This isn’t the future we were promised – Part II: Broken Institutions

By Santiago Hunt


Recap: In Part 1 I looked into how the world’s economy is slowing down, and how demographics forebodes ongoing anemic growth.


Our institutions are losing contact with reality

There are 3 players in societies across the globe that are turning their eye away from our new “anemic growth” reality. Government, Education and Health.

The real issue with lack of growth is that a positive sum game becomes a zero-sum game. With growth, we can all be winners to some extent. Without it, there will surely be losers. And our institutions are being not held accountable to this new reality.


The trend in government deficit for the past 10-20 years is clear. Spoiler: Governments like spending money…even if they don’t have it!

Source: World Bank

Governments across the world have been spending more than what they collect. They’ve fueled this spend with increased debt. Although one could argue that it makes sense to borrow when the cost is low (ie. low interest rates), it still means you’re borrowing. And you eventually have to pay back, right?

Source: World Bank

Actually, it depends. If it were an individual, eventually she/he will have to repay. But what happens when the borrower is the primary institution of a country? In most cases, the answer is that the debt is rolled over and diluted. Which explains (partly) why we are seeing negative interest rates, and why central banks have turned their money printers on, in the hopes to stoke inflation and gradually dilute debt.

This approach may or may not work – we’ll see. But it is unquestionable that most governments consider curbing spending an unpopular way to gain votes and popularity. Slowly but surely, the shadow of public spend has grown bigger over the course of the past two decades.  


Education is perhaps the clearest example of these 3 players. It has continued to balloon in terms of size and expenditure, but has its societal output grown at par?

Marc Andreessen keenly points out that there are 120 million new 18 year olds in the world each year. Yet even though education costs continue to sharply increase, we’re only educating a small amount of these people. Furthermore, the way we are doing so hasn’t really changed that much in the past 70 years. The last major innovation in K-12 has been Montessori, which is 50+ years old, and still only adopted in the system’s fringes (another Andreessen observation).

For all of us parents out there, 2020 has been a huge wakeup call in this sense. We’ve had to take a more active role both as teachers and observers of our children’s academic education. In the majority of cases, we have not been impressed. Although teachers individually have been asked to pour more effort than ever before, the cracks in the system have become visible. Regardless of the differences in geographies and school systems, there’s been a general admission that there is way less “academic learning” at school than what we thought. Instead, there is much more childcare and “social learning”. This is of value to society, but are we getting a fair price for what it costs?

The picture at a college level is likely much worse. At least at the schooling level there is a much stronger case in favor of its social intangibles. When it comes to university, the veil has been torn to pieces. While tuitions have skyrocketed in the past years, the actual “educational firepower” of universities has fallen behind. The student debt crisis in the US is the first example that comes to mind – but it is not the only one.

Source: Federal Reserve USA

Only 37% of people in the US think they will repay their student loans in less than 10 years. Almost 20% can’t figure out how they will manage to repay – ever. In the UK, the average student debt has 15x in the past 20 years according to Student Loans Company. Tuitions have risen. The earning power of the students paying these tuitions…not nearly as much. Companies like Lambda School are popping up in an attempt to arbitrage the system, at least regarding coding/engineering. The first of many attempts, given how badly the need for disruption in education is.

There’s lots of finger pointing about who’s to blame here, and little progress. What is clear though, is that the tuition trajectory behaves as if we were still in the world of economic growth of the 80s. While salaries reflect the 2020 world.


Of the 3 institutions mentioned, health is the most controversial. Many people would agree if asked “Is the health sector broken?”. However, there is strong evidence of progress and positive change in the space. Age expectancy has risen globally. Child mortality has decreased worldwide. And not only lifespan has improved, but “healthspan” (h/t Peter Attia) is also on the rise.

Unlike government spending or education, where evidence is hazier, there’s a clear link between spending money on healthcare and improvements in health. Take a simplistic yet powerful measure, like healthcare spend (%GDP) and life expectancy. The correlation is pretty clear.

Source: OECD

(By the way, it’s remarkable how much of an outlier the US is. No wonder “Health” is the #1-2 concern of Americans).

The challenge though, is that in many countries health spend (public + private) is representing an ever increasing % of GDP. Tradeoffs between healthcare and other priorities become very stark in a zero-sum game.  And a world with anemic growth is a big zero-sum game.

In %GDP terms, increases in healthcare spend (public+private):

– China: +44% in the last 10 years.

– Singapore: +55% in the last 10 years.

– US: +33% in the last 20 years.

– UK: +41% in the last 20 years.

Sweden: +47% in the last 20 years.

– South Korea: +103% in the last 20 years.

The trajectory is similar for most major economies in the world. And all of these numbers are pre 2020 jumps.

Enter something like COVID-19. Humanity as a whole has had to face the worst pandemic in 100 years. While most people have lived through this tough period with courage and grace (health workers being the standout example), there’s a common pattern across the world. Be it in Berlin, Buenos Aires, Cork, Montreal and a painfully long etc., there’s a small but relevant group with the same message: “It’s just the flu”; “It’s not a big deal”; “You can’t limit my freedom of choice” and so on. Even celebrities such as Noel Gallagher have come on the record against “being forced to use a mask”.

There’s an underlying thread to their point of view: the belief that the economic and social sacrifice they’re being asked for is not worth the health gains. A view that is shared by a much wider segment of people worldwide.

(Let me pause here and be clear: COVID-19 is not the flu. Wear a mask).

Having made that disclaimer, I think that we’re failing to understand the mental framework behind these claims. It’s tempting to dismiss them.  But it is both risky and naïve. What these small (but not that small) groups are telling us around the world is: “We’re spending too much of our resources on health, and too little on the rest”.

We might agree or disagree with their point of view. What we must not do is avoid facing it. Because this pain point has the markings of a struggling economic model. We cannot expect health expenditure to keep growing at a similar pace in the coming decades given the lack of economic growth. A relevant part of society is not open nor willing to do the required trade-offs. Historically, it hasn’t paid off to turn a blind eye from these warning signs.


I don’t intend for this post to be read as “Let’s go into Atlas Shrugged mode”. Government, education and health are some of the building blocks of society. We cannot do without them. We cannot shun them.

However, it is time we had an active discussion around their size and contribution. Otherwise, we will also be turning our eye from reality. And what’s worse, we’ll be turning our eye from reality’s consequences: the losers of zero-sum games. People who are anxious. And stressed. And angry.

This series ends with “Part III: The game’s losers”


Cover image copyright Amy Moore


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