Podcast Summary
Learning from Historical Parallels in Times of Uncertainty: Examining historical pandemics, like the Spanish flu, can provide valuable insights and help us navigate the current coronavirus situation. History offers context and valuable lessons for understanding the present and making informed predictions about the future.
History can provide valuable insights during uncertain times, such as the current coronavirus pandemic. Principal Asset Management, a real estate manager, utilizes a 360-degree perspective to deliver local insights and global expertise across various asset classes. During the podcast discussion, the hosts brought up the Spanish influenza pandemic of 1918 as a historical parallel to the current situation. Jamie Catherwood, also known as the finance history guy, was invited to discuss lessons from past outbreaks and their relevance to the present. While there are differences between the Spanish flu and the current pandemic, there are also similar trends. Historians and economists often look to history to understand the present and make informed predictions about the future. In times of uncertainty, revisiting historical events can provide valuable context and help us navigate the current situation.
Unexpected sales growth during the Spanish flu pandemic for certain industries: The Spanish flu pandemic led to unexpected sales growth for industries like mail order catalogs and mattresses, while some businesses reported a strong bounce back after reopening, reflecting current e-commerce trends and industry-specific growth during the global crisis.
The Spanish flu pandemic of 1918 led to unexpected increases in sales for certain industries and businesses, particularly mail order catalogs like Sears and Roebuck, and the mattress industry due to doctors' recommendations for bed rest. These trends mirror the surge in e-commerce sales and specific industry growth during the current global crisis. Despite significant retail foot traffic declines during the pandemic, some businesses reported a strong bounce back after reopening, as evidenced by May 2020's retail sales report coming in significantly higher than expected. The long-term economic impact of the Spanish flu is not well-documented, but available data suggests a pronounced but short-term effect with a relatively quick bounce back.
Historical economic responses to crises: Policymakers have evolved from ineffective responses during past crises to swift actions like increased spending and lower interest rates, leading to surprising economic resilience.
The economic response to crises has significantly evolved over time. During the Spanish flu pandemic and the aftermath of World War I, there seemed to be a lack of understanding and effective economic policies to mitigate the impact. However, in more recent crises like the one we're currently experiencing, policymakers have moved swiftly with measures such as increased spending and lower interest rates. This has led to a surprising resilience in the economy and the market. Looking further back in history, there is still debate among economists regarding the labor market and wage changes during the Black Death. While some believe that the shortage of labor led to higher wages, others argue that peasants revolted and demanded better earnings. From what has been studied, there appears to be a consensus that wages did indeed rise due to the high mortality rate during the Black Death. Overall, understanding historical economic responses to crises provides valuable insights into how policymakers have learned and adapted over time.
The Black Death led to significant wage growth for peasants: The Black Death caused labor shortages, leading to increased wages for peasants, but inflation partially offset these gains
The Black Death, which struck Europe multiple times between 1353 and 13 Woah (approximately a 50-year period), led to significant wage growth for peasants due to labor shortages caused by the high mortality rate. This wage growth was a response to the desperation of lords to hire workers to work their land. Peasants were able to demand higher wages and better working conditions, as they had the freedom to shop around for employment. This resulted in an increase in nominal wages for many, with some experiencing a quintupling of their weekly wages in just a few years. However, this wage growth was partially offset by inflation due to the constant gold and silver supply and the decreased population size. Overall, the Black Death led to substantial wage growth and inflation during this period.
Historical responses to labor market disruptions during crises: During crises, governing bodies have enacted statutes to prevent wages from spiraling out of control, such as setting wages at pre-plague levels and preventing peasants from leaving to work for other lords. These responses illustrate the importance of understanding labor markets and their responses to crises for effective economic management.
During times of crisis, such as the Black Death pandemic in the 14th century, there can be significant disruptions to labor markets and wage growth. In response, governing bodies, like parliament in this case, enacted statutes to prevent wages from spiraling out of control. These statutes included setting wages at pre-plague levels and preventing peasants from leaving to work for other lords. The Spanish Flu outbreak, which occurred during a war, also led to brief inflation but was mostly short-lived due to government efforts to control prices. The Black Death most likely originated in Central Asia or East Asia and spread along the Silk Road. These historical events illustrate the importance of understanding labor markets and their responses to crises for effective economic management.
Impact of historical events on trade and agriculture: During crises like the Black Death, lords adapted to labor shortages by shifting towards less labor-intensive agriculture and leasing land to peasants. Students of history observe potential long-term impacts of COVID-19 on trade routes, agricultural practices, societal responses, and economic policies.
Historical events, such as the Black Death in Europe, have led to significant shifts in trade routes and agricultural practices. During the Black Death, lords had to adapt to a decreased labor force, leading to a shift towards less labor-intensive agriculture and the leasing of land to peasants. Looking forward, students of history are interested in observing the long-term impacts of the COVID-19 crisis, including potential shifts in trade routes, changes in agricultural practices, and societal responses to economic hardships. Additionally, the future implications of monetary policy and fiscal stimulus in response to economic downturns are also areas of interest. The recent uptick in COVID-19 cases in some areas and the potential for a second wave of the virus, as well as societal reactions to public health measures, are also topics of ongoing observation.
The contrasting responses to the Spanish flu and the coronavirus pandemic: Increased awareness and knowledge of the coronavirus could help reduce its impact in the long run, unlike the downplayed response to the Spanish flu in 1918
The widespread awareness and coverage of the coronavirus pandemic contrast sharply with the response to the Spanish flu in 1918. During the Spanish flu, there was a tacit agreement among governments and media to downplay the severity of the outbreak, leading to less public knowledge and understanding of the virus. In contrast, today, the coronavirus is the only thing people seem to read about, making everyone more cognizant of the risks involved and the measures needed to prevent its spread. This increased awareness and knowledge could be a significant reason for optimism, as it may help reduce the impact of the virus in the long run. Jamie Catherwood, also known as the Finance History Guy, emphasized this point during his discussion on the podcast, Investor Amnesia. He also highlighted that the fact that the Spanish flu was not called the Spanish flu because it originated in Spain but because of the widespread reporting in Spain, which was neutral during World War I, is an interesting historical parallel. Overall, the discussion provided valuable insights into how history can inform our understanding and response to the current pandemic.
Learning from finance history with Jamie Catherwood: Exploring historical events offers valuable context and insights into finance and markets, with Catherwood's unique approach referencing primary sources and drawing parallels between past and present situations.
Following finance historian Jamie Catherwood on Twitter and reading his weekly newsletter provides valuable insights into finance, markets, and history. Catherwood's unique approach includes referencing primary sources such as cartoons and documents from past crises, offering comfort and perspective in the face of current challenges. The similarities between historical events and present-day situations, like the impact of the Spanish flu on commerce and the response to the coronavirus pandemic, are fascinating. However, it's essential to recognize that there are differences, such as increased transparency and significant interventions from central banks and authorities. Overall, learning from history can offer valuable context and insights, making Catherwood's work an excellent resource for anyone interested in these topics. Additionally, the history of retail giants like Sears and the evolution of their business models can provide intriguing parallels to today's retail landscape and Amazon's dominance.
