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Glimpse of the future decades from now post COVID

"No epidemic is ever just a health issue in isolation, and Covid-19 has emphasised this on the global stage. We need to be looking at it in terms of an economic issue, a livelihood issue, a social issue and a political issue too."-Juliet Bedford

"Until we get the virus defeated everywhere, the world economy will not return to normal." Erik Berglof, LSE

While most commentary is still focused on the impact of COVID and how economies and societies will normalize, not as much attention is paid to an invaluable preview of the distant future that COVID gave us. It is almost like warping decades into short 3 years

COVID gave us a preview:

1. Online courses proliferated, bringing us closer to a stage where specialized knowledge becomes less relevant and Bachelor degrees are only needed for those pursuing an academic career, replaced by multitude of certificates that a person accesses, as his interests change. Students no longer enter a tunnel, exiting four years later with a piece of paper. It would resemble medieval colleges, where one moved from one discipline to another, often never graduating.

2. Most countries have introduced versions of ‘basic income guarantee’, only to remove these after emergency passed. It is likely that UBI will regularly come back over the next two decades, eventually morphing into the backbone of societies where marginal utility of humans erodes.

3. ‘Work from home’ is only the first stage in a process that will ultimately dis-termediate labour, with most jobs and professional progression paths atrophying, and replaced (using Medieval analogy) with few managers and technology organizing itinerant contributors, engaged across various industries.

4. COVID accelerated the pace at which unrelated sectors are colliding, with borders becoming difficult to distinguish, explaining proliferation of inter-industry acquisitions.

5. Emptying of central business districts is a reflection of disintermediation of both labour and capital, which within decades will have very different properties.

6. Disorientation = societal and polarization extremes which will become even more pronounced

We are not there yet.

What does this future look like?

COVID is just nudging forward pre-existing trends that despite today’s preoccupation with ‘running out of people and stuff’, foreshadows a world where returns on humans and conventional capital will keep falling, until Singularity arrives sometime in 2040’s, massively raising productivity

As he has described in his book - ‘The Great Rupture’ - if a person were to suddenly fall asleep and wake up sometime in 2040’s, he would feel completely out of place but with a niggling feeling that before we went to sleep, he experienced something similar. To quote- ‘He would discover that in this new world, work and jobs no longer exist as the core axis around which societies revolve. People would tell him that “work” was something that happened in the cruel and distant past of their grandparents. He would also discover that people no longer drive cars and that the campus Harvard College was closed for lack of demand. However, he should also feel blessed for sleeping through the turbulence of the 2020’s and 2030’s’

The lessons of the last 5 centuries were unequivocal-without freedom, there could be no prosperity or happiness.

However, does this still hold true in the Information Age?

Ø Modern technologies are disrupting our societies, altering every facet of our lives, from the nature of work and what we intrinsically value, to how we are informed, entertained, and educated-it promises to be a far deeper disruption than Industrial Revolutions.

Ø Humanity is at a major turning point, and how we respond to the merger of technology and financialisation will decide our future.

Will it be capitalism or communism, feudalism or despotism?

Risk of a Deflationary Bust

The medicine for overcoming our greatest financial challenge in decades – record global debt – is daring and controversial,

Forget about repaying the massive bill of as much as $500 trillion since this would lead inevitably to a collapse in asset prices, from homes to 401(k) pension plans.

The global economy is wedded to technology and “financialisation” of everything from mortgages to esoteric corporate and consumer loans. The idea of old-fashioned lending practices with simpler pieces of notes and clear cut lenders is a dim memory. Loans today have been financial zed with every part – from principle to interest – sliced and diced and sold off to multiple investors and traders.

In times of uncertainty, people often reach for historical analogies. In recent weeks and months, as inflation has continued to climb and commodity prices spike, there's been a lot of talk of a return to the 1970s.

But is that the right parallel?

Bond market red flags still matter and Equity markets are ignoring yield curve inversion and rising consumer concern about inflation. Bonds have fallen into an extraordinary bear market in recent weeks, with yields (which move in the opposite direction to prices) surging across the world as investors anticipate a swath of central bank tightening.

Yield curve inversion – which suggests rate rises in the short term before a slowdown or fall in economic growth leads rates to fall – has been seen as a reliable indicator of a coming recession in past cycles and is guaranteed to attract the market’s attention. So far, the spreads between 20-year and 30-year yields, and between five-year and 30-year yields, have inverted, while the closely watched spread between two-year and 10-year yields has closed to within about 12 basis points. But it’s fascinating just how little impact these bond market red flags have had on equity markets, which continue to ignore both the action in the yield curve and signals such as the weakening consumer confidence and rising inflation expectations.

Where once the long end of the yield curve represented the views of the private sector (banks and companies) on future financial conditions, central bank bond buying and attempts at rate control – moving, from acting as conductors to also playing in the orchestra pit – have changed the game.

When uncertainty is high like it is today, investors may want to concentrate on owning assets where cash flow visibility is clearer and where the products are mission-critical.

Weakening nexus between freedom and prosperity

By learning from the past and projecting into the future, Viktor Shvets explores the weakening nexus between freedom and prosperity and what that means for the future of humanity.

From the birth of our modern world, pivotal events in human history have led to the collapse of non-Western civilizations-Mongol warriors sweeping across Eurasian steppes; the Black Death and a re-awakening of human spirit; Zheng He's voyages and the collapse of Novgorod republic; and finally, the ban on printing in Arabic.

What can we learn from these events to better prepare ourselves for the future?

As we hurtle toward that uncertain future, we must decide whether our cherished individual freedoms are still necessary for success and prosperity, or if in adapting to new technologies, non-Western civilizations are now better positioned for this new world, creating illiberal orders that might no longer suffer from stagnation of ideas.

For the first time in at least 5 centuries, we have an opportunity and tools to build a different society and economy. Will we embrace the challenge?

The great rupture, the essence of money and the future of humanity

The impending impact of the information age and generational change on the economic and financial markets

The impact of millennials on politics, society, and their increasing expectations from the state

What is the role of central banks, Universal Basic Income, and how corporates will need to evolve to stay relevant?

What were the key decisions that led to the collapse of all non -Western civilizations?

Three 15th century choices that made all the difference, 3 turning points that changed the course of history:

1. Why did the West succeed? Will the same success formulae endure?

2. The Information Age and how it is profoundly reshaping our world.

3. What are the effects of our insatiable desire for wealth and growth?

What lies on the other side of the Black Hole?

Does China hold the key to the future? Are we breaking the nexus between freedom and prosperity?

Do we need to be free to be innovative, prosperous, or even happy?

Source: Author: Viktor Shvets

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