In human terms, 2020 has been a dreadful year. But recent news on COVID-19 vaccines has been unambiguously positive. No later than last month, in November 2020, stock markets such as Germany’s DAX were only slightly lower than they were on January 1, while the US S&P500 is up on the year. Equity investors are telling us that, in economic terms, 2021 will be something like a typical year.
Peaceful era despite hurdles
From a long-term perspective, we are living in one of the most peaceful periods in human history. Harvard psychologist Steven Pinker has indicated that worldwide deaths in battle per 100,000 people have in modern times dropped to historic lows – despite the growth of the world’s population. Free trade is one underlying factor: the global embrace of free trade has created an enlarged community of states which have much more to gain by doing business rather than fighting each other.
Dropping poverty levels
Extreme poverty, though stubborn and accompanied by extreme concentrations of wealth, had dropped over the long term, when looking at the situation before the Covid-19 hit the world. The World Bank estimated that COVID-19 was responsible for 71 million to 100 million additional people falling into extreme poverty in 2020 (measured using the international poverty line of $1.90/day). The proportion of people living on less than $1.90 had tumbled over the last two centuries. The role of free trade in lifting people out of poverty is far from exhausted: the African Continental Free Trade Agreement (AfCFTA), delayed but not derailed by COVID-19, is due to come into force at the start of 2021.
Rapid technological advances
In the meantime, technological advances that will spread prosperity still continue at a breakneck pace. Artificial intelligence, computer automation, Blockchain and cloud computing have barely scratched the surface of their potential. Within a generation and probably sooner, iPhones will seem as quaint and outdated as early computers of the 1980s. As we grapple with climate change, the costs of storing and distributing natural energy sources such as wind and solar continue to drop.
Living longer
In the meantime, technological advances that will spread prosperity still continue at a breakneck pace. Artificial intelligence, computer automation, Blockchain and cloud computing have barely scratched the surface of their potential. Within a generation and probably sooner, iPhones will seem as quaint and outdated as early computers of the 1980s. As we grapple with climate change, the costs of storing and distributing natural energy sources such as wind and solar continue to drop.
Pessimism cuts life short
Avoiding pessimism is in fact good for us. Good news and a positive attitude are healthy. Studies have shown associations with personal levels of pessimism and optimism and the risk of disease. Researchers led by John Whitfield found this year that less pessimistic people tend to live longer. The research has shown that people who scored higher on pessimism in a questionnaire were likely to die on average two years earlier than those with low scores. Optimism in itself doesn’t help: there is no correlation between taking a bright view and living longer. But avoiding a doom and gloom outlook clearly does.
In philosophical terms, the pendulum has swung away from the unbridled optimism of the late twentieth century. Thinkers such as Fukuyama have seen the spread of capitalism as creating the possibility of an end to history. Of course, there is no such thing: at the end of history comes more history.
Optimistic leadership is recipe for success
Our era brings new, formidable challenges, but also an unprecedented set of resources to tackle them. What we need is not the naïve optimism of Fukuyama, but the practical optimism of leadership shown by figures such as Nelson Mandela, Lady Diana or Kofi Annan. A backdrop of peace, technological advance and improving prosperity for many gives us a better chance to solve global problems than has been available in most periods of history. Our collective (and individual) task is to put that endowment to the best possible use for the years to come.
