Tuesday, June 30, 2020

Predictions for a post-COVID world: US economy through 2025

If you've been following these posts, you'll know by now that I am extracting insights and predictions from a post-COVID scenario I drafted.  You can find the entire scenario writeup here (Tip:  hover over the bottom right of the pop-up window and click on the expand box, and you'll see a full screen view where you can also download the document).

I've written a number of blog posts teasing out some of the implications of the scenario and making predictions about the future.  In my last post I wrote about the potential fracturing of Europe into three regions - Northern, Southern and Eastern - and why France is the loser in this scenario, along with a weakening Euro and long standing trade and defense relationships.

I've written a few other blog posts that examine the rise of the Millennials, the likely focus on supply chain resiliency and manufacturing repatriation and other topics.

Today, I want to focus on the US economy through 2025, and what could happen.

The US economy 2020 - 2025

As we stand now, in the middle of 2020, and in the (hopefully) middle of the COVID outbreak, the economic news is grim.  Over 16M people are at least temporarily out of work due to closures and lower consumer demand.  The economy shrunk in the first quarter and is in an official recession.  The big debate now is between types of recovery - V (everyone hopes for), U (a bit worse but we can handle) or an L (not so good).

There are a number of factors that will dictate the health and resiliency of the economy:

  • Consumer spending.  Since consumer spending comprises about 70% of GDP, the money households spend on required and discretionary spending matters a lot.  In a locked down economy, much of our discretionary spending (entertainment, travel, dining out, etc) cannot happen.  This means there will be less spending and with less spending there is less demand.  Fewer goods and services are required, leading to less aggregate demand.
  • Services vs manufacturing - much of the economy is now based on services rather than manufacturing.  Something like 80% of employment in the US is based on services rather than manufacturing, so weak demand for tangible goods impacts a smaller portion of the economy, but weak or no demand for movies, restaurants, tourism, travel and so forth impacts a significant number of jobs
  • Compensation and safety nets in services.  Many of those services jobs are held by people with little savings or safety net.  They need to work to pay bills, and without their services jobs or the gig economy, they cannot afford to pay for even essentials like housing, food, clothing and taxes.  The impact on the economy is profound when lower and middle income families in the services sector struggle to find work.
  • Easy money can't last forever.  While the Fed is promising easy money now, it cannot do so forever without the risk of inflation.  The dollar is already strong relative to other currencies, so our exports are more expensive (leading to less demand for our products overseas) and cheaper imports. Again, more pressure on local jobs and local growth
  • Debt service.  The government now has over $25 Trillion in debt, and that balance is growing rapidly.  We are approaching the point where our debt is larger than our GDP, typically a warning sign for most economies.  At some point, the government will have to start paying a significant amount of its tax intake on debt service, crowding out other spending on important items like Defense and infrastructure.
  • Real Estate sector difficulties. As noted in a previous post, the real estate sector is likely to be hit hard in the aftermath of COVID for at least two reasons.  First, many small retail shops and restaurants will close because of the prolonged impact of the virus, and few entrepreneurs will want to take those spaces until conditions improve, leading to a glut of retail real estate.  Second, if companies are serious about sending people to work from home, there will be a significant amount of corporate real estate coming available in 2021 and 2022, and less demand from corporations.
  • Job creation and destruction. Jobs will return post-COVID, but the type and nature of jobs will change and we may face a capabilities gap.  More and more jobs are being replaced by robotics and automation, but we don't have enough engineers and technicians to do the work to implement and maintain these solutions.  Plus, more data will be available for analysis, yet we lack enough people with data science skills.  Meanwhile, many of the people who held manufacturing and services jobs may see those jobs disappear, and they may lack the skills to take on new roles.  Many college graduates simply don't have the skills to take on new digitally transformed jobs and companies won't be willing to train new employees at the rate they have in the past, when margins are slimmer. 
  • Household savings.  Americans are becoming savers, finally.  Historically, we saved very little but in the face of the economic slow down and COVID, our individual saving patterns have changed.  Now, we are saving more than ever, but this saving works against consumer spending.
Three Drivers of spending

There are three significant drivers of spending - consumers, businesses and the government.  As noted above, most consumers are rapidly becoming savers, and many will not have much discretionary money to spend.  This means 70% of the economy will remain stagnant for some time.  If the dollar grows stronger, businesses will suffer from weak local demand and products will be considered expensive in the export market, meaning many companies will struggle to drive sales in the US or abroad.  The government will act as a spender of last resort but cannot continue to inject trillions of dollars into the economy.  Spending may occur under a new administration, but even in that scenario it will take new legislation for infrastructure or major project spending, and time to roll out the programs.  This means it's unlikely the government can increase spending on roads, bridges and other infrastructure before at least summer 2021.

Winners and losers

The winners in this new economy are the asset-light and asset-less companies that have reasonable scale, low costs and few employees, and create a valuable service, especially those supported by ad sales.  Facebook, Instagram, Google and others are already digital, already relatively profitable and will weather the storm.  Amazon will take even more of the retail market for may of the same reasons.  Companies in the communications and information technology sector, especially those in networking and transmission or digital communications should do well.

Most consumers are likely to become much more value and price conscious, so low cost stores (Walmart as an example) are much more likely to weather the storm than higher end boutique stores.

Basically, the further along any business is in its digital transformation, the better positioned it will be for success in the near future.

Companies that face headwinds in this new world are those that are reliant on exports, since it is likely the dollar will be strong and other countries will experience even slower growth than we do.  Other companies that will struggle are those companies that rely on discretionary spending - travel and entertainment - because we can anticipate that there will be fewer dollars available.

Health and Education as concerns 

Unless we have significant new legislation, I think the health of the average citizen may suffer, because health care costs have increased dramatically and people are likely to postpone healthcare or forego surgeries or medications if money is tight.  For many people who are unemployed and may have lost their healthcare coverage, or those who are in the health insurance markets and finding prices unaffordable, these and others may risk consuming less health care service and may find their health impacted negatively.

People in their late teens and early twenties are likely to see a real impact on their educational and job opportunities as the economy slows.  A college education - already expensive - may seem out of reach if funds are tight.  Those graduating from college may find it difficult to find a job and have to settle for employment that is compensated at far less than their education or anticipation.

Colleges and universities are in for a real shock, I think.  Years of unrivaled cost inflation have placed many colleges out of reach without substantial loan debt.  For many schools, tuition does not cover the cost of attendance.  So we have programs with rapidly escalating prices which don't adequately cover costs, at a time when fewer and fewer people can afford to go to college and the college degree does not convey value as it used to.  Plus, state legislatures are going to take a hard look at the money they spend on colleges and universities.  The next few years will be a real reckoning for small and mid sized colleges, and all colleges and universities will face significant financial challenges.

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posted by Jeffrey Phillips at 8:47 AM 0 comments

Thursday, June 11, 2020

Post-COVID predictions: Directional Europe

Over the last month I've been posting some of my thinking and predictions based on a post-COVID scenario I wrote and published in May.  You can find the entire document here (tip:  open to full screen by clicking on the icon in the lower right and then you can download as a PDF if you are interested).  In previous posts, I've highlighted some of the predictions that come out of the scenario, including the rise of the Millennials as a leadership cohort in government and business, a restructuring of supply chains to build resiliency, the potential for repatriation of "Critical" companies and component manufacturing, and more.  You can find those previous posts here, here and here.

Today I am interested in writing about another factor I think we'll see coming out of COVID, or perhaps simply exacerbated by COVID:  the division of Europe. 

The "new" world order

As I wrote in my last post, the world is no longer bi-polar, which was a fairly consistent phenomenon through the late 1990s.  After the fall of the Soviet Union, we had a brief period where the EU could have been the second pole - balancing the power of the US, but the EU has proven less powerful and effective than previously thought.  Now, China is striving to become the leading global power, seeking to eclipse the US in global reach and economic might.

While China may grow economically stronger, the relationships other countries will have with China will always be transactional or under duress.  China does not want interference in its internal policies and for that reason does not seek to extend its political thinking or power beyond its economic necessities.  Whether the US and Europe were right to try to spread capitalism, the rule of law and human rights more broadly remains to be seen, but for years these values were important if not always evenly practiced.

In a post-COVID world all bets are off.  Past alliances and relationships seem arcane, or are called into question.  The EU has proven less than effective and is actively disliked in many quarters.  The Trump administration has extracted the US from the WHO and made disparaging remarks about previously unquestioned commitments like NATO.  These global alliances, while important, have not proven effective and the governments that support them have not fully committed to their success.  This calls into question existing and future trading programs and platforms, programs to advance human health and human rights and many other good goals, at a time when many nations will become more nationalistic and less likely to work effectively with their neighbors. Populism and nationalism could rise in response to COVID, and populism was already on the rise in a range of countries, from Brazil (Bolsinaro) to Hungary (Orban) to Russia (Putin) to the US (Trump).

Geographies and Regions

Further, even geographies or regions that have worked together in the past may face a rethinking or restructuring.  In my last post I wrote about the possibility of a mid-east war, brought on by countries for the most part that have existed for less than a century, drawn up by the UK and France at the end of World War I with little regard to people or facts on the ground.

Even "stable" Europe exists only at the recognition of the treaty of Westphalia in 1648, which stipulated that countries recognized the existence of other countries. This didn't stop Napoleon, Hitler and others from trying to remake the structure of Europe, or from disparate German states forming a powerhouse of a country in Europe.  The point is that Europe, like the Middle East, is not a permanent structure but has evolved before and will again.  COVID may create the conditions to restructure Europe into three parts:  Northern, Eastern and Southern.

The directional Europe

Europe is, to some extent, already aligned this way.  Northern Europe is more capitalist in nature, more productive, more efficient and has more stable governments.  Northern Europe contains the most powerful European economies - Germany and the UK, with strong but smaller economies in the Netherlands and Scandinavia.  Northern Europe is more secular and has a more defensible borders.  It has less memory of domination by others.

Southern Europe struggles with good governance.  Italy has averaged more than one government per year since the end of the Second World War.  Greece had to be rescued by the rest of the EU.  When you include Spain and southern France in the Southern Europe camp, you have a less efficient, less well governed, less capitalist population more dependent on tourism and agriculture.

Eastern Europe, while perhaps less well governed in some aspects than Western Europe, has more vitality and more optimism and energy than Southern Europe.  Eastern Europe is relatively new - many countries emerging or gaining strength out of the end of the Soviet Union.  The Poles and the Czechs especially are thriving, and looking to the West for inspiration.  They tend to reject the domination of the Northern Europeans in Europe and look with concern on Russia as an adversary.

Three important countries remain poorly defined in this analysis - all sitting in the middle:  France, Switzerland and Austria.  Each of these have different reasons for their positioning.

France wants to be part of the Northern Europe collection, but its economic policies and spending priorities align more with Southern Europe. Plus, France and Germany have both desired to lead Europe and France does not want to be in Germany's shadow.  France has a larger agricultural industry and is less industrialized than the North, and shares many attributes with its Southern neighbors.

Switzerland belongs with the Northern collection but likes its independence.  It's position in the middle of Europe provides it with the ability to be a broker between all of the European factions and a banker to all of them.  Plus, Switzerland likes its independence and is reasonably well governed and wealthy when compared to its neighbors.

Austria is an interesting case - a middle Europe country, bounded by energetic new Eastern countries but an older country never under Russian domination.  It contains both a magnificent city - Vienna - home to many institutions, but is mostly rural and conservative, making it more like a Southern European country.  I'm not quite sure where Austria will end up, but it may find partnering with Eastern Europe is in its favor.

OK, so what?

So far, a possibly interesting analysis of the facts of Europe, but what does all of this mean?

In the near future, we may see a real shift in Europe, not a full divide but subtle shifts based on interests and regions.  Eastern Europe does not trust Russia and wants guarantees from the international community about Russian interference.  These countries - and let's not leave out the Baltic states among them, are young, energetic and active, in a growth spurt and trying to carve out their role in Europe and on the global stage.  They are interested in more international agreements, especially on trade, and concerned about Russia, now, and in the near future as Russia starts to degrade.  These countries - the Baltics, Poland, the Czech Republic, Austria, even Bulgaria, Romania and Hungary - could from a vital bloc of countries that are more dynamic than Southern Europe and want more trade and security than Northern Europe is able to offer.  They are likely to resist efforts by Russia and China for closer ties.  They may not want to be tied to the issues that Southern Europe is facing, and may look more to the West for leadership.

Northern Europe will tire of supporting Southern Europe.  Increasingly we are already seeing a bias for bonds and even euros printed in Northern Europe, even though all euros, regardless of where they are printed, are supposed to have the same value.  Northern Europe is less militaristic, more willing to work with Russia and tolerate China.  These countries want to get along, and for the most part be left alone.  Their investment in their military continues to decline, as social programs and other policies grow.  These countries won't intentionally sever relations with the East or South, but will continue to place economic goals and plans on the EU that put stress on the Southern European economies.

The South looks back to a mostly agricultural past, with economic benefits from tourism.  There is not enough vitality and growth in this region and young people will start to migrate away from this region to the North, where immigration is tolerated, or to the US or other countries.  As emigration continues, vitality and renewal become difficult and the countries could become older and more conservative.  It will be increasingly difficult to provide the services necessary to support an older population with very slow economic growth. Neither Southern Europe or Eastern Europe wants immigrants which could offset the native born emigration, and both felt a bit overwhelmed by the refugee crisis brought on by the Syrian war.  Neither the South nor the East want to repeat that experience.


If these predictions unfold, Europe will be even less of a monolith than it has been.  Through Brexit the UK has already demonstrated that it's possible for countries to secede.  We'll soon see the results of this experiment.  If the UK is reasonably successful, the EU will find fewer countries desiring to join, and more planning to leave.  The Euro will grow weaker as the countries bicker, consider other alternatives, and their economies struggle.

While I've painted these three regions with a large brush, there are pockets of "northern" sentiment in Southern Europe (for example, northern Italy is far more like Northern Europe than southern Italy) and we may see regions in countries clamoring for vastly different policies.  Italy as we recognize it today formed in the late 1850s, so it too is a relatively recent formation, and could face stress to offer regional autonomy to sectors within the country.

As certain regions seek or gain autonomy, what does that mean to regions with some autonomy today - for example, the Catalan region in Spain?  The area around Barcelona has a different history and dialect than much of the rest of Spain and is more industrialized, and has some autonomy.  If these trends continue, could we see a fragmenting of Spain, Belgium, Northern Italy and other regions where the local population differs from the rest?

If Europe does divide up or break up, it will become less efficient, more bound by trade rules, overburdened with agreements between countries and may need to introduce new currencies.  None of these concepts promote improved business or economic growth, but they may give many what they've wished for for years - more local control and autonomy.

Winners and Losers

The winners as this division of Europe occurs are Germany and the Netherlands, because their economies are already vital.  These countries, the Scandinavian countries and the Baltics could form new trading blocks with the UK.

Switzerland will be a winner either way - it's geographic position and financial services capability position it exceptionally well for almost any scenario short of war.

In this analysis, France is likely to be a loser, because while France has punched above its weight for quite a while, a division in Europe will expose the French economy and spending policies to global challenges.  The same is true for Italy, although Italy and its governance have already been exposed.

None of the Eastern European countries is large enough to stand on its own.  These countries - the Baltics, Poland, Czech Republic and more - need to band together, either as an Eastern European bloc or part of the larger EU, in order to have strength.  We can see this in that most of these countries are more enthusiastic members of NATO than Northern and Southern Europe.

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posted by Jeffrey Phillips at 1:38 PM 0 comments

Wednesday, June 03, 2020

Post-Covid Predictions: Mid-East unrest, digital transformation and lack of leadership

About a month ago I published a long look at the world post-COVID, a scenario I built from extending a number of trends, as well as examining some features and outcomes of past pandemics.  You can download and read the entire scenario and the top predictions.  In the following few weeks I am calling out a couple of the predictions or implications, to extract some insight and to help make sense of what is happening and what is going to happen.

Two weeks ago I wrote about three predictions:  the rise of Millennials in leadership, a coming real estate bust and a potential crime wave.  Last week I wrote about the impact of the pandemic on supply chains, the demand to repatriate manufacturing and the impact of COVID on currency.

Today, I am going to examine three other likely outcomes in the near future:
  • The opportunity for war in the Middle East and the likely apathy about the unrest outside the Middle East
  • Where digital transformation will occur, and why it may slow somewhat in the next few years
  • The leadership vacuum on the global stage, leading to a multi-polar world

What if they gave a war and no one came

There are few places on earth that are more rife with tension that the Middle East, but over the past century, since the fall of the Ottoman empire, there have been "great powers" active there.  France and the UK partitioned the Middle East into spheres of influence after the first World War, and were active in governance and oversight until the second World War.  Upon discovery of oil, the US took an active interest in the region, and has been the leader in the Middle East for years.

Of course, to call it the Middle East is simplifying matters.  From Egypt in the West to Iran in the East, Syria and Turkey in the North, the Middle East is a mixing bowl of interests, tensions, languages and even different sects of Islam.  Egypt has long seen itself as a power broker in the Middle East, but has seen its power and influence dwindle.  Syria, combined with Egypt, attacked Israel to attempt to wipe it out in the Six Day war in the 1960s, and Syria has gone to war with Israel several times.  Iraq was dominated by a dictator, Saddam Hussein, until he was deposed by the US in the second Gulf War.  Despite the hopes of the US Administrations, we've left behind a nascent Shia state rather than a democracy.  Iran simmers under economic blockade imposed by the US over Trump's rejection of a nuclear treaty.  Iran has traditionally seen itself as a major power broker as well, looking back to the Persian empire.

The Saudis, Qataris and Emirates have fairly prospered over the last 50 years.  Dubai, Qatar and Abu Dhabi are thriving economic centers that rival the largest cities in the world, yet they are built on very fragile economics.  And, of course, sitting in the middle of all this is Israel.

There are any number of sparks that could incite another major war in the Middle East.  Iran is constantly testing its neighbors and wants to break out of the economic blockade.  Iran and Saudi Arabia are contesting for leadership in the region, and both are backing and fighting proxy wars.  Syria is attempting to recover from years of civil war against its own people and against the remnants of ISIS, but Assad will want to take more of a leadership role in the region as soon as possible, egged on by his new benefactor, Vladimir Putin.  Hezbollah, backed by Iran, will continue to seek opportunities to attack Israel.  The Israelis will do themselves no favors by continuing to annex land in the West Bank, creating a reason for other Islamic neighbors to protest.

But it will all be different this time.  Europe does not have the energy or military might to intervene once a war starts.  The EU and other European organizations will make motions in the UN and plead with the participants of a war, but to little avail.  The US, exhausted after years of war in Iraq and Afghanistan, will not want to make a significant contribution to a war in the Middle East, and increasingly is less and less reliant on oil from the region.  When and if a war starts, it could escalate quickly and there are few opportunities or regional actors to slow the outbreak.

War could begin between Saudi Arabia and Iran, or between factions loyal to Iran and Israel.  These could be wars of religion, between the Shia population in Iran and potentially Iraq and the Sunni population elsewhere.  As Israel annexes the West Bank, the Palestinians could become a rallying point for other countries, in support of the Islamic brothers.  Turkey, in a fit of overreach, could attempt to arbitrate or enter into a war in the region while trying to assume a power broker status in the region.

There are far too many reasons for war, and far too many actors with far too many rationales and grievances.  It will only take a spark to start a larger war.

Why this matters

This matters politically because there is not longer a significant power broker in the Middle East.  The most likely players, the EU, the UN and the US, all have limited influence or a lack of interest.  Russia is not trusted in most of the region, and China traditionally has not been interested in engaging in the internal affairs of other countries or regions.  If a war starts, it may continue for quite some time, pulling in countries on the periphery who have no desire to fight.

While the US is no longer dependent on oil from the region, Japan, China, the EU and other countries and regions are, so any fighting will dramatically increase the price of oil and is likely to decrease the supply of oil.  In a weakened economy, such an economic shock could have long term implications.  Moreover, as we've witnessed with Syria, war will create mass migration.  The Middle East sits in close proximity to the EU, and we could imagine millions more refugees and migrants attempting to reach Italy, Greece and the Balkans.  Migration could destabilize Turkey, radically change the Emirates and Qatar.

If the war extends and draws in enough countries and combatants, it could extend further afield, to North Africa or Pakistan.  Several of the countries in the region are announced (Pakistan) or suspected but unannounced (Israel, Saudi through the US) nuclear powers.  A long war or one that threatens to escalate will draw in other global powers, if only for negotiation, but tensions and grievances are such that war in this region will escalate quickly, with devastating results for the region and for the global economy.

Digital Transformation, slow and fast

Everyone talks about digital transformation, but few define it thoroughly.  It can mean the transition from seat of the pants planning to decisions driven by data, or it can mean the transition of traditionally manual activities to automated activities, or it can mean putting machines and smart systems to work more effectively, or it can mean all of these things.

All companies will become digital companies, with fully automated business processes using data to drive better decisions.  However, the digital revolution may hit a speed bump.  In an era of massive unemployment, digital transformation that leads to fewer jobs, or worse the reduction of existing jobs, may be untenable from a political perspective for a few years.

Digital transformation will continue to accelerate where it leads to lower costs or better decisions.  We'll see this especially where data integration across silos leads to better decision making.  However, in an era of high unemployment it will be difficult for companies to implement some aspects of digital transformation that lead to the replacement of workers.  Robotics, for example, has long held promise to reduce costs, increase productivity and improve consistency over human workers, but the political price a company may pay in the short run for implementing robots over people may be more than the company can tolerate.  Even though digital transformation and the supporting tools, such as robotics, machine learning and IoT create jobs, these technologies create job displacement in many tasks and create far fewer new jobs than the jobs they create.

Digital transformation will continue through the pandemic and afterwards, but will happen at different rates.  Where it merely improves existing processes or improves data visibility and interpretation, it will accelerate.  Where it reduces human employment or shifts toward automation and causes a loss of jobs, it may be slowed due to societal and economic pressure.

Why this matters

Every business wants to transform into a truly digital business, where data drives decisions, automation and robotics drive mundane tasks and better data drives machines and actions.  However, there will be pressure in the next 2-3 years to slow the advance of digital transformation when it has a significant impact on human jobs.  With unemployment high and jobs scarce, many businesses may be concerned about the optics of improving efficiency and cutting costs by automating processes.  This matters because the companies that do proceed will gain a significant advantage in the marketplace, while drawing short term anger, and those like Amazon that are already well on their way will simply improve efficiencies and cut costs even more.

Companies that are early in their digital transformation will be caught out - the digital transformation requires a full commitment - no half measures.  Either fully commit to a digital transformation and risk the ire of your workers and customers, or risk falling behind your competitors in terms of efficiency, pricing and better insights.

The utter lack of global leadership

In my scenario, I described several future outcomes, and here I am basically lumping several predictions into one - the lack of global leadership.  For almost 80 years, the world has had leadership from a number of multi-national organizations like the UN, and had leadership or at least organizing principles from several fronts, including the US and at one time the Soviet Union.  For many years the US-Soviet standoff created a bi-polar world, and eventually a third "non-aligned" movement was created.  This lasted until the fall of the Soviet Bloc. Since then, the US has been the major player in global affairs, with support from the G-7 when the G-7 agreed with US positions.  China is a rising player from an economic point of view, but not from a political perspective.

As the US retreats from global leadership, the EU experiences a loss of membership and internal squabbles, large countries or regions are backing away from any claim to global leadership.  Further, many global institutions have been called into question.  The World Health Organization is under scrutiny after the COVID pandemic.  The UN seems ineffectual and toothless.  Even multi-national trading programs and agreements - like the joint program between Europe, the US and Iran - seem to wither and die.  Whether it's the UN, the global climate change accords, trading pacts, the JCPOA, NATO or other international organizations, all of these agreements and the benefits they bring with them are at risk.  COVID did not start the unwinding - Trump actively questioned the value of NATO and pulled the US out of potential trading partnerships long before COVID, and the UN was increasingly becoming a sideshow before COVID. COVID will only exacerbate trends that were already underway.

This lack of clear leadership leads to a dissolution and a lack of trust between countries.  At the same time there is a wave of populism in Europe due in part to mass migrations from the Middle East and Syria, and in South American, especially Brazil, and of course in India.  These countries and regions seem to be taking matters into their own hands, trusting less in global structures and standards and focusing more on their country, borders and interests.

While many countries bridled under the bi-polar world dominated by the US and the Soviet Union, and did not like the US dominance thereafter, at least there were countries or institutions that established some norms and set out a vision for what should happen.  Without strong international leadership and key organizations that countries and leaders trust and support, every country will work to its own advantage. While this approach is logical in the local setting it creates tension and barriers between countries and regions, and could lead to many unnecessary disagreements, fractures between trading partners and distrust.

Why this matters

International agreements, rules of law, and a common vision promote commerce, trade, immigration, human rights and other critical political and economic standards.  Without cooperation, without leadership backed by either political power or even military power, the natural state is entropy.  Governments and polities like the environment will move toward entropy - less organization rather than more organization.  As that happens, everything becomes more difficult, less efficient and less transparent.  Doing business between countries will become more difficult.  Working to create peaceful outcomes in conflicts between countries and regions will become more challenging.  Fewer countries will want to work on global issues like climate change, instead focusing only on what's best for their citizens.


 These factors - a lack of global leadership, a haphazard digital transformation and growing unrest in the Middle East, combined with previous predictions around real estate bubbles and potential crime waves, or repatriation of significant manufacturing, lead us to consider a future that is much different than the present we live in today.

Many people talk about the new normal, as if there will be a "normal" when COVID ends.  There are so many converging factors and trends that it is probably safer to talk about the new volatile, rather than the new normal. 

Companies and governments that carefully consider these future trends and what they indicate for life, the economy, politics and society in the near future will be able to predict outcomes and build new programs and new offerings.  Those that don't will be culled from the herd or will be in a difficult position, trying to catch up to the leaders.
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posted by Jeffrey Phillips at 11:45 AM 0 comments