Cover of the World Economic Forum report, “Global Risks Report 2019”. Graphic: WEF

20 January 2019 (Desdemona Despair) – At the beginning of each year, the World Economic Forum publishes its Global Risks Report, which  “presents the results of our latest Global Risks Perception Survey, in which nearly 1,000 decision-makers from the public sector, private sector, academia and civil society assess the risks facing the world.”

In 2019, for the first time, abrupt climate change tops the list of concerns (cf. Davos climate obsessions contain clues for policymaking – The environment has replaced the economy and finance on the global elite’s worry list.)

But another theme emerged: the rise of anger globally and the tribalization of politics. “Where opposing political groups previously expressed frustration with each other, they now express fear and anger. […] Anger has long been associated with loss of status.” The WEF report suggests that the impoverishment of the public sector, as well as increasing within-country wealth inequality are driving anger and populist movements. With global debt skyrocketing to a higher value than before the 2008 financial crisis, don’t expect the anger to abate any time in the foreseeable future.


Net private and public wealth, 1970–2015

Net private and public wealth 1970–2015 (percent of national income) in Germany, France, Spain, the United Kingdom, Japan, and the United States. Data: World Inequality Database, https://wir2018.wid.world. Graphic: WEF

Page 11: High levels of global indebtedness were one of the specific financial vulnerabilities we highlighted last year. These concerns have not eased. The total global debt burden is now significantly higher than it was before the global financial crisis, at around 225% of GDP. In its latest Global Financial Stability Report, the IMF notes that in countries with systemically significant financial sectors, the debt burden is higher still, at 250% of GDP—this compares with a figure of 210% in 2008. In addition, a tightening of global financial conditions has placed particular strain on countries that built up dollar-denominated liabilities while interest rates were low. By October last year, more than 45% of low-income countries were in or at high risk of debt distress, up from one-third in 2016.

Inequality continues to be seen as an important driver of the global risks landscape. “Rising income and wealth disparity” ranked fourth in GRPS respondents’ list of underlying trends. Although global inequality has dipped this millennium, within-country inequality has continued to rise. New research published last year attributes economic inequality largely to widening divergences between public and private levels of capital ownership over the past 40 years: “Since 1980, very large transfers of public to private wealth occurred in nearly all countries, whether rich or emerging. While national wealth has substantially increased, public wealth is now negative or close to zero in rich countries”.

Coupled with political polarization, inequality erodes a country’s social fabric in an economically damaging way: as cohesion and trust diminish, economic performance is likely to follow. One study attempts to quantify by how much various countries’ per capita income would hypothetically increase if their levels of trust were as high as they are in Sweden. Even in richer developed countries, the estimated gains would be significant, ranging from 6% in the United Kingdom to 17% in Italy. In some other countries they are much greater: 29% in the Czech Republic, 59% in Mexico and 69% in Russia. Given these results, it is sobering that the 2018 Edelman Trust Barometer categorizes 20 of the 28 countries surveyed as “distrusters”. Beyond economic impacts, eroding trust is part of a wider pattern that threatens to corrode the social contract in many countries. This is an era of strong-state politics, but also one of weakening national communities.

Global foreign direct investment inward flows, 2015-2019

Global foreign direct investment (FDI) inward flows (US$ billions), 2015-2019. Data: Organisation for Economic Co-operation and Development (OECD). Graphic: WEF

Page 28: The past year’s developments in foreign direct investment (FDI) are arguably even more significant than trade tensions. As discussed in the 2018 Global Risks Report, outward investment has become more associated with geopolitical positioning. As a result, caution towards inward investment is growing. Because FDI creates economic facts on the ground in a way that trade flows do not, this is an area where increasing geo-economic competition could sow seeds of tensions that take years to grow and years more to resolve. Western countries in particular have been sharpening their power to block investments in strategic sectors, particularly emerging technologies—raising the prospect of a partial unwinding of globalization in investment, as in trade. […]

As with trade, if the climate for cross-border investment flows continues to worsen it will hamper global economic growth and risk creating a vicious circle in which economic and geopolitical tensions aggravate each other. The data already point to a sharp fall-off in FDI in 2017, despite other macroeconomic indicators being solid. This trend continued in the first half of 2018.

If this were to be sustained, it would leave many states — particularly smaller or weaker ones — having to make painful choices between securing investment for growth and maintaining fiscal control and strategic independence.

Negative and Positive Experience Index, 2006-2017

Negative Experience Index (left) and Positive Experience Index (right), 2006-2017. Every year Gallup takes a large-scale snapshot of the world’s emotional state. It asks respondents—154,000 across more than 145 countries in 2017 — whether they had various positive and negative experiences on the preceding day. Overall, the positive experiences (such as smiling, respect and learning) comfortably outstrip the negative (which include pain, worry and sadness) — but the trend lines are worrying. As illustrated by these graphs, the positive experience index (a composite measure of five positive experiences) has been relatively steady since the survey began in 2006. Meanwhile, the negative experience index has broken upwards over the past five years. In 2017, almost four in ten people said they had experienced a lot of worry or stress the day before; three in ten experienced a lot of physical pain; and two in ten experienced a lot of anger. Data: Gallup 2018 Global Emotions Report. Graphic: WEF

Page 34: Every year Gallup takes a large-scale snapshot of the world’s emotional state. It asks respondents—154,000 across more than 145 countries in 2017 — whether they had various positive and negative experiences on the preceding day. Overall, the positive experiences (such as smiling, respect and learning) comfortably outstrip the negative (which include pain, worry and sadness) — but the trend lines are worrying.

As illustrated by these graphs, the positive experience index (a composite measure of five positive experiences) has been relatively steady since the survey began in 2006. Meanwhile, the negative experience index has broken upwards over the past five years. In 2017, almost four in ten people said they had experienced a lot of worry or stress the day before; three in ten experienced a lot of physical pain; and two in ten experienced a lot of anger.

Although still the least prevalent of Gallup’s negative experiences, anger is commonly referenced as the defining emotion of the zeitgeist. Some suggest this is an “age of anger”, noting a “tremendous increase in mutual hatred.” And while it is conceivable that public anger can be a unifying and catalysing force — a hope often expressed at the start of the decade in relation to the Arab Spring — it has since come to be seen more as politically divisive and societally corrosive.

In the United States, public opinion researchers note that where opposing political groups previously expressed frustration with each other, they now express fear and anger. In one survey, almost a third of respondents reported having stopped talking to a family member or friend over the 2016 presidential election. In another, 68% of Americans said they were angry at least once a day; women reported themselves more angry than men, as did the middle class relative to their richer and poorer peers.

Anger has long been associated with loss of status. Recent research also suggests a strong link with group identity. The risk is that this combination generates angry polarization — an increasingly prevalent feature of politics in many countries. And as further explored in the technology section below, in recent years group identities have been hardened by a process of “social sorting” that has eroded traditional, cross-cutting societal ties.

Life prospects in various countries, 2016

Life Prospects in various countries, 2016. “Will you have had a better or worse life than your parents’ generation?” (% of respondents). Data: Ipsos Global Trends, 2016. Graphic: WEF

Page 36: Another important generational pattern relates to expectations of increasing quality of life. As illustrated by Figure 3.2, there is significant variation across countries in terms of young people’s perceptions of how their lives will compare to those of their parents. Only 5% of survey respondents in China expect to live a worse life than their parents, compared with 30% in the United States and the United Kingdom and almost 60% in France.

Within affluent countries, wealth affects well-being in complex ways. The prevalence of anxiety disorders is higher among lower-income groups. But attitudes towards money matter too — researchers have linked reduced well-being to societal shifts away from intrinsic motivations (related to community feeling and affiliation) and towards extrinsic motivations (related to financial success and social status). This is generationally significant: in one US study, 81% of 18- to 25-year-olds said that getting rich was their generation’s top or second goal, compared to 62% of 26- to 39-year-olds.

The Global Risks Report 2019

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