The Second Renaissance

The Second Renaissance is a term I am using to describe the rapid movement of the world’s population from cooking with wood to electricity to using an iPhone.   It’s a one time event in the history of planet earth.  It can happen in a short bus ride from a village shanty to a new modern factory, much faster than the the First Renaissance happened.  It’s a leap, for many,  from pre-Industrial Revolution, bypassing over 100 years, landing squarely in the 21st century sometimes in a matter of hours.

Below is a link to a You Tube video by Hans Rosling showing the modern history of  life span and income from 1810 to 2009:

What are the ingredients have brought about this change?   There are several; for one the Internet has allowed masses to arise against tyrants and throw them from power.  It’s allowed technology to flow to the corners of the globe.  The rule of law, democracy, land ownership, absence of war, education, health, infrastructure,  crop and farming science, all contribute.  The Internet also shows the leaders of underdeveloped nations and their masses what is happening in the rest of the world.  You can bet Cubans watch  their brethren’s  lifestyles 90 miles away in FL., this plays over and over again around the globe.

For a single indicator of the progress I again turn to a video from Hans Rosling.  I can’t think of a better measure than a washing machine.  If somebody has a washing machine they have electricity and time to read themselves and educate others.  Time to pursue what they like to do and thus what they are best at.  Which leads right back to author Adam Smith and his book the “Wealth of Nations”, 1789. Wealth is created when a resource is liberated for a better use.  It’s a far better use of time to read to a child than to hand wash clothes.

Here is the washing machine video from Hans Rosling:

Watch the end of the video for current day examples.

Layered on top of the above is the rapid development of new technology, this will allow the developed nations to continue to move forward and for underdeveloped countries to make bigger and bigger leaps when the conditions become right.  For example, many countries bypass running phone lines and go straight to cell phones, no need for gas guzzling, fume spewing 1970s cars, clean 40 mpg are available, etc.

What does this mean as investors?  There will be rapid development in some countries on earth.  Many US companies will participant in this rapid change and growth.  Most in the world will want the very same things that we have in this country.  What was successful in the US will likely work elsewhere.  Modern food and health care will be adopted quickly because they are most basic needs and wants of humans.