Dear Q&A friends,
In order to celebrate our 75th edition, all of our article titles end with a 'y' this week. Why? Enjoy!
In this newsletter, we often spotlight the downsides of economic growth. Environmental impact, inequality and human health are often at the other end of the scale where high economic growth is present. Nudged by one of my favourite economy writers, Tyler Cowen, I decided to explore the upsides and causes of economic growth by picking up a copy of 'How the World Became Rich' by Mark Koyama and Jared Rubin. Their opening statement:
"Our focus on economic growth does not mean that we don’t value other aspects of human development. Leisure time, long life, good health, literacy, education, female empowerment, and rights and protections for the vulnerable are all central to having a happy and fair society. That said, we hope to convince you by the end of this book that all of these features are made possible by economic growth."
The writers try to combine the leading research into the factors behind economic growth as a sort of meta-study, exploring the main factors one chapter at a time. Since I'm saving this book for my summer holiday, I only read the first chapter as an appetizer, and I find it fascinating.
Exploring geographical features of the world's countries like temperature, coastline and ruggedness of terrain, they explain how connectivity impacts overall market size for producers, increasing the scope for specialization and division of labor, and therefore being a source of economic growth. They dive into Roman history, and the way its 80.000 km road network affected growth in Europe deep into the middle ages. Only when transport over water (being 20 times cheaper than transport over roads in those days) became the biggest driver for trade, did countries where superior waterways were present, prevail. Countries that invested heavily in water-infrastructure gained an advantage that lasted for centuries.
As the economy of the last few decades encounters new limitations in fragility of supply chains and we shift more towards a service-based economy, I wonder what type of geography we will look back on as the winner. Internet connectivity might be a good candidate.
Tiago Forte is not a household name for most of us. In the world of PKM (Personal Knowledge Management), though, he is a driving force. In order to make effective use of all the information that we receive (and hoard), he based an entire online course (and now also a book) around his method of Building a Second Brain.
I've been into PKM for most of my life without knowing the proper terminology. While cleaning up a box with childhood stuff last year, I bumped into a birthday wish-list containing a little 'filing box and index cards'. People knowing me will smile in recognition.
While my recent use of PKM (using Roam Research) tends to move away from using it as a hardcore productivity tool (I'm more of a 'gardener' these days), I can vividly remember wielding it as the ultimate weapon in my day to day job. Tracing the history of decisions, finding sources I could not remember, mastering an impressive to-do list, you name it. Augmentation of my human brain impacted my productivity in the best way possible.
Seeing Tiago firmly in the 'PKM & productivity' camp, he surprised me with an article last year called 'Productivity is a phase' where he highlights the temporal nature of our focus on productivity before moving on, linking it to stages of spiritual growth. As you move from the phase of 'By me' (driving change, being in control) to 'Thru me' (being part of a whole, giving up control), productivity tools lose some of their value.
Trying to sell someone on the pleasures of a great PKM system last year, I got a response that baffled me back then. The guy did not write down anything. He trusted himself in remembering the stuff that really mattered. Which might just be what's ahead of us.
The 'central bank of central banks', the BIS (Bank of International Settlements) urges all national central banks to do their utmost to control inflation. That means: increase interest rates, as that is the only tool they have. They believe it is important to raise interest rates to decrease demand and economic activity. You might ask yourself whether high demand is the root cause for the current inflation level. Moreover, central banks are not the only ones influencing financial and economic metrics.
Systems and markets have their tendencies to return to a certain path of equilibria at their own chosen times. Our economies are complex systems, involving many different inputs of which interest is just one. Very likely, there is no one root cause for the current situation, even though we human beings like things to be simple and clear cut.
Low interest rates, for a prolonged time, have certainly had their influence on current inflation levels, but the immediate reason why the rise in inflation is occurring now, seems to be caused by other factors. The most important factors currently seem to be the Ukraine war and the Covid-pandemic aftermath. The first leads to uncertainty and high energy prices; the second has led to supply chain disruptions and demand imbalances, leading to delays and higher prices.
Both problems could be solved. In a way, inflation will help solve the supply chain problems, as higher prices will lower demand (the system correcting itself). The Ukraine war is an entirely different animal and influenced by (geo-)politics. The longer it drags, the longer we will suffer high energy prices.
In my humble opinion, we should call our leaders to action: find a road to peace in Ukraine as soon as possible. Apart from a good chance that this will push inflation down, it will definitely be a solution for avoiding human disaster and lives lost. What would be your priority?
A recent London Business School article by Rosie Parry brought several of our favourite topics together: nurturing creativity, mean-reversion tendency, preferring the known above the unknown, optimizing energy.
In its first paragraphs, the article highlighted an experiment done by in 1968, by a scientist called George Land, testing creativity in children. It essentially proved what we have discussed before: children are enormously creative ("98% of them scored at the ‘creative genius’ level"), but that ability is greatly reduced by the time they are adolescents ("only 12% were scoring anywhere near the level they had done").
Where we blamed solely our education system for these results, the article highlights other factors that are in play. One that stands out, is that our bodies seem to be always optimizing for energy. This results, amongst others, in our brains and patterns of thinking to prefer automation and 'the known'. Go where you have gone before. Fall into the groove.
“The brain uses about 20% of our energy, more than any other single organ in the body. So of course, subconsciously we’re always looking for ways to use our brains less, in case we need that energy for something else – like running from a predator.”
The good news is that we can actually try to consciously pursue to be creative and being curious about ambiguity. This concerns a separate part of the brain and can be activated by learning new things, celebrating successes and our unique strengths, as well as experiencing the personal impact we have on the world. As Professor Cable puts it:
“Ultimately, learning programming or coding or digital marketing is not the important thing – the important thing is being able to forget your assumptions in order to stay relevant.”
That's it for this week! If you got forwarded this newsletter and like what you read, get your own. Or get an impression of everything else we shared in our renewed, searchable archive.
As always, we would love to hear your thoughts and tips. Just reply to this e-mail to get in touch with us.
Have a great week!
Quinten & Alphons