The Microshare Economy

The birth of the 21^st century is now

By Charles Paumelle

Anyone who sat in front of the news or an amazing firework display on 31 December 1999 could have been mistaken for thinking they were witnessing the birth of a new century. But history does not care for nice round numbers ending with two zeroes, it deals with major shifts that fundamentally shuffles the cards, and it recently happened towards the end of the second decade of new centuries. 2019 seems a strong candidate for the birth year of the 21^st century.

The 19^th century did not start in 1800 but was born from the aftermath of two decades of Napoleonic conquests coming to an end at Waterloo in 1815 giving birth to modern nation-states and global empires. The 20^th century did not start in 1900 but on the 11^th of November 1918 when European nations finished exhausting their resources and the USA emerged as the new global power. The 21^st century will be truly born once humanity has fought and won the battle against Covid19 and starts dealing with the completely new demographic and economic reality.

The situation we’re living in is unprecedented in our lifetime and in the history of mankind. We’ve had pandemics before such as the “Black Death” (Bulbonic plague) ravaging late Middle Ages Europe and killing a third of the population, the smallpox carried over to South America by the Conquistadors and decimating an estimated 90% of the natives or the 1918 influenza (“Spanish Flu”) estimated to have killed more than the Great War. The differences between these pandemics and the Covid19 is two-fold: communications and expectations.

The internet is 50 years old if we date it to the start of ARPANET in 1969. Yet, it is probably the smartphone invention of 2007 which truly marks the beginning of the instant-always-in-your-pocket Internet. We need to another few years before more affordable smartphones made it truly universal, as smartphone ownership surpassed the 3 billion mark as recently as 2019. This means that in 2020, most humans (certainly in the developed world) have access to instant information in their pocket. This level of communication is certainly unprecedented to any pandemic we’ve known before and has meant information about the pandemic is only days or hours behind the pandemic itself.

The inhumane working conditions of the first two industrial revolutions were the breeding ground for new ideas for a better world. The utopia developed by Karl Marx and Friedrich Engels proved a failed model when they were applied on a large scale, as was attempted by the Bolsheviks and other regimes. This was because some elite class always ended up “more equal than the others”. However, the milder social-democratic themes adopted by most Western European nations as well as many other countries such as Japan during the first part of the 20^th century and generalised after WW2 ended up with a social contract where the state provided a universal framework of education, healthcare and old-age retirement provisions paid for by contributions paid throughout one’s working lives. Institutions such as the British NHS or the French “Sécurité Sociale” have become an integral part of the expectations of several generations who have never known another reality where being sick would mean not being able to pay one’s bills and being scared of going to see a doctor because of the cost of healthcare. It is that expectation that “the state will care for me” which has led to the response many governments who had only known peacetime reacted. In our culture, it is simply unthinkable that the state would not take care of the individuals in every way. And when these individuals cannot go to work because of “stay at home” lockdowns designed to stop the spread of the virus; the expectation is that the state will provide monetary compensation for lost earnings.

And therein lies the new unprecedented situation from an economic standpoint: the social-democratic model mentioned above was originally paid for by voluntary contributions by citizens to create a pool of money that would pay for the healthcare and pension benefits when needed. We’ve known that system to be broken for several decades now, replaced instead by public debt, but we lived in the illusion that it was somebody else’s problem and kicked the proverbial can down the road. The US kept raising the federal debt ceiling and the Europeans government kept finding ways to avoid the real issue and making marginal changes to pension entitlements (e.g. France) or lowering expectations in the state provisions and introducing a dual-speed system for education or healthcare where the rich who can pay get a better experience than the masses who rely on an ever-decreasing level of service (e.g. UK).

The level of debt needed to finance millions of people staying at home with no way to earn money in the services economy, as well as the costs of procuring emergency facilities to enable at-scale temporary healthcare provisions for thousands of virus-affected citizens is on a completely different scale to the now seemingly-casual level of debt governments were taking in recent decades to top up their welfare programs. When Donald Trump joked about signing a $2 Trillion coronavirus stimulus bill, he was adding to the already estimated $23.4 Trillion of government debt. A significant amount (around 10%) was already owned by China and Japan and it is very likely China will use its cash reserves to increase that percentage as it was the first hit as well as seemingly the first to emerge from the aftermath of Covid19.

The 21^st century will be dominated by Asian countries and it started in 2020. You read it here first!

Charles Paumelle is Managing Director and Chief Product Officer at Microshare, which provides Data Strategy as a Service that enables clients to quickly capture previously hidden data insights that produce cost savings, sustainability metrics and business opportunities.