Can world economy be managed?

The world faces huge risks over the next decade. But the most important question is whether our world has become so complex — and our attempts at global governance so inadequate — that constructive solutions may not be possible. If so, we face increased chaos and heightened risks of destructive decline.

The world faces huge risks over the next decade. But the most important question is whether our world has become so complex — and our attempts at global governance so inadequate — that constructive solutions may not be possible. If so, we face increased chaos and heightened risks of destructive decline.

With world population now about seven billion people, and heading to about nine billion people by 2050 — with another 700 million people by 2022 — and the growing demand for food, energy resources, minerals and water, a big increase in the number of mega-cities, the intensifying competition for jobs, rising inequality and accelerating pressures on the environment, including climate change, the potential for conflict can only grow unless the world can find the will and the ways to better manage the challenges it faces.

For the seventh year, the World Economic Forum has published its report on the big global risks we face over the next decade. It is a sobering document.

At the top of the risks it outlines are severe economic inequality, chronic fiscal imbalances, rising greenhouse gas emissions, cyber-attacks and water supply crises.

The first two threaten the global economy because they are drivers of protectionism, nationalism and populism at a time when our vulnerability to systemic financial shocks, an oil shock, and possible food and water crises are all high.

Not surprisingly, many people believe their children face a lower standard of living than they enjoy; this is especially true in North America and Europe.

The report, based on a survey of 469 experts from around the world, highlights five risk categories: Economic, environmental, geopolitical, societal, and technological. But failure of global governance connects many of the risks that the experts have highlighted.

In the economic sphere, the greatest risks over the coming decade are chronic fiscal imbalances as Europe and the U.S. in particular struggle with huge budget deficits, a major systemic financial failure, severe income disparities and extreme volatility in energy and food prices.

In the environmental sphere, rising greenhouse gas emissions, the failure of climate change adaptation efforts, land and waterway systems mismanagement and the failure to properly address the growth of major cities are the leading risks.

Among geopolitical risks, the greatest are seen to be the failure of global governance, for example through the G-20, the United Nations, institutions such as the International Monetary Fund, the growth of critical fragile states including in the developed world, the impact of pervasive entrenched corruption and terrorism. The leading societal risks include unsustainable population growth, a backlash against globalization, mismanagement of population aging, water supply crises and rising religious fanaticism.

In technology, the greatest risks come from the failure of critical systems since the world has become increasingly dependent on the Internet and the use of communications systems to manage electricity grids and power systems, water systems, security, banking, air transportation and many other aspects of life, cyber-attacks, mineral resource supply vulnerability, a massive incident of data fraud or theft, and massive digital misinformation.

Underlying all of the main risks — 50 are identified — are what the report calls “constellations of risks that present a very serious threat to our future prosperity and security.” One of these it calls “the seeds of dystopia.”

Dystopia occurs when “attempt to build a better world unintentionally go wrong.”

For example, current fiscal and demographic trends could reverse the gains achieved through globalization. Societies with growing numbers of young people with few prospects, elderly people who find debt-straddled governments cannot deliver pensions and health care and growing inequality between rich and poor “can expect greater social unrest and instability in the years to come.”

As Occupy Wall Street shows, even the U.S. may not be immune to greater unrest.

Our own government’s foreign policies don’t help because they reflect narrow domestic or partisan political interest rather than a willingness to help achieve global solutions. Its disdain for the United Nations. Rather than trying to improve its capabilities, its trade policy has focused on opportunistic bilateral trade deals rather than trying to make the Doha Round of the World Trade Organization a success.

We have earned the reputation of a pariah in negotiations to deal with climate change.

And for domestic political reasons we have ceased to have a role to play in pursuing peace in the Middle East.

Yet a future world of peace, prosperity and sustainability depends on constructive co-operation with others, not how many F-35 aircraft we buy.

Economist David Crane is a syndicated Toronto Star columnist. He can be reached at crane@interlog.com.

Just Posted

Patrons practice on a putting green as the Whitestone Bridge looms in the distance at Trump Golf Links at Ferry Point in the Bronx borough of New York on Tuesday, May 4, 2021. Former President Donald Trump has a rich history of fighting back when he’s down and making others pay, and that’s exactly how he intends to deal with New York City over its plans to fire his company from running the city golf course. (AP Photo/John Minchillo)
Dump Trump? Kicking him off NYC golf course may not be easy

Trump Organization has been reeling after the Capitol riots

A photo illustration made December 14, 2012 in Montreal shows a computer in chains. THE CANADIAN PRESS/Ryan Remiorz
Irish health system says it’s targeted in ransomware attack

Health care systems have been a target before

A woman wearing a mask talks on her phone near an exhibition depicting a rover in Mars in Beijing on Friday, May 14, 2021. China says its Mars probe and accompanying rover are to land on the red planet sometime between early Saturday morning and Wednesday Beijing time. (AP Photo/Ng Han Guan)
China Mars rover to land between Saturday and Wednesday

Only the United States has successfully landed a spacecraft on Mars

Smoke rises following Israeli airstrikes on a building in Gaza City, Thursday, May 13, 2021. Weary Palestinians are somberly marking the end of the Muslim holy month of Ramadan, as Hamas and Israel traded more rockets and airstrikes and Jewish-Arab violence raged across Israel. (AP Photo/Hatem Moussa)
Palestinians flee as Israeli artillery pounds northern Gaza

Israel called up 9,000 reservists as fighting intensifies

Bo’s Bar and Grill owner Brennen Wowk said the hospitality industry is looking for more clarity from the province around what conditions must be met to allow for restaurants reopening. (Advocate file photo)
Frustated restaurant owners want to know government’s reopening plan

Restaurant owners feel they are in lockdown limbo

Team Canada’s head coach Troy Ryan talks with players before the start of the of the Rivalry Series at the Save-On-Foods Memorial Centre in Victoria, B.C., on Monday, February 3, 2020. Ryan of Spryfield, N.S., has been named head coach of Canada’s women’s hockey team for the 2022 Winter Olympics in Beijing.THE CANADIAN PRESS/Chad Hipolito
Troy Ryan to coach Canadian women’s hockey team in 2022 Winter Olympics

Ryan was Canada’s assistant coach from 2016 to 2019

FILE- In this April 19, 2021, file photo, people wearing masks as a precaution against the coronavirus wait to test for COVID-19 at a hospital in Hyderabad, India. Misinformation about the coronavirus is surging in India as the death toll from COVID-19 rises. Fueled by anguish, distrust and political polarization, the claims are further compounding India’s crisis. (AP Photo/Mahesh Kumar A, File)
Misinformation surges amid India’s COVID-19 calamity

Distrust of Western vaccines and health care also driving misinformation

FILE - In this Friday March 6, 2020, file photo, Britain’s Prince Harry visits the Silverstone Circuit, in Towcester, England. In an episode of the “Armchair Expert” podcast broadcast Thursday, May 13, 2021, Prince Harry compared his royal experience to being on “The Truman Show” and “living in a zoo.” (Peter Nicholls/Pool Photo via AP, File)
Prince Harry thought about quitting royal life in his 20s

Feared his family would have to deal with the same spotlight that was on his late mother

Opinion
Mental health: Gossiping, backbiting and forming factions is unhealthy

We all know of dysfunctional organizations, which can be as troublesome as… Continue reading

Family practice physician Christina Tuomi, D.O., (right) gets Homer's first dose of Pfizer's COVID-19 vaccine from Emergency Department nurse Steve Hughes (left) on Thursday, Dec. 17, 2020 at South Peninsula Hospital in Homer, Alaska. Tuomi has been the hospital's medical lead throughout the pandemic. (Photo courtesy Derotha Ferraro/South Peninsula Hospital)
Alberta physicians: Vaccines are our path forward

As the AMA representatives for Alberta’s family physicians, we were immensely relieved… Continue reading

Vancouver Canucks' Nils Hoglander, right, is checked by Calgary Flames goalie Jacob Markstrom during third-period NHL hockey action in Calgary, Thursday, May 13, 2021.THE CANADIAN PRESS/Jeff McIntosh
Lindholm, Tkachuk lead Calgary Flames in 4-1 win over Vancouver Canucks

Lindholm, Tkachuk lead Calgary Flames in 4-1 win over Vancouver Canucks

Chicago Bulls guard Zach LaVine, right, drives to the basket against Toronto Raptors center Khem Birch, left, and guard Jalen Harris during the first half of an NBA basketball game in Chicago, Thursday, May 13, 2021. (AP Photo/Nam Y. Huh)
LaVine, Markkanen lead Bulls past Raptors, 114-102

LaVine, Markkanen lead Bulls past Raptors, 114-102

Most Read