Reshaping future fast forward

Human capital: A worker welds some body panels at an automotive plant in Pegoh, Melaka. The best investment in current volatile times is to invest in our people.

EVERYTHING is happening so fast that we feel as if the future is being compressed into the present at a frightening speed.

Conservatives hark back to the golden age of stability and gradual change. Liberals hate the current inequalities but cannot agree on how to change things.

But if technology is moving at Moore’s Law of exponential growth, then knowledge and complexity are expanding too fast for most of us to comprehend and decide how to cope with an unknown future.

Sociologist Mauro Guillen at the Wharton School has projected to 2030: How today’s biggest trends will collide and reshape the future of everything. All the big trends, macro and micro, will shape the future. The biggest trends are demographic, how rich countries are aging, poor ones are growing, but these numbers will push migration that create border wars. At the same time, women will grow richer, and the Asian middle class will edge out the European and American middle class.

Climate change will threaten cities through rising seas, water and food shortages. Technology will be the new tool to solve problems, but job disruption is a major political threat. We may no longer need to own anything, but simply subscribe or rent cars, houses and smart gadgets, simply to keep up with the technology.

Money will shift to digital currencies and finance will be very different with zero interest rates.

These trends are well known. In 2017, the US National Intelligence Council global trends: Paradox of progress (to 2035) and EU’s Global Trends to 2035, conducted thoughtful reviews of the future seen from their perspectives. Macro-trends that converge at unprecedented pace will make governing and cooperation harder, fundamentally altering the global landscape. Both studies recognise that conflict risks will grow, because the world is increasingly fractured between aging and shrinking rich, and growing young, poor and unemployed, packed into over-crowded cities that are ready to explode.

The US study surmises that the 2035 world will splinter into national “islands”, regional “orbits”, and sub-state and trans-national “communities” that will interact to make global and national governance harder. Interestingly, it predicted that “the global pandemic of 2023 dramatically reduced global travel in an effort to contain the spread of the disease, contributing to the slowing of global trade and decreased productivity.” They foresaw the pandemic, except it happened three years earlier, and they bungled its management.

In contrast, the EU study focused on four possible scenarios:

(1) sick men of Europe: unstable Europe in stable world;

(2) Cold War: stable Europe in stable world;

(3) Hollow foundations: unstable Europe in unstable world; and

(4) Europe as global power: stable Europe in unstable world. Europe knows it has to get its act together.

What has the Covid-19 pandemic taught us so far?

First, the pandemic was mismanaged globally, with UBRIC epicentres, namely the US, Brazil, Russia, India and Colombia, having highest infections and mortality. Europe and Africa are still adjusting and East Asia, being the first to be hit, was the first to control and economically recover. The virus has its own timetable and if its spread is not properly controlled, the economy will be lower for longer.

Second, the global system is now more complex and harder to govern. If a 3x3x3 Rubik’s Cube game has 43 quintillion (10 to power of 19) possible permutations, we realise that seven or more key players interacting with each other at “islands” national, regional “orbits” and transnational “communities” levels means that everything is possible, which is exactly why we are in the current mess.

We have sick men running sick economies in a pandemic that is out of control. Both leaders and economies are surviving on steroids. No one can think long term. All are reacting short term rather than dealing with the important long-term consequences.

With top leaders and their inner circle infected, new factors emerge every day that change the direction of the game profoundly. Covid-19 has turbo-charged Future Fast Forward, hastened existing trends, pushing online shift faster, as well as killing off dying or obsolete industries.

Basically, hardware can be obsolete and expendable, but people are dying, which is why we need to teach them to become more resilient and adaptable to rising risks and threats. In short, invest in people, their health, education and re-skilling them to address technological, jobs, military and natural threats. Be smart and we will survive and thrive. Dumb us down and die.

Two important studies show how investing in hardware is less effective that investing in people. Jorda, Schularick and Taylor (2017) discovered that between 1870-2015, risky real returns on equity and real estate averaged 7% per year, whereas safe returns averaged 1%-3% per year, and these have been declining with lower productivity. What financialisation has done is to distort the rate of return, favouring the rich and actually slowing down productivity and the growth rate.

The World Bank study on 139 countries since 1950 showed that the average rate of return on education is 9%-10% per year, with private returns on low-income primary education as high as 25%.

Simply put, the best investment in current volatile times is to invest in our people. The world is not facing a trade war, it faces a talent war. Because East Asia has invested more in last four decades in their young, teaching them to act cooperatively rather than narcissistic individualism, the region has been able to handle the pandemic better than other regions and catch up in technology and industries. It’s not about democracy or freedom, but about inclusive education in common sense.

If people and planet are recognised as one, then the young will learn how to take care of other people and contribute to our common home, the planet, as Pope Francis emphasised in his Encyclical, Laudato Si. Politics and morality are people issues.

Future threats and opportunities are coming at us fast and furious. Future Fast Forward is not about denial and who is to blame. Throughout the ages, humanity has survived calamities because the community taught the young common sense survival skills. That is the true mission for surviving and thriving beyond this pandemic.

Andrew Sheng is a Distinguished Fellow of Fung Global Institute, a global think tank based in Hong Kong. Views expressed here are his own.

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