It’s time to put the pandemic behind us, and start focusing on the positives that will come after it. Every crisis is followed not only by economic recovery, but economic growth.
The 18th century British noble Baron Rothschild said ‘when there’s blood in the streets, that’s when it’s time to buy’. The tragedy of the blood does not detract from the upside for those who invest and grow now. By the same token, policymakers shouldn’t just be talking to us about infection rates and vaccines, they should be encouraging the right investments and skills to profit from the post-pandemic boom.
Pandemic catastrophe is often followed by economic prosperity. In the book ‘Apollo’s Arrow’, sociologist Nikolas Christakis argues that the aftermath of a pandemic results in more social interactions, experimentation and risk-taking, all of which is conducive to social progression and economic growth.
And it’s not just pandemics. The 1918 Spanish flu came on the tail end of World War One, the aftermath of which was a renaissance in culture, from movies, jazz and dancing, as well as improved women’s rights (many entered the labour force during the war, and stayed there). For example, the amount of women working in the railways increased five times during World War 1 in America. Twentieth century feminism and gender rights were born out of a world war.
Similarly, from the ashes of World War Two the US rose from being a mid-level power to becoming the world’s leading superpower. The dollar overtook sterling, and became the world’s primary currency as a result of the Bretton Woods Conference in 1944. If it wasn’t for the war, the outcome may well have been different.
This is not a uniquely American phenomenon. Japan faced widespread poverty and starvation after it’s annexed territories were stripped away and two major cities were nuked in World War Two. Yet through external investment and internal reform, Japan became a global industrial leader once again by the start of the Korean War, only eight years after Japan’s defeat.
Likewise, someone standing in Slovenia, Czechia or Estonia in 1989 might struggle to believe that these countries would go on to become prosperous, modern economies in the space of two decades, but they have.
We are living through the modern equivalent of 1918, 1945 or 1989. A turning point where crisis and tragedy will give birth to opportunity and growth – if we embrace it.
The sense of a new moment is especially strong in the US. We are witnessing a ‘Great Resignation’; millions are quitting their jobs each month. This has been accompanied by another trend; an unprecedented rise in new business creation. Whilst it is true that approximately 163,735 businesses went bust in America in 2020, a further 804,398 businesses have been created, a 13-year high. Whilst many high-street restaurants and fashion chains may be going bust, it is the emergent businesses in the technology sphere that are popping up in their place; indeed, UK tech firms attracted a record $16 billion in venture capital funding in 2020.
In the same way that manufacturing techniques for mass-producing tanks and aircrafts during wartime created a post-war manufacturing boom, digital tech that was necessary during the pandemic will fuel growth after Covid.
Cloud computing, artificial intelligence and Big Data will turbocharge many new businesses. McKinsey has already predicted how this digital revolution will fuel the economy of the future; they expect that AI will contribute $13 trillion to the global economy by 2030. These technologies will not just benefit the few. Any start-up can access Amazon’s powerful cloud computing network, or Facebook’s Big Data processing capabilities.
The pandemic has changed us, and our businesses, for the better. McKinsey found that many corporations are seven years ahead of where they planned to be in terms of digitisation. This creates new work opportunities, and speeds up business expansion. Another pandemic dividend is the cost savings through reduced office space, business travel and corporate hospitality. I expect much of those funds can be invested into expansion or R&D.
For any of this to come to fruition, we and our political leaders must move beyond culture wars around face masks or vaccines. We should be thinking about which industries need investment, how we should gear up our education system for a digital future, and how we should tax our businesses in a way that stimulates the most growth possible.
It would have been tempting to focus on the past in 1918, 1945, or 1989. Those who looked to the future often became billionaires. 2021 is no different.
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