Over the past week, I have had several people enquire about The Great Reset so I want to provide some insight as to what this is. This blog isn't an exhaustive research piece, just an introduction. I'm just scratching the surface here, but I do think we will be talking about this a lot in the coming months.
What is the Great Reset?
It's a theme. The January 2021 World Economic Forum's theme is the Great Reset.
Its leader: Klaus Schwab
It's a proposal. This is a direct quote from the WEF website:
"To achieve a better outcome, the world must act jointly and swiftly to revamp all aspects of our societies and economies, from education to social contracts and working conditions. Every country, from the United States to China, must participate, and every industry, from oil and gas to tech, must be transformed. In short, we need a “Great Reset” of capitalism."
Is there an agenda?
There are probably many agendas and many opinions. In reality, this is a group of "Elite Think Tank" popular and powerful people, but their immediate ability to legislate change is yet to be determined. Prince Charles is a prominent proponent of The Great Reset. It's an economic reset, but it requires political buy-in. Because of the economic devastation caused by the pandemic, the world will never be the same and there needs to be an immediate response by the governments and business leaders of the world to build a better world and a better economy by creating a more sustainable and fair world for everyone. The world was broken before, but now it is more broken than ever and there is an opportunity for a great reset. The old model, which is shareholder capitalism, is not working and the new model needs to be stakeholder capitalism.
Shareholder capitalism is where corporations work to maximize shareholder returns.
Stakeholder Capitalism is defined as working for the benefit of all stakeholders, which is the employee, the customer, the suppliers, and the environment.
Their proposal has 3 components: (Direct quotes from WEF site)
1. "The first would steer the market toward fairer outcomes. To this end, governments should improve coordination (for example, in tax, regulatory, and fiscal policy), upgrade trade arrangements, and create the conditions for a stakeholder economy.”
"Moreover, governments should implement long-overdue reforms that promote more equitable outcomes. Depending on the country, these may include changes to wealth taxes, the withdrawal of fossil-fuel subsidies, and new rules governing intellectual property, trade, and competition."
2. "The second component of a Great Reset agenda would ensure that investments advance shared goals, such as equality and sustainability."
"Here, the large-scale spending programs that many governments are implementing represent a major opportunity for progress." "Rather than using these funds, as well as investments from private entities and pension funds, to fill cracks in the old system, we should use them to create a new one that is more resilient, equitable, and sustainable in the long run. This means, for example, building “green” urban infrastructure and creating incentives for industries to improve their track record on environmental, social, and governance (ESG) metrics."
3. "The third and final priority of a Great Reset agenda is to harness the innovations of the Fourth Industrial Revolution to support the public good, especially by addressing health and social challenges."
"The COVID-19 crisis is affecting every facet of people’s lives in every corner of the world. But tragedy need not be its only legacy. On the contrary, the pandemic represents a rare but narrow window of opportunity to reflect, reimagine, and reset our world to create a healthier, more equitable, and more prosperous future."
Is there a specific motivation?
Yes. It appears that the motivating factor is to equalize economic opportunity for all global citizens. The world isn't an equal opportunity place. You have no control over who your parents are, or where you are born, or what school you attended in your formative years. But, it has everything to do with where you rank on the socio-economic scale.
The great reset is about being a better world citizen. Every public business is now being forced to recognize its environmental commitment. There is a new metric for measuring global citizenship requirements - it's called ESG - which stands for environment, social, governance. I recently noticed a new metric on Morningstar's independent analysis of mutual funds. (Morningstar is at third-party fund analyst)
This analysis is forcing fund managers to choose very carefully what kinds of companies they include in their fund portfolio.
Conclusion
This ESG movement is not stoppable - the toothpaste is out of the tube.
The great reset is unavoidable. What is unclear is the impact it will have on our daily lives. How fast the reset will take place. My prognosis is that as we emerge out of the COVID pandemic within the next 12 months we will be experiencing a whole new economy. This will not be necessarily a result of the great reset, but because a whole new business environment will be required and will emerge. Imagine what happens in the Springtime after an entire field of brown grass is burned away and within a week or two it reemerges with a fresh green blanket.
That new economy will have a greater focus on protecting the environment, social equality, gender equality, sustainability, and better governance. This is going to create a booming economy, post-pandemic. The types of businesses that will benefit the most from this new economy are technology, 5G, food safety, supply chains, privacy, cybersecurity, remote learning, remote working, IT, infrastructure, and clean energy.
Many Theories Abound.
The unknown provides the worse kind of fear. Uncertainty breeds fear. A lack of understanding produces fear. The best way to combat fear is to get informed. The best way to get informed is to develop critical thinking skills. the best way to learn critical thinking skills is to get perspectives from more than one side or angle. Anything is possible, but what is the probable outcome? Based on a set of circumstances, what are the likely outcomes? Continue to Part 2 of this series.
We have now created online access to our popular workshop on
Everything You Need To Know About CPP & OAS
A 6-Part Series - Sign up by clicking Here
Learn more about our flat-fee planning services for those 55+
Book an introductory meeting.
Retirement Income, Investment & Tax Planning
Willis J Langford BA, MA, CFP
Nancy Langford CRS
