chamath Palihapitiya and another on NPR’s “Fresh Air” with Max Brooks — got me thinking about some of the potential implications for scholarly societies and publishers, academic institutions and libraries, and individuals involved in scholarly and scientific publishing.
Here are 10 insights gleaned from these two interviews and some other ideas floating out there, boiled down for our industry, in no particular order:
- Leased space deals are going to change dramatically. Whether your organization leases space to others or leases offices itself, the potential success of people working from home could lead to massive changes in these deals. Smaller tenants may realize they can strip costs by terminating leases, and their businesses won’t suffer, leaving landlords in the lurch. As office space opens up, prices will fall, leading to renegotiations with tenants who wish to stay. If your company leases space, you may experience the other side of the coin, as the organization finds that funding a home office for you is just as productive for them, while it costs less than leasing office space, sharing in cafeteria costs, and subsidizing parking spaces.
- Non-profits and universities may have to pay taxes on retained earnings and investment funds. Palihapitiya makes a compelling case that once all the bailouts and financial obligations are expressed as debt, governments are going to look around for ways to pay these debts off, and see businesses with massive cash balances all around them, just waiting to be taxed. We typically think of such taxable entities as the Apples and Amazons of the world. However, just last year, new federal taxes on university endowments went into effect, and state and local leaders are well-aware that many of their charities are sitting on big, relatively dormant investment funds. Pleas of charitable purpose will find few sympathetic ears when stockpiles of $700 million or more are mentioned in the same breath. For his part, Brooks points out that part of the problem we’re facing now is “rusted out” American infrastructure — not strong enough, deep enough, or resilient enough to handle a pandemic. National stockpiles aren’t sufficient, for instance. Citizens are going to want a better safety net — infrastructural and otherwise — and taxing corporations, large non-profits, and rich universities may prove to be the politically palatable solution available, resetting decades of precedent.
- More room for expertise, less room for nonsense. The trend away from nonsense, conspiracy theories, and misinformation has been real and gradual. This trend is likely to accelerate rapidly in the wake of COVID-19. With China having suppressed information, the US government having ignored expert warnings and intelligence assessments, and the US President peddling what will certainly turn out to be egregious and fatal fantasies about drugs and timelines, the era of comfortable information indulgences will end. Experts are looking better all the time. Anticipate requirements for more rigor around the information you publish, more skepticism about its provenance and factual basis, and less tolerance for people who are sloppy, casual, or reckless with communications.
- Start-ups stall or stop for years. With real estate, margins, and equity all suddenly more uncertain as sources of capital, the funny money for startups could be locked up, put away, and preserved for 3-5 years. In addition to lower sales for foosball tables and bean bag chairs for childlike offices, this may also mean that many current popular but cash-starved start-ups are acquired for pennies on the dollar. Hiring gets easier for established, cash-rich companies, as well, as talent seeks stability after the shockwaves.
- Doing business gets more expensive for a variety of reasons. One of the lessons of the COVID-19 pandemic is that living on thin ice will no longer be acceptable. This is being internalized in many ways — people are experiencing the thin ice of borderline wages, high health insurance deductibles, limited savings, and brittle supply chains. As Palihapitiya states it, the age of pursuing efficiency and high profits is over, and the age of depth, resiliency, and lower profits approaches. Brooks also mentions “resiliency” as a key future-shaping concept. Stockpiling and warehousing will become more common, as opposed to the fragile and disruption-prone “just-in-time” production systems we’ve lived with for years. We will also be paying people better so they can save for rainy days again; providing more robust (i.e., expensive) health benefits — in some public or public/private arrangement — so nobody gets caught out again; having sustainable and backstopped ways to fund all of this; and, improving the overall quality of life for people, from health to climate.
- Prices go up. The age of downward pricing pressure — which has made lower wages and life on thin ice possible — is going to come to an end. With higher taxes, higher costs (wages, health insurance, inventory), and greater resiliency requirements (more inventory, more vendors, more risk mitigation planning, more layers and redundancy in staff and management layers), inflation will hit the economy. If managed well, it could be healthy and finally alleviate some of the income inequality we’ve been dealing with for the past 20-40 years. If you think fighting for library budget was hard with 3-5% increases, try doing it when your institution’s tax bill has gone up, enrollment numbers are down (see next entry), and annual price increases are 5-15%.
- Higher education will have to prove its worth again, reinvent itself so it costs less, does more, and/or students make money while being educated. In the cushy days pre-COVID-19, going to college was a luxury few questioned and many could afford. In a few short months, the value of this — in the face of families squeezed on all sides financially and reeling from economic disruption — will be questioned. Taking 4-6 years out of an early career may feel to many like a questionable decision all of a sudden. So, more public/private partnerships — with students earning money during arranged summer internships, working part-time for school credit during the year, and so forth — may become common quite quickly. Either that, or students and families may just sit out university for a while, a gap many colleges won’t be able to deal with.
- A “biometric Patriot Act” may be coming. One advantage China had in getting on top of their COVID-19 outbreak was the ability to get surveillance data from “private” companies when needed. Will Western norms around privacy be changed by this? Will we accept new laws that would let the government — in dire circumstances — access certain data when needed? Even if we balk at the possibility, Palihapitiya thinks we should get ready for the discussion, and for changes around privacy at least under certain circumstances.
- Less tolerance for chronic disease solutions and the slow-walking of the climate crisis. With a booming economy, lots of equity upside, and the thin ice we’ve been living on apparently sufficient, people to this point have been satisfied managing their diabetes, hypertension, and other chronic diseases, and relatively passive in the face of climate change. That may change. With comorbidities leading to worse outcomes with COVID-19, people are going to be looking for cures, not chronic management that leaves them more vulnerable to other problems. The pursuit of cures will add to additional science funding and higher health care expenses in the short-term, and research will likely be redirected from disease management to disease eradication. Once cures come into place, health care costs may fall. During this long-term pivot, which will place the general issues of health, wealth, and the future front and center, climate change is going to become an even bigger political and financial variable than it’s been so far. It’s almost best framed as a health and financial issue, anyhow.
- More emphasis on competence among leaders. As Stephen Colbert tweeted recently, “What I wouldn’t give for a dull moment.” Or, as Scott Galloway noted, “Freedom is not having to think about your leaders.” Over the last decade of relative peace, economic prosperity, and safety, we indulged in entertaining and narcissistic leaders, from the Brexit Bunch to Trump. I took as a sign of rejection of this how long the less flamboyant and more competent Democratic candidates lasted in the recent US primaries — most notably, Klobuchar and Buttigieg — while the comparative showboaters like Warren and Sanders faded. Get ready for a preference of boring and capable. A lot of people want a dull moment.
This doesn’t hit tomorrow or all at once, of course. Palihapitiya believes it will take a decade or more for these changes (and others) to play out, and Brooks sees longer timelines, as well. But decades pass quickly (Instagram launched in 2010), and adjustments have themes. These may be some themes to think through. Better to look ahead, and plan now. Change is afoot.