Daily Archives: January 2, 2012

The big issue of 2012 will be more of the same: rolling protests across multiple countries that will morph into revolutions in many. This is the result of “disruptive technology” – which means that disruptions in the lives of individuals – arrest, beatings, torture, rape and murder – are much more likely to disrupt entire societies.

The immediacy, apparent veracity and power of words and images instantly transmitted to millions of people can transform existing currents of dissent into a raging flood, and fuel determination that lives lost shall not be in vain. Success in one country fuels a sense of possibility and competition across a region.

In 2012 we should see many more protests in sub-Saharan Africa. Zimbabwe and Sudan are obvious candidates; Nigeria could rise up en masse against corruption; Ethiopia, Uganda and others are possible. In Russia, shame among educated classes that Vladimir Putin is just the latest czar, combined with growing economic desperation and corruption in rural areas, makes another revolution plausible if not probable.

Revolution is the ultimate disruption; it is an overturning rather than a reshaping through reform. Rolling disruption is somewhere in between. Wise governments will preempt and respond with rapid and meaningful reform. But wise governments are few and far between; wise governments able to act quickly far fewer. Expect a very turbulent year. Continue reading »

Inequality will be the central theme of 2012, topping the agenda of voters, protesters and politicians running for office.

There is nothing new in the fact that a few people have too much and too many have too little. In the past, this has been hidden from the population (the Soviet Union), tolerated (Latin America) and even celebrated (the US). But the economic crisis made the world more aware of the extent and scope of economic inequality. In 2012, peaceful coexistence with inequality will end and demands and promises to fight it will become fiercer.

The problem is how to lower inequality without harming other goals (investment, innovation, risk-taking, hard work). The fight for a more equal society was the goal of countless experiments that resulted in even more inequality, widespread poverty and loss of freedoms.

This year, elections will take place in 12 important countries, while Spain and China will also change leadership. Inequality will become part of electoral debates that will influence the conversation even in countries where it has long been taken for granted. Continue reading »

The big debate of 2012 will be over the role of government in the economy. Although this sounds like an economic issue, it is really about politics. There is no economically optimal size of government. The ongoing financial crisis provides stark evidence that the current model of high public sector spending financed by growing public sector debt has hit the buffers.

The US election campaign is already taking shape around this issue, but the US may be able to fudge the issue for a little longer. There are still willing buyers of US debt in Asia and, if 2012 brings more financial shocks, the dollar will benefit from safe haven flows. But Europe is running out of time and it starts from a worse position. Taxes are already so high that they depress growth. This problem is compounded for eurozone members, which cannot adjust by depreciation. Meanwhile welfare spending and public sector employment now benefit so many voters that it is hard for politicians to win backing to cut them.

The social contract that underpins democracy requires compromise. But the political debate will grow more confrontational in 2012. This will be the year that the financial crisis turns into a number of political crises. Continue reading »

Technology is profoundly changing the world’s energy equation, and all its geopolitical implications. Energy efficiency in the advanced countries has risen sharply, implying that their demand has peaked, and vast discoveries of oil and gas have been made in politically stable areas, including in the US. This suggests that in future, gas will account for a much larger proportion of the world’s energy supply. While these developments are positive for geopolitical stability, they may pose difficulties for the climate.

The environmental implications of these new technologies are not yet clear. The movement towards renewable energy sources, nuclear power and climate stability may be slowed by the new abundance of oil and natural gas, and the relatively low price of gas. Even in 2040 respected forecasts now envision that fossil fuels will still supply 80 per cent of the world’s energy needs.

However, energy security and national security for much of the world will be improved, as the influence of rogue oil states diminishes. That is quite a plus. Continue reading »