Each New Year presents opportunities for you to reflect on your life and work situation and write down goals and objectives for the coming year or years; but it can prove challenging to do so in times of uncertainty. Circa 2022 the world faces innumerable problems, not least of which climate change, pandemic and political tensions between China and Russia on the one hand, and Western-styled democracies on the other. Pandemic has been particularly disruptive, with all of us seeking out workarounds for lockdown restrictions and adapting to the consequent work-from-home trend. You should pay close attention to global developments because South Africa’s future is inextricably linked with that of the rest of the world.
Peering into the future
Pandemic will no doubt be top of mind as you scan the opportunity and threat environment for the coming years, and much of your business and personal planning will be influenced by the apparently insurmountable Covid-19 virus. A critical question is whether the pandemic will peter out and allow society to reclaim some of its pre-pandemic norms, or whether the world will remain locked in an ongoing struggle against further variants of the virus, and potentially even face new outbreaks of disease.
Assessing the impact of uncertain events on lifestyles and livelihoods falls under the remit of scenario planners and futurologists like Clem Sunter, ex-chair of Anglo American’s Gold & Uranium division, prolific author and keynote speaker. In a recent Biznews.com article, Sunter identifies five flags you should be aware of and offers advice on how you might approach the unknown. “Do not try to forecast what is un-forecastable,” he writes. “Rather identify the forces changing the game, paint different narratives or scenarios of how the game can play out, pick the best flags to watch and weigh up the probabilities of the different outcomes as the future unfolds”.
His first flag, the red flag, is that China and Russia are on a collision course with America. As someone who reads and writes extensively on insurance and investment, hardly a day goes by without a news story about some or other Chinese overreach insofar economics or geopolitics. Over the course of 2020 and 2021 the Chinese authorities have clamped down on countless technology businesses and reasserted their authority over Hong Kong, all under the guise of furthering common prosperity goals. More recently, the media has been flooded with reports about China’s sabre-rattling over Taiwan. The Taiwan saga has the potential to escalate tensions between China and the West, most notably the United States.
China and Taiwan versus Russia and the Ukraine
“Despite China’s incredible economic success in the last 40 years, its current rulers appear to be reverting to some of the chief tenets of old-fashioned communism,” notes Sunter. But the Chinese threat could be dwarfed by Russia’s obsession with taking back Ukraine. “President Putin bemoans the dismantling of the former Soviet Union as an unpardonable error and views the threat of Ukraine joining NATO as totally unacceptable,” he writes. In this context, Russia’s annexation of the Crimean Peninsula in 2014 could be viewed as a precursor to an invasion of Ukraine itself!
Having identified a flag, the scenario planner’s job is to contemplate outcomes or scenarios that may arise from it. In this case, the optimistic scenario is for “modern communications technology and intense diplomacy to ensure that none of these three nations accidentally stumble into military conflict”. On the flipside, there are real concerns that these disputes could escalate into a global war. Thus, the pessimistic scenario is that “instead of World War I followed by the Spanish flu, we have Covid-19 followed by World War 3 … the final war between democracy and autocracy”. Thankfully, based on recent developments, the optimistic scenario seems more plausible.
The ultimate existential threat
The Conference on Climate Change (COP26) held in Glasgow in November 2021 was well-timed, in that it refocussed the private and public sector on the need to address climate change and away from the pandemic. More specifically, COP26 sought commitment from stakeholders to achieve net zero carbon emissions by 2050, with the overarching goal of reducing the total average annual global temperature rise to just 1.5C by 2100. Combatting climate change is a long game that will play out over decades, but that does not mean scenario planners can ignore it.
Sunter identifies climate change, the green flag, as the second flag you must keep in view. “The 21st century is unique in that at no previous stage in the history of humankind have we, through sheer numbers, posed an existential threat to the sustainability and diversity of our own world,” he writes. The solution requires sacrifice, but it is unclear whether society is ready for the trade-off between economic growth and sustainability. South Africa is case in point, as the allocators of capital debate whether removing funding from fossil fuel projects is the right way to go… Yes, closing dirty industries will help the country to reduce carbon emissions; but at the same time entire sectors of the economy could be wiped out, causing job losses and untold social hardship.
How will climate change play out on the global stage over the next decade? “The best-case scenario we call ‘paradise regained’ where, against all expectations, nations come together to share new technologies to make renewable energy cheaper than energy derived from fossil fuels,” writes Sunter. Failure to address climate change globally will result in a scenario that he labels ‘pandemonium’. Under this scenario, billions of people will seek to relocate from uninhabitable regions, creating a global migration crisis. You can play your part in the climate change response by modifying your own behaviour to achieve and maintain a lower carbon footprint.
The Omicron variant and the pandemic future
The pandemic flag is the third on Sunter’s list. Over the past two years, entire countries have ‘locked down’ as governments vainly try to prevent the spread of infections and reduce the burden on medical facilities. Vaccination research was fast tracked to put the globe in a position to vaccinate citizens as the main means of allowing society to return to normal… “Two scenarios are in play following the arrival of the Omicron variant, which appears to be more infectious but milder than its predecessors,” writes Sunter. The first is that the variant signals the beginning of the end of the pandemic because it will eventually create population immunity around the world.
The second and more negative scenario is that another variant develops ‘out of the blue’ or a completely different virus emerges to turn the world upside down. Aside from its impact on lives and livelihoods, pandemic is putting a squeeze on human freedoms that you have come to take for granted over the past decades. Just consider the political heavy-handedness in Australia over the past few months. It only takes small tweaks to regulation to turn a democracy into a police state! The only good news under the pandemic flag, according to Sunter, is that “we may be better prepared for the next pandemic”. He also reckons that governments are learning to walk the tightrope between lives and livelihoods more effectively.
Easy money and the inequality pill
Central banks and governments have created more than US$14 trillion in debt to assist their citizens and corporations through the Covid-19 pandemic. Unfortunately, this flood of cash has exacerbated the inequality that already blighted the world pre-pandemic. “The easy money injected into economies by governments all around the world as relief measures, has somehow found its way into stock markets and property which are now at record levels,” writes Sunter. “Hence, the super-rich are now much richer than they were in 2019, while the middle class and poor are battling to restore their lives”. He labelled the fourth flag ‘the inequality flag’. Inequality also features strongly in the World Economic Forum’s 2022 Global Risk Report (GRR 2022).
The main concern is that inequality, exacerbated by economic disruption, pandemic restrictions and rising inflation, will lead to widespread anger among ordinary people which may well alter the general social and political dynamic in the years ahead. “The inequality flag is rising up the pole and fluttering in the breeze: governments beware!” warns Sunter. He does not, however, expect the downside scenario of a global market collapse to occur: “Fast-forwarding to 2022, the dominant issue now coming to the fore is how the free enterprise system can be tweaked to achieve a fairer outcome without in any way deflating the entrepreneurial spirit”.
The fifth flag was identified as the crowded space flag, by which Sunter did not mean an Old-World nightclub dancefloor around midnight Saturday, but the boundless zone of space found above and around our planet. “With all the activity now taking place in space, more laws will no doubt be in the offing, particularly since private companies are now starting to argue about their share of space; the flag also pinpoints our dependence on satellite systems to communicate with one another,” he writes. The scenario planner’s job is to ask: What if? What if countries get into fisticuffs over who ‘rules’ space? Or what if the overcrowding results in collisions that collapses the global communication system? Another important questions: Who does space really belong to?
Bring me solutions, not problems
The call to action to all who read the Biznews.com article, repeated here, is that you can make a small difference to the scenarios that eventually play out across the globe. “You may wish to be an activist by making your own individual contribution to improve the odds of a good scenario materialising in the world at large, while lowering the odds of a bad one,” encourages Sunter. “Social media, together with the momentum one person can create through it, provide an overlap between the circles inside and beyond your control – you can magnify your influence many times by innovative communication that exploits the overlap.” I hope to join with you, dear reader, in modifying our behaviours to leave less of a mark on the planet, and more of an uplift to society.
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