Global Economic Transformation: Embracing New Market Dynamics

Taking the long view, the world appears to be in the early phase of an economic transformation to something bigger and more integrated than anything ever seen before. It is more far-reaching and sophisticated than any previous alliance in human history. We will all be potential rivals, but also all potential friends. Alongside the demise of entire sectors will be new markets, new trade, and new partnerships. Gone are the days when General Motors could import rubber and steel and export automobiles. The design, raw materials, components, assembly, and marketing of today’s cars might come from fifty different countries around the world.

World War II was drawing to a close. Governments were turning their attention to their shattered economies and how to rebuild them after two catastrophic wars, a global depression, a long escalation of protectionist tariffs, and some crazy currency devaluations. Everyone at the conference wanted to figure out how to stabilize currencies, get loans to war-ravaged countries for rebuilding, and get international trade moving again.

The power of greenhouse gases is simply beyond dispute. Their existence was deduced in the 1820s by the French mathematician Joseph Fourier, who noticed that the Earth is far warmer than it ought to be, given its distance from the Sun. Without greenhouse gases our planet would be an icebox, like the Moon and Mars, with temperatures some 60° Fahrenheit colder than today. Their magic comes from letting solar radiation easily in but not easily out, roughly analogous to how a closed-up car becomes hotter inside than out from sunlight passing through the window glass.

At the height of the last ice age, when Chicago was buried under a mile-deep sheet of ice, global temperatures averaged just 5°C (°F) cooler than today. From historical weather-station data the global average temperature is already +0.8°C warmer than in Arrhenius’ time, with most of that rise since the 1970s. An increase of that magnitude is already much larger than the difference between any one year and the next. As expected, this warming trend varies strongly with geography, with even some local cooling in some places.

Greenhouse gases follow both natural cycles-which fall and rise with ice ages and warm interglacial periods, respectively-and human activity, which proceeds much faster. These two actors operate over totally different time scales, with the ice age variations happening over tens of thousands of years but our human excursion unfolding over tens of years. The natural processes that drive greenhouse-gas shifts–rock weather-ing, astronomical cycles, the spread of forests or wetlands, ocean turnover, and others- -take thousands of years, whereas human excavation and burning of old buried carbon- as illustrated earlier from U.S. history- is an action both massive and brief.

We know this from the ancient memories of glaciers, deep ocean sedi-ments, tree rings, cave speleothems, and other natural archives. Most spectacular are tiny air bubbles trapped within Greenland and Antarctic ice, each a hermetically sealed air sample from the past. Loose air inside a glacier’s surface snowpack gets closed off into bubbles as the weight of still more snowfall fuses it into ice. Annual layers of these bubbles have been quietly laid down for hundreds of thousands of years, before being drilled from the guts of Greenland and Antarctica by a rare breed of scientist. The gas levels inside them prove we have now elevated the concentrations of greenhouse gases in the Earth’s atmosphere higher than they’ve been for at least eight hundred thousand years.

A very profound event that also happened in 2008. Its exact timing will never be known, but at some instant during the year, the number of people living in urban areas grew to briefly match, for a few seconds, the number of people living in rural areas. Then, somewhere, a city baby was born. From that child forward, for the first time in our history, the human race became urban in its majority.

The reason that the world’s rural people are moving into cities is that they can make more money in town. This is partly because of the described growth of urban economies, and partly because demand for farm labor falls as agriculture commercializes, mechanizes, and becomes export-oriented.

Singapore has learned to manage long-standing tensions between its main ethnic groups (Chinese, Malay, and Indian) and religions. Mass transit is abundant, clean, and energy-efficient.” There are wonderful parks, cheaters, and museums. Singapore’s health care is excellent and its life expectancies are the fourth-longest in the world (seventy-nine years for men and eighty-five years for women). Aggressive law enforcement while also leading to complaints of excessive strictness and a sort of police-state authoritarianism-has made corruption, violent crime, and the trafficking of sex and drugs virtually nonexistent.

Unfortunately, there is no rule saying a city must be a nice place to live in order to attract fast population and economic growth. Parks, good gov-ernance, and smoothly flowing traffic are optional, not required. Sometimes cities grow at an astonishing rate, despite being hell on Earth.

“Population momentum” is another example of how demographic futures can be foreseen. Even if a society’s average fertility rate? suddenly falls, its population will continue to grow twenty years later owing to the abundance of new parents carried forward from when fertility rates were high.? This works in the other direction, too, meaning that elderly countries will keep shrinking even if fertility rises, owing to a small cohort of parents born when fertility rates were still low.

This aging will hit some places faster and harder than others. With a median age of 44.6 years Japan is the world’s most elderly country today. In contrast, the median age in Pakistan is just 22.1 years, almost half that of Japan. Pakistan is youthful; Japan is full of geezers. But both places will become grayer during the next forty years. By 2050 the median Pakistani age will rise twelve years to 34. Japan’s will rise another decade to 55.

Korea, Russia, and China will join Japan as the world’s great geriatric nations. Mexicans will be older than Americans. Median ages will be higher everywhere, but Korea, Vietnam, Mexico, and Iran will age radically, by fifteen years or more. Only our poorest, least-developed countries like Afghanistan, Somalia, and the Democratic Republic of Congo- will still have youthful populations in 2050; and even they will be somewhat older than today.

Economists stare hard at something called the “elderly dependency ratio,” usually calculated as the percentage of people aged sixty-five or older relative to those of “working age,” between fifteen and sixty-four.” By the year 2050, elderly dependency ratios will be higher all around the world. Some places, like Korea, Spain, and Italy, will have elderly dependency ratios exceeding 60%. That’s barely sixteen people of working age for every ten elders. Japan, with a dependency ratio of 74%, will have only thirteen.

In an aging world, those countries best able to attract skilled foreign workers will fare best. The early signs of a migrant planet are already here. In 2008, some two hundred million people 3% of the world population–were living outside their native countries. In most OECD countries the proportion of foreign-born was over 10%, even in countries like Greece and Ireland, where emigrants used to flow out, not in.

Source : The World in 2050: Four Forces Shaping Civilization’s Northern Future by Laurence C. Smith

Goodreads : https://www.goodreads.com/book/show/7816424-the-world-in-2050

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