7 Lessons And 1 Resolution For 2023
Let’s face it: we have not done so well in 2022 — or in the previous couple of years, for that matter. Here are 7 lessons we should take to heart to stride into 2023 on a surer footing.
Photo by BoliviaInteligente on Unsplash
As we leave 2022 behind, here are my thoughts on what we should have learned and how we can enter 2023 on a better footing.
1. Shocks “R” Us
You’ve read in countless articles that the global economy has had to contend with an unprecedented series of shocks. Look closer, and you realize these shocks are of our own making:
The Covid epidemic seems highly likely to have originated in a lab (somehow scientists thought that ‘gain of function research’, i.e. developing more contagious and lethal viruses than nature managed to, was a good idea);
Policymakers then decided the right way to deal with the pandemic was through blanket lockdowns and Kafkaesque rules, eschewing targeted protection of the vulnerable and ignoring common sense and evidence at every step of the way;
The “energy shock” was triggered by Russia’s decision to invade Ukraine, and exacerbated by the misguided energy policies of the past decade;
All this disrupted global supply chains that we had built with a single-minded focus on lowering costs and little thought to the costs and risks of complexity.
These are shocks alright, but of a quite different variety than an asteroid hit or a solar flare. We are our own worst enemy, and with a bit of common sense could spare ourselves a lot of trouble.
2. You Can’t Fight Human Nature
Incentives, incentives, incentives. What makes economics fascinating is that human behavior is both depressingly predictable and maddeningly unpredictable. The predictable part has been on stark display in 2022.
If you pay people not to work, they will not work. Having shut down their economies, governments across the world told people, don’t worry, we are here for you. They doled out gigantic amounts of money to make sure their subjects could get by without working. People got the message and, lo and behold, we now have millions of people “missing” from the workforce.
If you forgive debt, people will take on more debt. If you signal that actions do not have consequences, people will not worry too much about their actions. We can now see this all over the place. The US student debt crisis has come about because students have been encouraged to rack up massive debt to pursue degrees that do not give them the skills and career opportunities needed to repay such debt.
Rinse and repeat. In the US, we want to forgive student debt. Italy has maintained for years a version of universal basic income because close to one quarter of youth are unemployed. But we do nothing to give students an incentive to acquire useful skills.
3. Normalcy Won’t Kill You
In 2022 the laws of economics reasserted themselves, and central bankers started steering monetary policy towards a somewhat more normal stance. Interest rates have risen by a meaningful margin — even though they remain well below inflation; and the Fed has even begun to reduce its bloated balance sheet. And against all odds…
…So far we’ve survived!
The global economy has not plunged into a deep recession, nor has unemployment jumped into double digits.
It turns out that in a rather ordinary situation, the global economy is quite capable of getting by without extraordinary support from monetary and fiscal policy.
This has been the bee in my personal bonnet for quite a while, reinforced by my experience in industry: perhaps we can now muster the courage to switch attention to the supply side of the economy.
4. Technology Is Fun (And Games, Mostly)
AI has mastered yet another game, rising into the top ranks for a challenging game of strategy and diplomacy. The much-talked about GPT-3 has proven proficient at delivering — on demand — the same pedestrian articles we avoid reading in the daily press and the mediocre poetry inflicted upon us in our early school years.
Meanwhile if we want to stop the Russia-Ukraine war, avoid a US-China escalation, solve the energy storage bottleneck, develop new and more reliable clean energy sources, cure cancer, etc… well… it looks like we’re on our own.
For decades, robots have been set to take all our jobs and consign us to mass unemployment. But as 2022 draws to an end, companies keep complaining of worker shortages, while the robots are busy playing games or censoring our Instagram posts.
Don’t get me wrong, I am very optimistic on what technology can help us achieve. But it’s a powerful tool, not a deus-like machina. It’s high time we move beyond the utopian and dystopian exaggerations.
5. The Misinformation Age
We’d been told this was The Information Age, where “information has become a commodity that is quickly and widely disseminated and easily available especially through the use of computer technology” (Merriam-Webster). They forgot to tell us it would too often be false and misleading information.
2022 has confirmed the staggering scale of this problem. It was the third consecutive year when finding reliable information on the Covid-19 pandemic and associated mitigation policies was all but impossible, as we bounced between official propaganda and conspiracy theories. Social media and traditional media continue to filter and censor information at will, “canceling” the voices they don’t want to be heard — cue the drama of Twitter’s acquisition by Elon Musk. Today I find it harder than ever to gather reliable, complete information on the issues I follow, and I don’t trust a single headline without some fact-finding research of my own.
Welcome to The Misinformation Age
6. A Data-Obsessed, Innumerate Society
“Data is the new oil.” This quote by British mathematician Clive Humby underscores that data should be the main driver of value in the digital economy: our greater prowess in harnessing, analyzing and storing data can and should boost productivity and improve living standards across the board.
Unfortunately, too often data turns out to be the new snake oil.
This is mostly due to our inability and unwillingness to take a critical look at data — and even to equip our society with a basic level of numeracy.
Once again, it is in the context of the pandemic that this has been in the starkest display: a widespread gross misunderstanding of the the most basic facts about the pandemic, such as that Covid-19 is infinitely more dangerous for the elderly then for the young and least for the children; the relentless focus on the number of new cases unadjusted for the number of tests, just to name a few examples.
The issue is pervasive, and it’s becoming more so: We have become obsessed with numbers, and are getting hooked on apps that throw at us an avalanche of statistics on our exercise routines, our sleep quality, our diet, you name it. Yet too many of us still seem unable to grasp even basic statistics. This combination is a recipe for disaster.
We’re becoming a data-obsessed innumerate society.
7. Losing My Religion
Over the past few years, science has become the new religion. Just think of how many times you’ve heard someone saying “I believe in science.” This oxymoron has become a badge of honor. We’ve seen this religious fervor in action: during the pandemic, those who questioned the orthodoxy on lockdowns, masks or vaccines were ostracized in the name of The Science. Similarly on climate change we’ve been warned that the science is settled — a convenient way of shutting down debate, much like appealing to an unchangeable and unquestionable sacred text.
That’s the way religion works, not science; the essence of science is debate.
This problem has been with us for a while. What 2022 taught us, however, is once you treat science like a religion, it is bound to follow religion’s same fate: growing disaffection and disbelief as its tenets and predictions clash with reality.
We are seeing scientific institutions lose credibility; people’s confidence in experts has been severely eroded. Combined with a flood of misinformation and a plague of innumeracy, this is likely to get worse.
Science should be our guiding light. Unless we restore it to its proper role, we’ll fumble in the dark with disastrous consequences.
One Resolution For 2023
To move forward, we need the right balance of visionary ambition and humble pragmatism. We have to aim high with innovation and technology; but keep a sober view of their current limitations. Hold on to common sense. Follow the science, but not blindly – science is a work in progress, and debate is crucial to moving forward. We should remain alert to the age-old failings of human nature. Celebrate what we have achieved so far, but embrace the hard work needed even just to maintain our standards of living, let alone to raise them further. Let’s try to be a bit smarter, and rediscover a healthy skepticism of magical economic and technological solutions.
Happy New Year!
Your article reflects my current thoughts perfectly, but add to the misinformation, a lack of freedom of expression which the social media suppresses if it doesn't mirror their usually liberal accepting narrative. Roosevelts 4 freedoms have never been more absent.