‘Play the music, light the lights’

Amongst the most watched films over the holidays was, once again, The Muppet Christmas Carol. It takes the most famous Christmas story (apart from the original one obviously) and adds songs, jokes and puppets. The enduring popularity of this film and the book on which it is based is surely down to the message behind it. Scrooge treats people less fortunate than himself as if they don’t exist and if he doesn’t change his ways he is going to hell. He is shown the error of his ways and learns to understand the real meaning of Christmas. He changes and shows ‘a life can be made right’.

We may not have the widespread slums Dickens describes; however social injustice and homelessness remain a curse. But one aspect which is strange to modern eyes is the darkness and gloom which envelopes the characters and their surroundings, and the reluctance of Scrooge to light his candles: ‘Darkness is cheap, and Scrooge liked it’. To modern eyes, this is preposterous and shows his penny-pinching, but this would have been less noticeable to readers in Dickens’ time.

The Economist Tim Harford notes that the electric lightbulb is one of the ‘Fifty things which made the modern economy’ in his book of the same name. He describes how economists have studied the deflation in the price of illumination, as measured by the cost per lumen-hour. By this measure, the price has fallen by a factor of 500,000 over recent centuries. Too precious for Scrooge to use has become too cheap for us to notice.

At times during these past twelve months, it has felt like a blanket of gloom has been wrapped over the lives we used to lead. In many areas however, 2021 promises much brighter times.

With its means to replicate severely reduced, Trump 2017-21 should die away quickly, though mutations of the strain cannot be ruled out. A Brexit deal for goods is done and we move on to what happens next. And most of all, the speedy roll out of effective vaccines promises a return to normality at some point this year.

These vaccines potentially cast a bright radiance at the end of the Covid tunnel – but how long is the tunnel? It is unlikely that the strong economic recovery which stretches out ahead of us will be smooth and in a straight line. For example, we haven’t had to worry much about inflation for several decades as structural forces such as technology and globalisation have reduced prices for many consumer goods and services. However, it is likely that if vaccines are rolled out successfully demand for all those things we have been unable to do these past months will come roaring back. Can governments and central banks avoid policy errors such as cutting spending and tightening money supply which would hurt the recovery?

How will governments, companies and individuals react to the high levels of debt accumulated? And whilst many countries have access to vaccines, many do not. It seems likely that we will have to tolerate this virus for many years to come and accept a certain level of it, in the way we do with other diseases – this is a difficult message for politicians to give and may be difficult for voters to accept.

The recovery promises to be uneven, bumpy, unfair and still many months away. Indeed, the UK economy is not expected to return to 2019 levels until 2023. However, we continue to believe in looking forward and being guided by the light ahead of us.