The Futurist Interviews Elaine C. Kamarck, Clinton White House policy advisor
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 November of 2008 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, 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 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. (Original interview date, December 2008).
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 Kamark: 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 both for environmental and human health.
THE FUTURIST: Are you 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 that 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 be produced elsewhere, doesn’t matter because the entire system of valuing one thing over another deteriorates. 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 before 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, because real consumer growth lies in other countries and 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, 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 some 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 ten 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 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.
About the Interviewee
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 campaign and is the author of The End of Government As We Know It: Policy Implementation in the 21st Century (Lynne Rienner Publishing, 2006).
This interview was conducted by Patrick Tucker, senior editor of THE FUTURIST magazine.