It is a shame that inequality has become sharper during our constitutional democracy than during apartheid.
More sun than clouds. Mild.
In last week’s article I identified the clockwork and cloudy flags changing the global game over the next five to ten years. But where could the game be positioned by the end of the period? That is the question you have to ask yourself when making strategic decisions about your long-term future.
There is nothing worse than being obliged through lack of foresight to continue playing on a field where the weeds are growing, and everybody else has moved on to greener pastures. It gets very lonely if you are bowling a cricket ball or kicking a rugby ball in an empty stadium- that is if the stadium still exists! What’s the point?
Hence, given the current flags, it is worth examining the possible paths that the world could take in the intervening years to 2026 and assessing the probability of each path becoming the actual one. I call the paths scenarios which provide a narrative of the trip along the way and describe the type of destination waiting at the end.
Of course, you have to survive the ride in order to experience whatever the destination holds in store for you. So along with the right strategy to keep you in synchronicity with the evolving reality of the planet, you need to optimise your short-term tactics as well. These keep you and your organisation in sufficiently good health to meet the daily challenges posed by the twists and turns of fortune. If the momentum sags at any step along the path, you may not complete the journey.
In short, resilience demands both setting yourself the right goals and implementing the best actions in achieving them. Even then, you must be prepared to adapt your strategy and revise your tactics if the future heads off in a totally unexpected direction, one which none of your scenarios have anticipated. The reset button should always be by your side in case of emergencies.
So looking towards the horizon, what are the latest global scenarios? I would like to put forward several for consideration. They are related to the flags I chose in the previous column. These scenarios neither complement nor exclude one another. They are different stories about the future illustrating the themes of the different flags.
On Golden Pond
This is the scenario driven by the grey flag corresponding to the ageing of the world’s population and the fact that in advanced economies the numbers of people are static or declining. By the 2020s, Britain, Europe and Japan are having to battle with the problem of an increasing proportion of their populations being well advanced in age. The baby boomers are now the geriatric boomers and they have to be looked after, thus putting a strain on hospitals, medical aid schemes and government welfare programmes dedicated to prolonging the lives of this section of the population. America faces the challenge of the grey flag too, but with a much more youthful demographic mix and a birth rate which is respectable.
The bright side of this scenario is that there is a boom in all industries involved in maintaining quality of life for elderly people. These include retirement homes and villages, the provision of financial advice on how to make capital last a lifetime as well as the production of accessories and health care products which make growing old easier. Institutions like the University of the Third Age flourish.
Nevertheless, the general picture is that economic growth rates remain low to non-existent in the countries most impacted by this scenario. America does comparatively well because of its better demographics as do developing economies with growing populations providing they have good government. Meanwhile, China will continue to slow down as it develops a middle-aged bulge.
The probability associated with this scenario is close to 100% as the grey flag is a clockwork one ticking away relentlessly in the background.
World War Three
This scenario is linked to the red flag of the deteriorating relationship between America and Russia which has resulted in a second Cold War now being firmly in place. The annexation of Crimea by Russia was the origin of this state of affairs. In this scenario, the uneasy situation developing between Russia and the former Soviet Union states on its Western border, that are now members of NATO, leads to some incident which quickly develops into a full-scale nuclear conflict. The war is much shorter than the two previous world wars but results in much greater destruction of cities and civilian populations. It is interesting that this scenario is now increasingly being played by experts in nuclear game theory who believe that the principle of mutually assured destruction no longer has the sway it used to have among military strategists on both sides.
The fascinating feature of this scenario is which way China swings in light of America’s growing animosity towards China. This is due to the latter’s occupation of islands in the South China Sea in order to use them as military bases. Would China back its previous ally Russia in the event of war?
The other trigger for this scenario is if a terrorist organisation gets hold of nuclear weapons and starts using them to destroy Western cities. Waging war with such an enemy will be much more difficult because of the dispersed nature of that enemy. As the current conflict associated with the religious flag has shown, conventional military tactics do not work against an enemy that has no territorial boundaries.
Despite the fact that every century for the last 2 000 years has had major wars, neither Russia’s ambition to extend its influence beyond its existing borders nor the intensification of competition between the great religions of the world suggest that one should give more than a 10% probability to this scenario. It is still an outlier.
The Gilded Cage
Chantell Ilbury and I first put forward this scenario in a formal letter to George Bush which we published in The Mind of a Fox in June 2001. Globalisation has been the principal force behind the opening-up of the world economy since the Second World War. In this scenario, by contrast, the globalisation trend is reversed by the anti-establishment flag which is unleashing the fury of ordinary citizens against the super-rich and the political establishment in places like Washington and Westminster. Globalisation is perceived as an evil force which has widened the gap between the winners and losers and created unacceptable levels of inequality in wealth and income. Those left behind feel immense bitterness.
Britain leaving the European Union is just a beginning of the phenomenal change of direction envisaged in this scenario. In the event that Donald Trump becomes president of the United States, the walls go up on America’s borders and US companies are incentivised to stay at home instead of establishing their manufacturing facilities in countries with lower labour costs. Protection rears its ugly head as nations seek to respond in kind to America turning its back on them. In this scenario of tit for tat, the US military umbrella is also withdrawn from its NATO allies in the interests of America reducing its own federal budget deficit while making the others pay more.
At its worst, this scenario could be the prelude for another Depression like the one which occurred in the 1930s as well as for something like the market crashes of 1929 and 2008. One can also expect a massive round of defaults on national and corporate debt which have reached record highs as a consequence of cheap money. Brexit could end up being the right decision for all the wrong reasons, as the European Union descends into chaos.
Given that Donald Trump is closing the gap on Hillary Clinton in the current US presidential election race, the probability of this scenario playing out is calculated to be around 30-40%.
This scenario has at its centre the green flag of climate change. Nature over the rest of this decade starts really intruding into everyday life with record heat waves; melting glaciers in Greenland and Antarctica raising sea levels that begin to threaten major coastal cities; and massive storms and droughts increasing in frequency and causing widespread loss of life and property. To begin with, lack of international cooperation hampers the move away from fossil fuel consumption as the Paris accord of last December gathers further dust. At some point, however, the situation becomes potentially so disastrous that necessity yet again becomes the mother of invention.
A new technological wave around smart energy and better water management kicks in to initiate the next global economic boom, similar to the one we had in the last century with the invention of computers and latterly the internet and mobile phones. Obviously, companies in fields protecting the environment will demonstrate the same sensational track record that IBM and Apple achieved in their ascent to the top of the pile in the last boom.
On account of the green flag being a megatrend which puts it in the category of a clockwork flag, the probability attached to this scenario materialising over the next ten to fifteen years is estimated to be as high as 80%.
In the words of Bob Dylan
As I said at the end of my most recent book Flagwatching, I would like to conclude with a line of an old song by Bob Dylan which captures the essential nature of the future: “The answer, my friend, is blowing in the wind.” I wish you the best of luck in watching the flags in order to work out which way the wind is blowing and which scenario is in play.
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