SAMI Consulting
Robust decisions in uncertain times
Blowing the Cobwebs off your Mind
What will change our world?
Gill Ringland,
with Martin Duckworth, John Reynolds, Dr Wendy
Schultz, Laurie Young and the BTCOYM Task Force
(c) SAMI Consulting 2013
Four major forces
Robust decisions in uncertain times
• Demographics – societal forces
• West to East – political and economic forces
• Environment and resources – limits and impacts
• Technology – challenges and opportunities
This deck also contains some provocations:
• could the world be very different from our
expectations?
(c) SAMI Consulting 2013
Demographics
Robust decisions in uncertain times
(c) SAMI Consulting 2013
Global population
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Source: UN Population Division
(c) SAMI Consulting 2013
Where will they be?
Robust decisions in uncertain times
10
Billions
8
6
Africa
Rest of Asia
China
India
Latin America
Oceania
Northern America
Europe
World Population Prospects
UN Population Division: 2006 Revision
4
2
0
1950
1975
2000
Source: UN Population Division
(c) SAMI Consulting 2013
2025
2050
An ageing population
Robust decisions in uncertain times
800
Other less developed
World 2050 Age Pyramid
India
600
China
More developed regions
400
200
Source: UN Population Division
(c) SAMI Consulting 2013
90-94
80-84
70-74
60-64
50-54
40-44
30-34
20-24
10-14
0-4
0
Migration
Robust decisions in uncertain times
Migration increases due to economic factors – south to
south as well as south to north
Also increases due to environmental degradation:
as other parts of the world become too hot or too dry, become flooded, Northern
Europe could become a target for environmental refugees.
Increases due to regions of constant conflict,
Increases in urban conflict from new waves of migrants.
Undocumented migrants pose problems for governments
and NGOs.
(c) SAMI Consulting 2013
Workforce – war for labour
Robust decisions in uncertain times
In order to maintain the economic
growth rate of the two decades
before the crisis, the USA needs
26 million and Europe 46 million
more people by 2030.
People will be encouraged to
work longer, with an explosion in
life-long learning, retraining for
new careers and flexible hours.
Even developing countries will hit
the working age inflection point by
2050.
Source: http://www.eurofound.europa.eu/ewco/surveyreports/EU0902019D/EU0902019D_2.htm
(c) SAMI Consulting 2013
Lifestyle diseases go global
Robust decisions in uncertain times
Health in the developed world is under
threat due to ignorance or complacency
about the effect of lifestyle choices. In the
US, the total number of people with diabetes
is predicted to rise from 11million in 2000 to
almost 20 million in 2025. By 2050, this is
projected at 29 million people—a 165%
increase over the 2000 level. Whilst some of
this can be attributed to natural causes,
much of it is down to unhealthy living
In the developing world diseases once
thought of as being a developed-country
problem are rapidly increasing due to a
globalisation of lifestyle, urbanisation and
increasing affluence.
Source: http://care.diabetesjournals.org/content/24/11/1936.full.pdf+html
(c) SAMI Consulting 2013
Increasing role of women
Robust decisions in uncertain times
Education of women reduces
family size and population
growth – evidence from Kerala
vs India average.
Move to cities increases
women’s education and role
in paid work: increases size of
formal economy.
Demographic and Socioeconomic Indicators in India and
the United States, 2000
US
India
Kerala
Total fertility rate
2.1
2.9
1.7
Infant mortality rate
65
58
12
Life expectancy (male)
75
62
71
Life expectancy (female)
80
64
76
Female literacy
99
54
88
Contraceptive prevalence (all
methods)
73
56
69
Will we see more involvement
by women in politics? More
consensus working?
Source: http://www.unfpa.org/pds/poverty.html, http://www.prb.org/Educators/TeachersGuides/HumanPopulation/Women.aspx
(c) SAMI Consulting 2013
West to East
Robust decisions in uncertain times
(c) SAMI Consulting 2013
Growth outside the G7
Robust decisions in uncertain times
China and India will continue to
grow faster than OECD countries.
With huge populations, as GDP
per person rises, their economic
influence will grow. Economic
power leads to political, social and
ethical dominance in the following
decades.
GDP in US $ billions
90000
80000
70000
60000
50000
Big 5+M
40000
G7
30000
20000
By 2050 (halfway through the
“Pacific Century”), the geopolitical
landscape will have changed as
the combined Big 5 +M (BRIC plus
Indonesia and Mexico) GDP
exceeds the GDP of the G7.
10000
0
Source: http://carnegieendowment.org/files/World_Order_in_2050.pdf
(c) SAMI Consulting 2013
2009
2030
2050
GDP by 2050
Robust decisions in uncertain times
•
•
•
•
•
Crucial role of demographics in driving economics
Everywhere will have an older population by 2050
Asia is not homogeneous – East Asia ageing fast, India, Indonesia, Philippines about 30% under 14
Africa starts to boom (Uganda 50% under 14)
Fast growing middle class in Asia and Latin America: service economies boom in BRIC countries
(c) SAMI Consulting 2013
GDP per capita by 2050
Robust decisions in uncertain times
The current trend is for incomes within countries to become more unequal, but for
the differences between the richest and poorest countries to become less so.
Over a billion new middle class consumers in Asia, mostly Muslim.
(c) SAMI Consulting 2013
% living on less than $2.00/day
Robust decisions in uncertain times
By 2050, no country in the G20 will
have more than 5 % of the population
living in extreme poverty, though
significant portions of society will still
be living on less than $2.00 a day.
70
60
Poverty rates are expected to decline
significantly in Indonesia, Brazil,
Mexico, and Turkey, but growth in
China and India will be the driving force
behind this shift, responsible for lifting
600 million more people from the most
extreme forms of poverty.
50
China
40
India
30
Indonesia
20
SS Africa
10
0
Sub-Saharan Africa has higher poverty
rates in 2050, partly due to the
explosion in population.
2010
Source: http://carnegieendowment.org/files/World_Order_in_2050.pdf
(c) SAMI Consulting 2013
2020
2030
2050
Western political model
Robust decisions in uncertain times
Based on “democratic liberalism” and notions of fairness, but-----On the ground, role of black economy, corruption, organised crime
ignoring laws & regulations, patronage, nepotism
Multiple levels and layers of governance – complexity, lack of
accountability
Lack of trust of politicians
Low turnout in elections especially among the young
Source: http://www.lawandliberty.org/pol_phil.htm
(c) SAMI Consulting 2013
Values
Robust decisions in uncertain times
Relevance to a moral decision
Harm
Fairness
Affiliation
Authority
Purity
Decreasing traditionalism 
Neural economics identifies what
happens to the brains of people who
are making decisions, and it is able to
identify specific common locations in
the brain which light up when choices
are being made that are heavily laden
with a particular kind of issue.
The chart is based on the five dominant
dimensions of choices being made
about social matters. It shows that, the
more traditional a society is, the less
that, for instance, “purity” is relevant to
a moral decision, in that there is less
belief that one can improve by acts or
by association.
©Beyond Crisis, Ringland, Sparrow, Lustig, John Wiley 2010
(c) SAMI Consulting 2013
Values
Robust decisions in uncertain times
Experimental economics explores
peoples’ behaviour in situations where
economics makes predictions.
The graph shows the outcome of one
experiment consisting of a set of
carefully-designed 'games' that are
played for money. Participants have the
opportunity to cheat, to be detected
cheating and to punish other players. It
shows the relative tendency to punish
those detected cheating, and those who
detect cheat (the 'police'). The
policemen commit a crime against
affiliation and purity, shaming the group.
©Beyond Crisis, Ringland, Sparrow, Lustig, John Wiley 2010
(c) SAMI Consulting 2013
Global culture vs local diversity
Robust decisions in uncertain times
One indication of diversity is a count of the number of languages spoken. By
2100 more than 90% of the languages currently spoken in the world would have
gone extinct. 1.8 billion people speak English: the main growth is of Indlish and
Chinglish.
Even as the cultural difference between countries decreases, national cultures
will become internally more diverse, due to the effects of migration and easier
communications between like-minded individuals across the world.
The OECD countries are facing increasing pressure to place respect for religious
beliefs in equal terms with other values such as press and academic freedom or
gender equality, e.g. Halal accountancy, a unique Sino-jurisdiction in law.
Source: http://en.wikipedia.org/wiki/Cultural_diversity
(c) SAMI Consulting 2013
Governments try to reduce risk
Robust decisions in uncertain times
Regulation – international, EU, national – will increase
•Lack of international coordination amongst regulators prompts de-listing
•With the pace of scientific change outpacing that at which regulation can be created
or adapted, governments are increasingly invoking the precautionary principle.
How international agreements will evolve, and the implications for
global security, are not clear.
•A “regulatory Tsunami” is hitting banking: at what scale will the Financial Services
industry be regulated? (Country, EU, Global?) There is no international body with the
legal or regulatory authority to oversee the system and ensure against catastrophic
systemic perturbations
•New industries, like Biotech, face evolving regulatory regimes
•New media regulation after Leveson? Aggressive energy regulators?
•Halal standards being created by Islamic governments for law & accountancy.
•The PRC has announced that it will build a “magic circle law firm” & a “Big Four
accountancy firm”
Source: http://mercatus.org/sites/default/files/publication/the-future-of-regulation-1%20copy.pdf
(c) SAMI Consulting 2013
Role of NGOs
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(c) SAMI Consulting 2013
Potential for Global War
Robust decisions in uncertain times
The unprecedented shift in relative wealth and economic power from West
to East now under way will continue. The US will be subjected to internal
political, economic, financial and social upheaval and the "Dollar Wall" on
which the power of the USA sits, will collapse.
Possible wars between India/Pakistan, Iran/Israel, America/China.
Major climate changes and extreme events lead to food and water wars.
The relative power of non-state actors— businesses, tribes, religious
organizations, and criminal networks—will increase .
While regional wars will continue, the aging populations in US, Europe and
East Asia are unlikely to allow their governments to get involved in global
wars.
Source: www.smithsonianmag.com/specialsections/40th-anniversary/George-Friedman-on-World-War-III.html, and SAMI research
(c) SAMI Consulting 2013
State sponsored cyber threats
Robust decisions in uncertain times
Companies and infrastructure are routinely
attacked through state sponsored cyber attacks
– Stuxnet worm crossed a previous ‘red line’
– No accepted norms of what is now ‘off limits’
– UK now acknowledges that it has offensive cyber
capability
– Cyber is now judged to be at least as big a threat to
national security as terrorism
(c) SAMI Consulting 2013
Criminal activity moves to cyber
Robust decisions in uncertain times
Companies and individuals subject to criminal
cyber attacks
– We are increasingly dependent on networked
activity
– Cyber crime has the potential to undermine
confidence in the internet both in the UK and
internationally
– Criminal and terrorist links are increasing
– Increasing range of cyber threats and scams
– Will we be able to defend ourselves effectively?
(c) SAMI Consulting 2013
Increasing dissent in China
Robust decisions in uncertain times
The number of annual protests has grown steadily since the early
1990s, from approximately 8700 “mass group incidents” in 1993 to
over 87,000 in 2005. In 2006, the Chinese Academy of Social
Sciences estimated the number of annual mass incidents to exceed
90,000, and Chinese sociology professor Sun Liping estimated
180,000 incidents in 2010. Beijing in 2012 spent $111 billion on its
domestic security budget, which covers the police, state security,
militia, courts and jails. This is now higher than its publicly disclosed
military expenditure.
The role of Chinese versions of Twitter and Facebook in organising
dissent is increasing.
Effect on global economy?
Source: http://www.npr.org/2012/10/30/163658996/in-china-a-ceaseless-quest-to-silence-dissent
(c) SAMI Consulting 2013
Education
Robust decisions in uncertain times
Globally, literacy and broad-based
education and educational
opportunities will continue to
increase.
9
Total world population
Secondary education
Graduate-level education
6
The number of Chinese and Indian
students currently enrolled as
“honours students” exceeds the
combined total population of the
OECD countries.
3
By 2050 it will be rare for people to be
illiterate or innumerate.
1850
©Beyond Crisis, Lustig, Ringland, Sparrow, John Wiley 2010
www.samiconsulting.co.uk
1900
1950
2000 2025
Corporates and ----Robust decisions in uncertain times
Consumer and client value replacing shareholder value as
dominant metric:
Sustainability, responsibility and ethics have increased role in corporates
Lack of consumer trust.
Corporate responsibility has moved one step further.
Companies are now accountable in the public eye, not only for their own
actions, but also for those of their subcontractors, customers and
associates
New forms of capitalism
eg banks vs B2B and P2P lending
Increasing role of NGOs, partnerships, social enterprise and
family firms
Source: http://www.forbes.com/sites/stevedenning/2012/08/29/is-the-hegemony-of-shareholder-value-finally-ending
(c) SAMI Consulting 2013
Frugal innovation
Robust decisions in uncertain times
Jugaad:
Finding an innovative solution to
a problem when the resources
are very limited or almost nil.
• Increase in 'constraint-based
innovation' based on
functionality and ease of use;
• Targeting customers at the
base of the pyramid;
• Focused on affordability, low
cost and ease of production.
eg earthen fridge (which runs
without electricity)
Source: www.innovationmanagement.se/.../jugaad-lessons-in-frugal-innovation
(c) SAMI Consulting 2013
Examples of use:
• Renault-Nissan
• GE
• Proctor & Gamble
• Pepsico
• Siemens
Environment
Robust decisions in uncertain times
(c) SAMI Consulting 2013
Environmental limits
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The logarithm of the ratio of the current situation to the probable long term
sustainable limit: the metrics in italics have been breached already
Carbon dioxide
Change in land use
Species extinction rate
0
Freshwater use
Nitrogen cycle
Sustainable limit
Ocean acidification
©Beyond Crisis, Ringland, Sparrow, Lustig, John Wiley 2010
Stratospheric
ozone depletion
(c) SAMI Consulting 2013
Phosphorus cycle
Climate Change
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Changing marine environment
Physical changes over the next 40 years include sea-level rise and coastal
vulnerability, higher ocean temperatures and ocean acidification: leading to
threats to food sources and threats to cities at/near sea level
Weather gets wilder
Greater frequency of severe, extreme weather events and changing
precipitation patterns will adversely affect property, services and food
supplies. Frequency asnd intensity of natural disasters increases, people
migrate to cities. New areas become vulnerable to flooding or drought.
Poles get warmer
The Arctic Seas open up for intercontinental traffic and for oil exploration
via an ice-free North Pole route
Source: http://www.chathamhouse.org/sites/default/files/public/International%20Affairs/2012/88_1/88_1blunden.pdf
(c) SAMI Consulting 2013
Urbanisation
Robust decisions in uncertain times
By 2050, 70% of the world’s population will be
living in towns and cities. Most will live in mid-sized
rather than mega-cities.
Northern America, Latin America, Europe and
Oceania are highly urbanized, with proportions
urban ranging from 70 per cent in Oceania to 82
per cent in Northern America, and their level of
urbanization is expected to continue rising, so that
by 2050 all of them, except Oceania, are expected
to be more than 84 per cent urban.
In contrast, Africa and Asia remain mostly rural,
with just 40 per cent and 42 per cent of their
respective populations living in urban settlements in
2010, and even by 2050 they are expected to be
significantly less urbanized than the other major
areas, reaching a proportion urban of 62 per cent in
Africa and 65 per cent in Asia.
Source: http://esa.un.org/unpd/wup/Documents/WUP2009_Press-Release_Final_Rev1.pdf
(c) SAMI Consulting 2013
Smart Cities
Robust decisions in uncertain times
•
•
By 2030, 5 billion people will be living in cities
Smart City initiatives are accelerating to address challenges of increasing urbanization:
–
–
–
–
•
Combine big data analytics, social networks, crowd-sourced reporting, and ubiquitous
sensing to provide real-time feedback on the city’s built environment and infrastructure
–
–
–
–
–
•
Case study: Barcelona Smart City Strategy
Masterplanning new smart cities, eg, New Songdo City, South Korea; Putrajaya, Malaysia; Wuxi
Huishan, China; Living PlanIT Valley, Portugal
Adopted for national planning: Singapore’s Intelligent Nation 2015; Malta’s The Smart Island
Major investment trend – ‘smart city’ tech investment to total $108 billion by 2020
Sustainability gains – energy savings, environmental quality monitoring in real-time
Safety and security gains – residents use social nets to report on potholes, leaks, worn
infrastructure, criminal activity
Visitor industry gains – real-time updated maps, transit info, event info
Citizenship / governance gains – people take increasing responsibility for conditions within their city
Governance gains – increasing transparency, local authority and citizen involvement
Emerging forms of networked, open government may emerge in smart cities first.
(c) SAMI Consulting 2013
Lifestyles
Robust decisions in uncertain times
Travel
People like to travel, and the
amount of travel has always
historically increased with other
forms of communication. By 2050,
much of the travel world-wide will
be for leisure; virtuality being
used for business contacts.
Food
If we all eat like Americans we
need 3-4-5 planets: so GM foods
are back on the agenda. Livestock
eat 70% of all the grain we
produce - hamburger can be
grown from stem cells.
Source: http://metro.co.uk/2012/03/14/with-1bn-hungry-and-1bn-obese-what-is-the-future-of-the-worlds-resources-351881
(c) SAMI Consulting 2013
Energy - new technologies
Robust decisions in uncertain times
Over the next four decades, the world’s energy system will see
profound developments. Some preferred energy solutions will only be
affordable and available at scale tomorrow. Others are available now
and will remain attractive.
For example natural gas and shale oil will make a growing contribution.
Shale gas is expected to make the US energy independent, which will
have major destabilisation impacts on the global balance of power.
By 2050 global energy supply is likely to be far more diverse than
currently with fossil fuels playing a less important role. The energy mix
will be made up of existing fuel sources, and low carbon technologies:
nuclear power back on the agenda
Source: http://www.shell.com/global/future-energy/scenarios/signals-signposts.html
(c) SAMI Consulting 2013
Resources - a perfect storm
Robust decisions in uncertain times
The growth in consumption among emerging economies is
generating a worldwide rush for resources:

Increasing pressure on water supplies and increasing water
shortages

Increasing pressure on agricultural systems and food supply

Increasing pressure on soils and productive ecosystems

Finite supplies of minerals like rare earth metals critical for high
tech
Growing recognition of the need for resource efficiency, and the value
of‘waste,’ with increasing re-use and recycling, cleaning water
for re-use, and new methods of creating food, such as GM
foods and synthetic biology
Source: www.mckinsey.com/features/resource_revolution
(c) SAMI Consulting 2013
Technology
Robust decisions in uncertain times
(c) SAMI Consulting 2013
Pervasive computing and data
Robust decisions in uncertain times
Uptake of mobile technologies is creating an always-on, constantlyconnected society: 6 billion mobile phones globally. ICT becoming
pervasive: sensors and computers everywhere.
The capabilities and potential of digital technologies are moving from the
consumer sphere into business and education and challenging established
business practices and models, largely driven by user expectations:
•
•
•
Processing capability - the “Singularity”, big data
Disposable laptops which match the human brain.
Holography, interactive surfaces & virtual assistants
ICT is likely to be found in silicon-based, quantum, nanotech and
biologically based carriers, decreasing in cost and increasing in capability.
Source: www.computer.org/portal/web/computingnow/pervasivecomputing
(c) SAMI Consulting 2013
Digital media
Robust decisions in uncertain times
The ease with which digital media can be
created, published via the internet, stored,
and shared is revolutionising many
traditional processes across the spheres
of business, entertainment and education.
The boundaries between creator,
publisher and consumer are blurring as
individuals gain the ability to create and
share their own content, and download
the content they choose rather than what
is chosen for them.
Source: http://mashable.com/2011/10/11/digital-media-future/
(c) SAMI Consulting 2013
Smart transport infrastructure
Robust decisions in uncertain times
Transport infrastructure
will change radically over
the next 50 years.
Technological
developments will change
what we define as
infrastructure – not only
what we travel on, but the
vehicles we travel in and
the information we have
about the system.
The amount we need to
move is determined by the
spatial spread
of the places we need to
get to: urban design can
cut out distance from
journeys,
Source: http://www.bis.gov.uk/foresight/our-work/projects/published-projects/intelligent-infrastructure-systems
(c) SAMI Consulting 2013
Nano-whotsits
Robust decisions in uncertain times
Nanotechnology applied to materials, biology, information technology,
and cognitive sciences is progressing at a rapid rate and interacting with
more established fields such as mathematics, artificial intelligence and
environmental technologies. Working at a nano level reshapes the
building blocks of life.
This will create transformational change by providing new products and
services, enabling new human capabilities, and reshaping societal
relationships. These advances are creating unprecedented capacities to
manipulate nature.
This is changing what “natural” means and raising many new ethical
issues.
Source: www.wtec.org/ConvergingTechnologies/Report/NBIC_report.pdf
(c) SAMI Consulting 2013
Synthetic biology
Robust decisions in uncertain times
Synthetic biology is the design and engineering of biologically based
parts, novel devices and systems as well as the
redesign of existing, natural biological systems. It has the potential to
deliver important new applications and improve existing industrial
processes.
It is a rapidly developing technology applicable to a wide range of
biological systems, and could help to solve a number of major global
challenges including in the fields of healthcare, energy and the
environment.
A deeper understanding of genomics, coupled with computational biology,
is leading to the ability to hack life itself and build organisms that never
existed in nature…to make an engineering field out of biology.
In production now – hamburger grown from stem cells
Source: http://www.rcuk.ac.uk/documents/publications/SynthethicBiologyRoadmapLandscape.pdf
(c) SAMI Consulting 2013
Augmented humanity
Robust decisions in uncertain times
Refers to the application of nano technologies to improve human performance, eg,
healthier ageing as well as mechanical (cyborg) enhancements, and drugs to
amplify mental alertness, acuity, and intellectual performance, eg
BP’s CTO “by 2057, every employee of a Fortune 100 company will need to be augmented”
Increasing understanding of ageing processes and biomarkers, brain development
and plasticity, maintenance of physiological functionality, disease prevention,
application of bio-geronto-technologies; DNA mapping – effect on life and health
insurance.
Direct neural interfaces between computing devices, infrastructure, and the human
brain provide medical opportunities, include the reversal of paralysis or blindness,
and treatment of brain disorders: for instance cyborgs as artificial limbs, extraskeletons for disability, as well as the potential for advanced applications in warfare
and social manipulation.
Source: www.fastcompany.com/.../future-according-schmidt-augme
(c) SAMI Consulting 2013
3D printing everything
Robust decisions in uncertain times
3D objects are created by sending a digital file or scan to a printer which
then builds the item layer by layer - a process know as "additive
manufacturing".
The range of objects the technology can manufacture is rapidly expanding
- in the medical sector it is being used for dental work, while the fashion
industry is experimenting with it to produce clothing.
3D printers are being used to produce insoles and splints to help people
with disabling foot and ankle conditions. Normally, a model of the foot is
made, often from plaster, then plastic is moulded around it by hand. This
process can take anywhere up to six weeks, with patients waiting in
considerable pain. The technology is surprisingly cheap - the 3D printer
costs about £2,000 and the insole is manufactured on the site.
The use will expand with small multi-use printers / prototypers / fabbers
/programmable materials enabling printing of consumer goods,
photovoltaics, houses, or human organs at point of sale or use.
Source: http://www.bbc.co.uk/news/uk-scotland-20020600
(c) SAMI Consulting 2013
Ultralight adaptive infrastructure
Robust decisions in uncertain times
Use of
• metamaterials (artificial materials engineered to have properties that may not be
found in nature),
• smart materials (materials that have one or more properties that can be significantly
changed in a controlled fashion by external stimuli, such as stress, temperature,
moisture, pH, electric or magnetic fields),
• nano-materials (natural, incidental or manufactured materials containing particles of
which one or more external dimensions is in the size range 1 nm – 100 nm).
• next generation networks (with defined separation between the transport
(connectivity) portion of the network and the services that run on top of that transport,
eg the Internet))
• personal fabrication (using 3D printing plus a number of other tools)
to create increasingly adaptive, agile, light-weight, decentralised, and mobile
infrastructure.
Source: eg http://replicatorinc.com/blog/2008/10/personal-fabrication-for-dummies/
(c) SAMI Consulting 2013
SAMI Consulting
Robust decisions in uncertain times
Thank you
(c) SAMI Consulting 2013
Robust decisions in uncertain times
Provocations
thoughts about the unexpected
(c) SAMI Consulting 2013
Globalisation & values
Robust decisions in uncertain times
• Globalisation does not mean homogeneity
• How do cultural differences & religion affect strategy
• How do languages constrain thinking, eg
• Mandarin – no verb tenses or noun/pronoun gender
• Greek – same word for book-keeping, cost accounting,
management accounting ------
• Diversity and equality as “goods” do not travel
• Soft drinks company in India
• “Chief Values officer” in some Indian companies
(c) SAMI Consulting 2013
Scope of the state
Robust decisions in uncertain times
In the 20th Century,
•
the British Empire and the Soviet Union shrank,
•
the EU grew in size and scope;
•
claims for extra-territorial jurisdiction widened;
•
international agencies acquired more clout.
As the world economy continues to integrate, it is becoming increasingly
difficult for national governments to control what happens within their
boundaries eg to protect their currencies: but there are increased
requests for governments to take on responsibilities.
•
Will the nation state be the standard unit of governance?
•
What will be effective scale of the state in 2050?
What will be the reserve currency in 2050? (US $; Chinese Yuan; a
basket of world currencies?)
Source: www.samiconsulting.co.uk/4insafehands.pdf
(c) SAMI Consulting 2013
Reverse globalisation
Robust decisions in uncertain times
Pankaj Ghemawat’s book “Globaloney” has data from 2008:
• Only 1% of world mail crossed national boundaries, less
than 2% of world telephone call minutes were international,
only 17% of all Internet traffic was routed across national
borders
• Only 3% of the world’s population were first generation
immigrants, overseas students were less than 2% of all
students, 90% of all people would never leave the country
they were born in.
• Only 15% of venture capital was deployed outside the
investing fund’s home country.
(c) SAMI Consulting 2013
Global Economic Growth
Robust decisions in uncertain times
•
•
•
Will people in the West on average get richer over the next 40 years?
What will be the rate of economic growth over this time? In the West? In other
parts of the world?
Will global growth be relatively smooth or violently unpredictable?
•
Will average output per hour worked increase in Western economies? What will
happen to employment as ICT extends further into white collar professions?
•
Even researchers follow the herd, and many forecasters are predicting flat global
economic growth, just as they predicted a continuing boom before the 2008 credit
crunch and before the 2000 dot.com crash.
•
Sensible contrarians exist, eg Standard Chartered Bank is forecasting a new
economic “Supercycle” which will triple global GDP. But it will be mostly outside
corporate plcs and driven by sovereign wealth funds and private equity.
(c) SAMI Consulting 2013
Economic Management
Robust decisions in uncertain times
How will governments seek to manage the economy?
• Through Keynesian full-employment approaches? These tend to
produce relatively short Stop-Go business cycles.
• Through monetary policies to target prices (e.g. the Gold
Standard, or the MPC). These tend to encourage longer-term
business cycles, driven by inflating asset prices.
• Or some other way?
What will inflation be over the next 40 years?
How will real interest rates behave?
What will happen to asset prices in relation to current prices?
(c) SAMI Consulting 2013
How will people save?
Robust decisions in uncertain times
How will people save for their old age?
• Savings and asset-backed pension plans? (e.g. Personal
Pensions)
• Earning entitlements backed by the state (e.g. UK public-sector
pensions; many European pension schemes)?
• Gaining entitlements through citizenship or residence (e.g. UK
NHS entitlements; UK old-age pensions)?
What will be the retirement age in 2050?
Will there still be a concept of retirement?
(c) SAMI Consulting 2013
Equality within countries?
Robust decisions in uncertain times
The current trend is for incomes within countries to become more
unequal, but for the differences between the richest and poorest
countries to become less so.
Will the gap between rich and poor persist?
• What level of income transfers will be mandated by government?
• How progressive will the tax system be?
• What levels of social mobility will we see?
How will rich people acquire their wealth?
• Inheritance?
• Transfers through the education system (Public Schools in the
UK, Ivy League colleges in the US) ?
• Hard work? Luck?
(c) SAMI Consulting 2013
Environmental forces – effects?
Robust decisions in uncertain times
Environmental challenges create new business opportunities in
• Energy generation, storage and distribution
• Waste and water management
• Food production
Closer regulation of some companies
Re-thinking of urban design and transport
Political re-evaluation of the societal benefits
Less or more grant support for green business?
Attracting lots of investment capital (e.g. Al Gore’s venture fund,
Warren Buffet investment in solar power)
(c) SAMI Consulting 2013
Education
Robust decisions in uncertain times
What should education look like to prepare for the world of 2050?
•Role of early learning, parents and community
•Life long learning, multiple careers and skills
•Role of literacy and numeracy vs ability to “ask the right
questions” and judge the answers delivered by the cloud
•Role of ability to communicate with other people or groups vs
with the cloud
•Who will pay? social vs private good.
(c) SAMI Consulting 2013
Technology – the adoption rate
Robust decisions in uncertain times
It always takes longer than people think & turns out differently.
•The first design for a steam engine was in A.D. 50.
•The first patent for a fax machine was 1840.
•The internet precursor ARPANET went live in 1969.
•There was no “HAL”, or Mars mission, in 2001.
•So far, no flying cars.
Should we slow down the hype from the Silicon valley geeks?
And who gets technology first? – there may be delays due to societal
values (eg stem cells in the US) – and/or individual or societal wealth.
(c) SAMI Consulting 2013
Trends in Europe
Robust decisions in uncertain times
(c) SAMI Consulting 2013
UK Population
Robust decisions in uncertain times
The population of the UK is projected
to grow over the next few decades,
due to higher birth rates and infant
survival, migration and extended life
expectancy. The High projection
shows the population reaching 77
million by 2050.
The population is ageing, mostly due
to extended reduced mortality in the
old and very old. This effect will be
more severe under the low projection.
Households are growing even faster
than population mostly due to the
increased number of single-person
households.
UK population projections, millions
90
80
70
60
50
Low projection
40
Principal
30
High projection
20
10
0
2011
2021
2031
Source: http://www.gad.gov.uk/Documents/Demography/Population%20Trends/Population_Trends_109.pdf
(c) SAMI Consulting 2013
2041
2051
Workforce demographics
Robust decisions in uncertain times
The ‘greying of Europe’ will
lead to a considerable increase
in spending on pensions, which
puts additional stress on public
expenditure. Potentially:
•the retirement age will be
raised from present levels;
•access to early retirement
schemes will be further
curtailed;
•there will be improved
incentives for older workers to
remain in the labour market.
Projected working age (15-64) population and total employment,
EU25, 2002–2050
The decline in working age
population may be offset by
immigration.
Source: http://www.eurofound.europa.eu/ewco/surveyreports/EU0902019D/EU0902019D_2.htm
(c) SAMI Consulting 2013
Wealth transfer in the West
Robust decisions in uncertain times
Now from younger to older generation, in form of taxes
Now
from younger
to older
generation, in form of taxes.
contributing
to health
and pensions.
Democracy
Democracy––currently older generation vote more than
younger
demographic
trends
are for increasing
older
effect of -ageing
population
is towards
conservatism,
population
especially as currently the older generation vote more
than younger.
Haves and have nots - increasing trend for social dissent as
Western
economies
stall
Haves and
have nots
– - increasing ability to organise eg
London
riotstrend
2011,for
demonstrations
Greece
•increasing
social dissent in
asPortugal
Westernand
economies
stall
•increasing ability to organise eg London riots 2011, street
demonstrations in Portugal and Greece.
Source: http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-CM-AWAMS-Wealth-Transfer-Final-June2012-Web-Version.pdf
(c) SAMI Consulting 2013