The Power Of A Story

Adult friendships can be tricky. They're not as fragile as the friendships of the teenage years, when something as simple as your pal going to Starbucks with someone else can shake your relationship to its foundations; but neither is it like primary school, where you can just go up to someone in the playground and decide you are now best friends for ever.

But the post also helped a lot of people. Since writing it, it's generated a staggering amount of thank you emails, and no less than 20 people notified me that it inspired them to end their relationships (or even in a few cases, their marriages).

Every introductory psychology class talks about this thing called "The Skinner Box." It sounds like something out of a Saw movie, but it's actually a famous psychological method from the golden days of research, back when pregnant women still drank and torturing rats for science was cool.A Skinner Box works like this: A rat or some other unsuspecting small animal is placed in this box which has a lever and a little feeding bowl.

Charlie Hoehn was a full-time employee of mine during the making and launch of The 4-Hour Body. It was an intense period. In this post, Charlie will share his M.E.D. (Minimum Effective Dose) for overcoming anxiety and managing workaholism. There are six techniques in total.

I grew up ski racing in Lake Tahoe. I was on the Squaw Valley Ski Team, and it was the center of my life for over a decade. At a conference a few months ago I was asked what skiing taught me about investing. This was on stage, where you can’t ponder your answer – you have to blurt out whatever you can think of. I didn’t think skiing taught me anything about investing. But one incident came to mind. “Well, let me take this to a dark and tragic place,” I said before telling a group of 500 strangers a story I hadn’t talked about much in almost 20 years. A dozen of us had grown up skiing together. Most had known each other since we were young children. By 2001 we were in our late teens, having spent the majority of our waking hours over the previous decade never far from each other. We skied six days a week, 10 months a year, spending summers on the glacier of Mt. Hood, Oregon and in New Zealand, where the seasons mirror our own. Skiing took precedence to everything. Most of us were in an independent study program that let us bypass traditional high school. After skiing all day we read a few books and filled out a few forms in the evening in what – to our amazement – led to a diploma. The amount of time we spent together created a relationship closer to siblings than friends. Ski racing is an odd hybrid between a team and individual sport. You train and travel and eat as a team, but the sport itself is individual. Our race results did not rely on each other; our daily sanity did. Any group of a dozen teenagers will find a way to butt heads. Half the time I think we hated each other. Twenty years later, few of us keep in touch. But of the dozen teenagers who, by 2001, I had spent the majority of my life with, four of us had become inseparable best friends. This is the story of two of them – Brendan Allan and Bryan Richmond. You take amazing things for granted when they become routine. Squaw Valley is one of the largest ski resorts in North America, was home to the 1960 Olympics, and attracts a million visitors a year. It’s staggeringly beautiful. To us, it was just an extension of home. Ski racing required four hours a day of training, which felt like work to us. The rest of the time – another four hours a day, six days a week – we just skied around, unstructured, having a good time. We called it “free skiing.” Everyone else just calls it skiing. On February 15th, 2001, we had just returned from a race in Colorado. Our flight home was delayed because Lake Tahoe was blasted with a blizzard vicious even by its own standards. You can’t race or train when there’s a blanket of new snow – racing requires hard-packed ice. So it was time for a week of free skiing. Earlier that month Tahoe received several feet of light, fluffy snow that comes from Arctic temperatures. The storm that hit in mid-February was different. It was warm – barely at the freezing point – and powerful, leaving three feet of heavy, wet snow on top of the light powder that came before it. We didn’t think about it at the time – we didn’t think about much at age 17 – but the combination of heavy snow on top of fluffy snow creates textbook perfect avalanche conditions. Imagine a thick layer of sand with a layer of heavy cement on top. Now imagine putting those layers on a steep hill. It’s fragile, prone to sliding down. That’s what Squaw Valley was like in late February 2001. Ski resorts are good at managing these kinds of conditions to keep people safe. Few tourists realize it, but if you visit a ski resort in the early morning hours after a blizzard you will hear what sounds like bombs going off. The sound isn’t deceiving. With a combination of mortars, grenades, and charges dropped from helicopters, ski patrol do controlled blasts of at-risk pitches to intentionally trigger avalanches when the resort is empty, preempting slides before guests arrive (check out some videos). It’s an effective system, keeping avalanche accidents at major resorts rare. But if you’re skiing out of bounds – ducking under the DO NOT CROSS ropes to ski the forbidden terrain untouched by masses of Bay Area tourists – the system won’t help you. Skiing out of bounds is illegal, a form of trespassing. The main reason resorts don’t want you doing it is because it’s dangerous. Out-of-bounds areas aren’t patrolled, so you’re on your own if you get injured. They usually don’t lead down to a chairlift, so you have to find your own way back up. And they’re not bombed for avalanche control. So it’s here – out of bounds – that a skier is most likely to discover Mother Nature’s sliding wrath. On the morning of February 21st, 2001, Brendan, Bryan, and I met in the Squaw Valley Ski Team locker room, like we had hundreds of times before. Bryan’s mom told me years later that his last words when he left his house that morning were, “Don’t worry, Mom, I won’t ski out of bounds.” But as soon as we clicked into our skis, that’s what the three of us did. The backside of Squaw Valley, behind the KT-22 chairlift, is a stretch of mountain about a mile long that separates Squaw from Alpine Meadows ski resort. It’s good skiing – steep, wide open, with rolling terrain. And since it’s out of bounds, it was completely untouched. Our private playground. Before February 21st I had skied it maybe a dozen times. It wasn’t one of our frequent spots, because it’s a pain in the ass. The end of Squaw’s backside spits you out on a back country road, where we would hitchhike back to our locker room. Brendan, Bryan, and I decided to ski it that morning. When an event becomes life-changing, all kinds of mundane details sear into your memory. Almost 20 years later I remember Brendan duct-taping his ski pants shut on the chairlift because I had broken the side zipper while wearing them the week before. I remember Bryan cackling with joy as the three of us entered barren wilderness while the rest of the resort was packed with crowds. And I vividly remember getting hit by one of the only avalanches I’ve ever experienced. It was tiny, not going over my knees. It wasn’t scary. I remember laughing. But the feeling is unforgettable. I didn’t hear or see the slide. I just suddenly realized my skis weren’t on the ground anymore – I was literally floating in a cloud of snow. You have no control in these situations, because rather than pushing back on the snow to gain traction with your skis, the snow is pushing you. The best you can do is keep your balance to remain upright. I remember putting my hands up and shouting, “Wahooo” like I was on a roller coaster. I essentially was. The avalanche ended quickly. Brendan was to my left and Bryan was below us. No one stopped. We just charged to the bottom. “Holy shit, did you see that avalanche?” I remember saying when we got to the road. “Haha, that was awesome.” Brendan said. No one thought much more of it. We hitchhiked back. At first we had trouble getting a car to pick us up, so I decided if we took our shirts off in the 20-degree weather people would have sympathy for us and stop. It actually worked. Seventeen-year-old boys are resourceful. When we got back to Squaw Brendan and Bryan said they wanted to ski the backside again. I have no recollection of why, or how this came about, but I didn’t want to go. It may have been the hitchhiking, which I always hated. That, more than the out-of-bounds skiing, felt reckless to me. But I had an idea. Brendan and Bryan could ski the backside themselves. Rather than hitchhiking back, I would pick them up in my truck. Everyone agreed on the plan, which we made in the Wildflour Baking Company cookie shop in the Squaw Valley lodge after lunch. This was before we had cell phones, so syncing on concrete plans ahead of time was important. Brendan and Bryan walked out and skied off. Thirty minutes after Brendan and Bryan took the chair up to ski the backside, I drove to the back-country road where I was scheduled to pick them up. They weren’t there. I waited another 30 minutes before giving up. It took maybe five minutes to ski the pitch, so I knew they weren’t coming. It didn’t occur to me that they were in danger. I figured they beat me to the bottom and hitchhiked back. I drove back to our locker room, expecting to find them. They weren’t there, either. I asked around. No one had seen them. I drove to Brendan’s house, which wasn’t far from the pick-up point. No one was home. I drove back to the locker room and called his house. It went to voicemail. I remember ending the message with, “I hope you’re OK man.” I was starting to get nervous, but not enough to make a big deal. People were more comfortable being out of touch before the texting era. Later that day, around 4 pm, Bryan’s mom called me at home. I remember every word. “Hi Morgan, Bryan didn’t show up for work. Do you know where he is?” she asked. I told her the truth. “We skied the backside of KT-22 this morning. He and Brendan did it again, I was going to pick them up on the road. But they weren’t there, and I haven’t seen them since.” “Oh my God,” she said. Click. I think in that moment she pieced together what may have happened to her son. I did, too. Later that evening, after sunset, my friend Ahren and I bought heavy duty flashlights at a drug store and drove to the pick-up spot. We shined the lights up the mountain shouting, “Brennnndan …. Bryyyyyan.” I remember Ahren and I thinking they had likely broken their legs and were stuck on the hill. In the back of my mind I knew it was more serious, but it was comforting to think we could find them. We gave up quickly and drove to the locker room. I forget who made the call, but the police were suddenly taking our information in what had become a missing-person report. I don’t fault the police for this, but they didn’t take it seriously. I remember one saying, “99% of the time in cases like these the person is out drunk at a party, or ran off with a girl for the night.” I’m sure he was right – that was usually the case. But I knew he was wrong. “Their shoes are right there,” I said, pointing to Brendan and Bryan’s sneakers on the locker room floor. “That means their ski boots are on their feet. And it’s now 9 pm. Think about that. It’s 9 pm and they have their ski boots on their feet. They are not at a party.” Around 10 pm I was told to go to the Squaw Valley Fire Department where I met the local search and rescue team. They took it much more seriously. I explained everything Brendan, Bryan, and I did that day. The search team pulled out maps, and I showed them exactly where we entered the out-of-bounds area, where we exited, and the path we took. I told them about the small avalanche we were caught in that morning. As soon as I mentioned it I could see the dots connecting in the rescuers’ heads. These were seasoned professionals who understood the danger of mountains. When I finished talking I remember two of the rescuers looked at each other and sighed. They knew. I drove back to the locker room around midnight. The Squaw Valley parking lot can hold several thousand cars. By this time it was almost empty. Everyone had gone home, except two cars parked next to each other: Brendan’s Jeep, and Bryan’s Chevy pickup. Search and rescue teams were on the backside of Squaw a little after midnight. It was still a blizzard, with gusty winds and low visibility even during daylight. I remember watching them ski off in the pitchblack night. With giant floodlights and a team of search dogs, they went looking for Brendan and Bryan. I later learned that as soon as the rescue team entered the out-of-bounds point where I told them we skied, they found the fresh scars of a massive avalanche field. I tried to sleep on a bench in the locker room, but couldn’t shut my eyes. I remember hoping Brendan and Bryan would come bounding through the door. The hours dragged on, and felt like days. By 9 am the locker room was packed with other ski racers, parents, friends, and family, all eager to help. It became a staging area for the search. I laid back down on the bench and finally fell asleep. A few minutes later I awoke to the sound of a scream, followed by yelling and commotion. I knew what happened. No one needed to say it. I walked to the second floor of the locker room where I saw Bryan’s mom on a couch. The scream was hers. “I’m so sorry,” I told her, bawling. It’s hard to describe a moment like that. I didn’t know what else to say then. I don’t know what else to say now. Search dogs had honed in on a spot in the avalanche field where rescuers with probe poles found Brendan and Bryan buried under six feet of snow. They were born one day apart, and died 10 feet from each other. Later that day I drove to see my dad at work. I wanted to be around family. He met me in the parking lot and said, “I’ve never been so happy to see you.” It was the only time I’ve seen him cry. It didn’t occur to me until that moment how close I was to going with Brendan and Bryan. Why did I ski the backside with them once that morning, but then decline a second run? I’ve thought about it a million times. I have no idea. Why was the avalanche on our first run a tiny little thrill, but the second run triggered a massive slide that killed two 17-year-olds? We’ll never know. The next evening, Tom Brokaw told Brendan and Bryan’s story on the NBC Nightly News. It was surreal to watch. We were laughing together 36 hours before. Now their death was national news. And the only thing that kept me from being a third name in the newscast I had watched religiously was a fluke decision I put no thought into. It’s been almost 20 years since this happened. Sometimes I think about everything that’s occurred since – college, marriage, career, kids – and remind myself that I’ve only experienced it because of a blind, thoughtless decision to decline another ski run. This story isn’t unique. Many people reading this have had near-death experiences. Most have lost someone dear to them. And everyone reading this has made what seemed like know-nothing, inconsequential decisions that fundamentally reshaped their lives. Sometimes those fluke decisions are positive. Sometimes they’re negative. But they’re always out of the blue, unforeseeable. It’s just how life works. After I told this story at the conference I had to tie it back to an investing lesson. It was easier than I thought. My risk tolerance plunged after Brendan and Bryan died. I broke my back skiing (no nerve damage) a few months later, which crushed it even more. I haven’t skied much since. Maybe ten times in the last 15 years. If I’m honest, it scares me. I’ve been risk-averse in other areas of life ever since, too. I drive the speed limit. I obey the seatbelt sign on airplanes. I invest in index funds. I don’t know if Brendan and Bryan’s death actually affected how I invest. But it opened my eyes to the idea that there are three distinct sides of risk: The odds you will get hit. The average consequences of getting hit. The tail-end consequences of getting hit. The first two are easy to grasp. It’s the third that’s hardest to learn, and can often only be learned through experience. We knew we were taking risks when we skied. We knew that going out of bounds was wrong, and that we might get caught. But at 17 years old we figured the consequences of risk meant our coaches might yell at us. Maybe we’d get our season pass revoked for the year. Never, not once, did we think we’d pay the ultimate price. But once you go through something like that, you realize that the tail-end consequences – the low-probability, high-impact events – are all that matter. In investing, the average consequences of risk make up most of the daily news headlines. But the tail-end consequences of risk – like pandemics, and depressions – are what make the pages of history books. They’re all that matter. They’re all you should focus on. We spent the last decade debating whether economic risk meant the Federal Reserve set interest rates at 0.25% or 0.5%. Then 36 million people lost their jobs in two months because of a virus. It’s absurd. Tail-end events are all that matter. Once you experience it, you’ll never think otherwise.

Life is a little easier if you expect a certain percentage of it to go wrong no matter how hard you try. Smart people screw up. Good people have bad days. Nice people lose their temper. Pablo Escobar expected 10% of the cash he stored in warehouses to be eaten by rats or spoiled by mold. That was if everything went well. Some downsides are unavoidable. You can push back, but they’ll never die. They’re part of life, and you might as well learn to accept them than pretend perfection exists. Three in particular get in the way when thinking about risk. 1. It’s impossible to think about risk and opportunity without a reference point. And your reference point is at best incomplete if not totally wrong. How risky do you think Covid-19 is? What should we do about it? What happens next? No one can answer those without acknowledging what Covid-19 looks like in the eyes of different people. An 80-year-old with asthma doesn’t think about its risks the same way a healthy 20 year old does. A parent with young kids doesn’t think about working from home like a single person does. A restaurant owner doesn’t think about economic opportunity like a software engineer does. So people come to vastly different answers about Covid’s future – not because one is more right than the other, but because they’re thinking about the same problem with different reference points. Everything we think about risk and opportunity is colored by our own unique situation and personal experience. I do it, you do it. It’s unavoidable. All risk and opportunity has to be measured against a set of baseline expectations. But since different people who’ve experienced different things and want different outcomes have different expectations, two people thinking about the same problem come to different conclusions. Both expect their conclusions to be right. Both are mystified when they’re often wrong. You can try to be open-minded. But the world you see through your own eyes will always make more sense than the one you try to understand through others’. So we all wander around with a view of risk shaped by narrow experiences but applied to the broad world. “Nothing can be done without preconceived ideas,” Sherlock Holmes said. I wish there was a way around this, but there’s not. Humility is the only antidote. It’s an acceptable flaw. 2. Long-term thinking is hard to implement because the long run is a collection of short runs that have to be managed, marketed, and used as information to gauge whether a long-term reward still exists. Imagine you’re a fund manager whose portfolio is down 30% one year. Then 10% the next year. And the next. The fund manager could tell its investors, “Our investments are just temporarily out of favor. Over the long run they’re still going to outperform.” And let’s assume that the fund manager is* right *about that. The fund’s investors will still leave. Nine times out of ten, poof, they’re gone. The fund manager is forced to close the fund, and the long term isn’t achieved because the short term wasn’t survived. Long-term thinking looks easy in a spreadsheet. You can look at a long stretch of history and say, “If you just put up with a few lousy years you went on to capture excellent returns.” That’s good thinking. It’s right thinking. But the real world doesn’t play out in spreadsheets. It plays out in quarterly letters, where you have to convince investors that poor performance will be temporary vs. a signal that you don’t know what you’re doing. It plays out at the dinner table, where you have to convince a spouse that your net worth has plunged but, don’t worry, it’s all part of the plan. It plays out in your own head, when you start to wonder whether your poor performance means you missed something, second-guessing your own skill. Something can be as impractical as it is right. Long-term thinking often falls into that bucket – especially when it’s interpreted as a complete disregard of the short run, where critical decisions are made. Short-term thinking is the root of most of our problems in business, investing, and politics. But I get why it happens. It has to happen. Short-term thinking can be the only way you’ll survive long enough to experience long-term results. It’s an acceptable flaw. 3. Underestimating the odds of change because an honest assessment of how unknown the future is would make most people refuse to get out of bed every morning. Most of us are at least a little overconfident because of two truths: No one knows what the future will look like. You can’t make decisions unless you think you know what the future will look like. We can poke fun at how inaccurate business and investing forecasts are. And we should. But I get why they happen. I get why they’re so persistent despite their track record. To rid yourself of the idea that the future is knowable is to admit that your decisions might be futile. It can feel like you’re fighting an opponent five times your size, which might be enough to say, “Why even try?” Nothing would get done in the world if people were only driven by the accurate probability of their future success. Smart people think probabilistically about their chances. But even then, there’s widespread denial. If you know there’s an 80% chance your endeavor will fail, the majority of people will assume they will end up in the fortunate 20%. Daniel Kahneman often asks business leaders, “To what extent will the outcome of your effort depend on what you do in your firm?” “The answer has never been less than 80%,” he says. They’re aware of the actions they’re taking, and to remain optimistic they have to assume those actions correlate with results. “They know less about their competitors and therefore find it natural to imagine a future in which the competition plays little part,” Kahneman says. Moving forward with a degree of blissful unawareness. A little blindness, a little over-optimism, and a little denial is one of the economy’s most potent fuels. It’s a flaw, but the alternative is worse. So it’s an acceptable one. More on this topic: Useful Biases When You Have No Idea What Happens Next Risk Is What You Don’t See

This is a story about when big innovations happen. Not how, but when. And to some extent, why. Hopefully you find it counterintuitive at first before it quickly seems obvious. That’s how most important ideas work. And hopefully you’ll see why 2020, for all the hell its brought, could be the new beginnings of something promising. Cars and airplanes are two of the biggest innovations of modern times. But there’s an interesting thing about their early years. Few looked at early cars and said, “Oh, there’s a thing I can commute to work in.” Few saw a plane and said, “Ah-ha, I can use that to get to my next vacation.” It took years and decades for people to see that potential. What they did say early on was, “Can we mount a machine gun on that? Can we drop bombs out of it?” Every new invention looks like a toy at first. Adolphus Greely was one of the first people outside the car industry to realize the “horseless carriage” could be useful. Greely, a brigadier general, purchased three cars in 1899 – almost a decade before Ford’s Model T – for the U.S. Army to experiment with. In one of its first mentions of automobiles, The Los Angeles Times wrote about General Greely’s purchase: It can be used for the transportation of light artillery such as machine guns. It can be utilized for the carrying of equipment, ammunition and supplies; for taking the wounded to the rear, and, in general, for most of the purposes to which the power of mules and horses is now applied. Nine years later, the LA Times did an interview with young brothers Wilbur and Orville Wright, who talked about the prospects of their new flying machine: The Wrights had reason to believe this was true. Their only real customer in their early years – the only group to show interest in airplanes – was the U.S. Army, which purchased the first “flyer” in 1908. The Army’s early interest in cars and planes wasn’t a fluke of lucky foresight. Go down the list of big innovations, and militaries show up repeatedly. Radar. Atomic energy. The internet. Microprocessors. Jets. Rockets. Antibiotics. Interstate highways. Helicopters. GPS. Digital photography. Microwave ovens. Synthetic rubber. They all either came directly from, or were heavily influenced by, the military. Why? Are militaries home to the greatest technical visionaries? The most talented engineers? Perhaps. But more importantly they’re home to Really Big Problems That Need to Be Solved Right Now. Innovation is driven by incentives. And incentives come in many forms. On one hand there’s, “If I don’t figure this out I might get fired.” That will get your brain in gear. Then there’s, “If I figure this out I might help people and make a lot of money.” That will produce creative sparks. Then there’s what militaries have dealt with: “If we don’t figure this out right now we’re all going to die and the world will be taken over by Adolf Hitler.” That will fuel the most incredible problem-solving and innovation in the shortest period of time that the world has ever seen. The 1955 book The Big Change describes the burst of scientific progress that took place during World War II: What the government, through its Office of Scientific Research and Development and other agencies, was constantly saying during the war was, in effect: “Is this discovery or that one of any possible war value? If so, then develop it and put it to use, and damn the expense!” The result has been likened to a team of experts combing through a deskful of scientific papers, pulling out those which gave promise of usefulness, and then commandeering all the talent and appropriating all the money that might be needed to translate formulae into goods. Militaries are engines of innovation because they occasionally deal with problems so important – so urgent, so vital – that money and manpower are removed as obstacles, and those involved collaborate in ways that are hard to emulate during calm times. You cannot compare the incentives of Mountain View coders trying to get you to click on ads to Manhattan Project physicists trying to end a war that threatened the country’s existence. You can’t even compare their capabilities. The same people with the same intelligence have wildly different potential under different circumstances. Militaries are an extreme example of panic-induced innovation. A broader point that applies to everyone is that the biggest innovations rarely occur when everyone’s happy and safe, or when the future looks bright. They happen when people are a little panicked, worried, and when the consequences of not acting quickly are too painful to bear. That’s when the magic happens. The 1930s were a disaster. Almost a quarter of Americans were out of work in 1932. The stock market fell 89%. Those two economic stories dominate the decade’s attention, and they should. But there’s another story about the 1930s that rarely gets mentioned: It was, by far, the most productive and technologically progressive decade in history. The number of problems people solved, and the ways they discovered how to build stuff more efficiently, is a forgotten story of the ‘30s that helps explain a lot of why the rest of the 20th century was so prosperous. Here are the numbers: Measuring total factor productivity – that’s economic output relative to the number of hours people worked and the amount of money invested in the economy – hit levels not seen before or since: Economist Alex Field writes: In 1941, the U.S. economy produced almost 40 percent more output than it had in 1929, with virtually no increase in labor hours or private-sector capital input. Almost all of the increase in output per hour is attributable to technological and organizational advance [of the 1930s]. A couple of things happened during this period that are worth paying attention to, because they explain why this happened when it did. The New Deal’s goal was to keep people employed at any cost. But it did a few things that, perhaps unforeseen, become long-term economic fuels. Take cars. The 1920s were the era of the automobile. The number of cars on the road in America jumped from one million in 1912 to 29 million by 1929. But roads were a different story. Cars were sold in the 1920s faster than roads were built. A new car’s novelty was amazing, but its usefulness was limited. That changed in the 1930s when road construction, driven by the New Deal’s Public Works Administration, took off. Spending on road construction went from 2% of GDP in 1920 to over 6% in 1933 (vs. less than 1% today). The Department of Highway Transportation tells a story of how quickly projects began: Construction began on August 5, 1933, in Utah on the first highway project under the act. By August 1934, 16,330 miles of new roadway projects were completed. Historian Robert Grodon writes: The 1930s witnessed the construction of multilane engineering marvels, including the George Washington, Golden Gate, and Bay Bridges, as well as the beginning of multilane limited-access turnpikes, including the Merritt Parkway in southern Connecticut and the first section of the Pennsylvania Turnpike. These anticipated, and in some cases became part of, the postwar Interstate Highway System. As of 1940, a map of the principal routes of the U.S. highway system looks virtually identical to a map of today’s Interstate Highway System, except that most of the roads were two-lane with intersections rather than featuring limited access. The Pennsylvania Turnpike, as one example, cut travel times between Pittsburgh and Harrisburg by 70%. The Golden Gate Bridge opened up Marin County, which had previously been accessible from San Francisco by ferry boat. Multiply those kinds of leaps across the nation and 1930s was the decade that transportation truly blossomed in the United States. It was the last link that made the century-old railroad network truly efficient, creating last-mile service that connected the world. A huge economic boon. Electrification also surged in the 1930s, particularly to rural Americans left out of the urban electrification of the 1920s. The New Deal’s Rural Electrification Administration brought power to farms in what may have been the decade’s only positive development in regions that were economically devastated. The number of rural American homes with electricity rose from less than 10% in 1935 to nearly 50% by 1945. It is hard to fathom, but it was not long ago – during some of our lifetimes and most of our grandparents’ – that a substantial portion of America was literally dark. Franklin Roosevelt said during a speech on the REA: Electricity is no longer a luxury. It is a definite necessity. It lights our homes, our places of work and our streets. It turns the wheels of most of our transportation and our factories. In our homes it serves not only for light, but it can become the willing servant of the family in countless ways. It can relieve the drudgery of the housewife and lift the great burden off the shoulders of the hardworking farmer. I say “can become” because we are most certainly backward in the use of electricity in our American homes and on our farms. In Canada the average home uses twice as much electric power per family as we do in the United States. Electricity becoming a “willing servant,” – introducing washing machines, vacuum cleaners, and refrigerators – freed up hours of household labor in a way that let female workforce participation rise. It’s a trend that lasted more than half a century and is a key driver of both 20th century growth and gender equality. A second productivity surge of the 1930s came from everyday people forced by necessity to find more bang for their buck. The first supermarket opened in 1930. The traditional way of purchasing food was to walk from your butcher, who served you from behind a counter, to the bakery, who served you from behind a counter, to a produce stand, who took your order. Combining everything under one roof and making customers pick it from the shelves themselves was a way to make the economics of selling food work during a time when a quarter of the nation was unemployed. Laundrymats were also invented in the 1930s after sales of individual washing machines fell – they marketed themselves as washing machine rentals. Factories of all kinds looked at bludgeoned sales and said, “What must we do to survive?” The answer was often to build the kind of assembly line Henry Ford introduced to the world in the previous decade. Output per hour in factories had grown 21% during the 1920s. “During the Depression decade of 1930-1940 – when many plants were shut down or working part time” historian Frederick Lewis Allen writes, “there was intense pressure for efficiency and economy – it had increased by an amazing 41 per cent.” He wrote again in 1943: Anybody can understand the basic principle of a fork truck. But the layman can only stand in awe before some of the complex electronic machines which came into use after 1935 – machines for measuring materials with microscopic exactitude, or for watching the performance of a machine and automatically correcting flaws in its performance. The language used by engineers in talking about them is quite unintelligible to him, as are the processes involved. But at least he can appreciate the miraculous results they achieve. Something as simple as quality control sampling massively reduced manufacturing waste and became common in the 1930s. Lewis Allen again: The workman can thereupon regulate the adjustment of his machine, not by guesswork, but with exact knowledge of just how it is functioning. This [process] – which in many a factory has saved large amounts of money by reducing the number of defective products – has the effect of raising the status of the workman by making him in a special sense his own boss, the informed critic and judge of his performance. This story was repeated across industries. Productivity growth in the 1930s was not constrained to a few fields, like it was in the 1920s when manufacturing accounted for nearly all the gains. The ‘30s saw huge technical progress in utilities, farming, wholesale trade, retail, transportation, mining, and communication. “The trauma of the Great Depression did not slow down the American invention machine,” Alex Field writes. “If anything, the pace of innovation picked up.” Economist David Henderson writes: “Topping” techniques in electricity generation — using exhaust steam from high-pressure boilers to heat lower-pressure boilers — raised capacity by 40 to 90 percent with virtually no increase in the cost of fuel or labor. New treatments increased the life of railroad ties “from eight to twenty years.” With new paints, the time for paint to dry on cars fell from three weeks (!) to a few hours. [Total research and development] employment in 1940 was 27,777, up from 10,918 in 1933. Driving knowledge work in the ‘30s was the fact that more young people stayed in school because they had nothing else to do. High school graduation surged during the depression to levels not seen again until the 1960s, according to Field. One student recalled: High schools had a larger attendance than ever before, especially in the upper grades, because there were few jobs to tempt anyone away. Likewise college graduates who could afford to go on to graduate school were continuing their studies – after a hopeless hunt for jobs – rather than be idle. All of this – the better factories, the new ideas, the educated workers – became vital in 1941 when America entered the war and became the Allied manufacturing engine. The big question is whether the big technical leap of the 1930s could have happened without the devastation of the depression. And I think the answer is “no” – at least not to the extent that it occurred. You could never push through something like the New Deal without an economy so wrecked that people were desperate to try anything to fix it. It’s doubtful that business owners and entrepreneurs would have so urgently found new efficiencies without the record threat of business failure. Managers looking at their employees and saying, “Go try something new. Blow Up the playbook, I don’t care,” is not something that gets said when the economy is booming and the outlook is bright. Big, fast, changes only happen when they’re forced by necessity. World War II began on horseback in 1939 and ended with nuclear fission in 1945. NASA was created in 1958 two weeks after the Soviets launched Sputnik and landed on the moon just 11 years later. Stuff like that rarely happens that fast without fear as a motivator. It reminds me of this: HOBBES: Do you have an idea for your story yet? CALVIN: You can’t just turn on creativity like a faucet. You have to be in the right mood. HOBBES: What mood would that be? CALVIN: Last-minute panic. There’s an obvious limit to stress-induced innovation. There’s a delicate balance between the economy being thrown upside down, everyone inside it driven into action by necessary panic, while the foundations of the economy itself remain intact, capable of supporting the new ideas and innovations. My guess is that balance has only happened a few times in modern history. One was the period from 1930 to 1945. Parts of the Cold War might qualify, though it was concentrated in a few defense sectors. Then there’s 2020. The hardest thing about stress-induced innovation is reconciling that positive long-term trends can be born when people are suffering the most. It makes the topic difficult to even discuss without looking insensitive. But think of what’s happening in biotech right now. Many have pessimistically noted that the fastest a vaccine has ever been created is four years. But we’ve also never had a new virus genome sequenced and published online within days of discovering it, like we did with Covid-19. We’ve never built seven vaccine manufacturing plants when we know six of them won’t be needed, because we want to make sure one of them can be operational as soon as possible for whatever kind of vaccine we happen to discover. We’ve never had so many biotech companies drop everything to find a solution to one virus. It’s as close to a Manhattan Project as we’ve seen since the 1940s. And what could come from that besides a Covid vaccine? New medical discoveries? New manufacturing and distribution methods? Newfound respect for science and medicine? So many important discoveries happen by accident when frantic experimentation uncovers an unrelated quirk of science. In his book How We Got to Now, Steven Johnson writes: Innovations usually begin life with an attempt to solve a specific problem, but once they get into circulation, they end up triggering other changes that would have been extremely difficult to predict … An innovation, or cluster of innovations, in one field ends up triggering changes that seem to belong to a different domain altogether. This is happening in medicine right now. It’s happening with doctors in hospitals and scientists in labs. It’s impossible to know what it will lead to. But there’s currently so much experimentation, with stakes so high, that you know we’re going to look back in 10 or 20 years at the important discoveries that wouldn’t have been possible without Covid-19. That’s always how it’s worked. Or think about cities. I don’t think San Francisco or New York are dead – that’s absurd. But it doesn’t take many companies letting their employees work remotely to take the pressure off one of the biggest social problems of the last generation: affordable housing. Having so much of the economy’s economic potential clustered in a few cities – a few neighborhoods, really – created $2 million starter homes in cities with good jobs and cheap homes in cities with little economic growth. Even a slight shift to permanent remote work could make cities more livable and rural areas more prosperous. Or colleges. Student loans are another major social issue of the last generation. Without Covid the college industry would have likely corrected in the coming decades. With Covid it’s correcting in the coming weeks. When schools say, “Pay full tuition and we’ll teach you over Zoom,” and students and parents say, “Wait, there’s no way that’s worth it,” you realize – quickly, in stark terms – that you’re not paying for an education. You’re paying for a credential and a social experience, which doesn’t need to cost $68,000 a year. Scott Galloway recently put it: There’s a recognition that education — the value, the price, the product — has fundamentally shifted. The value of education has been substantially degraded. There’s the education certification and then there’s the experience part of college. The experience part of it is down to zero, and the education part has been dramatically reduced. You get a degree that, over time, will be reduced in value as we realize it’s not the same to be a graduate of a liberal-arts college if you never went to campus. You can see already how students and their parents are responding. It’s not crazy to say that could be the most important developments of the next generation, because student loans have been one of the biggest burdens of the past generation. On the tech front, Microsoft CEO Satya Nadella said “two years of digital transformation took place in two months,” this spring. What does that lead to? Almost every business in the world is now asking how they can work more efficiently, save a few bucks here and here, and do more of their business online. What does that lead to? Tens of millions of people who lost their jobs, and hundreds of millions of people who kept theirs but worried, will be permanently scarred into thinking about risk, opportunity, and safety nets differently than they were six months ago. What does that lead to? I don’t think anyone knows the answers. All we know is that the most important changes of the last 100 years have taken place during upheavals. And we’re currently in the biggest upheaval of the last 100 years. We know that creativity and discovery surge when people are forced to find, rather than just want, new solutions. We know that an irony of technology is that economies often make their greatest leaps forward when the outlook is bleakest. It might be one of the only silver linings of 2020. In October, 1933 an Ohio lawyer named Benjamin Roth wrote a diary entry about the economic carnage devastating his town. A quarter of the town was unemployed. Farms were bankrupt. Surviving businesses used new efficiencies to get by with fewer workers, exacerbating unemployment. Roth tried to remain optimistic. “I am confident that new inventions and scientific discoveries will remedy this situation,” he wrote. At nearly the same time he was writing an electrical engineer named Edwin Armstrong introduced a new radio technology to David Sarnoff, an RCA executive struggling to hold together an industry smashed by the Depression. Sarnoff later recalled the conversation, as told in the book Man of High Fidelity: “Why are you pushing this so hard?” asked Sarnoff. “There is a depression on,” said Armstrong. “The radio industry needs something to put life in it. I think this is it.” The technology – FM radio – transformed 20th century communication. Maybe we’ll be so lucky.