In 1982, the economist Mancur Olson set out to explain a paradox. West Germany and Japan suffered widespread devastation during World War II, but in the years following the war, both countries experienced miraculous economic growth. Britain, on the other hand, emerged victorious from the war, with its institutions more intact, yet immediately entered a period of slow economic growth that left it behind other European democracies. What happened?
In his book “The Rise and Decline of Nations”, Olson concluded that Germany and Japan have experienced explosive growth precisely because their old arrangements had been disrupted. The devastation itself and US occupation and reconstruction forces dislodged the interest groups that had held back innovation. The old patterns that stifled experimentation have been swept away. The disruption opened up the space for something new.
Something similar can happen today. The Covid-19 has disrupted the daily lives of Americans as few emergencies have done before. But it has also shaken things up and paved the way for an economic boom and social renewal.
Millions of Americans have suffered heavy loss and anxiety during this pandemic, but many have also used this time as a period of preparation, so they can walk out the door when the going comes. After decades of slowing entrepreneurial dynamism, 4.4 million new businesses were created in 2020, a far modern record. A report from Udemy, an online course provider, says 38% of workers took additional training in 2020, up from just 14% in 2019.
After decades in which consumption took precedence over savings, Americans spent trillions of dollars in 2020, reducing their debt to levels not seen since 1980 and putting themselves in a position to spend lavishly at as things open up.
The most important changes, however, can be mental. People have been reminded that life is short. For over a year, many lived slower, more entrenched, more domesticated daily routines. Millions of Americans seem ready to change their lives to be more in tune with their values.
The economy has already taken off. Global economic growth is expected to be north of 6% this year, with strong growth expected to last until at least 2022. At the end of April, Tom Gimbel, who heads the recruitment and staffing firm LaSalle Network, told The Times : “It’s the best job market I’ve seen in 25 years. We have 50% more openings now than before Covid. »Investors invest money in new businesses. In the first quarter of this year, American start-ups raised $ 69 billion, 41% more than the previous record, set in 2018.
Already, this era of new creation seems to rebalance society in at least three ways:
First, power began to shift from employers to workers. In March, the US manufacturing sector, for example, grew at the fastest pace in nearly four decades. Companies are desperate for new workers. Between April 2020 and March 2021, the number of unemployed per opening rose from 5 to 1.2.
The workers are in the driver’s seat for now, and they know it. The “exit rate” – the number of workers leaving their jobs because they are convinced they can find a better one – is at its highest for two decades. Employers are increasing wages and benefits in an attempt to bring workers back.
Second, there appears to be a rebalancing between cities and suburbs. Covid-19 has accelerated trends that have been underway for a few years, with people moving from major cities like New York and San Francisco to suburbs and to rural areas like Idaho and the Hudson Valley in New York . Many move to find work or because of economic hardship, but others say they have moved to have more space, lead slower lives, be closer to family, or interact more with their neighbors.
Finally, there seems to be a rebalancing between work and domestic life. Stanford economist Nicholas Bloom expects that even when the pandemic is over, the number of work days spent at home will drop to 20%, compared to 5% in the pre-pandemic era.
While this increased the pressure on many women, millions of American women who could work remotely found that they enjoyed being at home, having dinner with their children every night, not worrying about commuting. We are apparently becoming a less work-obsessed and more domestic society.
In 1910, educator Henry Van Dyke wrote: “The spirit of America is best known in Europe for one of its qualities: energy. That energy has seemed to wane in recent years, as Americans have come less often to travel and start new businesses. But the challenge of Covid-19 has sparked a lot of dynamism, movement and innovation. Labor productivity rates have increased recently.
Americans are looking for ways to make more money while living more connected lives. Joel Kotkin, professor of urban studies at Chapman University, points out that as the American population disperses, the economic and cultural gaps between coastal cities and inland communities are very likely to narrow. And, he says, as more immigrants settle in rural areas and small towns, their presence could reduce nativism and increase economic competitiveness.
People change their personal lives to solve common problems – loneliness and loss of community. No one knows where this national journey of discovery will take us, but the journey has begun.