The past predicts the future

It is very weird how much we can learn from the past.?

Just after Covid hit, in April 2020, we commissioned a historical study on what had happened the last time a pandemic had hit, the Spanish Flu in 1918. It was called “Lessons from a Pandemic”, and it was a fun exercise to understand what had happened then, and what we could expect in 2020. We presented it at Tiger and Club B and a few other places back then.

I summarized some insights on duration and the like in a fun article called "when will I fly again?" Overall, it was interesting to see how something that had happened almost a century ago had strangely prescient lessons for us in 2021. At the time, everyone wanted to know, when do we go back to normal, so that was the focus of a lot of the discussions and data.?

The final page of the paper, however, was a summary of what had happened AFTER the 1918 epidemic. It wasn’t of much interest at the time, since everyone was focused on getting out of the pandemic, and there wasn’t much interest in what happened afterwards, since obviously 'this was different'.?

So what was the last page? It basically summarized some of the changes that hit the world post pandemic. Specifically, it called out a series of changes that shaped the world post pandemic that is eerily weird to recall now. Let's go through them:

Inflation: The end of the pandemic in 1918 resulted in a spike in inflation. Inflation 1917-1918 shot up to around 20% from around 4%, and stayed high for about 3-4 years after the pandemic.?

How we did a century later: inflation shot up from around 1% in? 2020 to 8-9% post pandemic, and stayed high for around 2-3 years after the pandemic.?

Social above all. The end of the pandemic meant that people could mingle again, and travel soared. Attendance at sports game, dances, and other social events skyrocketed to numbers well above those before the pandemic.?

How did we do a century later: well, pretty much the same thing. This shows the travel pattern prior and during and post pandemic, but the same chart could be made for concert revenues, tourism, and many others.?

Loss of trust in institutions:? The pandemic shook the trust that people had in governments and institutions. There was a huge rise in ‘spiritualism’, basically as an alternative to organized religion, a move to alternative medicine (which was mostly potions with 16-20% alcohol content), and a rise in individualism from the collective society of the turn of the century.?

How did we do a century later: I mean, kinda the same? It’s hard to measure trust in institutions, but Gallop measured a drop in the confidence in major US institutions from about 37% (of high confidence) in 2020 to about 26% in 2023. And anecdotally, it’s hard to not cry a little at people threatening FEMA after a hurricane.?

The rise of remote

The pandemic pushed people to stay at home, of course, and started the trend of… remote! Telephones were less spread than they are now, of course, but the pandemic started businesses to use the phone to order things, leading to the rise of catalogue giants like Sears and others post-pandemic.?

How did we do a century later: well, exactly the same thing, but now with video and audio? It is fun to note that even in 1918, articles bemoaned the shoppers and salesmen who “stayed cosily at home, utilizing the telephone”, in contrast to the “brave men and women who venture in person to buy and sell”.?

There were two other, harder-to-measure changes that the authors called out:

The rise of nationalism and tribadism

The pandemic made people view foreigners with suspicion. They could be bringing in the disease, and this suspicion remained post-pandemic. The years after the Spanish Flu (which was not Spanish)? marked a strong shift to tribalism - a rise in nationalism and a rise in tribadism even within nations.?These tensions would eventually escalate into WW2, of course.

Past appeal

Waren Harding, a Republican, was elected in 1920, mostly with a message of “restoration” and “return to normalcy” and “not experimentation, but equipoise”.?Similarly, there seems to have been a real push for consumers and voters for 'security' - a simpler world, unpolluted by realities of the pandemic and the war, and a real desire to reconnect with a world that was forever gone.

It is so strange that a century of technological change later, the chart for the changes post 2021 would look very eerily like the one for 1921. This leads to one inevitable conclusion: every good private equity fund and hedge fund should hire a historian on staff.