Home Knowledge WHAT IF HISTORY REPEAT ITSELF?

WHAT IF HISTORY REPEAT ITSELF?

AND THE COMBINATION OF 4th INDUSTRIAL REVOLUTION AND COP-19 REPEAT THE 1930 CRISES?

In the time from Octobe1929 to the end of the 1930 decade, a large number of countries including the US faced up to 25% unemployment. Will it happen again? 

In the 1920 decade (one hundred years ago), the world had faced the first world war, Spanish flu, revolutions and new regimes being formed and women winning the right to vote. What we tend to overlook is the enormous development happening in various industries during the early years of the decade, partly because of inventions fueled by the rise of electricity usage i.e. refrigerators and other new laborsaving products and gadgets starting to make their way into the communities and countries.

In an excellent article in Businessweek October based on Robert Shiller`s book Narrative Economics and edited by Christina Lindblad, she points out the real changes happening and leading up to the global crash 1929. Inventions and new machines have always had unemployment as a consequence, but also new jobs. It is the belief we always had, that in the long run new inventions create growth and even more new jobs, but the net result is often opaque. In early 1928 a US study showed an unemployment rate of 7,4% in the middle of a financial and industrial boom. The study also made it clear, that the main reason was technological unemployment due to the elimination of jobs, through laborsaving methods and machines, which was much faster than creating them.

This was perhaps new knowledge to the public, but months before this information popped up in connection with a business show in Chicago:

“The national business show yesterday revealed that the business office of the future will be a factory in which machines will replace the human element when the robot (the mechanical man) will be the principal office worker”

Here is a list of exhibits: addressers, Autographs, billers, calculators, cancelers, binders, coin changers, form printers, duplicators, envelope sealers and openers, folders, labelers, mail meters, payroll machines, tabulators, transcribers and other mechanical marvels. A typewriting machine pounded out letters in forty different languages. A portable computing machine carried by the traveling salesman was on the exhibit,

The world at that time had seen a huge increase in transport though the enormous production and efficient manufacturing with Ford T entering the consumer market. With 1½ million cars produced annually, Ford is maybe the best example of overproducing. At the end of the decade, there was an overproduction of products unable to be absorbed by the markets.

In early 1930 newspaper articles changed from advertising new and exciting products to tell stories about people- replacing innovations. Dial phones replaced switchboard operators, mammoth strip steel mills replaced steelworkers, new loading systems replaced coal-workers, cereal box filling machines replaced the people filling them, new machines dug ditches, concrete mixers laid and spread new roads and many more people-replacing innovations. In 1933 the US had 25% unemployment.

We know the new deal implemented by President Roosevelt and the coming of the second world war followed by the Marshall help changed that.

Why is this scenario repeatable?

We are in the middle of another wave of innovations from exploding development of software, AI, machine learning, VR, AR, blockchain, robots in many shapes and forms and new communication structures. We have experienced an enormous increase in spending and buying from a more and more wealthy population and decreasing poverty. For the last 3 decades, we have travelled extensively, bought a huge number of products, adventures, and experiences and have until now expected this to continue with even more wealth for more people around the world.

The corona crises have changed the world and brought fear to everyone. Suddenly we are forced to recognize the possibility of death and illnesses. The spread of the virus has been so fast that we all have been caught on the wrong foot. We have learned that family comes first, and local social support and help has increased exponentially. Closing down of all the places and experiences we gather to be social with other humans, no more planes in the air, limited public services and pressure on our health system will have a deep impact on our future behaviour in the near and future term.

I do not believe in a global trend towards more nationalism. We have all gotten used to globalization, but it will decrease, and we will expect more state influence. Governments will invest in, take ownership and control of key areas like healthcare, medicine, energy, cybercommunication, and water supply. We will turn to the state for help and guidance, rather than supporting the free market. This trend may, however, threaten the idea of democracy as some states undoubtedly will implement restrictions in conflict with human rights such as personal freedom (including freedom of speech) and the right to privacy.

The combination of fewer people jobs with increased poverty will hurt the spent globally. A huge part of country populations will be unemployed and poor. These armies already exist and act like the yellow jackets in France. We must accept that being an animal we seek shelter when in danger and history has shown us drawn into closed societies either religious from Mormons to Amish, guerilla i.e. Boko Haram, criminal enterprises i.e. the mafia or drug cartels, and, not the least, sects like Moon, Jehovah, and Scientology. These groups will gain influence in the time to come, weaken democracy, destroy our equality and the consequence of the corona crisis will throw petrol on the fire.

If nothing is done (outside some short-term financial relief packages in the wake of COP-19) I believe we in the coming years' unemployment (and poverty) reach the same levels as the early 1930ies.

CAN WE DO ANYTHING?

If the government, public services companies, unions, and private businesses realize the trend and act together in connection with the return to “normality” after the corona crises and rethink our world, structures, work, and living.

During the financial crisis and earlier pandemic, people stopped spending on “nice to have” products, services, experiences, travel and laid aside whatever they could afford.  This corresponds with a sustained period with depressed investment opportunities and low interest. 

We have seen at least 1 winner; the climate! Most democratic governments have already taken firm control of this issue. Hopefully, this will lead to and facilitate the introduction of a new economy. Furthermore, they must:

  • Continue to invest and improve our climate and close the usage of fossil fuel products. Use people to plant new forests and invest in large projects           (labour-intensive) helping us control the climate and environment.
  • Increase investments in alternative energy. Not just renewable but also fusion.
  • Decrease weekly working hours and eliminate pseudo work.
  • Eliminate demarcations and look at future robotic human job needs
  • Introduce citizen pay
  • Work with the global religions and appeal to birth control globally
  • Change, introduce and improve education virtually and physically
  • Spread the wealth and charge global wealth tax
  • Continues to invest in low energy transport
  • Rethink agriculture and food production

If we act now (using the return to “normality” after the corona crises) and start the areas mentioned above, we might be able to avoid Armageddon. If we do that on a global and democratic platform, the possible negative impact of the 4th industrial revolution may end up being a positive scenario.

  • AMMCONSULTING.DK © 2020
  • AMM Consulting - Praestevejen 10A, DK - 3230 Graested - phone +4530343429