You cannot escape the responsibility of tomorrow by evading it today ~ Abraham Lincoln
We are barely a month away from 2023 and the world has moved in unprecedented ways in 2022, forcing us to hold our breath against the unrelenting winds of change. A bewildered international community has witnessed a rules-based international system being upended. Arbitrary and capricious geo political tactics; our implacable attitude towards climate change and lack of collective commitment; the exponential advance of technology playing to the inexorable strings of Moore’s law ( the number of components in integrated circuits doubles every two years); the portentous disaster from nuclear abuse; and unexpected economic shifts, all stare at our faces as we prepare for a new year of hope. Hope that we may gradually get rid of the pandemic threat present and future; hope that the geo political trends will stabilize; and above all that we could have a better standard of living from the base of Abraham Maslov’s pyramid of needs to its apex.
Amidst this chaos, the megatrends we have so far identified – which are powerful global transformative forces that affect our existential future and change the global infrastructure, economy, business and society – will still remain. These megatrends are: shifting global economy; climate change and resource security; technological change; shifts in demography, social change and choices; population explosion and rapid urbanization; and inter connectivity. All these have shown twists and turns, adding two possible trends which could possibly emerge as mega trends in the near future. These are water scarcity and water wars (which can be identified as corollaries to climate change as well as geopolitics) and the global rise of the middle class.
Before getting to the water crisis, mention must be made of the rise in middle class at the global level adding another twist in megatrends and that is the rise of Africa, and the significant economic shift toward the continent which cannot be relegated to the background anymore. Africa has the fastest growing middle class in the world.
Rana Foroohar, Global Business Columnist and an Associate Editor at the Financial Times, and CNN’s global economic analyst says: “Africa has the fastest growing middle class in the world. Sure, we are talking about people spending about $2-20 a day, but this is a huge increase from only a few years ago. In my mind, Africa is where China was a few decades ago. Massive, unorganized, underutilized, but with a huge untapped potential. Of course there are striking differences in culture, history and social structures (plus Africa is a continent comprising several countries), but they seem to follow a similar path towards growth.
On a same note, China seems to be entering a maturity phase after years of massive growth. Its economy is slowing down and its population is ageing. People are finally starting to spend more. Frankly, it reminds me a bit of Europe a couple of decades ago”.
The water crisis is mainly due to the unequal distribution of water. Water is crucially essential to human beings. Arguably, water is the essence of human existence and we can barely survive a few days without access to it. Historically, it is an incontrovertible fact that that human societies and civilizations sttled in areas that had abundance of water. In the modern world, growing population and the climate crisis are two contributary factors to the acute water crisis we face. Experts at the World Resources Institute have said: “Water is likely to cause the most conflict in areas where new demands for energy and food production will compete with the water required for basic domestic needs of a rapidly growing population”.
Within these megatrends – which take years to unfold – are indicators which are seen in the short term transitioning from year to year with characteristics that are embodied in megatrends. Ruchir Sharma, Chairman of Rockefeller International and Founder and Chief Investment Officer of Breakout Capital, and author of 10 Rules of Successful Nations, in a recent interview unfolded ten indicators. I give below my understanding of what Dr. Sharma said at the interview with the caveat that any error in the erroneous explication of Dr. Sharma’s views are mine alone.
Dr. Sharma began by saying that trends are determined on a decadal pattern, where economic trends evolve decade by decade. In 2023, Dr. Sharma predicts that the United States will peak economically (giving a twist to the megatrend which indicates that there will be an economic shift from the West to the East) while the rest of the world would also rise. Also, in 2023 the top ten companies in the world will struggle in the next decade and small companies will flourish. Dr Sharma sees a potential fall of the big tech companies which will still remain strong but diminish in growth and wealth creation. Next year will also see a trend toward de-globalization where capital, migration and protectionism will take center stage, largely due to populism. The trend that has already started on emphasis being laid on local goods and services will continue, prominent among which will be data localization, again as a corollary to rising nationalism, protectionism, and surveillance. The end result would be that de-globalization will make way for localization.
Another trend identified is the shrinking working population where a distinct decline in working age population can be observed. There will be fewer people joining the workforce, bringing to bear a negative effect on the global economy where fewer people at work would mean lower growth. Another trend is that there will be changing consumer spending, particularly by the new generation – millennials who are between the ages 22-37 ( the generation gap is chronologically identified as Generation Z- under 21 years of age; Millennials – 22-37; Generation X – 38-55 years, baby boomers – 54-71, and the silent generation – over 72). The new generation will perpetuate new consumption habits based more on experiences rather than material goods. Gaming will be the largest generator of consumption and wealth creation.
Another indicator identified by Dr. Sharma is that populism will surge, and polarization will increase politically notwithstanding that it has already deepened to unacceptable proportions. Added to this disturbing trend will be the undesirable return of inflation due to low growth which will be the result of low employment. The Fourth Estate – the media – will continue to diminish in usage (and perhaps credibility) as people are receiving less news due mostly to the decline in print media. Traditional media, which has been the bulwark of democratization of society will continue to give way to what Dr. Sharma calls the Fifth Estate – online news (such as twitter) which will continue to serve as the more popular medium. Finally, there will be a continuation in the rise of inequality – which President Obama called the defining factor in our lives – as an example of which Dr. Sharma cites India, which had 49 billionaires in 2010 whereas there were 106 billionaires in 2019.
Admittedly, Dr. Sharma, who is an expert on finance and economics, focused more in his areas which inexorably have an impact on all the megatrends and indicators. To this one might add public health, the resources of which were seriously impeded and impacted to unbearable proportions during the Pandemic. In 2023 one could look forward to a heightened sense of awareness in this area. There are four scenarios to envision as plausible: that the Covid-19 virus might stay on continually, whether in Pandemic form or not; that the Pandemic and the virus will go away like the SARS virus did; and that, depending on these two scenarios our lifestyles will change; or we would go back to living the way we were.
There are two certainties that the Pandemic would bring to bear in any of these scenarios. These are a health revolution and a communication revolution of sharing information, both of which the world had not seen before in the intensity that they would be present in the future. In this context the generation that would impact the next 5 to 10 years most would comprise the Millennials. Whichever way we go in the scenarios mentioned above, Millennials would take center stage in the health revolution and the communication revolution.