Minding the Perils of Progress
The COVID-19 crisis has been a brutal reminder that, for all of our wealth and technological mastery, we are still vulnerable to catastrophic tail risks. To ensure future prosperity, we must adopt a growth strategy that places collective risks front and center, rather than treating them as an afterthought.
CAMBRIDGE – It is always worth remembering that in the grand sweep of history, we are the fortunate ones. Thomas Hobbes’s description of life as “solitary, poor, nasty, brutish, and short” was apt for most of human history. Not anymore. Famines and hunger have become rarer, living standards for most people have risen, and extreme poverty has been reduced substantially over the past few decades. Average life expectancy at birth even in the least healthy parts of the world is above 60 years, whereas a British person born in the 1820s would have expected to live to around 40.
But, these fantastic improvements have been accompanied by catastrophic risks. Even if COVID-19 has shaken us from our complacency, we have yet to grapple with the dangers still facing us.
The improvements of the past 200 years are the fruits of industrialization, made possible by our acquisition of knowledge and mastery of technology. But this process involved trade-offs. Driven by the desire for wealth, firms and governments sought to reduce costs and boost productivity and profits, which led to disruptions that sometimes left hundreds of millions of people impoverished and unemployed.