Big Lessons from Small Nations

[Music]

when we think about what the future

might look like

we usually think about the impact of

climate ai

and aging societies but how often do we

think about the future of nations

here is a view of the earth from outer

space a world without

political borders now we see changes in

national borders since

1800 we take for granted that our

countries are stable

even permanent but history shows us that

they’re

in fact prone to change more often than

we think

what causes borders to change what

determines the size of nations

over the next few minutes i will attempt

to show nation formation has changed

significantly

in favor of smaller more socially

cohesive nations

and that they’re pointing the way by

their positive example towards maybe

even a superior model for our futures

so let’s get started

for most of history prosperity was about

conquest

a country’s status and power has equated

with size

its territorial reach natural resources

military might tax base size of its

domestic market

smallness was associated with weakness

inability to act even a question about

surviving

this bigger means better mindset

encourages empire building

think of alexander the great the roman

empire

napoleon or stalin the british empire in

1911 was the largest empire in history

yet at its peak it controlled only 25

percent

of the world’s population at some point

the advantage of expansion ceased

otherwise we would have experienced the

united states of the world

it turns out that the cost of social

cohesion at some point

outweighs the benefits of scale

different languages

ethnicities social norms

distances my first thesis

is that modernity has radically altered

the formula of nation formation

the advantages of size have declined

considerably

commodities and capital intensive

they’re unprofitable

and environmentally damaging so who

wants them

militaries are costly and often lead to

conflicts

economic power in fact is decoupled from

size

in a knowledge-based economy its

innovation and talent

matter nimbleness is now essential to

adapt to a world of accelerating change

think back 20 years ago we didn’t have

facebook

google maps tesla airbnb

bitcoin spotify the sweetest music

streaming company

didn’t exist 20 years ago either its

most successful market in the world is

chile with a market penetration of over

60 percent

but spotify doesn’t even have a company

in chile

nor does it employ one worker there the

cost of shipping has declined 80 percent

since 1940 for products sold over the

internet

like spotify’s the cost of distance is

zero so the world is shrunk

and meanwhile it’s changing faster by

the day

societies are losing their social

cohesion think of brexit

trump chilejon wherever we look there’s

a declining emphasis on marriage

families religion and communities

and the emergence of identity groups

across sexuality

gender race even generation

with narrow and confusing categories

like x y

and z there’s more emphasis on me

and less on we and think of the single

to noise ratios the rise of fake news

social media platforms such as facebook

instagram and google

that are designed to maximize our

attention not improve our understanding

taken together the declining value of

size

and the increasing cost of social

cohesion means that smaller more

cohesive societies have distinct

advantages

so we may witness the emergence of more

of them but this is really not new

it’s happened before denmark is a tiny

fraction of itself

compared to what it was in the 16th

century the british empire morphed into

the commonwealth

and then the united kingdom who would

have thought five years ago

let alone 50 years ago northern ireland

would consider uniting with ireland

economies of scale is economics what

gravity is to physics

the notion that greater efficiency comes

with greater societies

here is what we would expect to see if

there were a close relationship between

the population of a nation

and its ability to produce wealth in

this instance

gdp per capita but in reality there is a

weak almost random relationship when one

studies the data across all nations

meaning that size doesn’t seem to matter

at all

what merges instead is a cluster of

small outperforming nations

outliers as they say in statistics

switzerland

ireland singapore sweden

denmark finland the netherlands and

israel

big things come in small packages nine

out of ten of the most competitive

nations in the world have populations of

less than 20 million people

15 of the top 20 nations ranked by the

united nations human development ranking

or small countries

11 of the 15 per capita income

all the 10 countries ranked in terms of

happiness are small countries

a similar pattern emerges when we look

across a number of importance

performance metrics inequality

equitable treatment of whitman

confidence in government

co2 emissions singapore for instance

spends the least amount per student on

education

but achieves the highest pisa scores the

dutch have the best pension funds in the

world

according to rankings by mercer

their success is due to excellence not

clout

these nations what i call s8 nations

achieve twice the level of

competitiveness as their g20 or large

counterparts

what’s interesting is that their

outperformance is accelerating

just at a time when the larger nations

are declining

despite throughout performance s8

nations lacked voice among multinational

institutions

such as the united nations imf or the

world economic forum

participation and leadership in such

forms has traditionally been based on

power

rather than excellence but wherever we

look it seems difficult being in larger

nation these days

hardly a day goes by when yet another

doomsday scenario is put forward

so much of what we read and hear is

about failure

rather than success but progress

throughout history

has always been about finding something

that works in reverse engineering

whether it was the wheel or the iphone

ironically many of the solutions to our

problems are already here

we just need to look over the garden

hedge to find them

and here are a few examples copenhagen

is well on its way to becoming the first

carbon neutral city in the world by 2025

in good part because it has replaced

cars with bicycles

here is a major thoroughfare in

copenhagen in 1970 compared to

today the danes have taught us what it’s

like to live

at three kilometers per hour

israel leads the world in eradicating

covet

it has the highest per capita number of

vaccinations in the world

head and shoulders above any other

country

finland’s new prime minister and

majority of cabinet are women

in their 30s new zealand passed the law

last year called naked produce

preventing the sale of fruits and

vegetables in grocery stores

if they’re wrapped in plastic hence the

name naked

why are more innovations coming from

these smaller nations

well in the first case they’re more

exposed to exogenous forces so they must

be more adaptive

and they’re more inclined to experiment

the greater social cohesion means

they’re better able to deliberate

complex issues

and intermediate social consensus their

vulnerability

makes them more modest

it is in fact this vulnerability which

forces them to be proactive

rather than reactive and thus arrive in

many instances of the future first

their journeys are unique and they

provide us with a different framework

and they may even point us towards a new

order one more suited for the futures we

are about to face

let us compare the world will likely

grow slower in the future

as societies realize that growth cannot

be infinite

with finite resources we should focus