In my final post on the National Intelligence Council (NIC) briefing for the U.S. president called “Global Trends“, a report that covers potential risks to the United States 20 years ahead, I take a quick look at economic growth and technology as dealt with in the report.
In the Alternative Worlds chapter, the NIC considers four scenarios for 2030. The global GDP growth outlook for these scenarios looks like this (click for larger image):
In my mind, none of the four scenarios look particularly pessimist. The NIC, however, describes the Stalled Engine scenario, under which the U.S. and Europe turn inward and growth slows, as ‘bleak’. Nonetheless, GDP has still gone from $67.3 trillion in 2010 to $105.7 trillion in 2030, an increase of 57%. China’s growth has slowed to 3% per annum. Frankly, I would be amazed if China’s growth hadn’t slowed to below 3% in 20 years time.
The Fusion scenario is truly utopian. Technological innovation helps deal with both resource issues and climate change, while the U.S. and China form a strategic partnership that reinvigorates international institutions.
In the Gini Out-of-the-Bottle scenario, rising inequality is a theme, with Marxism making a come-back in many parts of the world. The title is a pun on the Gini coefficient, which measures how skewed wealth or income are in a particular country. The drivers behind the rising inequality and accompanying tension between the classes is not clearly explained. Nor is technology explicitly mentioned, except as a facilitator of the U.S. energy revolution. Indeed, as such, technology shields the U.S. from the decline in social cohesion abroad for a time:
I’m not sure that the US is yet ripe for revolution. It’s done too well from shale gas. The working class there got lulled by the increased manufacturing possibilities as businesses moved back from Asia when US domestic energy prices dropped.
Finally, the Nonstate scenario gives a leading roll to technology, but less so in the context of growth. Rather, new forms of media, data access and communications sideline the nation state and empower both individuals and organisations. Optimistically, the NIC sees such trends as enhancing global cooperation.
Overall, the NIC only sees technology on the positive side of the ledger. No consideration is given toward the social and political implications of new technology. I am no Luddite and don’t view technology in a purely negative light: rather, it just seems self-evident to me that technological progress now has negative and positive aspects. For this reason, I would have to give the NIC a D in this area.
Personally, I think a far darker nexus can be drawn among technology, growth, resource limits and climate change if governments don’t provide leadership. As this is not a doomer blog, I will call it the Rational Pessimist scenario.
Under this outlook, ruling elites in both the western democracies and BRICs place a wager that technology will allow them to avoid entering into difficult conversations with their citizens. They don’t want to lose support through delivering bad news, so instead they anchor their perceptions to the views of optimistic experts. When scientists or other professionals in a particular field voice grave concerns over policy they are ignored, even when such people make-up the vast majority of views in a particular field.
Stories are told by politicians about one hundred years of gas and the imminent arrival of clean coal technology. The stories have a receptive audience. Denial is preferred by ordinary citizens when faced with any fact that contradicts how they see the life path of themselves or their children. At no stage are policies advocated by governing politicians that would significantly decrease energy consumption or reduce fossil-fuel emissions if these lead to higher end-user prices.
Meanwhile, technology continues to polarise winners and losers both within countries and between countries. In both developed and emerging markets, the trickle down of wealth ceases as technology continues up the skills ladder eliminating jobs; median incomes start to decline everywhere. In the West, resentment grows at the return to a Downton Abbey-type Edwardian society of rich and poor. Dissatisfaction turns into political extremism and a loss of social cohesion. Moreover, populist politicians as always focus on the foreigner as a scapegoat. In this environment, international organisations promoting global cooperation cease to be effective.
As 2030 approaches, the shale technology revolution is seen to have only slowed energy price rises not stopped them. In turn, higher energy costs, plus declining returns to technology, translate into no or negative growth for much of the world. Simultaneously, climate change events in the form of recording-breaking droughts, floods and extreme weather reach the point where they reduce the value of real estate across vast areas.
Unfortunately, ‘the get rich and clean up’ model espoused by such economists as William Nordhaus for dealing with climate change fails: economic growth rates are nowhere near sufficient enough to compensate for the burgeoning costs now required for CO2 emission mitigation and temperature adaption. The level of CO2 in the atmosphere in 2030 coupled with the fact that most of the world’s energy infrastructure is still built around fossil fuel mean that more than 4 degrees Celsius of warming is inevitable by century’s end.
This is a scenario that deserves the title ‘bleak’. Unfortunately, I don’t see it as dystopian but rather a perfectly possible risk.