Top Risks in 2019

According to the Eurasia Group, a consultancy founded by Ian Bremmer, the global geopolitical environment is right now the most dangerous that it has been for many decades. So what is likely to impact on businesses, regional economies and society during 2019? There are around 10 areas of concern for us all.

Bad Seeds

There used to be an Australian band called The Bad Seeds, but we’re not talking about them. What the term ‘bad seeds’ means in this instance, is this: decision makers are so obsessed with an array of global crises in a world without trued global leadership, that they are allowing a range of future risks to take root and germinate, but these future risks are the ‘bad seeds.’ For example, the future of the European Union, the WTO and the relationship between Russia and China are negative.

US-China relations

The US leadership used to try and keep things smoothed over, but with Trump in office that approach has been dumped. Expect to see more confrontations between the two, especially in the areas of technology, economics and security.

Cyber Power

The US is going to exert its use of cyber power more seriously this year. However, it’s likely to backfire on it rather than create a system of global deterrence.

Populism in Europe

Europe is holding elections in May and it is likely that we will see more eurosceptics win seats. We have seen the rise of eurosceptics in the last two years, the UK and Italy being two prominent examples. These populists blame Brussels for their domestic problems and now they are winning support at home by promising to flout EU rules, or leaving the EU. They will win more seats and undermine the ability of the EU to function.

US domestic politics

The government has been closed down since before Christmas 2018. This year will bring more chaos and volatility to US domestic politics.

Reduced innovation

There will be a reduced level of investment in driving technological development. Eurasia Group believes this will be driven by concerns about security, privacy and economics, as leading countries “put up barriers to protect their emerging tech champions.”

Mexico

The new Mexican president Andres Manuel Lopez Obrador –or AMLO—wishes to improve Mexico by taking it back several decades. His strategy includes more spending and poor policies that are more interventionist. While Mexico was ahead of other Latin American countries, expect to see it look more like them this year.

Ukraine

Putin wants Ukraine to be within Russia’s sphere of influence. It is likely to interfere in Ukrainian elections this year, which will pose a problem, for Ukraine and leaders in the European Union who will have to decide how to respond.

Nigeria

This year Nigeria is about to hold one of its biggest and most fiercely contended elections since the country became a democracy in 1999. Neither of the two leading candidates have anything to offer the country, or policies that will reduce its problems.

Brexit

At the time of writing, the Parliament at Westminster is about to vote on the Withdrawal Agreement negotiated by Prime Minister Theresa May. Neither those who want to leave the EU, nor those who want to remain in the EU like it. Nobody knows what will happen when the deal is most likely voted down, but it is going to be an even bigger shambles in the UK throughout 2019 and that will affect the rest of Europe as well.

 

Tech innovation needs to find a balance in 2019

2018 put the spotlight on technological innovation, much of it venturing into uncharted territory where regulations will be needed before long. Amidst all the newcomers and startups, one old friend stands out as becoming more and more integral to our way of life, and that is the Internet.

Its reach into every industry is unstoppable, and as we move on from an app-centred era, there is going to be more engagement between policymakers and the technology innovators.

Steve Case, in his excellent thought piece at Medium, sums up the scenario:

“Investors will need to understand policy as well. In the Internet’s First Wave, the focus was on technology risk — can they build it. In the Second Wave, the key risk factor became market risk — there was little doubt it could be built, but considerable concern over which of the many app competitors would break through. In the Third Wave, policy risk will be front and center — can the entrepreneurs navigate the complex regulatory waters to successfully bring their product or service to market.”

Indeed, investors, entrepreneurs and governments will all be trying to find the right balance between regulation and innovation, as Case points out. This is necessary for the protection of society whilst also being open-minded about the potential of technology to improve life.

But what happened in the tech world during 2018 that has brought the issue of regulation versus innovation into focus? First there were the revelations about Facebook’s use of user data, which brought down on it the wrath of governments, as well as users. This is likely to mean the emergence of regulations to rein Facebook in.

There were also some serious data breaches affecting consumers. Privacy and security are no longer a given, which means consumers are no longer as confident when using online service providers.

Self-driving cars were a great story until a pedestrian got killed. They are still on the agenda for development, but now “innovators and policymakers need to work together to establish practices for safety and security (including cybersecurity),” Case suggests.

Space exploration got more interesting as it suddenly broke out of being controlled by NASA and other government-related agencies. This sector went commercial with SpaceX, and it is an exciting opportunity for innovation, but again we will need regulations for commercial ventures that protect the sector without stifling innovation.

2019 will be a year of finding the balance in these and other tech sectors.

Doughnut Economics — the best alternative for a sustainable future

Oxford based, Kate Raworth, a member of the University’s Environmental Change Institute, has blazed a trail with her book, “Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist” and reminded us that “economic growth was not, at first, intended to signify wellbeing.” Yet, that is what governments tell us.

Guardian journalist George Monbiot, a writer who is never afraid of taking on The Establishment, whether a government or a business like Monsanto, in his review of Raworth’s approach to economics pointed out that as billionaires capture governments, political leaders have become voiceless. The most they can offer citizens is the allure of economic growth, “the fairy dust supposed to make all the bad stuff disappear,” as he says. And we are supposed to turn a blind eye to the fact that this promised growth causes environmental destruction and does nothing to alleviate unemployment or inequality. He quotes a leaked memo from the UK’s Foreign Office: “Trade and growth are now priorities for all posts … work like climate change and illegal wildlife trade will be scaled down.” Nobody seems to mind what we destroy, as long as we have wealth.

Raworth is a much-needed voice in this scenario. She has voiced the ‘inconvenient truth’ that the economic philosophy of the last century, has “lost the desire to articulate its goals,” and has promoted a version of humanity that is deeply flawed. As she says, the dominant model of the “rational economic man” is one that is based on self-interest, isolation and calculation, which you might say paints a picture of the manipulative narcissist. She also says that what we have ended up with is a Holy Grail of endless growth.

The doughnut economy

Instead, Raworth says, economic activity should be aimed towards “meeting the needs of all within the means of the planet.” Her vision of a strong economy is one that “makes us thrive” whether or not the economy grows. And that means changing the picture of what an economy is and how it functions. Which is where the doughnut comes in.

She has restructured the concept of an economy by firmly placing it within the Earth’s systems and in society. Her diagram shows the flow of materials and energy, and also reminds each one of us that we are more than “workers, consumers and owners of capital.”

The doughnut has two rings: The inner ring of the doughnut represents a sufficiency of the resources we need to lead a good life: food, clean water, housing, sanitation, energy, education, healthcare and democracy. Anyone living in the hole in the middle of the doughnut, lives in a state of deprivation. The outer ring of the doughnut consists of the Earth’s environmental limits, and when we go beyond this we inflict dangerous levels of climate change, other forms of environmental pollution, loss of species and a variety of other assaults on the living world.

How can we create a doughnut economy?

An economic model that follows Raworth’s vision will primarily seek to reduce inequalities in wealth and income. Furthermore, the wealth we get from the natural world should be widely shared; this includes everything from agriculture to mining. The financial industry should be structured to conserve and regenerate resources, instead of squandering them, and state-owned banks should be investing in projects that radically change our relationship with the environment, such as zero-carbon public transport and community energy schemes. She also suggests that we must measure prosperity in a new way.

We have heard some of these ideas before, but what Raworth has done, is integrate them into a coherent programme, the results of which can be measured when implemented. Governments need to urgently turn Raworth’s ideas into policy.

If there is one resolution you make for 2019, I’d suggest it is this: read her book and discover that we could have human prosperity and a thriving living world. We owe it to our children and all future generations to change or economic model now.

The New Necessities

As technology progresses we have created a list of new necessities that we see as absolutely fundamental to living in a way that we see as fitting. In past decades, such as the 50s and 60s, these ‘things’ were fewer in number and many of them were focused around the domestic scene, such as vacuum cleaners, washing machines and dishwashers. Some of these were only available to wealthier people, whereas today, a refrigerator is present in almost every home in the developed world.

Today, we have moved on to the latest gadgets and services. The need for Wi-Fi, not just in the home, but everywhere we go, is just one of the new necessities. The mobile phone is another one, and younger generations can’t believe that people managed to survive without one. The smartphone has raised the game in mobile telecoms and now, if you don’t have an iPhone or Samsung Galaxy, you are seen as being out of step with society.

the new

What people want

I was looking at a recent survey of the luxuries that people couldn’t do without and was quite surprised to read what people considered vital and what could easily be discarded. Pets, a clothes dryer and a good mattress were classed as ‘must haves’ alongside Wi-Fi and a smartphone. It is a rather eclectic list. Buying lunch and eating out was also prioritised over going to the gym in the health and wellness category, which is also slightly odd, and such is the hold of coffee on today’s population that it was chosen as the ‘must have’ beverage.

Interestingly, grocery delivery isn’t as popular as the Amazon Prime service, and a music streaming service like Spotify is less popular than Netflix. Beauty products are almost a ‘must have’ but not quite, and in fact the whole Health and Beauty sector scored very poorly in terms of necessities, which strikes me as curious given the amount of marketing that goes into this sector.

A personal trainer is at the bottom of the health list, followed by massages and manicures, the latter scoring about the same as a grocery delivery service. Salon haircuts and attending a gym are on a level with Amazon Prime and organic produce, while the beauty products are on a par with having a dishwasher. But, nothing in Health and Beauty makes it onto the ‘must have it’ list.

Huge potential for the mobile industry

What we can conclude from this piece of research is that communication tools are the things we value most. Of course things like Amazon Prime don’t work without Internet, so many of the services that are further down the list are dependent on those two items at the top – Wi-Fi and a smartphone. Both these give us access to a world, at a new speed. And this is why the mobile telecoms industry is such an exciting one, because it is an important part of people’s new necessities.