When John F. Kennedy galvanized a new generation of Americans with his inaugural address 60 years ago, he looked out at a world adjusting to new political and economic realities. The Cold War was here to stay, the brutal suppression of the Hungarian Revolution had shown that the Soviet bloc did not intend to give up a whit of control, and the humiliation of the UK and France during the Suez Crisis left America preeminent in the leadership of the Western world.
Kennedy was elected as the youngest man ever to hold the presidency; Joe Biden is the oldest. Kennedy came from preppy Massachusetts money; Biden, the hardscrabble reality of Scranton, PA. But each has taken office at a time of crisis—literal krisis, in the Greek sense—for the established order, from finance to defense via trade, culture and climate change. And Kennedy made explicit what is more or less assumed six decades on, that we are all in this together and each of us must put our shoulder to the wheel if we are to recover from the cataclysmic shocks of the pandemic.
There are those on the political left who have welcomed President Biden’s election and his invocation of his New Deal as a sign that big government and federal largesse have returned to the menu; those Beltway taps are opening and will stay open for the foreseeable future. The American Rescue Plan, otherwise known as the Stimulus Package, will cost nearly $2 trillion, while the follow-up American Jobs Plan is marked to consume just shy of $2.3 trillion. These are staggering sums of public money.
There is another way. As a free marketeer whose education was in the wake of Thatcherism, I tend to think that governments are almost always the most inefficient (but sometimes the only) mechanisms for achieving change, especially when it comes to spending money. And we must never forget the elemental truth that there is no such thing as “public” or “government” money: There is only money the government has taken away from taxpayers.
We need to find a new paradigm. If government is necessary but not sufficient, then we have to find ways of involving the private sector more closely in our economic recovery, harnessing its innovation, competitive instincts and agility.
The UK’s COVID-19 vaccination program has been a perfect example: The national government appointed an experienced venture capitalist, Kate Bingham, and allowed her to run the program effectively as if she were investing in startups. She was permitted to take risks, which civil servants couldn’t comprehend, and she was unconcerned by a degree of duplication, understanding that the overriding priority was the swift and effective development of a vaccine. The result has been that the UK is now second only to Israel in terms of the percentage of the population which has been vaccinated.
This sense of needing the private sector to step up into spaces which would traditionally have been occupied by the government chimes neatly with the development of a desire among shareholders that the companies in which they have invested do good and do well; merely making a profit is no longer enough to satisfy many, and the search for meaningful outcomes, especially in terms of environmental, social and governance targets, is now a critical factor.
It began in 2018, when the CEO of BlackRock, Larry Fink, wrote an open letter to his competitors and colleagues entitled, “A Sense of Purpose.” This encapsulated the idea that the profit motive is not enough for investors or investment managers now, and when the message came from the head of a $6 trillion fund, it created waves.
What can we do, then? One area in which I’ve been very involved is the issue of green or ESG bonds. The appetite for this kind of investment has recognized three essential truths: 1) There are trillions of dollars currently earning little or no return in the global capital markets; 2) the managers of that money are desperate to increase the yield of their funds and 3) they are doubly happy if in doing so they can trumpet some kind of ESG or climate change action. If it is done right, with people who marry experience and imagination, it can be a game in which everyone wins. And the importance of taking action on climate change is becoming ever more pressing.
Corporations and entrepreneurs need also to engage much more closely with national, regional and local governments to understand how the new economy is going to work. It is not a matter of trammeling the instinct to profit off the market, simply digging a channel to supply the economic activity to where it is most needed. So, businesses must understand what the government’s policy direction on, say, electric vehicles or nuclear energy or digital infrastructure is, so that the two horses, public and private, can be yoked together at the right pace.
The table has been swept clean. We have the opportunity to carve our destiny into the virgin wood of the next 10, 20, 30 years, but we need to understand who will own the chisel who will guide its path and who will supply the motive force. If we can create an atmosphere of trust, honesty and reciprocal willingness to learn new ideas, we could make the post-COVID era truly the Roaring Twenties.
Eliot Wilson is the cofounder of Pivot Point, a change management, strategy and PR consultancy based in London.
