| This week, why the social contract is stronger than it has been in decades. Plus, a look at global vaccine flows, and poet and author Maggie Smith on the importance of maintaining a beginner's mind. |
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| Going big. To protect citizens from the immediate financial shocks of the COVID-19 crisis, governments have intervened on an unprecedented scale. Since the pandemic began, G20 economies have announced spending packages exceeding $10 trillion, about triple the amount spent during the 2008 financial crisis, according to a McKinsey Global Institute report. An analysis of 22 advanced economies revealed that in 2020, governments increased spending as a percentage of GDP by an average of 20 percent from the previous year. |
| Balancing act. These large-scale interventions have helped protect disposable income and employment in many advanced economies, in spite of historic declines in the global economy over the past year. In addition, countries that in the past have allocated less to social spending, such as the UK and the US, are outspending many of their peers to support small businesses, save jobs in affected industries, and provide direct financial relief to individuals. |
| Values and the virus. If we take a step back, we can see that the social contract, which broadly reflects notions of economic, social, and political arrangements, appears stronger and more effective than before. A renewed focus on how economic risk is shared between institutions and individuals has underscored deep social and economic divisions, highlighting anew what role governments should play in caring for society's most vulnerable. For instance, the US is experiencing a deeply divided economic recovery, despite efforts to undergird the most vulnerable. In partnership with Oxford Economics, we determined that it will take women, minorities, and low-income workers up to two years longer than their peers to recover from the effects of the crisis. |
| A financial test. The outsize financial-aid packages rapidly distributed to businesses and individuals have also created a high-stakes stress test for financial systems around the world. This, in turn, has emphasized the importance of having in place a robust financial infrastructure, one that can rapidly and reliably deliver funds to households and small businesses. In one targeted example, our previous research showed how a well-designed digital ID program could contribute up to 13 percent of a country's GDP. We now believe that potential gain to be about 20 percent higher than before the crisis. |
| Now the question becomes, what will stick once the crisis recedes? In many ways, the past few months have opened up a new era of experimentation during which governments and businesses have had to react with extraordinary speed to new economic and social realities. This is the time to learn from these experiments, and translate them into long-term solutions that can help strengthen the social contract in a lasting way. |
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| OFF THE CHARTS |
| Global flows of COVID-19 vaccines |
| Vaccine manufacturers have collectively announced that more than 12 billion COVID-19 vaccine doses will be released in 2021 (contingent upon the successful completion of clinical trials). It's a huge logistical challenge to get these doses into the hands of people who need them. While China, Europe, India, and the United States will produce 90 percent of the first wave of doses, we project that countries in Africa and Asia will be the biggest importers. |
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| PODCAST |
| Where are all the middle managers? |
| Many organizations have shifted to a flatter, more distributed organizational structure, upending the traditional management hierarchy. But where does this leave the middle layer? In this episode of McKinsey Talks Talent, McKinsey experts Bryan Hancock and Bill Schaninger discuss the vitally important role of the midlevel manager. |
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| MORE ON MCKINSEY.COM |
| The nine traits of future-ready companies | The rollout of COVID-19 vaccines has executives everywhere hopeful for the pandemic's end. We look at how organizations can ensure that survival-mode improvements that brought speed, flexibility, and purpose can be made permanent. |
| Consolidating European steel: Strategic responses to industry challenges | The European steel industry faces significant obstacles caused by stagnating profitability. To navigate the path ahead, European steel producers might consider rethinking their M&A strategies and priorities. |
| Meeting contraception needs in Africa | Adolescent girls and young women in Africa have high unmet needs for modern contraceptives. Concepts centered on self-care can help. |
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| How can leaders be authoritative while maintaining a sense of openness and curiosity? |
| Being a parent, in some ways, has prepared me for this duality. Because it's a balance and it's important, even as an authority—whether it's with your children, or in your workplace, or both. It's important to maintain a beginner's mind and openness as much as possible, even as you rely on your experience and your authority. |
| We've all probably been in workplaces where someone has said, “But that's the way we've always done it,” as an excuse not to make a change. And it makes sense, because change is uncomfortable, right? We often resist it, because it's uncomfortable. And, frankly, not having all the answers is uncomfortable. It feels so much better to be confident when you know everything. But we don't. |
| In a professional setting, it's important to value expertise and experience. But it's also important to value adaptability and flexibility and innovation and imagination and all of those things that make us able to change our minds, and take in and process new information without relying on the way we've always done it. |
| How can people be more creative in their daily lives? |
| In the arts, in our professional lives, and in our personal lives, newness and innovation only happen through experimentation and play. You can't get to it without trying something and maybe falling flat on your face. You have to be willing to fail. And so I think part of what we need to do, as adults, is learn to be more like children in that we're willing to try things and not worry so much about our ego, not worry about failing, and thinking that that's going to reflect poorly upon us. |
| To have or make any breakthrough—personal or professional—we have to put ourselves out on a limb. It won't always work, and that's OK. One of the ways that I've kept myself from getting too stodgy about things is by trying to spend time with young people and glean as much as I can from their open and curious worldview. But there are other ways to access that. Part of it is finding things that bring us joy and making room to do those things in our daily lives, whether it's reading, meditation, running, or dancing. Whatever the thing is that makes you feel alive, we need to carve out space for that. |
| What surprised you most about writing this book? |
| The level of response to the book has been really surprising to me, because it started out as a project that was literal self-help. So, to have so many people responding to it has been quite unexpected. Also, I did not know when I was writing this book that it would be released during a global pandemic. And what I've been hearing from people, again and again, is how the book feels right for this moment, which I could not have anticipated. |
| But indeed, we are all facing our own “What now?” life crises right now, whether it's work-related or family-related or health-related, due, in large part, to the pandemic. And so the book coming out this year does feel like just the right time. |
| — Edited by Belinda Yu |
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| BACKTALK |
| Have feedback or other ideas? We'd love to hear from you. |
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