Issue 74

The Great Acceleration

Delivered on 20 April 2020 by Justin Pyvis. About a 3 min read.

The International Monetary Fund (IMF) has dubbed the downturn we're about to have the "Great Lockdown". I quite like it, as it recognises that it's a self-inflicted downturn. Had governments been better prepared, or responded in a timely manner, we wouldn't be here.

But that was then, this is now. I want to discuss a different but related phenomenon that is emerging from within the Great Lockdown: the Great Acceleration. A month or so ago I wrote about the lasting effects of the coronavirus, with one possibility being a shift to working from home. I don't expect it to become the norm post-crisis, but I do expect it to become more widely accepted. The shift was already happening - 50% of Americans prefer working from home - and the "Great Lockdown" simply accelerated the process.

That shift is just one small part of the (costly) Great Acceleration. Businesses and cultural norms that could have lingered for decades may not survive into the next quarter, let alone next year. Upmarket department store chains, gigantic cruise ships, debt-laden airlines, marginal restaurants, universities, cinemas, crazy billionaire Japanese Ponzi scheme investors - none of them will return to how they were pre-crisis, or even return at all.

The Great Acceleration is Schumpeter's creative destruction on steroids. Essentially, business models which were already on the way out are being punished far more swiftly than would normally be the case. Rather than a slow transition over decades, it's all happening with one fell swoop (provided governments don't throw too much good money after bad propping up doomed businesses, creating a large wasteful 'zombie' economy).

On the other side of the ledger, ventures and technologies that were already on the way up are now so popular they're finding it difficult to keep up with the demand. Shopify is now handling Black Friday level traffic every day, video conferencing service Houseparty has seen 50 million sign-ups in the past month, and the share prices of Big Tech companies conducive to social distancing and working from home, such as Netflix and Amazon, have hit record highs.

Now before anyone gets carried away let me be clear: the Great Acceleration is a costly, ill-advised phenomenon. It would be far better, both economically and socially, for the process to happen organically as it normally does. But it is what it is, and those who refuses to acknowledge the accelerated transformation of the global economy over the past couple of months will find it more difficult to adapt to the post-crisis world.

Enjoy the rest of this week's issue. Cheers,

— Justin

Other bits of interest

Salvaging the scraps of Libra

China's Blockchain Service Network (BSN) will launch this week:

As the BSN takes hold in worldwide countries, it will become the only global infrastructure network that is innovated by China, whose gateway access is controlled by China.

China's attempt to usurp the US dollar hegemony? Perhaps. It'll never be the dominant platform for obvious reasons, but it'll be lapped up by any company that wants to do business in China.

Meanwhile, Facebook's Libra will: focus on creating a more traditional payment network in which coins will be tied to a local currency, somewhat like the digital dollars in a PayPal account. While Libra will also have a coin backed by multiple national currencies, which was the focus of the initial design documents, that will be less prominent.

Even that's not good enough for the G20, though:

Although stablecoins may help contribute to a new global payments system, “such instruments may have the potential to pose systemic risks to the financial system and significant risks to the real economy, including through the substitution of domestic currencies.”

Maybe China will win after all, as all of the competition will be regulated out of existence before it can see the light of day.

Australia's contact tracing app fail

Australia's government will soon roll out its COVID-19 contact tracing app. What are the odds that it'll be open source? 1%? 5%? All we've been told is it's based on the Singaporean BlueTrace app (probably because Singapore was kind enough to open source the code), but beyond that no one really knows what 'enhancements' ASIO or the AFP may have tacked on.

Unfortunately the years Australia's government has spent undermining people's digital privacy and security means if it can't convince people that this time is actually different, it'll never get the 40% installation rate it so desperately wants. It's not off to a good start, either: already politicians from the Prime Minister's own Liberal National Party have refused to install it due to privacy concerns.

Completely out of touch (and sadly, in good company).

Issue 74: The Great Acceleration was compiled by Justin Pyvis and delivered on 20 April 2020.