Persuasive Essay

How can the pace of the COVID economic recovery be increased?

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The fog dissipates, the clouds clear, the bitter winter disperses, the stars shine, and the light is ahead. In this storm sweeping the world, we are like a boat on the sea, seeing who can sail away from this storm faster. People’s lives and jobs worldwide changed dramatically during the Covide-induced storm. People were forced to choose to work from home; students were required to study online; travel to other countries or regions became difficult. At the same time, panicked global consumers, who could not leave their homes when they wanted due to government policies, purchased items such as food and cleaning supplies. At the same time, government and private sector purchases of protective equipment (PPE) and other medical equipment skyrocketed. These sudden orders caused a strain on the global supply chain. These increases in transit times caused by supply chain issues slowed the economic cycle, causing the economy to suffer a setback in the first quarter of 2020. 

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However, after a period of adaptation, the world economy rebounded quickly in a “V” shape, with most countries experiencing growth in 2021. However, what is the cause of this growth, what has been changed, and what are the consequences? In response to Covid, the digital economy, an economic situation that develops entirely online and virtually, became mainstream; however, this economy is insecure, and it only takes a split second for the digital economy to collapse due to the lack of actual product output. As people adjust to life and the effects of COVID-19, countries begin to reduce the measures they provide to boost their economic potential. After policy advantages disappear, or in the context of the global recession, these companies based on the digital economy could encounter problems.

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Covid has killed more than six million people and that number is still rising. It is unclear when and in what way it will come to an end. Covid impacted each country’s politics, economy, and society, as well as changing the way people think and perceive, “affecting individuals' daily lives” (Batthyány 264). In 2019, the Covid outbreak occurred in Wuhan, China, where the surge of infections and the global gaze added a touch of terror and swept the world with wild abandon. This silent war has not only caused us to suspend all offline teaching and shift the vast majority of our work to the home, but also has brought “quarantines”, physical distancing requirements, bans on large gatherings, stay-at-home orders, closures of schools, businesses, and public transport, masking requirements, and other measures (Greer et al. 51). At the beginning of the Covid outbreak, over 60% of businesses and governments encouraged people to work and live from home (Brett). 

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This phenomenon provided a unique environment for financial firms and high-tech companies due to the unique nature of working from home. Social media is used more often by people for the reason that they cannot meet in reality. People who live at home have more time and energy to focus on chatting or video on the internet, which led to heavy use of social media applications such as Facebook and Ins. As people use more of these apps, these apps become more visible, advertising revenue, marketing investments, etc., increase profits by 48% in the second quarter of 2020 compared to the past (Bringel and Pleyers 31). Secondly, due to the panic caused by Covid, people chose to stock up on food, household goods, and other supplies. At the same time, companies like Target and Walmart also limited the number of people shopping indoors, which resulted in people taking a long time to buy goods. For these reasons, online buying websites, which were previously unattended, exploded. For example, many grocery stores have online websites where consumers can select the items they need to order and make an appointment to pick them up at the store conveniently. Looking back on the Post-Epidemic Era, Covid has significantly impacted our lives. It has impacted lives and created a new economic situation, giving direction to large companies and new opportunities for small or newly established businesses.

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The emergence of Covid disrupted the normal functioning of the global economy, such as the home working measures implemented by the U.S. government. “Some countries used their authority to make and change rules to protect vulnerable workers from being forced to work in dangerous environments by requiring businesses to offer alternative work from home.” Many jobs that require human production could not function properly due to the massive home working, leading to a lack of orderly flow of people, goods, and capital, a lack of smooth functioning of industrial and supply chains, and a halt in productive activities and economic and social cycles, which has had an enormous impact on many industries (Greer et al. 55). 

In the past, people completed an entire project mainly through real-life contact with colleagues, but in the Covid era, people working from home had to communicate online to complete and address the surge in demand due to Covid in a number of areas. These shocks from work-at-home and newly emerging needs renewed considerable gaps in many areas, which makes the “market has certain advantages: it promotes innovation and productivity and makes it possible to combat rent-seeking” (Bringel and Pleyers 31). In fighting against Covid, people have started to use new production and transaction methods, ushering in an industrial transformation and economic transformation from a “contact economy” to a “contactless economy.” Online learning, home office, and online trading are becoming common. 

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During Covid’s early home life, people used software like Zoom, Google Meet, etc., to communicate with teachers, students, or colleagues. This led to a rapid rise in revenue and stock in the first half of 2020 for these apps, which had not been used by as many people before. Stay-in-home initiatives have also led to people having more free time, not spending time on transportation, and not having after-work parties. Other reasons that ultimately lead to people choosing to spend more time in industries such as the internet, gaming, etc. That extra time gives many startup companies to fill these gaps and proliferate in a short period. For example, Tiktok, a company founded in 2017, had previously lost money and was on the verge of bankruptcy. However, an increase in the number of time people spent on the internet during Covid and more people posting about their lives and watching videos of Tiktok helped them proliferate in the global market. Nowadays, Tiktok is a global company. 

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In addition to the software widely used by people in daily life, many medical enterprises have also gained significant benefits due to the rising global demand for medical supplies. New industries such as intelligent manufacturing, unmanned delivery, online consumption, and health care are showing strong growth potential. Owing to the rise of Covid, having a vaccine in the shortest possible time has become a goal for many countries. “We know from prior experience as well as the current pandemic that restrictions on behavior can be effective at controlling the spread of the virus and reducing its harmful effects on health.” As a result, large amounts of money are being invested in these vaccine development companies to develop vaccines that can reduce or eliminate Covid (Greer et al. 55). The influx of money and surging demand has allowed companies that have developed vaccines to see their revenues skyrocket, such as the Pfizer vaccine developed by Pfizer in the U.S. at the end of 2020, which helped them grow revenues seventy-seven percent in Q1 of 2021 (“Financials”). Nevertheless, will these companies that grew during the Covid era due to the massive influx of capital be able to maintain the growth trend and continue to move forward with these government incentives and reduced capital investment?

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In terms of the current situation, most of these companies that had the advantage of development at the time of Covid cannot maintain the high speed of development. The vast majority of these companies were profitable during the Covid period due to increased demand for a short period of time. However, the revenue these companies brought to the state did not allow the state to continue to support its growth through policy or investment, mainly because that the vast majority of the state’s economic base is not based on the Internet industry or digital economy. In contrast, the vast majority of the country’s economy is based on the real economy, such as manufacturing, agriculture, real estate, etc. What all these industries have in common is that they have an actual product output, not a string of numbers or codes on the web. 

After various countries relaxed monetary policies to give political advantage to the Internet industry, there is no way for these virtual economic outputs to support the country to continue to relax monetary policy because there is no product in reality (simply means that the nation, state, and companies are out of money). As a result, Expansionary Monetary Policy through massive money printing cannot be sustained forever, and countries must choose to tighten monetary policy in response to the resulting inflation. According to Nik Popli, the Fed has been raising rates and tightening monetary policy since March 2022 to address what is now the highest inflation rate in forty years (The Fed raised rates by twenty-five basis points in March, fifty basis points in May, seventy-five basis points in June, seventy-five basis points in July, and seventy-five basis points in September). These companies, with the massive funds issued by the state during the Covid period, have no way to resist today’s rapidly contracting monetary policy. Fewer and fewer capital investments and poor market revenues have forced them to lay off employees and reduce investments. 

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Today, what can be seen is that a large number of technology companies have started to lay off employees on a massive scale, reduce the number of new employees they recruit, and the stock market is rapidly declining. “When we are getting these kinds of declines, it is clear that the economy is slowing down,” says Bowersock Hill. “The fact that Big Tech earnings are coming in worse than expected is a big indicator about the broader economy” (Popli). As the market becomes saturated or even overflowing, people no longer need as many products as the market has now, resulting in reduced earnings for large companies and investors not wanting to invest in these businesses. These massive downward trends in equity markets are a consequence of the Federal Reserve's significant interest rate hikes, which have put enormous pressure on U.S. businesses, while the economic problems caused by the rate hikes are putting the world’s economies through varying degrees of scrutiny.

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The emergence of Covid has changed people's living status and habits, and the experience of living and working at home still has an undeniable impact in some industries. Many companies and businesses focused on the unique needs generated by the Covid period and quickly developed and expanded themselves. Unfortunately, with the passing of this economic wave, most of these companies are like marine organisms left on the beach after the tide has passed, just waiting and struggling.

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