The Economist magazine, the Wall Street Journal, Bloomberg Businessweek and others are writing up a storm about whether the 2020s will follow in the footsteps of the “Roaring” 1920s of the last century.
For sure there are similarities – the 1920s were preceded by a pandemic in which 50,000 Canadians died — almost as many as died in WW1. To date, 21,000 Canadians have died of the 2019 COVID-19 pandemic. The economy before both 1920 and 2020 was not serving all Canadians wonderfully well – the pandemic put it into a tailspin, with the deepest recession since records started being kept. In the last century, as this one, there was much protest, both peaceful and violent, about low wages, regional, race and gender discrimination. Tariffs were rising in both ‘20s.
As 1918 and 1919 gave way to the 1920s, the pandemic receded, and the world’s economies and societies opened quickly – and changed dramatically. The driving force behind the boom of the 1920s was technological innovation and a huge demand for our natural resources. Tech change was everywhere – assembly lines sped up the manufacturing process; manufactured cars killed horse-drawn buggies; telephones (in those days party lines) accelerated the transfer of information, as did radio. (Canada’s contribution: Armond Bombardier’s snowmobile in 1922; Edward Rogers’ first-ever alternating current (AC) radio tube that allowed radios to be powered by ordinary household electric current.)
The decade of the 1920s was the origin of Canada’s “branch plant” economy, as American firms avoided Canadian tariffs by opening branch plants here, to manufacture what was profitable and to export raw materials to the US for processing – US investment topped UK investment here for the first time.
A variety of labour-saving devices like washing machines and fridges drove both employment and consumer demand. Says Steve LeVine, editor at large for Medium, “If one wished to boil down the decade’s zing to two words, it would be electricity and combustion, a one-two technological punch that streamlined urban housework and took Americans out onto the road, thereby reverberating across the economy.”
So far, we’re only a little over one year into the 2020s – what will be the one-two technological punch that will change the way our economy operates now? The proponents of replicating the Roaring 1920s see them clearly: artificial intelligence is at the core and a biotech renaissance built on the vaccines developed to defeat COVID-19. These technologies have been visible for more than a decade and are now ready to grow exponentially, they say. Voice recognition software, self-driving software, specialized robots to perform surgery, argue the law or be a companion. Genetic, DNA, mRNA breakthroughs to conquer disease. And the rise of “delivered services” that will transform our cities: work is at home through Zoom, the gym is at home through NordicTrack and Peloton, the restaurant is at home through Skip the Dishes and Uber.
And there are billions of dollars in savings waiting to finance everything.
There is, of course, a contrary view.
The make-up of the 2020s is different. We are no longer a young country with a growing workforce as we were 100 years ago. Young people and growing families are the backbone of growing economies. According to the Howe Institute, business investment in Canada lags investment in other advanced economies. “New investment per available worker in Canada in 2020 was about 58 cents for every dollar of investment per worker in the United States – lower than at any point since the beginning of the 1990s.” And perhaps the most salient point: we have to tame the virus in order to open the economy.
“History doesn’t repeat itself, but it often rhymes”, said Mark Twain. Looking back and imaging our future is a first step to creating it. What are you planning for yourself and your family by the end of the decade?
Dian Cohen is an economist and a founding organizer of the Massawippi Valley Health Centre.
Cohendian560@gmail.com
The Roaring 20s
By Dian Cohen
