For audience overseas, I recently presented a series of lectures on world affairs. One of the hot button topics I addressed was entitled “New World (Dis) Order”. How to begin -or even end – such a broad topic, forced me to compress thoughts into 5 broad themes, each culled from the first 5 letters of the alphabet.
Here is my headline takeaway on the flashpoints and hazards on the global dashboard right now:
- A is for AI.
AI is such a big force on global and especially US markets that it accounts for 40% of US GDP and 80% of the gains in US stocks. And if you like big numbers, consider that the major tech companies plan to spend $750 bn on data centres to power their AI models (leading to a lot of environmental and energy costs on the way). Global spending will crest around $3 Tn by 2029. That is a lot of money but who knows if and when the bubble bursts?
For all the risks on the market and investment front, there is the threat (and opportunity) for the current work force: a range of jobs, in areas like accounting to call centres, will be replaced and fewer humans will be needed to fill them. On the other hand, an expert noted, about 60% of the job categories in the late 2010s did not exist in the 1940’s, so there is an upside too for innovative work.
Still, as Thomas Friedman wrote, for all its huge potential, AI is the ultimate ‘dual use’ technology. Like nuclear energy, it can be a force for huge good or total destruction. It will need a coalition of governments and industry to define how we get the best and cushion the worst of AI. But right now, we have the greatest power tensions since the end of World War Two. Not an ideal moment for global cooperation.
- B is for Break Up.
The UN, WTO and other global bodies put in place decades back to police world order and synchronise global trade are, simply put, no longer effective or fit for purpose.
Is the world, or its major powers, going to go back to the 19th Century when powerful countries dominate and even oppress the less powerful within their demarcated spheres of influence. Certainly, both Russia and even Donald Trump’s America tilt in that direction.
- C is for China and Climate.
China is viewed by many Western countries, and some of its neighbours, as a threat to their interests. Not for the first time that a rising power threatens an existing one. With the big exception here that China today is enmeshed in the world economy and global supply chains in a way no other challenger to US hegemony ever has. It has a big hold on rare earth minerals and also happens to be the largest global polluter.
This is where the unresolved climate crisis fits in. Rising global temperatures and extreme weather events cry out for the sort of concerted cooperation, missing in action right now.
- D is for Donald Trump the Great Disruptor.
Leave aside the partisan furies the US president arouses in the US, his disruptive, unpredictable and transactional diplomacy has shaken the world and disrupted historic alliances. For the good it seems to have stilled the guns in Gaza, but has left Ukraine exposed to deep uncertainty and his on-off tariffs have unsettled world trade in a manner unseen since the 1930’s. His America First agenda will, in some form, continue after he leaves office.
- E is for Endgame.
Last year was a record breaker -the highest number of state-based conflicts for 70 years.
But are we entering an even more dangerous phase, where a bleak new nuclear age threatens potential extinction?
Not such a stretch according to experts and the old maxim from the cold war, ‘mutually assured destruction’ might not apply as more actors reach for the nuclear option.
Trump himself has announced that for the first time since 1982 the US will resume nuclear testing, while China has expanded its nuclear arsenal at ‘breakneck speed’.
Let’s just hope that the Netflix movie “A House of Dynamite” – based on the fiction of a nuclear weapon hurtling toward Chicago, is just a scary thriller and not a prediction!
– Tony Leon
Executive Chairman