The Great Despondency
‘Where’s economic growth going to come from?’ On the radio and in the newspapers I keep hearing that we’ve run out of money, got lazy, and can’t expect to be better off in the future, and I think, ‘Are you kidding me?’
Compared with the carnage of the recession of the early eighties, we’ve lost a bit of national resilience and are in danger of falling into a quite unwarranted Great Despondency. The financial crises has dented our confidence so much that we can’t see where productivity, and therefore future prosperity, is going to come from.
Really? Look around you. I see scope for productivity increases everywhere, for generations and generations to come. If you don’t believe me, ask yourself this. Do things in your life run effortlessly smoothly? No, me neither. Is everyone working to their full potential? No waste? Never had to wait, or repeat something, or clear up some confusion?
Here’s just a few examples to remind us where the productivity and economic growth are going to come from.
It’s only relatively recently that women have entered the workforce in strength, and we’ve not even achieved genuine equal opportunities yet. When we do, and it can’t be too far away now, women will really just have arrived at the starting line. Men (as a large group rather than a small privileged class) have had several hundred years head start in the race. Look at all the productivity achieved to date in a world where it was mostly men who had the opportunities, and it’s easy to see the increased scope for innovation with double the available resources.
Essentially the same argument as above can be applied to all the countries outside the developed world. At different speeds these countries are only now crossing the starting line, while most African countries are still a way off. It’s not a zero-sum game. Innovations from the rest of the world will increase productivity at home.
Information and communications technology have been major drivers of productivity in my lifetime, but computers have been around since the war. It can take decades after a new technology comes of age before the effect on productivity and innovation reaches its full impact. Think Apple Mac in 1984 to iPhone in 2007. If the decoding of the human genome in 2001 was the equivalent moment in the life sciences to the first Apple Mac in computing, we’re in for an exciting time over the next 23 years.
Extended Working Life
Looking beyond the financial adjustment that seems inevitable with an ageing population, it seems fairly clear that a long-term consequence will be extended working lives. This has got to be good news. The idea that someone hits peak earnings productivity in their late forties before starting a downward trajectory until they hope to retire around sixty will seem to future generations as an oddly ‘declinist’ mentality.
The re-appropriation by managers in the private sector of their ‘right to manage’, which was a big legacy of the Thatcher era, has not yet reached the public sector. Once the present unpleasantness has died away an equivalent ‘revolution’ in the public sector will no doubt take place offering a generation of productivity improvements in the 40% of the economy that has remained under-managed.
And these are only the factors that are in front of our nose right now. There will be plenty more that is hidden from view that will emerge in time. Plenty of unforeseen disasters too, I’m sure, so let’s assume these ‘unknown unknowns’ are broadly neutral.
When presented with any new proposal, an old boss used to always ask me, ‘What’s the very worst that can happen?’ It fairly took take the wind out of my sails. I had to ignore it and press on otherwise nothing would ever be done, because the very worst that can happen is often really bad! There’s too much of that same attitude around at the moment, and we need to ignore it.