Shoved into the future

To an extraordinary degree, disease shapes human destiny. The Plague of Justinian (A.D. 542 to 755) decimated the enslaved across the Roman Empire and triggered a new era of feudalism. The Black Death's toll centuries later sparked a social revolution that broke up the estates of feudal overlords and propelled the rise of new technologies—the iron plow in the countryside and, in cities, labor-saving devices like the printing press and water pumps. Of course, history never repeats itself exactly. This pandemic hasn't been nearly as deadly as those that depopulated the ancient world. And the novel coronavirus turns the Black Death paradigm on its head: rather than acting as a social leveler, it's dramatically increased inequality. U.S. billionaires added almost $1 trillion to their fortunes during Covid-19, even as the new laboring underclasses face economic hardship and hunger. Yet this respiratory disease has forced a profound reckoning. For better or worse, it has accelerated just about every transition we're focused on at the Bloomberg New Economy, starting with the shift of wealth and power to the East, a journey that will in large part define the 21st century.  Shanghai's financial district Photographer: Johannes Eisele/AFP This week in the New Economy Russian gas gets a new European rival as Caspian Sea flow begins. Liquified natural gas may see a global rebound in 2021. Africa heralds beginning of free-trade pact after years of talks. Turkey's trade gap widened in November as gold imports rose. Covid-19 drugs, EV batteries were good Korea stock bets in 2020.   By one estimate, the pandemic has given China a five-year jump on its goal to overtake the U.S. as the world's largest economy, the Chinese leadership's reward for locking down hard and early while the Trump administration fumbled its response—and then exacerbated it with mixed messaging, like holding super-spreader events in the White House. Sure enough, the moment that underscored how geopolitics pivoted in 2020 came this week with a European Union-China investment agreement. German Chancellor Angela Merkel and other European leaders chose to look past Uighur internment camps and a Hong Kong democracy crackdown to a Chinese economy that's likely to deliver at least one-third of global growth year after year. Volkswagen's future, for example, is in China. The idea of any country signing up for a program of "decoupling" from the soon-to-be-biggest global economy is dead. Likewise, the incoming Biden administration's hopes for a grand coalition to counter Beijing have come crashing down, even if the EU deal doesn't preclude cooperation on specific issues like intellectual property theft.  What else has changed? Businesses over the past year have seen the future rushing toward them, and that future is digital—in the way the world works, shops and searches for entertainment and medical advice. A weightless economy favors companies with intangible assets: brand, scale and the ability to raise capital. Investment banks all over the world have recorded their best year ever for fees while e-commerce has exploded. "Covid has acted like a time ma­chine: it brought 2030 to 2020," Loren Padelford, vice pres­i­dent at Shopify Inc., told The Wall Street Journal.  Wait for the backlash, though. China's assault on Jack Ma's digital empire isn't all about the Communist party's fear of uppity entrepreneurs. Alibaba's monopolistic pretensions sit no better with regulators in Beijing than Google's do in Brussels. Covid-19 has brought forward the antitrust showdown. The worst crisis since the Great Depression has also advanced the way economists think about money. Few worry about the trillions of dollars in state support for shuttered businesses and laid off workers. In the new economy, fiscal outlays—whether on stimulus checks or physical infrastructure—pay for themselves in future GDP growth thanks to rock-bottom interest rates. Another outcome is that a new social contract is emerging from this catastrophe. Poverty, notes the economist Adam Tooze, is now a political choice. In Brazil, the right-wing government of Jair Bolsonaro has actually rolled back poverty and inequality during the pandemic to levels unseen since at least 1970 through welfare payments. Many countries have similarly replaced lost income with emergency benefits. What happens when they expire? As Tooze notes, a decision not to relieve poverty, when it's fiscally possible, is also political, with life-and-death consequences. Democratic politics are about to become even more contentious. A pharmacist prepares a dose of the Pfizer-BioNTech Covid-19 vaccine at a senior citizen care home in Premnitz, Germany, on Dec. 30. Photographer: Liesa Johannssen-Koppitz/Bloomberg Then there's the vaccine itself. More than a century elapsed between the identification of the typhoid fever pathogen and the development of a vaccine in the U.S. The polio shot took half a century. The mumps vaccine was rushed through in four years, a record that held until Pfizer-BioNTech developed a shot for Covid-19 in 10 months or so, thanks in part to advances in genomic sequencing. Expect further accelerated development in biotechnology and pharmaceuticals: Healthcare will be a major driver of growth and employment in the post-pandemic world. There's hope, too, for the biggest challenge of all: the fight to slow global warming and the climate crisis. In a year when ExxonMobil was kicked off the Dow Jones Industrial Average, and Tesla's share price rocketed by almost 700%, China pledged to go carbon neutral by 2060. Europe, the U.S. and China are now aligned on net-zero. Wall Street is buying the green story: According to Citigroup Inc., about 50% of all new exchange-traded funds in Europe, the Middle East and Africa in 2020 were ESG-related. At Bloomberg New Economy, we're not going to make any bold predictions for 2021. But we're pretty confident that Covid-19 has sowed the seeds of change that will be every bit as consequential over the long term as the plagues that spurred Europe's passage from the Dark Ages to the Renaissance. In science and technology, not to mention the way we work and play, we've just entered a new age of discovery. __________________________________________________________ Like Turning Points? Subscribe to Bloomberg.com for unlimited access to trusted, data-driven journalism and gain expert analysis from exclusive subscriber-only newsletters. The pandemic is roiling trade and supply chains that drive the global economy. 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