04 Jan 19 Global Developments to Watch in the Year(s) Ahead
“There is a Chinese curse which says ‘May we live in interesting times.’ Like it or not, we live in interesting times. They are times of danger and uncertainty; but they are also the most creative of any time in the history of mankind.”
While it would be reasonable to date this quote to 2018, it is actually taken from a 1966 speech delivered by Robert F. Kennedy at the University of Capetown. Although more than 50 years old, it rings as true today as it did then. Almost daily, we are met with a barrage of headlines highlighting economic and political uncertainty stemming from trade wars, rising inequality, migrant flows, nationalism, populism, and enormous environmental challenges. Yet we’re also in an era of unprecedented innovation in domains from agriculture to biotechnology and alternative energies.
Last year, I noted “The world feels fragile, chaotic, and full of conflicting realities. Ambiguity reigns, and radical uncertainty is lurking behind every decision.” This seems as true today as it did a year ago. Just think of the events that transpired in 2018:
While America and China continued to escalate the tariff-driven trade war, NAFTA 2.0 helped avoid a North American economic conflict. Across the Atlantic, Brexit negotiations followed an (unsurprisingly) nonlinear path and Italy fought its own economic battles with Europe. And many stock markets had their worst performance since the Global Financial Crisis. 2018 also saw leadership changes in Brazil, Mexico, Colombia, Peru, South Africa, and Pakistan (to name a few), as well as at Vodafone, PepsiCo, Unilever, WPP, Deutsche Bank, Nissan and General Electric. And in contrast to otherwise ubiquitous change, both China and Russia escalated their leaders into seemingly permanent positions. Wildfires raged in California, Indonesia suffered devastating earthquakes, and Hawaii’s Kilauea volcano’s 35-year continuous eruption ended.
So what is one to do when facing a world of fluid relationships that seem to lack any resemblance to stability? How are we to make decisions in such an environment? While there is definitively no correct answer to these questions, my approach has been to focus on structural dynamics (the approaches seems at least marginally more helpful than my Ouija board and Magic 8 ball). Long-term trends underlying today’s cross-currents offer a compass that can help guide us through the turbulence of today’s headlines. Scenarios can help us map possible futures. But unlike others, who tend to make predictions on a one-year view, I opt for a longer time-horizon, believing that time allows signals to surface amidst the deafening noise.
In 2015, I made 15 Predictions for ’15-’20 and in 2016, I pointed to 16 global developments to watch between 2016 and 2021. In 2017, I wrote about the 17 developments to watch over the 2017-2022 timeframe, and last year, I presented 18 happenings that might transpire between 2018 and 2023. Regardless of how the predictions actually fare, the very act of considering them has proven helpful to me in navigating uncertainty. Yogi Berra noted “The future ain’t what it used to be” and it’s in that spirit that I’m offering this year’s set of 5 year-forward global predictions.
- Emboldened by US troop withdrawals, Saudi Arabia, in cooperation with Israel, escalates its aggressiveness towards Iran. Saudi Arabia’s defense budget, already the region’s largest, continues rising, leading analysts to suggest the Kingdom’s Crown Prince Mohammed Bin Salman is actively preparing for armed conflict with Iran.
- China continues to lend large sums of capital to overly-indebted nationsas a strategy to secure strategic infrastructure and resources. As the basis of Chinese investment into Asian and African infrastructuretrickle into public visibility, the citizens of many Asian and African nations demand increasing transparency into the burdensome financing terms of Belt & Road Initiative projects. Politicians from Malaysia to the Middle East and throughout Africa are increasingly defined by their approach to China.
- In the wake of ethically-questionableadvances in gene-editing, unanimous support at the United Nations emerges to develop globally coordinated regulations and guidelinesto limit the use of CRISPR technologies to defined domains. An underground market develops for designer babies; gene therapies also prove effective at treating several types of cancer.
- Driven by the combination of more people on the planet and shifting diets of a growing emerging market middle class, global demand for animal proteincontinues to grow. Acknowledging the inescapable need for grains to feed both people and livestock, many nations begin building strategic fertilizerreserves. Despite the promise of “clean meat,” the future of food gets increasingly fishy.
- Technology-driven economic inequality becomes a more disruptive force than artificial intelligence and leads to widespread social unrest. Despite its (repeatedly-proven) inability to efficiently allocate resources, communism regains momentum as “workers of the world unite” to take from those who have and give to those who need. The consumption of luxury goods slows as the world’s wealthy seek to be less conspicuous. Charitable donations surge.
Despite its (repeatedly-proven) inability to efficiently allocate resources, communism
regains momentum as “ workers of the world unite” to take from those who have
and give to those who need.
- Europe’s General Data Protection Regulation (GDPR)becomes a model to re-empower global consumers with the ability to control their personal data. Many US states follow California’s lead in writing and passing consumer privacy laws. Despite these regulatory efforts, the battle for data continues behind the scenes as ubiquitous sensors capture enormous streams of personal information.
- The Coddling of the American Mindinspires parents and educators to embrace the advice of America’s Worst Mom, Lenore Skenazy. In a massive backlash against helicopter (bulldozer?) parenting, the Free Range Kids movement gains global momentum. Marketers shift their focus from Millennials to iGen-ers.
- The number of business schools globally shrinks as applications to MBA programspersistently fallin the wake of global employers questioning the degree’s value.
- The global community acknowledges that Cold War IIis de factounderway between Russia, China, and the United States. Nuclear weapons production accelerates rapidly in the United States, driving Russia and China to also build large stockpiles. Strategic rivalrycontinues in other areas, most notably in the space and the cyber domains. Despite several dangerous escalations, the superpowers successfully avoid meaningful armed conflict.
- Persistently tight labor marketsin the United States generate wage-driven inflationary pressures that drive the Federal Reserve to raise interest ratesin an effort to avoid a wage-price spiral. Quantitative tightening proves more disruptive to asset prices than anticipated. A mild recession ensues and housing suffers, but inflation dissipates rapidly as technology-driven automation displaces jobs at an accelerating rate. Central bankers again worry about deflation more than inflation.
- Despite being the world’s fourth largest supplier of wheat, Australia is crippled by multi-year droughts that devastateproduction and lead the country to becoming a net importer of the crop. Scientists increasingly focus on Australia as the canary in the coal mine of climate change, as numerous local ecosystems collapse within the climatically-variable country. Advances in climate control technologies (as portrayed in Geostorm) help protect humans from the impact of more severe weather.
- The boom in electric vehicles, surge in solar and wind generation, and steady ongoing demand for handheld mobile electronicsdrives a global scramble for materials (lithium, copper, cobalt, nickel, graphite) necessary to enable power storage. Underwater seabed mining efforts persist, despite poor economic models, as security of supply trumps price considerations. Battery technology improves dramatically.
- After successfully containing an outbreak of the Nipah virusthat spread from India through Southeast Asia and into Australia, global health authorities are surprised by the emergence of a pandemic flu which infects hundreds of thousands. The pharmaceutical industry rapidly develops a treatment to prevent a global catastrophe, but growing human activity in formerly animal-only habitats leads to a steady stream of zoonoses that keep the World Health Organization in a constant state of high alert.
- Even as China’s economy slows, billionaires from the Middle Kingdomdominate art markets and real estate as they grow increasingly worried that a populist backlash against domestic inequality could force the Chinese Communist Party to adopt confiscatory policies. Capital flight from China accelerates.
- Despite numerous ups and downs, self-driving carsenter the mainstream market and prove significantly safer than human-driven vehicles.
significantly safer than human-driven vehicles.
- The world’s most pressing health problem becomes obesityas the ranks of the over-nourished swells past the mal- and under-nourished. Intermittent fasting is endorsed by public health authorities as a nonpharmacological approach to losing weight and improving metabolic health. Amai Proteins emerges as one of the world’s hottest companies.
- Policymakers eventually conclude the root cause of water scarcityis mispriced water, raise water prices meaningfully, and find most sustainability concerns dissipate. Almond milk prices skyrocket as the thirsty nut becomes significantly more expensive to produce, reversing the trend of steadily rising demand.
- As healthcare advances continue unabated,life expectancyrises almost everywhere, increasing pressure on large population nations to install demographic controls. Countries with large pools of cheap labor find automated manufacturing and robotics have closed the window of industrialization-driven development. Japan’s shrinking population allows for automation adoption without social unrest.
- American debtlevels reach globally-concerning levels and rising interest costs lead to politically unpopular cuts in discretionary spending programs. (No more federal funding for programs studying how fish perform on treadmills, for instance.) Investors begin questioning the ability of the United States to repay (rather than inflate away) its obligations, sending the US dollar to multiyear lows. Gold and silver trade at all-time inflation-adjusted highs.Each year, I end my predictions with the prescient words of John Kenneth Galbraith, who eloquently captures the essence of forecasters. There are, as he notes, two types: “those who don’t know and those who don’t know they don’t know.” Feel free to decide which you think I am, but I do hope that these 19 possibilities are useful in spurring your thoughts.Best wishes for successfully navigating the uncertain year(s) ahead!
Vikram Mansharamani is a Lecturer at the Harvard John A. Paulson School of Engineering and Applied Sciences. He is the author of BOOMBUSTOLOGY: Spotting Financial Bubbles Before They Burst (Wiley, 2011; second edition forthcoming in 2019) and can be followed on Twitter (@mansharamani).