24 June 2020

What is the new normal? Challenges and opportunities beyond COVID-19

A reflection from Wolfgang Teubner, Regional Director for Europe, ICLEI.

Now, as we seem to have moved beyond the peak of the first large coronavirus/COVID-19 wave in Europe and the dramatic death toll is decreasing, people and economic stakeholders are beginning to push for a fast reduction of restrictions as a way back to a new normal. This new normal will have to account for the fact that all aspects of daily life, like working, shopping, educating children and youth, mobility, recreational and cultural activities, as well as the first steps of economic recovery, will have to be organised with an existing virus still threatening the health, and potentially lives of people until medication and vaccines will be available. We will most likely see sustained discussions between groups with conflicting interests, wishes and needs related to the balance between risks and safety, and to individual freedom, quality of life, economic and social stability. In addition, the COVID-19 crisis is accentuating already existing societal problems, particularly in the field of social justice.

Each stage from here will have distinct risks, including, for example, ensuring transparency, protecting democracy and institutions, improving system resilience, avoiding the impulse to forget about other global causes and concerns like climate change or biodiversity loss, making sure that recovery is equitable, and cooperating with other cities, regions, and nations in solidarity. COVID-19 economic relief efforts, in particular, provide an opportunity to reflect and to push for needed systemic changes. Perhaps this pandemic has provided a necessary reminder that, as human beings, we are vulnerable creatures of flesh and blood, are an essential part of the biosphere, and that we ultimately depend on healthy and functioning ecosystems rather than on masses of goods and technology. There is no denying the positive impact innovative technologies can have in solving the problems and challenges in front of us; however, remembering that we are part of the natural – not technological – world might help to get our priorities right and to make better choices.

Challenges for our democracies

To have such discussions and debates in a transparent manner is one of the qualities of open and democratic societies. This may even be an opportunity for a revival of a civic engagement, with responsible and active citizens re-connecting with their neighbours in the spirit of solidarity. However, particularly with the dominance of social media and increasing tendencies towards populism, this is a tricky path to walk.

In times of uncertainty, populism and conspiracy theories can become particularly attractive thanks to the causal explanations and simple solutions they seem to offer. The fact that some countries with strong populist tendencies are not doing well in this crisis is not preventing citizens across the world from attacking their own governments and questioning the democratic system. As the negative consequences of lock-downs are becoming more visible, it is easy to see these as outweighing the avoided negative impacts of the pandemic, and to respond with distrust in democratic leaders.

Only a high awareness about democratic values, a high respect for each other and particularly for political institutions and decision makers, will keep us on track. To this end, the respect for democratic minorities and their positions is key, and decisions need to be explained in a transparent manner.

The freedom of media and the quality and credibility of science are also essential components of a positive recovery perspective for Europe and will need some support and attention in these challenging times.

The need for more resilience and the resilience paradox

It might be fair to conclude that, in addition to fast and strong reactions to the outbreak including all restrictions, a good and well-equipped health system is certainly helping to mitigate the impacts of the pandemic. Many countries were – and some still are – struggling with insufficient equipment, lack of capacities in both equipment and qualified staff, and medication. As a consequence, we see increased esteem for staff working in the health and care systems, particularly nurses, and the recognition that these people are not paid well enough. In addition, there seems to be a tendency to accept the necessity for creating more reserve equipment capacities, as well as a review of some of the production and supply chains.

However, the situation that we were facing was created not least by the cost efficiency principle that dominates our economies, and the privatisation pressure on parts of health systems. Increasing salaries, creating additional reserve capacities and stocks during a non-crisis situation will undoubtedly lead to an increase in costs. This leads to the question: how will the financing of these costs will be organised? Will it be through tax payments or social insurance systems? Who will ultimately pay for them, and how will this impact consumer prices in a highly competitive market?

Considering the current competition-driven and highly cost- and price-sensitive economy, chances seem to be low that much will change systemically once the crisis is under control. Already now, we see that economic paradoxes inherent to resilience are dominating societal and political discussions. The more rapid spread and higher death tolls that were avoided by strict measures and resilient systems are often not adequately taken into account. Rather, the economic damage that resulted from effective lock-down measures in countries that were – as a result – less impacted by COVID-19 are, in hindsight, disproportionally emphasised, even despite their noticeable impacts on reducing infections and death tolls.

This is highly relevant to resilience discussions as a whole, and particularly to the emerging climate crisis. Resilience requires cities to invest in solutions to unknown, possible, future catastrophes – catastrophes that have not hit, and are thus invisible to public perception. Research shows us that these pre-emptive investments pay off. However, making such investments is, in many ways, inherently contradictory to our competition-driven economic system. This contradiction must be kept in mind as we prepare for and cope with climate crisis, since we know that climate change will only increase the frequency and magnitude of debilitating natural disasters.

Changing local economies

It is also notable that online shops, particularly the largest platforms and companies, are booming. It is likely that this will have impacts on the recovery and revitalisation of local shops and trade, as well as on the livelihoods and quality of inner cities in the mid-term. Since online shopping leads to the de-localisation of business, turnover, jobs and related income and profits, it can also affect the tax income that can be generated locally, and thereby the investment capacity and quality of local services. This needs to be taken into account for recovery strategies particularly on the local level, with attention paid to hybrid retail and shopping, as well as to the related spatial impacts on inner cities.

Another factor is the steep increase in teleworking and home-office arrangements, which will most likely change the working culture beyond the COVID-19 crisis. Undoubtedly, this will lead to consequences on the demand for office space and business real estate, as well as on connected value chains, public income and land value capturing. Cities will need to consider this in their mid-term development plans.

Furthermore, we might see a considerable reduction in the event and business travel industries, since the fast – and in many cases surprisingly successful – transition to online formats is certainly offering an efficient alternative to physical meetings and events. Not only do cities with strong congress and trade fair businesses have to consider this for their future economic development strategy; attractive tourist destinations will also have to monitor their accommodation capacity development.

Inequality is brought to the fore

What we can also see is that the crisis makes social inequality even more visible, with socially disadvantaged people suffering considerably more from the consequences of COVID-19 mitigation measures. They depend more on educational institutions and child-care, they often have less living space available in their homes, they have more precarious employment conditions, often working in sectors that have suffered most from the crisis, and are more likely to lose their jobs. Simultaneously, employees in the health, care or delivery sectors are working harder than ever, and therefore face higher risks while continuing to be insufficiently paid.

In addition, the changes to the economy sketched above, and the strong push for digitalisation and artificial intelligence in industry and services, are likely to widen gaps in incomes and opportunities. This adds to the need to address fairness and social equity in all recovery measures.

Are recovery plans daring to be bold?

Are economic recovery strategies moving towards encouraging and supporting the urgently needed structural change towards a more sustainable, resource efficient and carbon neutral economy? Or will recovery just entail pouring money into the same channels and supporting established structures, non-innovative and unsustainable products and production, leading to a considerable slow-down in transformation? Embedding a structural change process into the recovery process could, of course, lead to a slightly slower recovery; but this can also make recovery more sustainable and resilient in the mid- and long-terms.

The immediate financial crisis mitigation measures have not yet taken into account any of these issues, and were mainly short-term oriented. For a longer-term and transformative recovery, not only money will be needed, but also regulation and fiscal measures that will change the rules of the game in the markets. Because, as it stands, innovative products that lead to more energy and resource efficiency are only supported if they generate good business cases and yield profits. This is insufficient to support change at the necessary scale.

Furthermore, recovery will not only be about financing and market frameworks; it will also be about values and culture. For a short time span, we were forced to substantially change our lifestyles, reduce our consumption and our mobility. We were provided with an opportunity to reconsider our consumption, as well as our priorities and needs – personally, but also as communities and societies. At the same time, we were confronted with challenges and deficiencies in our systems that are mainly caused by the ruling principles and mentality in times without crisis. To what extent we have made good use of the opportunity to reflect on all off this, and to draw conclusions leading to deeper change is yet to be seen.

Where do we go from here?

Taking a more general view on transformation, a lot will depend on some fundamental principles and values that need to be reconsidered to achieve needed systemic change. Will the dominating competitive economic spirit between continents, countries, regions, cities and people still rule in the coming years, or will a more cooperative spirit evolve, which will most likely be needed to solve the challenges of climate change and limited global resources? Will we see more fairness and solidarity within and between our societies, or will the race to the bottom for low taxes, social transfers, and environmental standards continue to be the rule of the game? Will we overcome the dominance and short-term perspective of finance and capital markets?

Early signs are not too encouraging, since nationalism and populism are still strong and a revival of multilateralism seems far away. Even within the EU we see an ongoing struggle to find a shared approach towards recovery, and the Green Deal is still far from being a clearly defined and agreed-upon way forward.

If we want and support the transformation towards climate neutrality and sustainability in a systemic way, the coming months will be crucial in terms of dialogue and discussion with all relevant societal actors, across all levels of governance. We sincerely hope that the upcoming Mannheim2020 European Conference on Sustainable Cities & Towns will play a substantive part in this process.

For more information, click here. Read Wolfgang's first coronavirus reflection (from March 2020) here.