In chaos theory, the butterfly effect describes a pocket-sized change that can accept massive, unpredictable consequences. An insect flaps its wings and, weeks afterwards, causes a tornado.

The coronavirus is more like an earthquake, with aftershocks that will permanently reshape the globe.

If we are lucky, the world volition pass "peak virus" within the next vi months. Just the economy, governments, and social institutions will have years to recover in the all-time-case scenario. Indeed, rather than fifty-fifty speak of "recovery," which implies a render to how things were, it would exist wise to project what new direction civilisation will take. That likewise volition be a bumpy ride. The next 3-5 years will remind us that COVID-19 was the lightning before the thunder.

Of course, it is difficult to draw directly lines between crusade and result. With the benefit of hindsight, we can trace how the Treaty of Versailles and the Groovy Depression enabled the ascension of Hitler. Merely in the hyperconnected world of today, dense global networks enable butterfly effects to ripple and amplify far more rapidly.

Can nosotros forward-engineer probable scenarios emerging from the consequences of today's pandemic? Given how stretched our institutions are in coping with the current crisis, few tasks could be more than urgent in helping us prepare for the future. It is easy to predict further doom after a devastating phenomenon such equally the coronavirus. Reality volition likely turn out differently—and it certainly can.

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The long emergency

The most obvious tail-risk scenario to consider is that the numerous existing strains of COVID-19 encircling the globe continue to ravage societies and the search for a vaccine proves more than elusive, extending beyond the currently forecast 12-xviii months. Countries that have accepted the rhythms of shelter-in-place policies and deployed contact-tracing technologies may exist able to isolate pockets of exposure through strict quarantines, merely poor and densely populated countries will remain especially unprepared and vulnerable. The amass death cost crosses from under 100,000 at nowadays to near one million or more than. At the moment, all countries are cocky-isolating, but in this trajectory, some countries would exist indefinitely band-fenced from concrete exchange with others. Domestically, they face a painful choice between reopening their economies and exposing their populations to farther infection.

We should therefore be cautious about forecasts suggesting we face only a U- or V-shaped recession. Numerous factors militate against this sanguine view. Virtually importantly, supply chains and markets are more than integrated than commonly appreciated, and near-shoring is more difficult than the wave of a pen. The current American debacle with surgical masks and ventilators is a example in point. Emerging markets and developing countries are critical both as suppliers and markets. Their demise weakens the world economy as a whole.

Furthermore, domestic unemployment is reaching Low-era levels, and the current relief packages don't yet amount to the stimulus that many Western publics may need for years to come. Precautionary savings and muted consumption volition govern household spending decisions, and concern investment volition sag. A long-fatigued-out W shape is therefore the most likely economic scenario for the years ahead.

At a human being level, the electric current economic nosedive is then steep that Gdp figures are the terminal thing on most people'southward minds. For governments and corporates, withal, spiraling debt is a matter of immense business organisation. One time revolving credit lines are tapped out, numerous big firms will collapse or be consolidated. Industries from commercial existent estate to aviation will suffer enormous write-downs on part buildings and shopping malls, airlines and airports. While European social policy keeps households afloat far meliorate than America's meager welfare, America's unmarried market is far more efficient than the eurozone, where leaders won't agree to a sufficiently big mutualized debt scheme. As big employers (and the states or provinces that depend on their tax revenue) plummet, governments may fall.

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The "Suez scenario"

Outright country collapse is non an implausible scenario for petro-states from Ecuador to Islamic republic of iran. Venezuela's contempo years of hyperinflation and starvation will be compounded by trickling aid and oil prices hitting lesser. Much equally the 1980s oil trough hastened the disintegration of the Soviet Spousal relationship, the combination of oil prices cratering and the likelihood that the hajj will have to be canceled eviscerates Saudi arabia'due south two largest sources of revenue. The high virus infection rate in Iran has been compounded by the stranglehold of American sanctions. Petro-states and developing countries have flocked to the IMF to admission its emergency lending facility and have also fatigued downwardly their USD reserves to buttress their financing and stave off capital flight. Gulf states may need to loosen their U.S. dollar pegs.

Information technology would exist besides simplistic to suggest that China will fill the void. Given its own difficulties with zombie firms, high municipal debt, and shift into deficits, Beijing has held back from extending generous credit to its usual client states such as Iran and Islamic republic of pakistan. Yet a "Suez scenario" remains plausible, harkening to the 1956 episode in which the Eisenhower assistants threatened to withhold back up for the British pound unless Britain withdrew its forces from the Suez Canal. With U.S.-China merchandise trending sharply down and People's republic of china line-fishing to re-toll oil into renminbi, a fragmentation of the global monetary order is a possibility for which all countries should ready.

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Another migrant crisis

Global economic fragmentation and diminished international lifelines all but ensure that people will continue to flee failing states. Turkey has fabricated articulate it wants neither to house 4 million Syrian refugees in perpetuity nor to tolerate a mass virus outbreak. Dwindling Gulf back up for Egypt and Sudan could spark an exodus from those states every bit well. Thus nosotros should expect the migrant crisis from Central America into Mexico and the Center East into Europe to surge once again.

More than broadly, if and when the pandemic restrictions on cross-border mobility elevator, millions of other people will seek to escape "carmine zone" geographies with inadequate healthcare in favor of "green zones" with better medical care. At present, nigh all the countries that offering universal medical care are in Europe. Those with skills and "immunity passports" may well gain entry equally some wealthier countries seek migrants to contribute to a consumption rebound and fill labor shortages. Within countries, the flying from expensive tier-one cities to more affordable provincial areas will likely accelerate. In America, they may benefit cities such as Denver and Charlotte; in Europe, Lisbon and Athens.

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Rising nationalism

Before many countries contemplate jump-starting migration, all the same, they will likely beginning undertake a serious review of their food and medical supplies and perhaps engage in the kind of stockpiling or "food nationalism" that Russia has done in limiting grain exports and Vietnam with restricting rice exports. A decade ago, the agricultural price volatility exacerbated by Russia's banning of wheat exports helped push button Egypt and Tunisia over the border. We should not be surprised for this contempo history to echo itself in numerous countries.

Information technology would exist wildly optimistic to predict, even to promise, that multilateral institutions will be upgraded by smashing powers to improve cope with future shocks. China's recent manipulation of the WHO and admission to the Human being Rights Quango, as well every bit the complete sidelining of the Un Security Quango, advise the United Nations volition continue its terminal disuse. While the International monetary fund has temporarily restored its relevance, macroprudential supervision will autumn by the wayside. The World Banking concern is woefully slow and underresourced.

The most optimistic scenario, and then, is a revival of regional organizations. The Eu has a take a chance to bring about the fiscal union it needs more ever, just it remains unclear whether information technology volition have it. Asian countries have only passed a Regional Comprehensive Economic Partnership (RCEP) and volition need to deepen their internal trade to cope with the global demand shock. Due north America'due south 3 states already trade more with each other than with China or Europe. Regionalization will be the new globalization.

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Technology versus the cost curve

What investments tin can nosotros make or deepen today to blunt the impact of the coronavirus pandemic and steer the future in a more stable and sustainable direction?

Greater investment in biotechnology and healthcare are obvious places to beginning—but not in their current form. Healthcare is being defined every bit a social good worldwide (as is already the case in Europe), but its cost is coming under scrutiny. Toll-effective universal provision can only be achieved through a model that emphasizes telemedicine and localized clinics and handling centers. The push being made in this direction even in poor countries such as India and Republic of indonesia may be instructive for much of the world. Fragmentation of life sciences regulation must also exist overcome if we are to sustain the "scientific discipline affairs" that has sprouted amongst this pandemic and reverse the decades-long tendency where the cost to produce a new drug has doubled with every passing decade.

Along similar lines, individual teaching will receive substantially more than investment given its strong performance during the crunch, but with a focus on digital delivery. This in turn should demonstrate how broad innovation in public education tin exist achieved toll-effectively as well. Digitization of financial services, which had already mushroomed prior to the pandemic, should be pushed to every living person in its wake. Neither widening inequality nor anemic consumption tin can be overcome without it.

[Source Image: PytyCzech/iStock]

Civilizational threats

The coronavirus has proven to be a greater test for leadership than 9/11 and the fiscal crisis combined, a sobering shock that has shattered conceited assumptions that progress always moves "up and to the right." Evolution, both biological and civilizational, is a much more haphazard and indeterminate process. Moving forward, public- and private-sector leaders will have to accept a far greater agency in defining long-term priorities such equally combating climate change and communicating the short-term sacrifices necessary to achieve them. Incentives volition have to exist realigned, with governments subsidizing investments in sustainability—and markets rewarding those firms that attain acquirement with resilience. If we are at "state of war" against the pandemic or future civilizational threats, we should act like information technology.

The further we look into the time to come, the more than we can imagine how global society may well be reinvented by the coronavirus pandemic. The 14th-century Blackness Death caused millions of deaths beyond Eurasia, splintered the largest territorial empire always known (the Mongols), forced pregnant wage growth in Europe, and promoted wider maritime exploration that led to European colonialism. These phenomena trace strongly to the plague fifty-fifty if they played out over centuries. The consequences of today'due south pandemic will emerge far more quickly, and with the do good of foresight, we can endeavour to mitigate them, capitalize on them, and build a more than resilient global system in the process.

Parag Khanna is founder and managing partner of FutureMap and author of numerous books including Connectographyand The Future Is Asian. Karan Khemka is an investor and director in pedagogy companies globally. He previously founded the Asian operations of the strategic consultancy The Parthenon Group (now EY-Parthenon).