Five years ago, Yuval Noah Harari published his Homo Deus. In a nutshell, the book's about how we – as a species – have tamed the elements and became gods. In the face of the raging pandemic, which has demonstrated how inadequate our institutions are, I think that Harari's ideas haven't aged all that well.
I've decided to start writing the newsletter again to put all that's happening into a perspective and share my notes about it. This pandemic is the most significant and the strangest event that I've experienced so far, and I'd like to understand it and experience it mindfully.
🏗️It's time to build
Marc Andreessen penned an article that has probably got all it takes to be just as important as his oft-quoted piece, Why Software is Eating the World. Andreessen claims that the old institutions have let us down. Regardless of our political inclinations, we might find it very difficult to put the blame on any single political party – everyone's failed here. Our leaders have lacked foresight and imagination.
Indeed, every developed economy around the world tripped over the simple issue of providing medical staff with enough face masks. Let alone the bigger challenges like SARS-CoV-2 tests, ventilators, A&E / ER beds, and vaccines.
In the later part of the article, Andresseen focuses on the US economy and its productivity. He claims – following Peter Thiels' observation – that the sharp rises in the productivity of the modern economy have taken place almost exclusively in electronics and the digital world. Education, medicine, transportation, and construction haven't improved much for years. The most vivid evidence of this process are the massive increases in the prices of those commodities and the lack of progress in how they are supplied to people.
Andreessen's solution is positivist: facing the environmental crises, we are obliged to build. We need to build a better world on the ashes of the world that's ceasing to exist, and we need to build better institutions and provide cheaper and better services to the whole of society.
Andreessen invites both sides of the political spectrum to join this great endeavour. He invites socialists, who blame it all on the big capital – they ought to be the ones who build and design better and more efficient state institutions, which will solve people's true problems. He also invites capitalists, who need to start building the American dream again.
⏳ In an interview for the Times of Israel, the Israeli philosopher Moshe Halbertal says that the pandemic has demonstrated how fragile of a species we actually are. We'd thought that technology had allowed us to keep in check the problems that marred humankind for centuries – but the pandemic has shown that this was merely an illusion.
Halbertal thinks that the world's reaction has been formidable – we have all jointly agreed that the lives of the elderly and the fragile are more important to us than financial losses. This amounts to a great change in morality – removing Darwinism and utilitarianism from the moral equation.
Halbertal claims that the extent to which the pandemic has impacted our lives is our fault. We have committed a sin of omission by not having prepared, by not having invested enough in medical care and preventive measures. Our hubris compelled us to think that tomorrow will always be the same as today.
Paradoxically, even the biggest capitalists – negating the age-old economic adages – call for help via printing money and direct help for the people affected by the pandemic.
Halbertal does not, however, believe in the transformational power of the pandemic. He thinks that wide-reaching social transformations such as the rise of feminism and the fall of communism do not occur as a result of a single event – they rather come as a result of long-running processes.
😓Charlie Munger, Warren Buffet's partner and Berkshire Hathway's chairman, claims that the pandemic of COVID-19 is the worst turmoil that has ever happened. Munger says that all people who manage big corporations have "frozen" and are waiting for the situation to develop. For instance, airlines have not done much to improve their balance sheets, waiting for governmental aid to come.
Interestingly enough, Berkshire has approached the current crisis differently to how they dealt with the financial crisis of 2008. At that point in time, Buffet and Munger's fund invested in the heavily discounted stocks of Goldman Sachs, GE, or Bank of America. Now, they have refrained from buying any of the discounted stocks, trying to keep their liquidity to enable them come out of the crisis unscathed.
🤔In his interview for TED, Ray Dalio, an investor, claimed that we're only at the beginning of a global depression similar to the one that occurred between 1929 and 1932. Massive unemployment, interest rates that have dropped down to zero, and a lot of debt generated by the US and the EU. Coming back to the growth rates of 2019 will take a lot of time, of which the first two or three years will be the worst, and then will come the time to build again. Dalio estimates that the global losses will amount to $20 trillion.
Dalio based his claims on his theory of how the economy works. Economy is driven by four primary powers:
- Productivity: our ability to make more goods with less resources. It grows by 1-3 percent yearly.
- Short-term debt cycles: they last anywhere between 8 to 10 years, and they result in mild recessions.
- Long-term debt cycles: the last anywhere between 50 to 70 years, and they result in a new world order and a deep redefinition of money and debt. The last new order that came about was instituted in Bretton Woods, 1945, where the global leaders decided that the world's economy should be based on the dollar. As of today, 70 percent of all the world's currency and debt is based on the dollar.
- Politics: this constitutes our values, the way we co-operate, and the way we deal with economic inequalities. During a crisis, domestic politics can give rise to a revolution, while international politics can result in a war.
Dalio claims that the pandemic constitutes a stress test that will make us decide who gets what, that is, how we tackle redistribution in both local and global terms.
🇨🇳China has begun unfreezing its economy after the pandemic. According to the reports of Deutsche Bank, the Chinese economy shrunk by 31 percent in Q1 2020. UBS's experts expect that it will grow by 1.5 percent in the whole of 2020, which will undershoot the planned 6 percent by a large margin.
As the quarantine is being called off, the market is coming back to life. The amount of vehicles and people in the streets is half of what it was this time in 2019. Car sales and property sales are beginning to rebound too (25% and 70% respectively). The restaurant market, however, is not looking good.
Export might prove a bigger problem to China. The West is in the midst of the crisis now, and the fact that we expect a recession to ensue makes the demand for Chinese products much lower.
On top of that, China has one more problem on their plate: the origins of SARS-CoV-2. It's likely that the virus broke out from a badly managed laboratory in Wuhan. Such speculations are by no means dampened by China's restricting publishing the results of any studies on the virus's origin.
🇪🇸Spain's minister of economy wants to grant universal basic income (UBI) to its citizens. This would make Spain the first country in Europe to launch such a programme countrywide. The pandemic has taken away the sources of income for many families, and universal basic income would ensure that they enjoy some rudimentary economic security. The two main problems UBI might cause is that people will have no motivation to work and that it will take a lot of money to sustain. Inflation might be another potential issue here: the increased demand on the basic commodities will increase the inflationary pressure.
The US have approached UBI differently: they sent $1200 cheques to large masses of US citizens.
Personally, I will be expecting more moves of this sort, because we are facing prolonged deflationary processes coupled with a large spike in unemployment. This makes for a potentially explosive mix. Andrzej Leder has a point (🇵🇱 only) reminding us that the Four Horsemen of the Apocalypse are Pestilence, War, Famine, and Death. We haven't managed to prevent Pestilence, but we can still avoid War and Famine.
💼Before we make a working vaccine, we need to get back to work. Just like we came up with the term "safe sex" during the HIV epidemic, we might be discussing "safe work" a lot now.
I feel that we need to reinvent office work again as well as the way we use public spaces. I published a post on LinkedIn about this issue.
🎨The recent weeks have been a tough time that we have spent mostly confined to our homes. Closed spaces do not breed creativity: we feel constrained and stuck in a rut. In such a situation, we ought to be looking for the help of technology, which might spark new ideas.
A few days ago, we released Kunster AR Portal, which was our AR/ML R&D project. Making use of appropriate filters, the app allows you to see the world through the eyes of Pablo Picasso, Edward Munch, Leonardo da Vinci or Vincent van Gogh. Come on – give it a try!