It has been the continuing obsession of this writer that we are living in an Interregnum, where the “old is dying, but the new cannot be borne”. The new National Intelligence Council report, Global Trends 2030, seems to be further evidence that others share my assumptions.“The ’unipolar’ moment is over and Pax Americana — the era of American ascendancy in international politics that began in 1945 — is fast winding down,”the report says.
The 140-page report released today by the National Intelligence Council lays out dangers and opportunities for nations, economies, investors, political systems and leaders due to four “megatrends” that government intelligence analysts say are transforming the world.
Those major trends are the end of U.S. global dominance, the rising power of individuals against states, a rising middle class whose demands challenge governments, and a Gordian knot of water, food and energy shortages, according to the analysts.
“We are at a critical juncture in human history, which could lead to widely contrasting futures,” Council Chairman Christopher Kojm writes in the report.
Although I discuss much of this in the new America 3.0 video, I’d like to touch on a few key points here.
- The End of U.S. Global Dominance-As I have been saying for a while, this is a good thing. Imperial overstretch has sapped our ability to rebuild the sagging infrastructure of America, on which future productivity and growth depend. Obama’s greatest legacy may be that he extracted us from two fruitless wars in the Mideast and restructured our military in a manner to suit the security needs of the 21st Century.
- The Rising Middle Class-The notion that for the first time in history less than half of the world’s population would be living in poverty is good news. But it also means that authoritarian regimes are constantly going to be challenged.
- The Rising Power of Individuals against States-I have thought for a while that a new breed of Cyber savvy Anarchist could be a great threat to the world order, especially in the most developed of nations. I don’t know how this plays out, but both government and multinational firms are really vulnerable to attacks from a few bad actors.
- Global Resource Squeeze-I’ve been studying Jeremy Grantham’s work recently. As the middle class grows, the demands for protein put real strains on the food an water supplies already stressed by Climate Change. Here again, the U.S. is in relatively good shape, but the strains in Africa and Asia will be massive.
Although I have not read the whole report, there is one other aspect of modern life that appears to be missing. There is significant evidence (as I pointed out in the piece on Grantham) that the rise of manufacturing automation will lead us to an era of very low job growth. The only antidote is of course the massive retirement of boomers. Krugman wrote eloquently about this yesterday.
In a recent book, “Race Against the Machine,” M.I.T.’s Erik Brynjolfsson and Andrew McAfee argue that similar stories are playing out in many fields, including services like translation and legal research. What’s striking about their examples is that many of the jobs being displaced are high-skill and high-wage; the downside of technology isn’t limited to menial workers.
Still, can innovation and progress really hurt large numbers of workers, maybe even workers in general? I often encounter assertions that this can’t happen. But the truth is that it can, and serious economists have been aware of this possibility for almost two centuries. The early-19th-century economist David Ricardo is best known for the theory of comparative advantage, which makes the case for free trade; but the same 1817 book in which he presented that theory also included a chapter on how the new, capital-intensive technologies of the Industrial Revolution could actually make workers worse off, at least for a while — which modern scholarship suggests may indeed have happened for several decades.
As he suggests, this discussion of the role of automation and the role of monopolies which has caused “the shift of income from labor to capital has not yet made it into our national discourse.” We have been talking about this on this blog for three years. Perhaps the wider conversation has now begun.