Writing in The Wall Street Journal, businessman/author Andy Kessler argues that history rhymes and that with all the new 5G applications coming, the 2020s will be a replay of the Roaring 1920s. Though it’s a term he doesn’t like, the “Internet of Things” will be decentralizing in ways our first decade of Big Data wasn’t, as big tech companies marshalled our information for their purposes, not ours.
It’s the future. Who knows? Maybe he’s right.
One good thing about decades is they’re so long in human-years that columnists’ turn-of-decade prognostications usually end up being forgotten. My reaction to Kessler’s hopefulness is that if he’s right and history does rhyme, we seem to be doing history backward. The 2020s may well be like the 1920s. But haven’t we just been through a paler, less brutal version of the 1930s? A big financial crisis, followed by a worldwide recession, followed by worldwide recrimination against the social system supposedly in sway. (“Supposedly” because to read some recent accounts, the capitalism of 2008 was “red in tooth and claw.” In reality, it was an almost completely domesticated version of the 19th-century beast.)
To be sure, 2008’s Crash didn’t actually lead to a worldwide depression. Only in a few places did unemployment reach the 20 per cent or higher that was common in the 1930s. After decades of unprecedented prosperity, however, we’re not as tough or resilient as our great-grandparents were. So even if it wasn’t a depression, it was earth-shattering to us.
As in the 1930s, a worldwide movement toward democracy took a hit. But despite loose talk in the universities about rising fascist tendencies, we had very little experience of true, honest-to-badness fascism of the sort that between the wars took hold in Germany, Italy, Japan and several other places that should have known better. We also, on the other side of the spectrum, didn’t have many people arguing for genuine communist revolution, as many intellectuals did after 1929. We did have the rise of Corbynism, however, and its revisionism regarding privatization, and we saw a gaggle of Democratic presidential candidates follow the lead of a fulminating 78-year-old Vermont senator fomenting a “social revolution,” albeit a democratic one. On the other hand, the leftism may have crested with Elizabeth Warren’s concession that “Medicare for all” would have big effects on choice and taxes — as Canadians can attest.
On the whole, it was a bad decade for the reputation of free markets. Command-and-control made a comeback, whether for financial markets, carbon suppression or, as Corbyn would have had it, running Britain’s railways. Almost everywhere markets were in disrepute. Nobel Prize-winning economist Angus Deaton ended the decade with a column arguing “it is hard to imagine a body of work more antithetical to broad thinking about inequality and justice” than the Chicago school of economics, which is still the leading advocate of markets.
Does history rhyme? Probably not. But maybe it swings. The world got over the radical tendencies of the 1930s in the quieter, more conservative 1950s. The increasingly regulatory and interventionist 1960s and 1970s were followed by the Reagan and Thatcher “revolutions” (which were actually reforms rather than revolutions). They in turn have been followed by recurring growth of the state, especially in matters financial, environmental and, now, technological.
My guess is that this latest swing to interventionism will once again raise appreciation for the virtues of markets. The essence of the Chicago view, after all, has never been that markets are perfect or all-wise, just that, as Churchill said of democracy, “in this world of sin and woe” they’re better than “all those other (mechanisms) that have been tried from time to time.”
Chicago’s central contention, which comes via Austria, is that decentralized, bottom-up systems in which many different players compete are much better at generating and making use of the myriad bits of information on which economic progress depends than are centralized, top-down systems, even ones run by society’s best and brightest (who in fact are not always in charge). The top-down systems can’t compute correctly. And they inevitably become corrupt — not necessarily in the crony-capitalism sense, though there is that, but as the political directors of the process turn the machinery to their own interests.
No doubt fans of centralization will argue that in coming years Big Data and quantum computing will make all the required calculating much more tractable. The basic problem is not the number-crunching, however, but deciding what goes into the algorithms. As for corruption, unless the robots take over completely it is unavoidable.
Thus the enduring virtue of leaving as many things as possible to the impersonal grindings of markets, which, my guess is, will be more appealing in 2029 than it may seem now. And on that note: no more forecasts until December 2029, at the end of what I hope will have been a decade brimming with health and prosperity for all loyal readers — and everyone else, too.