The world, since the end of the Cold War, has entered a new steady state. It is a colorless world that is insipid and boring with neither serious ideologies to argue over nor grand visions to realize, but with plenty of ideologues and demagogues sparring over religion and culture.
The world is also by and large more peaceful, but for the hiccup of September 11, 2001. The threat of a nuclear holocaust has receded, albeit Iran’s intransigence because Iran clearly wants nuclear power, not power from nukes, except that the worry is that it does not know how to build a safe nuclear power plant. People everywhere, a mouse-click or a touch screen away from at least seeing how life can be better, want a better life. Bin Laden the troglodyte, who communicates using satellite phones from Afghan caves, has turned into a nuisance even in the Middle East and North Africa. The peoples of the world simply want their religions coexisting with prosperity and without the excruciating uncertainties and travails of terrorism or power mongering.
The ups and downs of economies are being cushioned by gushes of money from the world’s central banks and through ever larger debt burdens. Everyone, without exception, is in the same boat. There is no arbitrage in the economic status quo but for the addition of more people who want to consume more. The world has even figured out how to live in a world without oil, and will get there by the time the oil runs out sometime during this century.
The addition of about 3 billion people in Central and South Americas, Asia and Eastern Europe to the feeding trough of a better life has vastly expanded labor supply and created legal arbitrage in production. On a cost-benefit basis, no incentive in the expensive wealthy countries can match the prospect of access to large foreign markets with many eager buyers, especially if the condition for that access is domestic production abroad. American exports may not rise unless foreign imports into the United States are tied to political change in the exporting countries to diminish the legal arbitrage which does not necessarily preclude American production abroad for foreigners on foreign soils.
Both capital and labor are still cheap, because labor makes capital. Even wind mills, solar panels, electric cars and trains could be made in China and elsewhere to be shipped back to the rich countries which appear to have pretty much resigned themselves into slower growth rates, higher unemployment and more internationalization to accommodate the aspirations of the multitude of the new entrants into the global economy. The higher unemployment reduces the average wage in the wealthy countries as the global labor supply and demand adjust to equilibrium prices for the various skill levels, in theory. In practice, however, the political arguments among the various interest groups would be over the distribution of income or the process of valuing skills. And among countries, they are and will continue to be about power sharing: in practical terms, the transition from the G7 to the G20.
A larger welfare state everywhere, similar to the debt burdens of countries, as the contagion of aging spreads around the world through the first three quarters of this century beginning in the G7 group of countries and extending around to Asia (both India and China), could ultimately stabilize the global debt burdens over the very long haul as well as diminish any arbitrage in production costs around the world, restoring global trade to balance by around 2075.
There are no human-induced catastrophes on the horizon, at least in this century after the bloody 19th and 20th centuries, but for the ups and downs of a transition to about 40 per cent of the growing world’s population being better off by the end of the century compared to less than 20 per cent of the world’s population by the end of the last century, as though the geopolitical tumult of the Industrial Revolution is finally settling down.
The existing level of technology, including in medicine, after the feverish change in the last 150 years, has become sufficient to spread prosperity and better health around the world. Average life spans in the G7 countries are pushing 80. There is more room to add people horizontally from around the world to the pool of those enjoying longer life spans than it is to push life spans in rich countries, on average, any higher. The consumption and hence investment opportunities are mostly abroad for the wealthy countries through mid-century with little need to invent anything new at a rapid pace, because so many more people do not even have the basics yet and them procuring the elementary conveniences of life is itself a very large market. The girth of the world economy is expanding.
There are plenty of natural resources to go around to last more than a century for more than the 10 billion people that will inhabit the planet by 2100. Computing and communications are cheap and the expensive outer space ventures, after the Cold War, are limited. It is also possible that technical change has achieved a steady state of improvement rather than requiring disruptive innovations concentrated in time. All the factors for breeding a culture of complacency have set in.
The trouble with not having to invent to survive and live better or when the necessity to invent is absent, the steady rise in the standard of living through ever higher consumption can stagnate at a level of efficiency (or inefficiency) that is commensurate with the level of technology whose steady state rate of change itself is becoming highly inefficient. The level of education is no longer in correspondence to its substance. There are more Ph.Ds since the ‘70s than before, around the world, but with little to show compared to the strides made by their far fewer predecessors since the turn of the 20th century. This stagnation is not noticeable even over the period of a century. It accumulates, unseen, because the gross domestic products (GDPs) of nations keep on rising. At some point, the pent up demand for higher efficiency would become so great that, without foresight and preparation over decades, it becomes extremely difficult and disruptive to turn on a dime.
The cause for the disruption would be the linearity of how work and the ways of life of the peoples around the world would be organized: to keep consuming more as if nature is a cornucopia. The dearth will begin to be seen toward the second half of this century, perhaps beginning after 2050 and rising in intensity approaching the year 2100, as around 6 billion wealthy consumers will begin competing among themselves for living even better lives to converge the global per capita standards of living (or income per person) ― the same inefficient competition to keep raising their levels of consumption without having to change their way of life ― which is now common among the 1.5 billion or so G7 peoples, beginning about 40 years after World War II.