2019 was another action-packed year. America’s economic expansion became the country’s longest, social unrest and protests spread globally, and Saudi Aramco’s $2 trillion valuation made it the world’s most valuable listed company. The US-China trade war generated massive boardroom uncertainty, but investors dismissed concerns and drove many markets to all-time highs. WeWork suffered a devastating setback, and Notre Dame’s roof burned. Streaming wars broke out while Canada, Thailand, Spain, India, Indonesia, South Africa and Australia (among others) held elections. The Business Roundtable, a group of America’s leading corporate chiefs, issued a statement on the purpose of a corporation and the annual Harvard-Yale Game was delayed by more than 45 minutes as student activists took the field to protest investment in fossil fuels.
And while this seems like an unusual year, I’m reminded by Billy Joel’s hit song “We Didn’t Start The Fire” that the world has always felt dynamic. The song, which summarized 100 events that had transpired between Joel’s birth in 1949 and its 1989 release, rambled off a series of seismic events such as the emergence of Communist China, the Russian launch of Sputnik, and “trouble in the Suez.”
Uncertainty and change, it seems, are unavoidable realities of life. Yet all of us are asked to make decisions in the face of these fluid dynamics, shifting relationships, and seemingly constant instability. What’s the best way to do so? Sadly, there is no correct answer, but I believe we must look through some of the day-to-day noise to have any chance of identifying the structural signals. Long-term trends that drive seemingly disconnected developments offer a compass to guide us through the numerous cross-currents that plague our lives; and as I’ve noted before, I believe this approach is at least marginally more useful than my Ouija board or Magic 8 ball.
We need to look beyond today’s headlines and think about how the world might unfold. But unlike many others who tend to make predictions on a one-year view, I opt for a 5 year look as a I believe time allows signals to surface amidst the ubiquitous noise. In 2015, I made 15 Predictions for ’15-’20 and in 2016, I pointed to 16 global developments to watch between 2016 and 2021. In 2017, I wrote about the 17 developments to watch over the 2017-2022 timeframe, and in 2018, I presented 18 happenings that might transpire between 2018 and 2023. Last year, I highlighted 19 global developments to watch in the years ahead.
Regardless of how the predictions actually fare, the very act of considering them has proven helpful to me in navigating uncertainty. And in the spirit of the hit Fleetwood Mac song “Don’t Stop” that urges a future focus, I offer this year’s set of 5 year-forward global predictions.
- The current debate on the purpose of a corporation moves beyond the false tradeoff between shareholders and stakeholders. Corporate leaders and policymakers alike agree that many of these tensions are the result of widespread short-termism and call for an explicit link between quarterly-reporting and long-term strategy.
- India, once thought to be a beneficiary of the US-China trade war, struggles to generate a middle class as its large population proves to be more of a liability than an asset in an era of automated manufacturing. Policymakers and academics concede that industrialization-focused development strategies are no longer effective for large population countries.
- Capitalist economies increasingly adopt inequalitystabilizers such as tax rates for the high-earning and wealthy that are statutorily linked to employment conditions and multiyear wage gains received by lower and middle classes. A universal basic training allowance emerges as a popular and effective means to help workers remain (or become) skilled for available jobs.
- The passive investing bubblebursts and the virtuous cycle of flows driving prices driving flows turns vicious. Regulators demand passive investment products disclose the elevated risks that accompany market capitalization-weighted indices.
- The electric vehicleboom accelerates as the entire global fleet of automobiles begins to be replaced; car manufacturers struggle to generate meaningful profits as competition accelerates. Autonomous driving functionality improves, but driver-less vehicles remain few and far between.
- The emergence of hypersonic weapons proves to be as destabilizing as nuclear weapons (if not more so), contributing to a surge in global defense spending. The Western world, lagging behind the Chinese and Russians in the development of hypersonics, channels large investments into defensive directed energy weapons systems.
- Global supply chains shift dramatically as “just-in-time, lowest-cost” logic gives way to “just-in-case, security-of-supply” objectives in corporate boardrooms. As the strategic value of cheap labor drops due to increasing robot use, the physical distance between producers and consumers of goods shrinks dramatically as factories move closer to consumers. Demand for dry bulk ships surges.
- A slowdown in American consumerspending and corporate investing leads the global economy into a recession. High debt levels limit the magnitude of fiscal stimulus governments are able to deploy, quantitative easing and currency wars return with greater intensity, and gold hits all-time inflation adjusted highs.
- Chinaconcludes the time has come to reintegrate Taiwan and threatens to do so militarily if necessary. Beijing throws it weight behind Taiwan’s pro-China parties and succeeds in spurring a diplomatic process around reintegration. Concerns of a surprise attack by PLA forces lead Taiwan’s wealthy to move their families (and assets) to other jurisdictions.
- The United States elects its first female President.
- Recognizing that talent developmentis an investment that bears fruit over years, the Financial Accounting Standards Board allows leadership development and management training expenses to be capitalized.
- Nanotechnology advancements accelerate. Smart dust proves to be one of the world’s most disruptive technological developments with major implications for healthcare, defense, agriculture, and a host of other industries, while twistron yarns demonstrate the power of fabrics to generate electricity from body movement.
- The world accepts the US-China rivalryis far more than a mere trade war, acknowledging it is a currency war, space race, economic war, technology war, and arms race – great power competition in the fullest sense. Telecommunications equipment platforms begin the bifurcation of the global economy into two distinct trading blocks, one led by China, the other by the United States. Countries everywhere are forced to choose which economic ecosystem they will join.
- The rapid rise of surveillance capitalism leads to a massive backlash against big tech. Global outrage over hidden corporate use of personal data generates popular support for regulations enforcing personal privacy protection. As human autonomy is threatened in the process, people struggle to once again learn to think for themselves.
- Radioactive cooling becomes cost effective as a means to harness the cold of outer space to ease the intensive energy demands of air conditioning. SkyCool Systems emerges as one of the world’s hottest companies.
- Driven by the combination of more people on the planet and shifting diets of a growing emerging market middle class, global demand for animal proteincontinues to grow. Acknowledging the inescapable need for grains to feed both people and livestock, many nations begin building strategic fertilizer reserves. Despite the promise of “clean meat,” the future of food gets increasingly fishy and buggy.
- Medical insurance companies and educators begin to jointly lobby against teenage use of social media as the links with mental illnesses such as depression and anxiety become more obvious. In a quest to avoid more drastic restrictions, companies self-regulate by removing share and like metrics from their systems and fund the development of curriculum to support responsible use of social media.
- As its domestic economy slows, the Chinese Communist Partyfaces an existential threat from rising social unrest among disgruntled workers. To divert attention from domestic matters, leaders provoke a nationalist spirit by claiming Western influences are the cause of Chinese hardships. Singer and Cole’s Ghost Fleet proves prophetic as US-China tensions escalate into military clashes.
- Although promising in concept, asteroid miningremains impractical and fails to generate momentum; seabed mining, however, gains significant traction as the International Seabed Authority continues granting exploration permits and makes progress (with reluctant and qualified support from environmentalists) towards an Underwater Mining Code.
- IMO 2020is successfully implemented as global shipping companies convert to using low sulfur fuel or install scrubbers. Due to uncertainty regarding future regulations on propulsion systems, shipping companies indefinitely hold off on reinvesting in new ships. Shipyard demand plunges and shipping rates rise dramatically.
Each year, I end my predictions with the prescient words of John Kenneth Galbraith, who eloquently captures the essence of forecasters. There are, he notes, two types: “those who don’t know and those who don’t know they don’t know.” Feel free to decide which you think I am, but I do hope that these 20 possibilities are useful in spurring your thoughts. I welcome all reactions to these ideas via the comments section below.
Best wishes for successfully navigating the uncertainty ahead!
- Please note that I’ll be launching a podcast soon that will discuss the ideas listed above as well as revisit my prior predictions. I’ll reflect on what I did and didn’t get right and how I’ve updated my thinking. I’ll also give listeners an early glimpse into content from my forthcoming book, THINK FOR YOURSELF.I hope you’ll subscribe! Link to podcast: https://podcasts.apple.com/us/podcast/the-think-for-yourself-podcast/id1496804554
Vikram Mansharamani is a Lecturer at the Harvard John A. Paulson School of Engineering and Applied Sciences. He is the author of the forthcoming THINK FOR YOURSELF: Restoring Common Sense in an Age of Experts and Artificial Intelligence (HBR Press, 2020) as well as BOOMBUSTOLOGY: Spotting Financial Bubbles Before They Burst (Wiley, 2011). He can be followed on Twitter @mansharamani.