29. The no recovery scenario of a permanent GDP collapse
The biggest economic risk of the coronavirus pandemic, which no trader has so far factored in, is a permanent change in consumption habits. After having been obliged to try it for a while, consumers may actually stop buying products and services they don’t need. This would be catastrophic for the economy, or at least for GDP, the useless, coarse measure of how our economy is doing. GDP would be permanently affected and there would be no recovery. Of course, the economy only makes sense as a construct to improve human lives and, therefore, in real terms this may not be a disaster at all, after a period of adjustment to pivot jobs, develop new industries, etc. The big fly in the ointment, and there is always one, is that our tax system generates its revenue from middle income work and consumption, and tax revenues may not suffice to sustain, let alone develop, the welfare state. We may come to a point where we finally have to tax corporations and wealth fairly, perish the thought Leng...