The things that will matter in the future. There are many things that will impact the US and countries throughout the world, both in a positive and negative way. Bloomberg recently did a study on these “Disrupters and Drivers”. Here is a quick summation of some of the points they made;
Trade and protectionism. Trade is a driver for many global economies, but without agreements on the rules of the game and without compensation for losers has resulted in a protectionist backlash. The cost of the trade war between the US and China could reach $1.2 trillion by 2021. The US is now below Brazil, India, Saudi Arabia and Russia on the index of protectionism compiled by Bloomberg.
Immigration is also an issue that the US has made an abrupt about-face in the last few years. A workforce boosted by immigrants and accelerating gains in productivity could support annual GDP growth of 2.7% in the next decade. Without those, the growth could slump to 1.4% a year.
The rising use of robots is another driver or disrupter. McKinsey Global Institute estimates that by 2030, some 14% of the global workforce-375 million workers-may have to find a new occupation. Rapid progress in artificial intelligence and machine learning could push that number even higher. If the transition is badly managed, it will lead to further polarization in income and increased dissatisfaction. This is why it is important to push for advanced education and also spending on support for displaced workers, which in the US, we are not doing adequately.
Populist politics is on the rise and this could be a disrupter. 43% of the total GDP in the group of 20 economies is under the control of populist rulers, up from 8% in 2016. Based on the evidence so far, populist rulers are better at identifying problems than they are at finding solutions. The result has been protectionism, opposition to immigration, unfunded tax giveaways, attacks on central bank independence and head-spinning policy uncertainty.
Climate Calamity is a future problem that is hitting us right now. Insurance losses on weather events have increased five-fold since 1980. The United Nations Intergovernmental Panel on Climate Change estimates the cost is from 0.2% to 2% of global GDP a year. Even at the lower end of that range, the costs will be measured in hundreds of billions of dollars a year. At the upper end, they’re in the trillions. Those countries that have a heavy reliance on agriculture, vulnerable populations, and limited resources for adapting are the most exposed. I would also add to those countries that choose to ignore the problem as well. Among the major economies, India and Vietnam show up among the most vulnerable. The future is frightening or it could be dynamic. It only depends on if you look forward and prepare. Instead many countries, including the United States are looking behind and trying to halt progress. That will never work and will just lead to a waste of vital resources.