Three Big Things: The Most Important Forces Shaping the World
Three Big Things: The Most Important Forces Shaping the World
by Morgan Housel
An irony of studying history is that we often know exactly how a story ends, but have no idea where it began. Here’s an example. What caused the financial crisis? Well, you have to understand the mortgage market.
What shaped the mortgage market? Well, you have to understand the 30-year decline in interest rates that preceded it. What caused falling interest rates? Well, you have to understand the inflation of the 1970s.
What caused that inflation? Well, you have to understand the monetary system of the 1970s and the hangover effects from the Vietnam War.
What caused the Vietnam War? Well, you have to understand the West’s fear of communism after World War II
And so on endlessly.
Every current event – big or small – has parents, grandparents, great grandparents, siblings, and cousins. Ignoring that family tree can muddy your understanding of events, giving a false impression of why things happened, how long they might last, and under what circumstances they might happen again. Viewing events in isolation, without an appreciation for their long roots, helps explain everything from why forecasting is hard to why politics is nasty.
Those roots can snake back infinitely. But the deeper you dig, the closer you get to the Big Things: the handful of events that are so powerful they influence a range of seemingly unrelated topics.
The ultimate of those great-grandmother events was World War II.
It’s hard to overstate how much the world reset from 1939 to 1945, and how deeply the changes the war left behind went on to define virtually everything that’s happened since.
Penicillin owes its existence to the war. So do radar, jets, nuclear energy, rockets, and helicopters. Subsidizing consumption with consumer credit and tax-deductible interest were deliberate policies meant to keep the economy afloat after war-time production ended. The highways you drove on this morning were built to evacuate cities and mobilize the military in case of a nuclear bomb attack during the Cold War, and the Cold War was a WW2 cousin. Same for the internet.
The Civil Rights movement – perhaps the most important social and political event of our time – began in earnest with racial integration during the war.
The female laborforce grew by 6.5 million during the war because women were needed in factories. Most kept working after the war ended, beginning a trend that led to a doubling of the female laborforce participation rate by 1990. It’s probably the single most important economic event of our lifetime.
Find something that’s important to you in 2019 – social, political, economic, whatever – and with a little effort you can trace the roots of its importance back to World War II. There are so few exceptions to this rule it’s astounding.
But it’s not just astounding. It’s an example of something easy to overlook: If you don’t spend a little time understanding World War II’s causes and outcomes, you’re going to have a hard time understanding why the last 60 years have played out the way they have.
You’ll struggle to understand how the biggest technologies got off the ground, and how the most important innovations are born from panic-induced necessity more than cozy visions.
Or why household debt has risen the way it has.
Or why Europeans have different views on social safety nets than Americans. John Maynard Keynes predicted countries wrecked by war would go on to have a “craving for social and personal security,” and indeed they did. Historian Tony Judt writes of post-war Europe:
Only the state could offer hope or salvation to the mass of the population. And in the aftermath of depression, occupation and civil war, the state—as an agent of welfare, security and fairness—was a vital source of community and social cohesion.
There are so many things happening today that aren’t easy to grasp without a working knowledge of the 75-year-old wartime forces that got them going in the first place. To me, the war is fascinating to study not because of what happened, but what it went on to influence.
Which raises the question: What else is like World War II?
What are the other Big Things – the great-grandparents – of important topics today that we need to study if we want to understand what’s happening in the world?
Nothing is as influential as World War II has been. But there are a few other Big Things worth paying attention to, because they’re the root influencer of so many other topics.
The three big ones that stick out are demographics, inequality, and access to information.
There are hundreds of forces shaping the world not mentioned here. But I’d argue that many, even most, are derivatives of those three.
Each of these Big Things will have a profound impact on the coming decades because they’re both transformational and ubiquitous. They impact nearly everyone, albeit in different ways. With that comes the reality that we don’t know exactly how their influence will unfold. No one in 1945 knew exactly how World War II would go on to shape the world, only that it would in extreme ways. But we can guess some of the likeliest changes.
1. A demographic shift that reconfigures modern economies.
Here’s what’s happening:
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