The Future of the Global Economy

Just Get the Direction Right
The Future of the Global Economy
The Bubble of Government Promises
It’s All About Supply, Not Demand
Boston, Chicago, Lisbon, Denver, and Lugano

If you establish a democracy, you must in due time reap the fruits of a democracy. You will in due season have great impatience of public burdens, combined in due season with great increase of public expenditure. You will in due season have wars entered into from passion and not from reason…

– Benjamin Disraeli, prime minister of England, novelist

In any bureaucracy, the people devoted to the benefit of the bureaucracy itself always get in control, and those dedicated to the goals the bureaucracy is supposed to accomplish have less and less influence, and sometimes are eliminated entirely.... In any bureaucratic organization there will be two kinds of people: those who work to further the actual goals of the organization, and those who work for the organization itself. Examples in education would be teachers who work and sacrifice to teach children, vs. union representatives who work to protect any teacher including the most incompetent. The Iron Law states that in all cases, the second type of person will always gain control of the organization, and will always write the rules under which the organization functions. [Pournelle's law of Bureaucracy]

– Jerry Pournelle, prolific science-fiction writer, August 7, 1933 – September 8, 2017

This letter will be the first of a series in which I outline my vision for the next 5–10–15–20 years of global economics. I understand that there is a substantial amount of hubris involved in such an undertaking, so I will approach the topic gingerly.

Why even risk such prognosticating? As longtime readers know, I am actually writing a book on what I think the next 20 years will look like, technologically, geopolitically, sociologically, and economically. The book is called The Age of Transformation. The basic thesis is that we are going to see more change in the next 20 years than we’ve seen over the past century. Consider how much different the world will be if a century’s worth of change is compressed into the next 20 years.

If you do not resolve to adapt to that level of change in your life and in the lives of your loved ones, you will not be ready to fully participate in the society of 2038. You’ll also fail to reap the full rewards of all the years of hard work and dedication you have put in, preparing for your retirement.

This series on the future of the global economy will shape my outline for the last 25% of the book. The book will expand greatly on this series. I feel comfortable opening up my thought process to you, and I welcome the feedback I’m going to get, because it will only improve the book. Thoughtful comments from friends are always welcome.

The first 40–50% of the book will focus on the technological and biological transformations that will happen in the next 20 years. In general, that is the rainbows and puppies section of the book. There are any number of books out there that deal with this broad topic in different ways, but nearly all of them have a somewhat techno-utopian slant. And for good reason. Living longer and healthier in a world of greater abundance, where the things we want cost less? What’s not to like?

The next 25–30% of the book will deal with the geopolitical/sociological/demographic changes that will inexorably force themselves on us in conjunction with this technological revolution. Some of those changes will be a reaction to the very technological forces that are driving the change. This section will conclude with the most difficult chapter of the book, the one that I have wrestled with the longest over the last two years, the chapter on the future of work. For some of us that will be quite a bright future; for others who are unable to adapt, not so much. Globally, hundreds of millions of jobs that are currently filled by humans will simply not require humans in the future. We will have to move on to other occupations.

This level of labor transformation is nothing that we haven’t done in the past. Many of you will recall that 80% of Americans toiled on farms in 1800. Today that number is less than 2%, who produce massively more per capita in much better conditions. But that change played out over more than 10 full generations. The changes I am talking about are going to happen in less than one generation. The transformation of employment will be one of the most difficult social and political problems that societies all over the developed world will face. It’s not just that there won’t be jobs, but that many of the new jobs will require different sets of skills and be in a different locations from where many of us live today. And while our ancestors may have set out boldly from other corners of the world to give America a try, never to see their home-countries and loved ones again, that propensity for relocation seems to have diminished in present-day culture. How many Americans relish the notion of moving from region to region anymore?

The last section of the book will deal with the future of the global economy. And there we have some issues, as my kids would say. I don’t think we end up in some techno-dystopian, cyberpunk Blade Runner-type world, but the tools we use to measure the economy and the things we are measuring are going to experience a great deal of volatility. Depending on which side of the volatility you find yourself on, it may be either extraordinarily beneficial or harmful. The purpose of my book will be to help you see the general direction and power of the unfolding transformations, so that you can adapt your strategies for the benefit of your family, friends, and businesses.

The massive amount of research that I’ve had to work through has forced me to change my opinions more than a few times as I’ve waded through material and prepared to put words on the screen. I’m deeply grateful to the 120 volunteer researchers who gave me literally tens of thousands of pages of material to read and sort through on an extraordinarily wide variety of topics.

I am ultimately optimistic, and the book itself will be optimistic about the future, but there are difficulties that we as a society will face. We will have to devise different, and in some cases heretical, ways of operating in order to bring the benefits of transformation to as many people as possible in our global society. Make no mistake, political turmoil lies ahead. The current dysfunction in Washington will seem almost quaint, by comparison, as the country and the world lurch from one vision of the future to the next.