How the collision of today's major trends will reshape the future of everything

Summary:

On 23 November 2020, the Rafael del Pino Foundation organised the dialogue "How the collision of today's major trends will reshape the future of everything", with the participation of Mauro F. Guillén, Professor of International Business Management at the Wharton School, and Moisés Naím, Senior Associate at the Carnegie Endowment for International Peace.

Moisés Naim pointed out that demographics are key. Comparing the ten most populous countries now with those that will be populous in 2050 is very revealing. They are now China, India, the United States, Indonesia, Pakistan, Brazil, Nigeria, Bangladesh, Russia and Mexico. But the coming decades will see profound demographic transformations on the planet, some of which can be projected but some of which cannot, because they may be affected by events such as climate change or the digital revolution. With this in mind, it can be seen that, by 2050, China will no longer be the world's most populous country, but India will take its place. Mexico and Russia drop out of the list. Nigeria moves from seventh to third place. The United States is the only rich country on the list. All the others are poor, underdeveloped countries. Of the ten countries on the list, five are in Asia, three in Africa and one in Latin America. The Democratic Republic of Congo and Ethiopia make the list. This is a different world because many of these countries are unstable, some almost a failed state. Many of them are countries at war. Some are nuclear powers, such as the United States, India, China and Pakistan. Many of them are very vulnerable to climate change, for example, Bangladesh, which is the most densely populated country in the world and the lowest in altitude, which means that, if the sea level rises, much of the country would be submerged, forcing its population to migrate to neighbouring countries, Myanmar and India, which have already said they are taking steps to prevent that population movement from happening. All these issues are unpredictable.

Mauro F. Guillén commented that, in some countries, we are going to have 30% or 40% of the population over the age of 60. Each generation born now is smaller in number than the previous generation. That implies that in the financial and consumer markets there is going to be a transformation in terms of the attention paid to this generational group. In terms of life expectancy, the over-60s can expect to live another 25 to 30 years. In addition, women continue to progress in their careers, thanks to better access to education. This does not mean that wage or career discrimination has been solved, but it does change the situation in many countries. In high-population countries, women have many children because they do not have widespread access to education. When they do, they postpone the decision to have babies. That is the factor that best explains the number of children a woman ends up having. Therefore, any process of change that leads to an extension of women's working or studying lives causes the birth rate to fall. Therefore, there will be more grandparents than grandchildren in the world. The over-60 market is going to be the largest segment of the market in terms of age. The new role of women is the trigger for all these changes, although we are still a long way from equality and parity between men and women. The world in which we were born and grew up is therefore changing radically. From a demographic point of view, from an economic point of view with the rise of emerging markets and from a technological point of view, we are going to see a transformation that is going to lead us to a completely different situation from the current one.

Moisés Naim indicated that education will define what prosperous countries will be in the future, as well as human activities. Almost all questions in this area have to do with creative destruction. New technologies generate enormous progress in productivity, but an initial decline in employment. Then jobs reappear later, in greater numbers, at higher wages, more stable. This has always been the case. There has always been a fear that automation, technological change would create structural unemployment that would be very damaging to society, economically and politically unsustainable, but that never happened. Technological unemployment never happened in the past. But there are studies that say we are in a different world now, because the kind of technology that has arrived now is different: it destroys jobs at a very fast rate and replaces them at a very slow rate, which creates a permanent gap of underemployment or unemployment. This is the case for drivers, now that ideas like the autonomous vehicle or the distribution of goods by drones are starting to become a reality in many places. It all depends on whether one believes that creative destruction is here to stay. Then we are reassured. But if this is not the case, many countries are going to experience very severe problems as the jobs destroyed are not recovered at the speed necessary for families to have a livelihood.

Mauro F. Guillén said, in this regard, that we now learn, work, play and even interact through technology, whereas before we used other methods of leading our lives. The business transformation is massive and we are seeing that these technologies are going to displace older workers, who find it difficult to learn another profession or move to another place. The important thing is to identify the groups that are going to be affected because they are very specific groups. You cannot understand the rise of populist parties without understanding these age groups and that technological change does not work for them and they have been left behind on the bandwagon of progress. There will also be voices saying why don't we stop the train. In a global economy, with market competition, this is impossible. What characterises the market is creative destruction. The engine of change is not technology per se, but competition in markets, so that entrepreneurs on the one hand, consumers on the other, and companies on the other try to reposition themselves when there is a technological novelty. What we have to do is prepare ourselves because the wave of change that is coming is enormous. If in one part of the world we try to insulate ourselves from it, another part of the world is going to move forward. Moreover, it is easier for these new technologies to be adopted by the most backward countries. In Africa, for example, we have seen how ten years ago they adopted mobile banking or telemedicine. Thanks to remote learning we are going to be able to educate that generation of so many children that are born there because we are not going to have time to build as many schools as would be needed in those countries with high population growth. So we have to understand the challenge in terms of competition in the marketplace, and to bear in mind that technology often has the effect of making the last become the first. From a European or North American perspective, you might think that nothing can bring us down, but that kind of thinking is very dangerous because technological change can mean that the laggards can become the frontrunners. This can apply to individuals who lose their jobs, but also to an economy.

Moisés Naim agreed with this idea of market dynamics and competition as the central driver of technological change. However, the distributional impacts of these new technologies, particularly artificial intelligence and its ramifications, must be emphasised because they have differential distributional effects. Not all African firms will be able to move at the speed of 21st century technology. The same is true in Latin America. There are companies there that find it difficult to make major leaps in size, which is inadequate because they do not have the necessary scale. There, the impact of technology is going to be differential. What does a 50-year-old driver who will no longer be hired by anyone do? There are no large-scale examples of reskilling. The world today does not have the technology, the method and the institutions to retrain workers on the scale that would be necessary. This leads to the issue of basic income for all citizens, which is a controversial but unavoidable issue.

Mauro F. Guillén referred to this and said that five or ten years ago proposals such as a minimum income were only made by very radical people and did not get much traction. Now we are going to have to debate it on both sides of the Atlantic. That income should only go to those families who really need it. That guaranteed minimum income, therefore, should not be universal, but only for those who need it. At the same time, it is reasonable to have a debate about whether robots should be taxed to help relocate those people displaced by technological change. There should be a discussion about whether they should be taxed in the same way that taxes are levied on petrol to help build roads. With regard to life expectancy and having several careers over a lifetime, Mauro F. Guillén pointed out that the typical worker who has been displaced by technology is a worker in his or her fifties, who has been affected by these changes at the worst time, who has a certain impossibility of geographical mobility. What can be done in this respect is to concentrate resources, whether private or public, for the benefit of these people. Not something universal, for everybody, because it destroys the culture of effort.

Moisés Naim pointed out that part of this new urban world will be under water. A fundamental determinant of the rural-urban divide is going to be climate change. Today there are more refugees from climate change than from armed conflict. The trend will continue. The frequency and intensity of damage caused by climatic effects is increasing. We have more and more hurricanes, fires and so on. Experts are getting better and better at detecting these trends, but not at detecting the speed at which they are happening. This is happening with climate change. Climate change is going to alter our lives, defining where and how we live, how we travel, how we connect in a very important way. We don't know what it's going to look like because we have no precedent. What we do know for sure is that cities are going to be more defined by climate change than by other trends.

Mauro F. Guillén agreed that we are going to rethink large urban agglomerations, especially on the coast. In Asia it is going to have a huge impact because most of their urban agglomerations are on the coast. In Europe, as a result of remote working, we are going to rethink living so close to city centres. The dangerous thing for the future is that in South Asia and sub-Saharan Africa there is still 60% of the population in rural areas, where opportunities are not very good. These people have incentives to migrate to the cities. This is going to contribute to more population pressure on these urban areas, which will be more affected by climate change. Secondly, so far, as consumers, we have been thinking that the problem of climate change is solved if governments agree and if we make technological innovations, especially in cleaner technologies. Apart from what governments can do and technological change, there is a third part missing that is incumbent on all of us: our own consumer behaviour. That is, instead of buying nylon T-shirts, buy cotton ones. Instead of throwing away 30% of the food that comes into our homes, try to share it. Try to use public transport more. There are a number of key consumer behaviours that can help us solve the climate change problem. Thirdly, 2% of the world's water is safe to drink. The rest is either not accessible or is salt water. With global warming, a lot of the freshwater reserves that we have in Greenland, in Antarctica, are going to turn into liquid water and, in the end, into salt water. The main problem we are going to have is the change in the dynamics in the oceans because they regulate the temperature in the rest of the Earth and cause a huge disruption in the global economy. Associated with this is the crisis in agricultural production, due to water scarcity and its poor distribution, the increased frequency of extreme weather events, and so on. We are talking about moving from a situation of food abundance to one in which there will be food shortages for most of humanity.

Moises Naim added that food insecurity has increased dramatically during the pandemic. The number of food insecure countries is gigantic and we don't see what the solution is. The food is there, what is lacking is the way to distribute it. As far as consumer behaviour is concerned, he does not believe that it will become greener. That's why he is betting that products that are not green will be more expensive than those that are. It is an incentive for them to be greener. Governments are very important, for example, because of subsidies to energy companies. 85% of the subsidies they give in the world is to make energy from hydrocarbons cheaper. These subsidies should be eliminated.

Mauro F. Guillén said that we must abandon the mentality that we can turn the clock back to the world that is slipping away, which is what populist politicians promise. That hope is unfounded, for all the reasons discussed above. Secondly, whenever there is a big transformation like the one we are going through, which has many dimensions - technological, social, political, economic, business - it is very important that we prepare for it, trying to connect all these trends, both as people and as workers. If we don't know how to connect things, we are not going to be successful in the world that is coming because so many things are changing at the same time that are interrelated with each other. Thirdly, no decision should be taken that is irreversible. There is room for manoeuvre to be able to change course as circumstances change, both as individuals and as companies change. Trying to instil in the population the false hope that it is possible to turn back the clock is very dangerous, because it is impossible.

Moisés Naim shared these ideas. Passionate love for dead public policies, which create misery, poverty, corruption, is repetitive. That is the threat of populists, who propose confirmed bad ideas. We are living in the golden age of charlatans, because they are now digital. We have to be careful with hyperspecialisation. There are not enough leaders to survive in this very competitive world. To be competitive you have to be obsessive, to have a very concrete vision, not to be distracted, because that's what competition is. But that obsession distracts from everything that is going on around you, in life, in the company. In a world full of change, threats can come not from competitors, but from those changes.

Mauro F. Guillén argued against the idea that, since we are in a multipolar world, the institutions that were created after the Second World War are useless and should be wiped clean. These institutions need to be reformed, rather than trying to build new ones. Moreover, the concern is that the parts of the world that are growing the most are not necessarily liberal democracies. They subscribe to the market, because it brings prosperity, but not to democracy and human rights.
Moises Naim added that, as the world globalises, the need for global public goods is increasing. The demand for these goods is increasing exponentially, but their supply is stagnating or shrinking. This produces the world's most dangerous deficit, i.e. the need for a good supply of global public goods because it is unbalanced. With the growth of global impact events, we need global responses, we need countries working together, in coordination, to address this demand for global public goods. Unfortunately, we are not doing that.

The Rafael del Pino Foundation is not responsible for the comments, opinions or statements made by the people who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their sole responsibility. The contents included in the summary of this conference are the result of the debates held at the meeting held for this purpose at the Foundation and are the responsibility of their authors.

The Rafael del Pino Foundation is not responsible for any comments, opinions or statements made by third parties. In this respect, the FRP is not obliged to monitor the views expressed by such third parties who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their own responsibility. The contents included in the summary of this conference are the result of the discussions that took place during the conference organised for this purpose at the Foundation and are the sole responsibility of its authors.

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