Page 139 - COVID-19: The Great Reset

be the most affected because they will be the first to shift
production patterns are automotive, electronics and industrial

machinery.

2.1.3. Governments and business

For all the reasons expanded upon in the first chapter, COVID-
19 has rewritten many of the rules of the game between the public

and private sectors. In the post-pandemic era, business will be
subject to much greater government interference than in the past.
The benevolent (or otherwise) greater intrusion of governments in
the life of companies and the conduct of their business will be

country- and industry-dependent, therefore taking many different
guises. Outlined below are three notable forms of impact that will
emerge with force in the early months of the post-pandemic
period: conditional bailouts, public procurement and labour market

regulations.

For a start, all the stimulus packages being put together in
Western economies to support ailing industries and individual
companies will have covenants constraining in particular the

borrowers’ ability to fire employees, buy back shares and pay
executive bonuses. In the same vein, governments (encouraged,
supported and sometimes “pushed” by activists and public
sentiments) will target suspiciously low corporate tax bills and
generously high executive rewards. They will show little patience

for senior executives and investors who push companies to spend
more on buy-backs, minimize their tax payments and pay huge
dividends. US airlines, pilloried for seeking government

assistance, having recently and consistently used large amounts
of company cash to pay shareholder dividends, are a prime
example of how this change in public attitude will be enacted by
governments. In addition, in the coming months and years, a
“regime change” might occur when policy-makers take on a

substantial portion of private-sector default risk. When this
happens, governments will want something in return. Germany’s
bailout of Lufthansa epitomizes this sort of situation: the

government injected liquidity into the national carrier, but only on

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