Considering The lessons Of History
In exploring a Post Pandemic Society, I first took a look at what we could learn from history. A recent article took a similar view. Written by Kevin Sneader and Shubham Singhal, Their Look Back at History explores the experience of Japan, the United States, and Western Europe, post-World War Two. The article explores the inclusive growth that was sustained for two decades following the war. As technologies developed for war were adapted for peace-time use, poverty, government debt, and inequality fell, while living standards improved and prosperity spread broadly.
A quote from the article may well be applicable today: “When everybody else thinks it’s the end, we have to begin” — Konrad Adenauer, chancellor of West Germany, 1949–1963. While the current pandemic does not rise to the catastrophic levels of World War Two, it is a global catastrophe not the less.
The first lesson from history per the article is the sense of purpose that existed post-war. In 1942, a British civil servant named William Beveridge said this: “A revolutionary moment in the world’s history is a time for revolutions, not for patching.” A lesson lies in that quote, as we stare into a post-pandemic society. Purpose is again a popular topic, as the world considers a shift from shareholder to stakeholder capitalism. A great example of global cooperation driven by purpose was the Marshall Plan. As the article states, the United States gave $13 billion in aid to 16 European countries between 1948 to 1952. This funding helped the economy in each participating country surpass prewar levels. Japan also received considerable aid and other support that fostered the structural adjustments it needed to transition from a war-focused to a peacetime economy.
The second lesson is truly relevant today: global institutions created the structures to promote technology sharing, economic growth, and political stability. These same institutions are now under attack. Major institutions like the United Nations and NATO were created to forge a more constructive economic and international order. The world came together to avoid the conditions that drove the horrors of World War Two. As we explore the future, what institutions help us manage a world of extreme events, rapid advancement in science and technology, and an extreme level of uncertainty? Does the ability to collaborate globally like that post-war period still exist?
The third lesson was the sustained investment in human and physical infrastructure. This lesson represents a personal pet peeve of mine: an inability to take a long-term view. Per the authors, in this period, governments took this long-term view, with effective planning teams that implemented multiyear initiatives in areas such as education, energy, infrastructure, R&D, telecom, and transportation. These were sustained through changes in political leadership and included the expertise of scientists and economists. Except for some governments, it seems we have lost the ability to focus on the long-term. This specific lesson speaks to the ability to accomplish things rapidly where there is a will to do so. The current crisis gives us more evidence of this, as years’ worth of innovation were accomplished in months. History tells us that Catalysts are required To drive human action — the pandemic serves as such a catalyst.
The fourth lesson speaks to the ability of business to adapt. The policies of the wartime period forced both the scaling of business and the acceleration of innovation. As the article states, wartime investments in areas like nuclear energy, rocketry, synthetic rubber, and automotive engineering all had positive spillover effects during peacetime. There was also a consolidation of business in this period that created larger organizations that made sizeable investments in innovative technologies. The stage was set for sustained growth with broad social benefits, as workers moved from lower-paid sectors, such as agriculture, into more productive and higher-paid ones.
While history provides its lessons, we don’t tend to learn from them. Henry Kissinger’s quote from the article says it well: “ It is not often that nations learn from the past, even rarer that they draw the correct conclusions from it.” It was Convergence in the postwar era of international institutions, domestic government policies, and private-sector actions that created the conditions for prosperity and improvements in our standard of living. It is this same level of convergence required across multiple domains to manage a constructive path forward. This was true pre-pandemic, with the need amplified by the current crisis. The article goes on to make several recommendations for our path forward:
Reform and reshape globalization: several critical points are made as the article explores this recommendation. The big one is the shift in trade between the 20th and 21st century. Specifically, trade in services is now growing much faster than trade in goods — 60 percent faster overall. Global institutions must be modernized as a result. The absence of global frameworks that advance the diffusion of technology is currently a critical weakness. It was this exact democratization of innovation that fueled post-war prosperity.
Renew the role and effectiveness of the public sector: the markers of societal unrest are evident, looking very much like those witnessed in the 1920s. The report makes it clear: “In many countries, there is rising distrust of established institutions, fueled by a sense that the young, minorities, and low- and middle-income earners are losing out.” To increase trust, governments need to show that they are serious about fostering economic inclusion. At the end of the day, the current social contract has expired, and it needs to be modernized. Examples of this are provided in the article.
Institute measures to increase productivity: a Next Generation of Productivity has avoided our grasp in this new era of great invention. In the post-war era, productivity gains fueled prosperity and improvements in our standard of living. Productivity has stalled, and although the means to attain needed gains exist, we have not leveraged them. Sustained long-term growth will come from pushing the frontier of innovation in both the sciences and technology. The article states that in the 21st century, digital capabilities are likely to be the most important infrastructure investment. In four sectors alone-mobility, healthcare, manufacturing, and retail-McKinsey has identified use cases that could boost global GDP by as much as $2 trillion by 2030. Yet, here in 2020, digital maturity continues to lag. Per an MGI finding, China, Europe, and the United States, have tapped into only 20 percent of their digital potential.
Invest in reskilling: this recommendation touches on the critical need to Reimagine Education. As stated in the article, educational models have not changed much over the past century, and in the countries that are part of the Organization for Economic Co-operation and Development (OECD), government spending on training has fallen. As we push toward productivity gains, the implications to jobs will be an unintended consequence. Much like the GI Bill in that post-war era prepared workers for the industrial economy, we now need to invest in a workforce that is equipped for a future of work that likely looks quite different.
Expand the labor force: Demographic Shifts play a major role in shaping our future. A drop in fertility rates and an aging society have driven a fall in working age population. Automation aside, this impact to economic growth must be addressed. The article recommends a focus on improving health as a means of addressing the issue. The focus on our Healthy Life Extension introduces the possibility of creating a longer, healthier middle age. Delaying retirement in productive and healthy ways is one potential resolution to the issue.
Reimagine and reinvigorate the private-sector social contract: people are beginning to sour on the current form of capitalism. Stakeholder capitalism is emerging as the next frontier, where purpose is as important as profit. It is defined as an idea where companies consider the interests of their employees, customers, suppliers, and communities, as well as shareholders, in their decision making. Generational pressures in my opinion will accelerate this phenomenon.
This article really resonated with me, as I am a firm believer in Learning from History. Something that I believe we are failing miserably at. I highly recommend the full article.
Originally published at http://frankdiana.net on August 3, 2020.