My father was born in an age of severe deprivation. He was an infant at the outbreak of World War I, a teenager during the Spanish flu pandemic, lived through the Great Depression as a young adult, and served as a soldier during WWII.
The early part of that period was that of the so-called Lost Generation. At the end of WWII it had merged with the Greatest Generation. (Then came the Silent Generation, followed by the Baby Boomers, Generation X, Millenials, Generation Z and now Generation Alpha; the latter being the first to be exposed to technology their entire lives.)
At this time of living in the Covid-19 pandemic, it is the lessons of those early times that one reflects on.
What awaits humanity?
Data and statistics tell only a small part of the story. Mood and emotion are not so easily transferable. But they are the essence of being able to capture the behaviour and societal response to events to get some idea of how we should respond and what awaits humanity after this time passes.
There are many different scenarios sketched by a variety of sources of a different world that we could be facing. I’m not a futurist and would be loath to go down that path. Of course it is already a very different world from that of the Greatest Generation, an age group known for its integrity, humility, sense of responsibility, work ethic and financial prudence.
For one thing there is the massive accumulation of debt used to prop up markets and act as an economic stimulus when we should have allowed natural cycles to do their work.
Severe distortions remain – especially in the bond markets – where there has been a flood away from ‘risky’ emerging economy bonds such as South Africa’s to ‘blue chip’ assets such as US long-term Treasury bonds.
Now massive amounts in more debt have been created, compounded by substantial amounts in government debt in combating the virus and declines in revenue from shrinking economic activity.
This has left a stark disequilibrium between the needs of the ‘have and have-not’ nations as the world enters recession.
There is no doubt that the world monetary system is being shaken to its core and will emerge very different from what it is now.
What it will look like is anyone’s guess but it could see a run on the dollar, which at this time is still the blue-chip global investment. Fiat currencies then lose their primary anchor, setting the stage for a Bretton Woods type redefinition of the monetary system.
And there can be little doubt that the International Monetary Fund (IMF) and the World Bank are going to be reshaped in the aftermath of the pandemic.
The other, positive difference is technology and communication. These played a small role in previous pandemics and their ability to keep a large part of the economy going, as well as keeping people informed, is a definite game-changer.
Ultimately, however, individual behaviour will determine the outcome.
All things are relative
In this I am reminded of a news headline that confronted delegates at an IMF and World Bank meeting in the late 1970s.
It read: “The victors beg from the vanquished” and referred to the US and Britain, the victors of WWII, urging the vanquished Germany and Japan to adjust their policies to correct their massive trade surpluses.
Many factors helped make these economies highly successful after WWII, but what is often forgotten is the role played by individual behaviour and societal response.
Surrounded by rubble and devastation, expectations were at their lowest. Aspirations, or cohesive self-help determination, was all the average citizen could fall back on. That played powerfully into the axiom that when people by and large are contributing more than they are taking, they create surpluses and prosperity. When taking more than they give, they create deficits and poverty.
I would argue that it is this that played the most important role in the economic recovery of these two nations.
My life partner passed away two days before the national lockdown. It has plunged me into deep nostalgia and reflection, part of which involved going back over the articles I have written these past number of years. Many of them reflect on the momentous times we are living in – and that this era will see a redefinition of economics as we know it.
I have also argued for a shift of our understanding of social interaction and the economic construct from a self-gain perspective to a contribution perspective; from an instinctive survival mode to an empathy mode. I have argued too that human empathy has made us the majestic species we are.
This is the opportunity presented by the pandemic. It demonstrates powerfully that survival and empathy are the same thing.