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July-August  2009 Vol. 43, No. 4


 
 

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Assessing Global Trends for 2025

Four policy experts examine the implications of a U.S. national security report and come to different conclusions about prospects for U.S. influence in the future global economy.
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In November 2008, the National Intelligence Council released a landmark study, Global Trends 2025: A Transformed World. The report lays out the possibility of a future very different from the reality to which most of the world is accustomed. Among the key possible futures:

1. U.S. influence and power will wane, and the United States will face constricted freedom of action in 2025. China and Russia will grow in influence. Wealth will also shift away from the United States toward Russia and China.

2. A broader conflict, possibly a nuclear war, could erupt between India and Pakistan. This could cause other nations to align themselves with existing nuclear powers for protection.

3. Rising world population, affluence, and shifts in Western dietary habits will increase global demand for food by 50% by 2030 (World Bank statistic). Some 1.4 billion people will lack access to safe drinking water.

As the report was published in the midst of a historic financial crisis, some of these scenarios now seem not so much wild cards as prescient depictions of a near-certain future. Others, in retrospect, seem further away. The once-indomitable engine of Chinese growth now seems significantly less robust. At 6%, the country’s GDP is scheduled to grow at half of last year’s pace, but still much faster than the United States. The question becomes, which scenarios remain credible, and which no longer apply?

THE FUTURIST asked four experts — Newt Gingrich, former U.S. House speaker; Elaine C. Kamarck, a senior policy adviser for Democrat Al Gore’s 2000 presidential campaign; Peter Schiff, economics adviser to Republican congressman Ron Paul’s 2008 presidential campaign; and Democratic congressman Dennis Kucinich — for their views on the report’s key forecasts and what the future of the United States, Asia, and the global economy looks like now, in the wake of the global financial crisis.

Interviews by Patrick Tucker

Newt Gingrich: Rising to Meet Global Challenges

THE FUTURIST: To what extent do you agree with the four key points outlined in the Global Trends 2025 report?

Newt Gingrich: The influence and power of the United States may decline, but this will not be a decline in our economic, political, or military strength. Rather than the United States enjoying the role of the world’s lone superpower, as we do today, the influence of other countries such as India and China will increase in relative terms. As the countries with the two largest populations, India and China will certainly have a voice in the next quarter century, and their current economic growth, along with the attendant increase in their military strength, will support that voice.

With respect to India and Pakistan, the United States can do much in the way of reducing tensions between them. What we are witnessing is a continuing ascendance in the strategic importance of both nations. The November 2008 terrorist attacks in Mumbai have raised tensions between India and Pakistan considerably. The United States can continue to work with both nations to reduce these tensions, find common ground where possible, and forge a cooperative relationship between them.

THE FUTURIST: Are the events laid out in the report inevitable?

Gingrich: Nothing is inevitable. In my book, Implementing the Art of Transformation, I provide a point of reference for considering what the decades ahead may look like. There will be more growth in scientific knowledge in the next 25 years than occurred during the past 100 years. We are exceeding, by four to seven times, the rate of change of the past 25 years. This means that, by even the most conservative estimate, in the next 25 years, we will experience the scale of change experienced between 1909 and 2009.

THE FUTURIST: How might the negative scenarios be averted?

Gingrich: Access to natural resources and energy may be the most important challenge the world faces in the next quarter century. We must develop a strategy for global energy abundance that maximizes both production and the efficiency with which energy is used. This sort of strategy would have a significant positive impact toward reducing or preventing future conflicts.

THE FUTURIST: How might the U.S. government, and how might U.S. citizens, cope with a state of diminished influence, a wealthier and more powerful Asia, and intensified competition over resources?

Gingrich: Education will be the key issue that determines our continued strength and prosperity in a world where China and India have increased influence. If you read A Nation at Risk, published more than 25 years ago, it makes clear that the education of our children is a serious national security concern and that parents, administrators, teachers, lawmakers, and leaders of this nation need to view it as such and respond accordingly. Finding innovative ways to dramatically improve how our children learn — especially in math and science — will make the biggest difference for our future.

THE FUTURIST: What do you see as the worst-case scenario, and the best-case scenario, of the above events coming to pass?

Gingrich: Within the key points you provide, the worst-case scenario would be a belligerent China and a resurgent and belligerent Russia. Likewise, a complete breakdown in relations between India and Pakistan and a corresponding threat of nuclear war would be destabilizing to the entire world.

Obviously, the best-case scenario would be increased cooperation and stronger, closer relationships among the United States, China, Russia, India, as well as Pakistan. A common recognition of the future threats to our livelihood that the global community faces as our populations increase and our needs for greater amounts of energy increase is essential. This recognition by all today and cooperation in achieving solutions would do much in terms of growing the global economy, as well as enabling health and prosperity for all.

THE FUTURIST: Might decreased geopolitical influence, with increased power in China, actually be good for the United States in some way?

Gingrich: It depends. We have a choice with China: cooperation or competition. Certainly if we strengthen our relationship with China, an economically and militarily strong China would be within our national interests to maintain stability in the Western Pacific region.

THE FUTURIST: What is the report overlooking?

Gingrich: The report doesn’t look closely enough at the impact of a failed Mexico. A failed state on our southern border is a significant national security threat to the United States.

THE FUTURIST: What would you add to the above list of key points?

Gingrich: Cybersecurity. As we continue to integrate computers into every single aspect of our lives, we are creating a significant vulnerability to our very livelihood. What we need today is a cyber think tank staffed by the generation today that lives and breathes in the electronic world. The institution would be set up much like the RAND Corporation was, with the exclusive purpose of ensuring the survivability of our networks and data.

THE FUTURIST: What’s the most important trend that will shape U.S. policy in the next two decades?

Gingrich: Increasing worldwide demand for energy with decreasing resources. We must take concrete steps today to become energy independent.

THE FUTURIST: What can we begin doing now to ease our transition into this new world?

Gingrich: We must make smart choices today that are an investment in our future. We need to fundamentally transform litigation, regulation, taxation, education, health, energy, infrastructure, and our national security apparatuses. The policies that we have in place today reflect the realities of the twentieth century. We can’t compete globally with our current laws, systems, and obsolete bureaucracies; they don’t have the flexibility or effectiveness required to manage the issues of the day. All of this seems to be a huge undertaking — and it is — but it can be done. It must be done.

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Elaine Kamarck: Moving Forward with Innovation and Intelligence

THE FUTURIST: To what extent do you think the above outlined points — such as a wealth migration from the United States to Asia, potential war between India and Pakistan — are likely?

Elaine Kamarck: I don’t see a shift in wealth away from the United States toward Russia or China, especially not Russia. That’s too pessimistic precisely because the structural components of innovation in the United States — culturally, legally — are so strong. The cultural and legal components for innovation in the rest of the world are, frankly, so weak.

Broader conflict between India and Pakistan? I don’t see the United States allowing that to happen. I think that, as bad as the United States has been when it comes to predicting asymmetric warfare, the United States is adept and prepared for more traditional kinds of warfare. We monitor nuclear materials around the world carefully.

As for rising world population and affluence, surely we’re already seeing shifts in Western dietary habits. There will be increases in world population, in demand for food, and in affluence, but this will be countermanded by the downsides of Western dietary habits — such as obesity and all the diseases that come from obesity — and there will be significant environmental problems resulting from the provision of all this food. This is a pretty complicated situation. Countries may take countermeasures instead of adopting Western dietary standards, for both environmental and human health.

THE FUTURIST: What you are saying is that the primary focus in the United States must be maintaining a culture of innovation and economic openness?

Kamarck: That includes controversial things like keeping fairly open immigration. Immigration is one of the best sources of American talent, and so we have to be careful not to give in to those who would cut off immigration. There are a lot of things that go into the American economic competitive advantage, from education to innovation. Fundamentally, we’re the most innovative economy in the world. There are very few signs that any of the other big economies will surpass the United States in innovation.

THE FUTURIST: What about an apocalyptic scenario, where being more innovative economically and producing goods valued higher than goods produced elsewhere doesn’t matter? How likely is that?

Kamarck: Isn’t that the basis of economic growth? Why would growth deteriorate other than in a severe recession? We’re not going to be in a severe recession until 2025, if that’s your time frame. In the short term, everybody has a problem, but between now and 2025 there will be new business cycles. We’ll likely lead the world out of the current downturn.

THE FUTURIST: Okay, but might one of these other developing nations develop an innovation model to match that of the United States in the decades ahead?

Kamarck: The big question is China, because China certainly has an entrepreneurial people and culture. But they still have an overhang from their communist era. When it comes to information, they’re still a closed society. It’s hard to imagine a society being truly innovative when there are so many restrictions on freedom of speech, as there still are in China. If that would change dramatically, and certainly the Internet is pushing at it to change, then China could become very innovative.

The second thing about China is that they still have significant corruption problems and they don’t have a rule of law that respects contracts. It’s hard to attract significant investments from people when investors have doubts about getting their money out, or when there’s the question of state nationalization of industry. It’s not a legal structure that fosters innovation. Until that changes in other parts of the world, people will still come to the United States to develop new products.

THE FUTURIST: What about the theory that the U.S. consumer market is tapped, that real consumer growth lies in other countries because of the amount of debt the United States has accrued as a nation? Is it overly pessimistic to think the U.S. is played out as a consumer market?

Kamarck: It’s not overly pessimistic for the short term. There’s still a lot of debt to be worked off in the U.S. economy. However, there is a very large generation coming up, the millennial generation. They’re bigger than the baby-boomer generation. They’re now in high school and in college. They’ll need to purchase homes and consumer durables. They’ll have children. As people work themselves out of debt, and as a new generation that doesn’t have this debt (because they’re kids) become adults, you can see a return to a more normal set of consumption patterns in the economy. Hopefully, you won’t see a return to overconsumption. We’ve swung dramatically from buying everything with money we didn’t have to buying nothing. Clearly there’s someplace in the middle.

THE FUTURIST: The issue of the amount of debt that is being placed on the backs of younger generations is of great concern to me. The average college graduate carries $19,000 in school loans and an additional $12,000 in credit-card debt before they get out of school. When you add on future entitlement spending (Social Security and Medicare) as the baby boomers retire, the cost begins to sound significant. Many young people are leaving school with bleak job prospects and burdens that the generation before them didn’t have. How would you rate that as a challenge for the United States going forward?

Kamarck: When you talk about debt to future generations in the U.S. economy as a whole, that’s different from school loans. People get upset about loans, but loans are politically and practically a different thing. I think there will be 10 hard years. That’s how long it will take for the overspending to move its way out. Eventually, people will need to buy cars, refrigerators, and houses again. That, plus whatever the Obama administration does by way of government spending, should help younger people to get jobs when they get out of college.

THE FUTURIST: You think it will take 10 years to fully move out of this current downturn?

Kamarck: It depends on how effective the stimulus package is and how quickly it succeeds in doing two things: It has to stop the rise in unemployment, and it has to get the credit markets moving again so that the banks have some trust and can start lending to people forming new businesses. Then you start having a more normal economy. That’s why for the time being, frankly, spending is a lot more important than thinking about deficits. Once the economy gets moving again, then you’ll have to confront the deficit crisis. If the stimulus works to really get the economy growing again, you’ll grow out of some of the deficits. The question is, what is an acceptable level of debt as an aspect of GDP? Who knows if we’ll ever get back to the Clinton administration levels? But certainly by the time we’re coming out of this recession, hopefully the next administration will be poised to reinvent government and try and get inefficiencies out of government.

THE FUTURIST: Assuming that we do absolutely nothing correctly in the next 15 years, the intelligence report on 2025 has outlined what looks like a very bad worst-case scenario. What’s your worst-case scenario?

Kamarck: If we do everything wrong in the short term, we face a long period of deflation and unemployment. It becomes more difficult to meet our international obligations and maintain our military force. Then you begin to see some of the darker scenarios that we started this conversation with. But there is also a feeling that the U.S. economy has enough flexibility in it that people will work out of the present situation.

THE FUTURIST: What do you think is the most important trend to shape U.S. policy over the next two decades?

Kamarck: Domestic or international?

THE FUTURIST: Let’s start with domestic.

Kamarck: The aging population. That will determine a lot of government spending, because elderly people vote and are sophisticated about influencing the government. The probability of being able to achieve any significant savings out of either Medicare or Social Security is pretty slim. And so that will be the most significant domestic problem.

Internationally, the biggest challenge is to deal with terrorism more as an intelligence matter and less as a military matter. The Bush administration treated the war on terror as if it were a war, including invading countries. When we see terrorism stop, it’s almost always the result of something similar to effective police and detective action rather than military action. The U.S. military, for all its talents, isn’t well suited to the prevention of terrorist plots. We need to build better alliances, and do better international police and intelligence work to preempt plots. That’s a change from the way the Bush administration dealt with the problem.

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Peter Schiff: A Post-American Economy

THE FUTURIST: In your television interviews and your books, you talk a lot about the wealth transfer to Asia. According to your Web site, it’s one of the key components of your investment strategy at EuroPacific Capital. To what extent do you agree or disagree with some of the scenarios in the Global Trends 2025 report?

Peter Schiff: Rising influence in Asia? I definitely agree with that, China more so than Russia. But there are other countries in the equation, like India. Japan will also have more clout in 2025. It won’t only be China and Russia that will see an increase in their influence and wealth. I think the United States will see a reduction in its economic, political, and military power. We’re in serious trouble. Our economy is a mess, but more worrisome is that the U.S. government is poised to completely destroy it. What Obama is seeking to do could ruin the economy.

The economy is a mess because of bad fiscal and monetary policy in the preceding years. But what we need in order to recover is more capitalism, more free markets. We need more savings to make credit more available to businesses that could borrow to build more factories and start producing again to repair the industrial base. We should make repairs to our infrastructure, but only when we can afford it. There’s a lot of serious work to be done. Unfortunately, President Obama seems intent on building roadblocks that will just prevent market forces from correcting the problems in our economy. By assuming more and more control and micromanaging our economy, by making the government bigger, our economy is going to be much less dynamic. The standard of living is going to fall more precipitously than would otherwise be the case. We’re going to recreate another great depression, only this one will be worse than the one the government created in the 1930s.

THE FUTURIST: How can individuals, particularly people in the United States, cope with the trends you’ve laid out? What’s an action plan for them?

Schiff: Their action plan is to get out of U.S. assets entirely. Don’t hold bonds or U.S. currency. Get out of U.S. real estate. U.S. assets are going to lose substantial value, especially relative to assets in other parts of the world and certain commodities. People need to understand that U.S. assets are going to be substantially marked down.

THE FUTURIST: Is this something that will have an effect geopolitically and militarily going forward?

Schiff: Of course. As the dollar loses value, it becomes more expensive to maintain the military — to supply it with food, fuel, and ammunition. Most of U.S. military equipment runs with imported components and imported parts. If we’re going to keep our planes in the air, our tanks rolling, and our ships steaming, we’re going to have to import more expensive foreign components. We have military bases all around the world. As the dollar loses value, it’s more expensive to maintain those bases.

THE FUTURIST: What about the argument that the United States will maintain its dominance because it has a unique culture of innovation, with the world’s best universities?

Schiff: We don’t have a unique culture of anything. American citizens aren’t innately smarter or harder working than people anywhere else. We’re no better than the Italians, the French, the Mexicans, or the Chinese. What enabled Americans to be so much more successful than people of other countries was that we were freer. We had a better system of government because we had a constitution that limited the power of government, so we had minimal regulation and minimal taxes relative to the rest of the world.… Now, I think, there’s more entrepreneurial capitalism going on in places like China than there is in the United States.

FUTURIST: Many developing nations face tremendous political uncertainty in the years ahead. To what degree will they become more open? To what degree will they become more democratic? Will there be social upheavals?

Schiff: There will be social upheavals in the United States. We’re going into a situation with severe economic hardship in this country. The inflation that the U.S. government is unleashing will lead to spectacular increases in the cost of living. Ultimately, it will lead the Obama administration to implement price controls for products, including food and energy, which will result in food and energy price wars. When people are cold and hungry, there’s a tendency to commit crimes, and this will lead to social unrest. There are a lot of problems in that respect coming to the United States. There’s also the chance the United States government will act in much more oppressive ways. I think the U.S. government might start seizing assets from its citizens, such as precious metals and foreign stocks. There could be outright confiscation and seizure. Moving money out of the country could be very difficult.

THE FUTURIST: Do you think there is any chance that the U.S. government would begin to pursue an open market strategy?

Schiff: I don’t see that happening soon. I see a lot more damage occurring in our economy before Obama comes to that revelation. But hopefully he comes to it in time. The failure to come to it in time will produce a hyperinflation. The dollar will be wiped out completely. That economic crisis will be far worse than the one we’re dealing with today. The United States will not be the largest economy based on GDP well before 2025. It will be China. The United States will still be behind Japan and it will no longer be in the top 20 countries in per capita GDP. We’ll see a significant reduction in our stature in the world.

THE FUTURIST: Do you think China and Japan will be able to shift from being export economies toward being economies that stimulate domestic consumer spending?

Schiff: They will certainly be consuming a lot more domestically, particularly China. But Japan and a lot of countries that are now exporting to the United States will simply export to other countries. For instance, Japanese exports to China will pick up significantly. It’s certain that a country that’s going to see one of the most dramatic increases in domestic consumption will be a country like China.

THE FUTURIST: When does it get very bad for the United States?

Schiff: When the only buyer left for U.S. debt is the Federal Reserve itself, that’s when hyperinflation kicks in. That’s when the bond market plunges and consumer prices really take off. That’s when we’re really up against a serious crisis.

THE FUTURIST: That can happen anytime between now and …

Schiff: That can happen any day. It could happen tomorrow morning, next year, two years. You just don’t know. The fact is it will happen. Even Bernie Madoff knew he would be found out eventually. Ponzi schemes can’t go on forever. That’s why they’re illegal. If you could make it work then it wouldn’t be illegal.

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Dennis Kucinich: Securing Peace and Prosperity

THE FUTURIST: To what extent do you find these scenarios to be credible?

Dennis Kucinich: I would suggest that such reports are interesting, but they’re not constructive because they don’t allow for our ability to change the direction of events. If the United States does not take control of its economic destiny, and if the country keeps spending money on wars and allowing the accelerated creation of material wealth — either through the instrumentation of government of because of the theft of Wall Street — certainly the United States will be in a precarious position.

When it comes to the globe, we need to look at ourselves not as a nation apart from other nations but as a nation among nations. We need to come into resonance with the founding principles of this country and its first motto: E Pluribus Unum (out of many, one). We are one people, not just fifty states, but we’re also one with a world that is increasingly interconnected. Why not rally around these ideas to save the world from scarcity, from drought, and from hunger? We need to do that now, not in 2025. These warnings that we get from economists, from environmentalists, from people who study global trends are warnings we should pay attention to not because they predict the future but because they give us a snapshot of what’s happening today. We can change the outcome.

THE FUTURIST: Getting more specific, what do you see as the most important trend that will shape U.S. policy over the course the next two decades?

Kucinich: The trend toward a more equitable distribution of wealth. In the last few decades, the United States has become a massive machine where all the instruments in government were aimed at accelerating the creation and accumulation of wealth. The last administration put in place more than a trillion dollars in tax cuts that went to the wealthiest 1% of the U.S. population. Our military spending is used to accelerate the accumulation wealth of the nation through war and huge amounts of defense spending. Our environmental policies deteriorated the quality of our air and water and appreciated the financial assets of companies who contaminated our environment. Our energy policies accelerated the accumulation of wealth by turning over our energy supply to the oil companies. These companies [were able to] determine the kinds of energy we had.

We’ve allowed insurance companies to run our health-care systems. One hundred million people in the United States are either underinsured or uninsured. Massive displacements are going on economically because people can’t afford health care.

You can look at every system of government over the last few decades and you can see how special interests have allowed the acceleration of the creation of wealth. We’re living with the culmination of lack of regulation. This lack resulted in fraud. We need to have a system that causes a more equitable distribution.

THE FUTURIST: Global collaboration seems to be one of your focal points. What sort of future opportunities do you imagine for the United States to collaborate with the developing world to improve the future?

Kucinich: We have an opportunity to stop looking at it as a world that needs to be developed. These distinctions need to be challenged. There’s a lot about the “developed” world that I don’t find particularly acceptable, such as the geography of nowhere. This is where everything looks alike, where local cultures are obliterated by concrete. This is an aspect of the so-called developed world. We need to come into rhythm with the natural world. We shouldn’t be talking about the developing world. We should be talking about the natural world.

THE FUTURIST: Do you envision a way to achieve this equilibrium you talk about and maintain the supply-side economic system?

Kucinich: We can’t sustain the system we have in place. We already know that. It’s predatory. It’s broken down — why should we revive it?

THE FUTURIST: Some might argue that supply-side economics over the last two decades has led to an increase in quality of life, especially parts of the world outside of the United States. On that note, one of the key issues in the Global Trends report is how the shift to Western dietary habits in many parts of the world, particularly in Asia, is one of the primary drivers putting strain on freshwater, because as people switch to eating more meat they deplete groundwater. I think this speaks to your broader point: How do you convince other people not to follow the growth path that the United States has established?

Kucinich: I think that most of the rest of the world sees that supply-side economics is a failure. If we want to restore our credibility with the people of other nations, we need to reject the canards of the past and start talking about human values that have proven to be sustainable. We need to set ourselves on a path where there are jobs for all, housing for all, education for all, health care for all, retirement security, clean water, clean air, a sustainable food supply, and peace.

This is not a pipe dream. All of this is achievable. We have it within our reach, but we have to change our institutions so that [those] institutions can respond and evolve with human potential.

THE FUTURIST: Which institutions in particular?

Kucinich: Every institution. Jefferson talked about the fact that institutions come from the mind of man and evolve with the mind of man. They have to change. They are our products. They didn’t make us, we made them.

THE FUTURIST: Why do you think it’s important for individuals to take their future seriously?

Kucinich: I think it’s important for individuals to live joyously. I think we need to live without fear of the future and enjoy the moment, live it to the utmost, and live it with great heart, love, and courage. That’s what I think we should do. If you do that, the future will take care of itself.

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About the Interviewees

Newt Gingrich served as the speaker of the United States House of Representatives from 1995 to 1999. He is the author of more than twenty books including, most recently, Real Change: From the World That Fails to the World That Works. He’s also the founder of the group American Solutions for Winning the Future. Web site www.americansolutions.com.

Elaine C. Kamarck is a Lecturer in Public Policy at the Harvard Kennedy School. She was one of the founders of the New Democrat movement that helped elect Bill Clinton president. She served in the White House from 1993 to 1997, where she created and managed the Clinton administration’s National Performance Review, also known as “reinventing government.” She worked as senior policy advisor to the Gore presidential campaign and is the author of The End of Government As We Know It: Policy Implementation in the 21st Century (Lynne Rienner Publishing, 2006).

Peter Schiff is the president of Euro Pacific Capital in Darien, Connecticut. He is also a contributing commentator for Newsweek International and served as an economic advisor to Republican Ron Paul’s 2008 presidential campaign. His book Crash Proof: How to Profit from the Coming Economic Collapse was published by Wiley & Sons in 2007. His second book, The Little Book of Bull Moves in Bear Markets: How to Keep Your Portfolio Up When the Market Is Down, was published by Wiley & Sons in 2008.

Dennis Kucinich is a Democratic member of the U.S. House of Representatives, currently representing the 10th District of Ohio. He was a candidate for the Democratic nomination for President of the United States in the 2004 and 2008 elections. He is the recipient of the Gandhi Peace Award, an annual award bestowed by the Religious Society of Friends–affiliated organization Promoting Enduring Peace. Web site www.kucinich.house.gov.

These interviews were conducted by Patrick Tucker, senior editor of THE FUTURIST and director of communications for the World Future Society.

 

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