Something more to look forward to in 2021

Ed Conway, economics editor of Sky News, recently wrote a positive article in The Times – in essence, his views were:

  • For decades, developed world economies have lacked ‘oomph’
  • Productivity is the ‘silver bullet’ viz:
    • The more we earn for each hour worked (an old school view) the more is spent on every other bit of the economy, the more governments receive in taxes
    • Hence, there’s more to spend on public services or redistribute to those who need it
  • Productivity growth would make most people better off – and it would help us repay pandemic debts incurred
  • But, in recent years, productivity growth has been ‘disappointingly weak’ (according to ONS statistics)
  • And proposed solutions such as improving infrastructue, boosting education and supporting entrepreneurs have not emerged with much success
  • Some experts even think we’ve become trapped in a ‘great stagnation’
  • We’ve plucked the low-hanging fruit and the great life-changing innovations of the industrial era are all behind us
  • “But what of fruit already on the ground, aka waste – and high-hanging fruit we’ve yet to pick to any great extent?”
  • Then, reading on, he agrees with the potential of my ‘high-hangers’
  • Vaccines are promising a return to something like normality – more likely a supercharged normality as a wall of savings made by many locked-down families is unleashed – indeed, a retail boom is in the offing for many who can manage to survive the next few months
  • And a host of innovations have appeared during this pandemic which have the potential to create not just a few new products but whole new sectors which could launch thousands of new products and even more thousands of new jobs viz:
    • The first mRNA vaccines have opened up the possibility to treat other diseases, including cancer
    • Deepmind has used AI (Artificial Intelligence) to predict the structure of proteins
    • Quantum computing, the next frontier in technology, came a step closer to reality – and from China
    • Nuclear fusion is said to be ‘close at hand’ according to MIT
    • GPT-3, an AI algorithm, can now write poetry or prose and sound uncannily human (i.e. pass the Turing test)
    • Apple have unveiled computer chips which are leagues faster and more efficient than their equivalents from Intel
    • Waymo has rolled out self-friving cars to consumers in Arizona
    • Singapore has approved the sale of ‘chicken bites’ grown in the lab without the death of a single hen


Add to the above the fact that businesses have been forced to become leaner, and so less wasteful, during the pandemic, and there is much hope

Conway, being an economist, then has to balance this optimism with a cautionary note (after President Truman’s quote: “Find me an economist with just one hand!”)

He finishes by saying it’s early days for much of the above – interest rates will not stay so low for ever, and for businesses and governments that have borrowed big, they will be hit hard when they do rise – and a bounce next year will not fully heal the scars suffered by  millions who have lost their jobs

Add in Brexit uncertainty (even if a deal is reached) and the fact that the UK market is focused on the kinds of business that have been hit hardest – banks, oil, Rolls-Royce and airlines for example – and one might worry that the world is on the brink of a productivity leap, but the UK could be left behind

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