Embed Size (px)
Citation preview
Bruce MehlmanNovember 13, [email protected]
follow @bpmehlmanQ4 2019
DE-GLOBAL
10 Trends Defining the New World
CONTENTS
DEGLOBAL: 10 Trends Defining the New WorldWhat Unleashed Hyper-Globalization………………………..…………………………………….3What Hyper-Globalization Unleashed………………………………………..…………………….8Why Hyper-Globalization Ended……………………………………………………………..……..14What’s Next: 10 Trends to Watch………………….…………………………………….............19
1) The World: Leadership & Direction Up for Grabs2) Major Economies: Aging Fast 3) Internet Policy: Regionalism Replacing Globalism4) Populism: The New Path to Power5) U.S. Politics: Anti-Globalists Ascendant6) U.S.-China: The Great Decoupling7) Business: Evolving Strategies for Braving the New World8) Government Economists: Fewer Fiscal / Monetary Tools9) Leadership: New Global Players Emerging10) Super-Disruptors: Climate, Debt, Technology & Urbanization
2
What Unleashed Hyper-Globalization1989-2009
3
NEW GEOPOLITICS OPENED THE WORLD
4
COLD WAR ENDED
1989: Berlin Wall fell1990: Germany reunified
1991: USSR ended
1993: Treaty of Maastricht
creates EU, Euro
INDIA LIBERALIZED CHINA OPENED EU BORN
1991: Reduced tariffs,
FDI enabled
1993: Deng’s 2nd big reforms push
privatization & opening
NEW POLICIES FACILITATED GLOBAL TRADE & INVESTMENT
5
1993
1994 1994Preferential Trade Agreements In Force
2000
NEW TECHNOLOGIES FLATTENED THE WORLD
6
Cost of International Calls Plummeted, # Internet Users Exploded
0
200
400
600
800
1000
1200
1400
1600
$-
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90
$1.00
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Internet Users (M) Cost of Int'l Phone Call (billed rev/min)
Cost
of a
n In
tern
atio
nal P
hone
Cal
l (Bi
lled
Reve
nue
/ Min
ute
(FCC
)G
lobal Internet Users (M
illions)
Sources: FCC (calls); Our World in Data (internet)
PERCEPTION 1990’s: AMERICA HAD ALL THE ANSWERS
7
MILITARILY TECHNOLOGICALLY CULTURALLY
ECONOMICALLY SOCIETALLY
What Hyper-Globalization Unleashed1989-2009
8
TRADE & GLOBAL INVESTMENT SKYROCKETED
9
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Trade as % World GDP Outbound FDI as % GDP
Sources: UN Conference on Trade & Development (FDI); World Bank (trade)
GLOBAL PROSPERITY
10Sources: Our World in Data (World Bank); Brookings/Kharas (Middle Class)
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
% World Living in Extreme Poverty
Perc
enta
ge o
f Glo
bal P
opul
atio
n
% World in Middle Class
47%
21%
36%
8%
Global Middle Class Grew as Extreme Poverty Plummeted
DOMESTIC DISPARITY
11
Winners Taking All in a Superstar Economy
8%
14%
22%
1975 1995 2015
Top 1% U.S. Households Share of Fiscal Income
25x
112x
272x
1975 1995 2015
CEO-to-Worker Avg. Pay Ratio
Sources: Income (World Inequality Database); Firms (Kahle & Stultz); CEO ratio (EPI)
49%53%
84%
1975 1995 2015
Top 100 U.S. Firms’ Share of Earnings
CHINA ROARED TO WORLD’S 2ND LARGEST ECONOMY
12
$-
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
1988 1998 2008 2018
GDP of China vs G7 Nations (ex-USA)
GDP
(Tril
lions
)
Source: World Bank (G7)
RISE OF THE HYPER-GLOBAL CORPORATION
13
Tech-Enabled, Wall Street-Rewarded
Assembly
MAXIMIZING SHAREHOLDER VALUE:IP SingaporeIT Bangalore
Manufacturing ChinaAssembly Mexico
Tax HQ DublinCEO Davos
Why Hyper-Globalization Ended2010 –
14
GLOBAL GROWTH SLOWED
15
3.64
3.022.53
5.17
5.98
3.28
0
1
2
3
4
5
6
7
1969-1988 1989-2008 2009-2018
GDP (world % growth) Exports & Imports (World % growth)
Psychology of Scarcity Replaced Psychology of Abundance
Sources: World Bank (GDP; Trade)
CHINA DID NOT TURN OUT AS EXPECTED
16
What the West Got Wrong
China didn’t liberalize it became more authoritarian
More expansionist China seeking regional dominance
Not a win-win… 2M U.S. manufacturing jobs offshored
China aims to dominate tech via subsidies, bullying & theft
Market access never evened, trade barriers persist
PERCEPTION 2010’s: THE AMERICAN MODEL WAS FLAWED
17
FOREIGN POLICY SAFETY NETECONOMIC SYSTEM
CULTURE TECHNOLOGY
NEW GEOPOLITICS CHANGED OLD ASSUMPTIONS
18
Middle East Got Harder… …And Less Essential
Aggressive Anti-Globalists… …Wielding Weapons of Mass Division
DEGLOBALWhat’s Next?
19
THE WORLD: LEADERSHIP & DIRECTION UP FOR GRABS
20
U.S
. CEN
TRIC
CHIN
A CENTRIC
GLOBALIZED
REGIONALIZED
Pax Americana Pax Sinica
Trade Wars end
U.S. growth slowed by debt, inequality & political instability
America First trade wars persist vs. rest of world
China leads global deals (eg RCEP, fix WTO, Climate)
Trade War with allies ends, unite to contain China
U.S. leads on new deals (eg USMCA, TPP, EU)
Trade Wars end
China growth slowed by debt, demographics &
lack of freedom
Free World United America Alone
MAJOR ECONOMIES: AGING FAST
21
31.5 30.1
25
7.9
3.3
-3.2-5.8
-14.3
13
-20.6
-30
-2.2
-15.2-18.9
-22.2
-28.7
-40
-30
-20
-10
0
10
20
30
40
US China S. Korea France Italy Russia Germany Japan
% Change in Working Age Population, Past & Future1990-2019 2019-2050 (est.)
Source: Census Bureau Int’l Database (per Collaborative Fund)
INTERNET POLICY: REGIONALISM REPLACING GLOBALISM
22
GOALProtect People
Empower People
Control People
APPROACH Heavy Regulation (eg GDPR)
Light Regulation State Dictates (eg Great Firewall)
ECONOMIC IMPACT
Older Industries Protected
(fewer startups)
Disruptors Dominate (consumers / competitors
less protected)
Nat’l Champions Dominate
(limited global reach)
POLITICAL IMPACT
Hits Nations > EC(populists empowered)
Permissionless Politics (government weakened)
Surveillance State (gov’t strengthened)
MEDIA IMPACT
Some Limits(copyright, truth, privacy)
Confirmation Bias (affirming > informing)
State-Dictated Reality
SOCIETAL IMPACT
Seeking Middle Ground
(free-ish speech)
New Voices Empowered
(both hope & hate)
“Social Credit Scores”
(less freedom)
POPULISM IS THE NEW PATH TO POWER
Voters Demanding Change, Rejecting Establishment
23
24
Open Borders Limit Immigration
U.S. POLITICS: ANTI-GLOBALISTS ASCENDANT
More Legal Immigration
Muscular Global Leadership
Business & Government Partner to Solve Problems
New Trade Deals Sought
Center CenterLeft Right
End Endless Wars End Endless Wars
Trade Deals Have Hurt Trade Deals Have Hurt
Vilify Elites (CEOs, Wall Street, Country Club)
Vilify Elites (Media, Globalists, University Club)
New Left
The Big Squeeze: Multinational corporations increasingly have no political home
New Right
U.S.-CHINA: THE GREAT DECOUPLING
25
Battlefields of the New Cold War
SUPPLY CHAINS
MARKET ACCESS
TECHNOLOGY RULES
MILITARY & ALLIANCES
INVESTMENT
DRIVING U.S.-CHINA CONFLICT
Domestic PoliticsU.S. mistrust of China is bipartisan
China needs someone to blame for slowing growth
Technology U.S. seeks to remain global leader in emerging techs
China aims to make the rules for emerging techs
Divergent ValuesU.S. prizes freedom, human rightsChina values order, collective good
Mutual ResentmentU.S. thinks China stealing from us
China thinks US holding it back
Increasing # of Potential CatalystsHacking, Taiwan/HK, South China sea, resources
ENCOURAGING U.S.-CHINA COOPERATION
Shared ChallengesClimate, Terrorism, Non-proliferation, Space
Mutual OpportunitiesBoth benefit from trade, investment, education & research
Powerful Domestic ConstituenciesU.S.: Ag, Hollywood, Wall Street, Universities
China: multinational tech, manufacturers
BUSINESS: EVOLVING STRATEGIES FOR BRAVING A NEW WORLD
26
Hyper-Global Corporation(1989-2009)
Regionally-Responsive Stakeholder
(2010- )Liberalism rising Populism rising
Abundance mindset Scarcity mindset
Global deregulation Regional regulation
Market access increasing Market access decreasing
Win Washington & the world follows
Need allies everywhere; Washington no longer leads
Spread functions globally Develop regional capabilities
Show Wall Street you’re global
Show Main Street you’re local
Markets value efficiency /Consumers value bargains
Markets value growth /Consumers value values
STRA
TEGY
LAN
DSCA
PEThe Regionally Responsive Stakeholder Replacing the Hyper-Global Corporation
LANDSCAPE
STRATEGY
LEADERSHIP: NEW GLOBAL PLAYERS EMERGING
2
State & Local Officials
NGOs
Solving Challenges National Governments Cannot (or Will Not)
CEOs
Activists
GOVERNMENT ECONOMISTS: FEWER FISCAL / MONETARY TOOLS
28Sources: CFRB (Worker : Retirees); Discretionary (Heritage 2016); Rates; Central Banks
Fewer Discretionary Dollars
Interest Rates Already Low…
Fewer Workers Per Retiree
…and Central Banks Hold Too Much
7.47
10.35
5.85
3.33
1.1
0
2
4
6
8
10
12
1970-79 1980-89 1990-99 2000-09 2010-18
Avg Weighted Rate at Major Central Banks*
30
• Slower Growth• Rising conflicts over revenue (e.g. digital tax)• Search for yield inflates global bubbles
• Slower Growth• Rising conflicts over water, food, resources• Accelerating migration & refugee crises
• Disruptive Growth• Displacements driven by automation, AI, blockchain• Cyber, deepfakes, autonomous systems increase risks
• Uneven Growth• Rising domestic conflicts: NYC = London ≠ Lackawanna• Higher risks from pandemics, critical infrastructure hits
SUPER-DISRUPTORS WILL ACCELERATE GEOPOLITICAL CHANGE
URBANIZATION
is one of the nation’s most innovative government relations firms, offering strategic solutions to
companies, trade associations, non-profits, and entrepreneurs that help them succeed in
Washington.
http://www.mehlmancastagnetti.com/
To be added to future slide distribution: [email protected]
RECENT MCR&T ANALYSES:Q3 ‘19: Wokepocalypse: http://bit.ly/Wokepocalypse2020
Q2 ‘19: The Roaring 2020s: http://bit.ly/Roaring2020s
Q1 ’19: Permissionless: http://bit.ly/Permissonless
Q2 ‘18: Empowered America: http://bit.ly/EmpoweredAmerica
Q4 ‘17: Navigating the New Gilded Age: http://bit.ly/Mehlman_NewGildedAge
