08 Dec 2020
While many people assumed a vaccine would come, the bar was set low at 50% effectiveness. There is no way we could know that we would ever get a successful vaccine. Based on the past, it was optimistic to hope for a vaccine in five years, let alone less than one year. What is even more amazing and shows how extraordinary the success of Pfizer and Moderna has been, is that the vaccines that they have created are with new medical technology.
At this stage we just have press releases, rather than detailed peer reviewed analysis of the vaccines. However, once the markets could see an end point, they do not wait, and equity markets rallied hard in November. This is despite the complete failure to contain the virus across a large part of the world.
Humankind progresses at different rates in different areas. What science and technology can do is nothing short of magic compared to any other times in human history. However, as a species we seem to have many problems that are as old as time! Politically, some would say we have regressed.
Since Adam Smith’s “The Wealth of Nations” which outlined the benefits of free markets and capitalism, we have seen an incredible increase in technology, productivity, and global wealth. However, even in Smith’s seminal works he never suggested unfettered markets were the goal. There were large sections of his work dedicated to market failure and the need for government actions to address these.
In a world that is truly global, we need global institutions, and these institutions need teeth. While we have the World Trade Organisation, China has engaged in blatant bullying of Australia. The United Nations has the Universal Declaration of Human Rights, but what happens if you break the rules?
In a world without strong global institutions, it is very hard to get agreement. We must rely on the leadership of powerful countries and if they take a highly self-interested perspective, the world gets a bit more dangerous for everyone.
You are never going to get everyone to agree, but if enough countries come together, the rest can be forced to follow. It is the interrelated global economy that binds us and with some positive leadership, hopefully these levers can ensure that we come together to deal with the important issues that impact on us all.
If you have any questions, please don’t hesitate to speak with your adviser.