In the previous post on Global Trends 2030: Alternative Worlds we looked at the four possible future models of the world out to 2030 – the alternative worlds portion of the study. As the title of the National Intelligence Council’s (NIC) capstone publication suggests, this look at possible alternative worlds is the essence of the study. The NIC’s companion report to Global Trends 2030, entitled Le Menu, provides the Cliff’s Notes description of this first alternative world; Stalled Engines:
“The United States and Europe are no longer capable or interested in sustained global leadership. Corruption, social unrest, a weak financial system, and chronically poor infrastructures slow growth rates in the developing world. The global governance system is unable to cope with a widespread pandemic: rich countries wall themselves off from many poor countries in Asia, Africa, and the Middle East. By disrupting international travel and trade, the severe pandemic helps to stall out, but does not kill globalization.”
Stalled Engines is the most plausible worst-case scenario presented in the GT2030 study and, in a sentence, is one in which “all boats sink.” However, this all-too-brief description doesn’t tell us enough about the details of this alternative worlds scenario, and we need to peel the onion a bit more to understand its potential implications more fully.
Global Trends 2030: Alternative Worlds leads with the Stalled Engines alternative world – a scenario in which the United States and Europe turn inward and globalization stalls – as one of its “bookends,” illustrating the most plausible worst-case scenario. Arguably, darker scenarios are imaginable, including a complete breakdown and reversal of globalization due to a potential large-scale conflict on the order of World War I or World War II, but such an outcome does not seem probable.
The National Intelligence Council’s analysis leads it to conclude that the risks of interstate conflict will rise, but the NIC does not expect bilateral or multilateral conflict to ignite a full-scale conflagration of the same magnitude as a “world war.” Moreover, unlike in the interwar period, NIC does not foresee the complete unraveling of economic interdependence or globalization. It would be more difficult – and therefore less likely – in this more advanced technological age with ubiquitous connections.
Stalled Engines is nevertheless a bleak future. The National Intelligence Council’s modeling and analysis suggests that under this scenario total global income would be $27 trillion less than under Fusion, the NIC’s most optimistic scenario. This amount is more than the combined economies of the United States and Eurozone today. In a Stalled Engines world, the United States and Europe are no longer capable, nor interested, in sustaining global leadership. In this dark scenario, the United States’ political system fails to address its fiscal challenges and consequently economic policy and performance drift. The European project unravels as Greece’s exit from the eurozone triggers the rapid, unmanaged exit of the rest of the periphery. More nationalist, even nativist, parties rise to claim positions of influence in coalition governments. By the 2020s, it looks like only a limited free trade zone will remain in what was once the Eurozone.
In this Stalled Engines world, economic growth continues in major emerging markets and accounts for approximately three-quarters of global growth. Nonetheless, fundamental economic and political reforms remain elusive in China and India. Corruption, social unrest, weak financial systems, and chronically poor infrastructures slow their growth rates. China’s growth falls, for example, from 8 percent at the start of the period to around three percent by 2030.
As pressures grow everywhere for disengagement and protectionism, the global governance system is unable to cope with a widespread pandemic that triggers panic. In this Stalled Engines world, rich countries wall themselves off from many developing and poor countries in Asia, Africa, and the Middle East, in what is essentially a “gated communities” scenario. By disrupting international travel and trade, the severe pandemic helps to stall out, but does not kill globalization.
While this Stalled Engines scenario is, indeed, bleak, and may not seem probable it does not stretch the bounds of the possible and thus is one that industry should, and must, hedge against. In much the same way as readers of fiction must often “suspend disbelief” to fully embrace plots in some novels, so too must government and industry leaders suspend disbelief in order to get their brains around this scenario. And without putting too fine a point on it, this is probably more true in the Stalled Engines scenario than in the other three scenarios we will explore in future posts. Why? Simply because human nature causes us to often avoid even thinking about unpleasant things (does working on one’s taxes come to mind at this time of year?), therefore there is real danger of “hand-waving” this scenario away and dismissing it as something that is not possible.
But it is possible. Carrying the writing or reading fiction analogy a bit further, even the most elementary writing class will include the rejoinder to begin a novel with a “destabilizing event.” And we need not look to only big events. Recall that it was a street vendor in Tunisia, Mohamed Bouazizi, setting himself on fire after being harassed by the police in December 2010 that ignited what is arguably this century’s most destabilizing event, the Arab Spring. Now look at how little it took to ignite the Arab Spring and look to today’s situation in North Korea, Iran, Cyprus, or a half-dozen other places and it is easy to see that another destabilizing event could be upon us at any time.
As suggested by the Global Trends 2030: Alternative Worlds Executive Summary, the destabilizing event that could precipitate a Stalled Engines world is one in which the risk of interstate conflict rises due to a new “great game” in Asia. This helps focus all of us in government and industry to look to Asia to try to discern where this might happen. As I suggested in my previous post:
“While no one wants war, a defense industry executive whose internal analysis tells him or her that a Stalled Engines scenario is looking more likely must anticipate many nations, especially those in the Asia-Pacific region, will have an increasing – and even urgent – demand for the platforms, systems, sensors and weapons that might be needed should interstate conflict occur.”
While the first 100-plus pages of Global Trends 2030: Alternative Worlds makes interesting and important reading, and might be categorized as a spectator sport, the alternative world analysis presented in this publication is a participatory sport. All of us in government and industry must participate in hedging for this Stalled Engines scenario.