May 14, 2020

During the 1920’s golden years, the United States had been the stage of one of the largest sociological experiments of the modern society: National Prohibition Act (The Dry Law)!

Between 1920 and 1933 - that is right, thirteen long years -  the 18th Constitutional Amendment created the age known as Prohibition (National Prohibition Act), during which the manufacture, transport and selling of alcoholic beverages (including beers)  had been completely forbidden in all territory.

The political momentum seemed to be adequated enough. In 1830, it was esteemed that the North American adult consumption average was 1,7 bottle of distilled per week (!!) - the triple of the current average esteemed in The XXI Century.  The Prohibition appeared with the noble objective to save the country from the problems related to the violence (also domestic) and from poverty itself caused by the addiction.

However, as a classic example of the state bankruptcy when intervening in the free initiative of the market, the Prohibition was a disaster in its objectives: instead of banishing the alcoholic consumption and raising the social welfare of the community, the law only completely demoralized the public authorities, gradually involved in corruption, beyond fortifying the mafia performance in the control of the illegal beverage traffic.

Common citizens and religious families were obliged to the illegal consumption of what they judged to be their natural right: the free-will in face of the decision to consume alcohol. And if the market economy already taught something to us  in these thousands of years, is that where there is restrained demand, some mechanism of offering will always appear, even if filthy to the contemporaneous eyes or impure to the religious. Offer and demand always meet  some balance price.

And, then, appeared the clandestine bars - the so called speakeasies in allusion to the secret environment around the secret meetings and to the stealthy purchases - usually located on the underground of commercial establishments with unsuspicious façade.

Walking in the streets of São Paulo in these times of pandemic - duly protected with the anti-virus devices - I start glimpsing the return of the speakeasies. This time not only for selling alcohol, but also commercializing the most varied goods and services. The scene is sui generis: almost closed doors, with plates informing attendance only by previous order, interior lights turned off, show windows with promotions… but inside, the camouflaged consumer buying and the store clerk overcautious selling. Whispers, fetches, adrenalin…. even buying a toy can be a contravention act nowadays.

The current pandemic provokes us to ambiguous reflections, many times in moral dilemmas to be openly debated by society. The dichotomy deceased and bankrupted quickly became a taboo, probably for having been transformed into guideline for political disputes. From the social-economic point of view, the impact of lockdown in the loss of job, destruction of wealth and social collapse is the great concern for the short term, for then evaluating the impact of medium to long term in the public finances. From the scientific point of view, the focus is on the reduction of the viral propagation, breaking the transformation of something pandemic into endemic and mitigating the high number of dead people all over the planet - but without vaccines, fast efficient treatments and massification of immunity tests, the mission becomes more difficult.

Taboos are not good options in face of complex realities. Simple answers are inevitably fast shortcuts for limited actions or even mistaken ones.

The social desperation caused by the social distancing is not only mental or emotional. The legitimacy of the desire to search income out of work is so relevant as the noble altruistic spirit in doing social distancing in favor of the collective well-being. It is worth inquiring, however, who are those desperate, resigned and altruistic. Reduction of the GDP above 4% is not theoretical, is real, that means it is really associated with the wealth destruction.

The social distancing seemed to be acceptable for the population as a temporary movement. Its prolongation will inevitably result in creative formats of disrespect to the governmental lines of direction, duly hidden in the underground of the cities.

Without concrete and immediate alternatives on the income rise and in the defense of the economic activity, inflamed moral judgments will be, once again, ignored by people.

Daniel Motta is the Founder and CEO of BMI Blue Management Institute, a leading niche consulting firm. He is a global thought leader focused on culture, strategy and leadership. He has a PhD in Economics, MSc in Financial Economics and BA in Economics. He is also an OPMer from Harvard Business School. He is the Managing Director of USA-based VC company White Fox Capital and the Senior Tupinambá Maverick of bossa&etc. He was a co-founder of Brazilian Society of Finance. He currently serves NGO UNIBES as Strategic Planning Principal. He is the author of the best selling books Essential Leadership and book Anthesis. He also has three articles published by Harvard Business Review. He is a Board Member of MASP.