Helping these transitions is the governments’ next task in Covid-19 recovery. These, in turn, may create new ways to do business with the public administration, simplifying the interactions between business and bureaucrats (Djankov et al. There is also the possibility that entirely new sectors emerge after the pandemic (Javorcik 2020). Besides retail, industries that are adaptable to remote work, such as back-office services, also took a larger share of business creations in 2020 than before. The office was becoming virtual even before the pandemic (Baldwin 2019) and may remain so post-Covid-19 in some economic sectors.įor example, in the United Kingdom, 20 percent of new businesses created in the third quarter of 2020 were in retail, which reflects an increase in online shopping during Covid-19. Workers have learned how to use remote databases and reach their customers over social media. Firms have invested in digital applications. Some of the new opportunities are just a different – technology-based – way to do the same business, just as Keynes predicted. Yet, we know from Joseph Schumpeter (1934), that economic crises are periods of creative destruction, where new ideas and ways of doing things come to the fore. Less is done to help new companies and employment opportunities emerge. The focus of Covid-19 recovery responses has been mostly on assisting existing businesses with weathering the crisis and saving jobs (Baldwin 2020). It concludes with several other areas where government involvement is likely to increase in the coming decades. It then describes some of the recovery initiatives underway and expand the state’s role through these initiatives. This essay tests Keynes’ prediction of the latest data on business formation in Western economies. Keynes conjectured that this enormous increase in wealth would be brought about by new ways to do business and by the emergence of entirely new sectors (Djankov and Zhang 2021). Between 19, the GDP per capita in the United States increased 6.7 times, and is on course to reach 7.5-8 by 2030, the pandemic notwithstanding. In the same essay, Keynes also predicted that 100 years hence, by 2030, the standard of life in Western countries would approach eight times the level it was in 1930 (Keynes 1932). This fear is alive now, too, as shoppers go massively online and shopping malls are going bankrupt, and cruise ships stay idle for months on end. The Great Depression was raging, just as the Covid-19 pandemic is now, and Keynes was worried about technological unemployment -unemployment due to the discovery of means of economizing labor through the use of new technology. In 1932 John Maynard Keynes – the most-famous economist at the time – wrote an essay entitled Economic Possibilities for our Grandchildren. So does the redeployment of workers from sectors severely affected by the pandemic to emerging sectors. These, in turn, require significant government investment. Furthermore, recovery packages involve long-term green energy policies, digitalization, education, and R&D in medicine and technology. The Covid-19 response and recovery have necessitated larger government expenditure, both on healthcare response and in supporting households and businesses through the crisis. The overarching trend over the next decades is an expanded role of governments.
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