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A world in crisis

It is apparent that the world is increasingly becoming a world unravelling into a state of confusion lacking order. Ian Bremmer, a well known geopolitical expert put it succinctly: “Governments, political parties, courts, media and financial institutions continue to lose the public credibility on which their legitimacy depends.” We are seeing the creation of a “…toxic antiestablishment populism in developing countries as well.”

There is so much anecdotal evidence of this disarray. In the United States, the economy is doing well. Unemployment is at a 17 year low, the stock market is the highest it has ever been and the economy is going. But President Trump has a very low approval rating and American society is now visibly divided by class, race and religion. Racism and religious bigotry is on the rise and politics has become bitterly partisan.

In Germany, the economy is very strong and unemployment is also very low. There is a labor shortage but there is a strong anti immigration mood in the country. There has been no government in place in parliamentary Germany for four months because Angela Merkel has not been able to form a working majority coalition.

South Korea continues to live in the shadows of a potential nuclear war. There is growing acceptance that North Korea will eventually have to be accepted as a nuclear power and the threat of an accidental nuclear war in the Korean peninsula is increasing. But somehow South Korea has become one of the most technologically advanced country in the world especially in the field of artificial intelligence.

The Russian economy, by all standard measures, is doing very badly. But Vladimir Putin remains very popular with the Russian people and Russia has again become a geopolitical world power. ISIS has been defeated in the battlefields of Iraq; but Islamism continues to fuel many populist movements and is growing in other parts of the world including Southeast Asia.

Stock markets are rising all over the world; but, global income inequality is at its worst stage today than it has ever been in the history of humankind. The short term future of the world looks robust; but, most long term projections I have read sound gloomy.

Richard Haas, president of the Council on Foreign Relations wrote in his latest book The World in Disarray wrote: “These are no ordinary times. It will not be business as usual in a world of disarray, as a result it cannot be foreign policy as usual.” His book is a timely examination of a world increasingly defined by disorder. The world needs a new “operating system.”

The United States, under Trump, has become increasingly insular and isolationist. It defines American interests in a very narrow sense. As China continues to rise, conflicts between China and the United States, especially in the areas of trade is becoming more likely.

There are other more serious problems on the world horizons. Global warming is approaching a critical stage; and, even the US military has called it a national security threat.

Another long term problem that is being ignored is the fact that since the 1960s, total global fertility rates have been cut in half. In developed countries, the introduction of commercially available birth control has played a major role. There has also been a major shift in social values. Changing religious values, the increased participation of women in the workforce and the higher cost of child care and education have all been factors in the declining birth rates.

At the beginning, declining birth rates were actually beneficial to economic growth. This is what motivated birth control programs even in China and India. Men and women could choose to start their careers before having families, while paying more income taxes and enjoying the benefits of a higher disposable income. Increased spending power creates demand which simulates job growth – and the economy benefits in the short term.

Today 46 percent of the world’s population lives in countries that are below the average global replacement rate of 2.1 children per woman. This imbalance is expected to continue over the coming decades. By 2100, the UN predicts that nearly 30 percent of the population will be made of people 60 years and older. By 2150, the average global life expectancy at birth will reach an average of 73.8 years for females and 69.1 for males.

As this large aging population exits the workforce, the positive effects of declining birth rates will be reversed and economic growth will face a significant burden. Health care costs for the elderly will strain resources, smaller working population will struggle to produce enough income taxes to support these rising costs. Spending power will decrease, consumerism will decline job production will slow down and economies will stagnate.

Ian Bremmer is predicting that 2018 could be the year of the unexpected crisis – the geopolitical equivalent of the 2008 financial meltdown. He says: “ America First and the policies that flow from it have eroded the US led order and its guardrails, while no other country or set of countries stands ready or interested in rebuilding it.”

Perhaps it is difficult to be optimistic in the midst of such gloomy predictions. But there are still messages of hope. They are not from people in power but individuals trying to shape a better world. Like Oprah said in her speech, there is new day coming. Maybe her voice and those of the optimists in this world will find a way to reverse all these messages of doom.

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