radical Briefing 0023 - Recovery Bets, Post-Covid Narratives & Buying into Certain Futures
Every investment carries within it a story about the future--about the ways that the pressures of today will shape tomorrow. We put money toward enabling the futures we’d like to see; we spend to ward off (or perhaps hedge against) the futures we fear might be taking shape; and in the true speculative sense, we simply bet on the futures we believe to be undervalued relative to their likelihood or potential impact.
If you bet Borussia Dortmund at -180 to win its match this weekend (as the German Bundesliga joins Russian and Chinese Table Tennis in keeping physical, IRL sports alive), you’re invested in a small story about the near-future. If you learn to code Python on the weekends, register for an executive MBA program, or make a downpayment on a house, you’re buying into a longer-term and more personal future narrative. If you launch a startup or buy shares in Beyond Meat or Amazon or Tencent, you’re investing in a set of more complex stories about markets and policies, people and planet.
And if we move from the hypothetical to the very real and fraught with human consequence while also scaling our investments all the way up to the GDP-slicing levels of what countries are pouring into Covid response and recovery stimulus plans, some very rich & deep questions emerge. What does 10% of GDP buy you? How about 20%? With luck, it buys stability and time in the near term. In the longer term, that massive investment will create rippling implications that effectively buy us into or certainly much closer to some macro-futures--while potentially foreclosing others.
These massive investments, too, tell stories. In the US, one of the first flashpoints in the Covid stimulus debate was around the tens of billions of taxpayer dollars that would be pumped into the cratering airline industry, a narrative turn that some saw as propping up a decidedly future unfit business model or worse still, validating a decade-long run of burning cashflow via stock buy-backs and extravagant executive bonuses all while hiking prices and slashing services for customers. Meanwhile Donald Trump, whose keenest instinct might be for ceaseless branding and self-mythologizing, immediately saw the opportunity to write a new narrative for his re-election campaign in the form of stimulus checks prominently bearing his own signature delivered to millions of struggling Americans.
The future stories that these investments shape will extend far past November 2020 and the American presidential election, and the trillions of dollars that governments around the world inject into economies this year won’t be repeated each year afterward. This could mean that the next few months will be heavily weighted in their potential to bend the arc of human history.
Gathering momentum for scaling up UBI pilots around the world, of course, suggests the increased traction of one set of future narratives and investment/policy choices. At the same time, a growing body of researchers and investor groups sees an opportunity in the Covid recovery to maximize returns on government spending while accelerating the trend away from fossil fuels by tipping systems toward new energy sources and production models (the must-read so far is here). Notably, Angela Merkel has explicitly called for a green recovery, weaving the post-Covid economic future into a larger narrative of climate safety, economic resilience, environmental sustainability, and Germany’s ongoing climate leadership (and upcoming EU presidency).
As befits our uncertain time, these narratives will be open-ended, broadly participatory, and highly contested. Firms saved by public funds could find themselves answering to a new set of stakeholders with a different expectation of value creation (as N. N. Taleb suggested recently), while forward-looking energy or infrastructure projects may be assailed for failure to move the economic needle far enough fast enough.
World leaders arguing for any of these recovery strategies or possible futures amid the mounting pressures & high stakes of the pandemic environment will have to manage a complex and dynamic tension that exists between the past and the future, between the world that was and the world that is yet to be. And in this sense, the challenge isn’t unlike one faced by business leaders in the age of systemic disruption: How do we reconcile short-term results focus with long-term vision--particularly in the Covid context when survival instinct and probably some degree of simple loss aversion both scream for a dramatic narrowing of scope? How do we maintain the core of the business today while driving innovation at the edge to power tomorrow?
We’ll explore the core/edge polarity at some length in the next Briefing, so that we can wrap here with a return to the connection between investment and narratives. Each, of course, offers a means of connecting the past and present to the future. Narratives allow us to communicate, investigate, and explore possible futures, and it’s through investment that we begin to translate certain possibilities (while inevitably foreclosing others) into something material. In Wired for Story, her book on the neuroscience of storytelling, Lisa Cron writes that story evolved “as a sort of dress rehearsal for the future.” And in an interesting line of etymology, our sense of the word invest probably comes from the Latin investire (“to clothe in, dress”) but via a particular Italian usage that suggested “giving one's capital a new form.”
Let us hope that today’s investments and their implicit future narratives both wear well in a transformed world.
Jeffrey and the be radical team
P.S. Interested in exploring how this applies to your organization and your products & services? Find out how be radical can help you. Simply hit reply to this email, tell us a bit about yourself and the opportunity/challenge you face, and we will be in touch.
We get it. There’s a lot out there. With radical Recommends, we’re not going to overwhelm you. We’ll only highlight a couple of reads/watches/listens each Briefing that are shaping our thinking, challenging our assumptions, or changing our minds.
⇒ If you read one study of how Covid fiscal recovery plans will intersect with climate change make it this one from the Oxford Review of Economic Policy.
⇒ If, on the other hand, you want to set aside the problems of the physical world and dive (very) deep into the virtual, Matthew Ball’s exploration of the possible metaverse is worth looping back to catch.