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IMF and World Bank have Western bias and benefit only US and EU - futurists

For the first time in a century, the US is no longer the world’s largest economy - China has taken over the spot. As the world’s power centers shift to the East, how will it affect the development of other nations? What will Asian domination bring to the rest of the world? And will the West ever rise again? We put these questions to leading futurists - John and Doris Naisbitt on Sophie&Co today.

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Sophie Shevarnadze:John Naisbitt, leading futurist, author and Doris Naisbitt, director of the Naisbitt China Institute - welcome to the show, it’s a great pleasure to have you back, it’s been a while. Now, let’s talk a bit about China and it’s role in the geopolitics. We hear a lot about how American power is declining and about the rise of China. Is it inevitable the China will surpass the U.S. as the world’s leading power, and if yes - than when?

John Naisbitt: Yes. And it depends on how you measure it. You know, by some measurements it already has, and by others it hasn’t; on GDP… GDP is not very reliable anyway, but in our view it’s inevitable and maybe it’s even here already.

Doris Naisbitt: And in purchasing power, yeah, it is there, but the definition of what’s really the global power must be seen from various parts.

SS: But, ok, where does Russia stand in this picture? What we’re seeing now is a growing relationship between Russia and China, with massive energy deals signed, and more economic interdependence… I mean, Russia is the biggest nuclear power in the world, so where do you see Russia’s role?

JN: It seems to be unclear, although by recent developments, Russia is certainly working to be a bigger force, a bigger presence in the world, and that can happen, except it cannot just be with economy based on natural resources. All of the trade agreements that are now taking place between China and Russia are really bonding almost the two countries together in a way; and partly, for Russia’s part in reaction to what the West has been doing to Russia, we will see more and more Russian-Chinese development and cooperation and so on in the months and years ahead.

SS: But, John, I know that you’ve said that U.S. and China are the main rivals, so why does Washington treat Beijing as less of a menace compared to Russia?

DN: Well, you got to put those relations in a global context. We are still thinking in the vocabulary of the 20th century, where we had the U.S. and Russia, Soviet Union as the big two ideological rivals. Now, China has moved up in importance and it is really now, as we just said, a very important global player - now, that changes the whole system. But we keep thinking in the old terms of two ideological blocks, and whether it is now China and Russia or whether it’s China and the U.S. - that’s all thinking. The world is changing and we have to move away from, first, western-centric world, to, then, a bipolar world, and now we have a multicentered world. We have to start changing our mindset and put the pieces together in a different way.

SS: But China has a lot of unresolved foreign policy issues with its neighbors, and we’re seeing a significant U.S. military buildup in the Pacific…

JN: Unlike Russia!...

SS: Oh yeah… But, did you hear about U.S. military buildup, because we see the U.S. military build-up right now in the Pacific. Is there a danger of the U.S. and China competition in the region escalating?

DN: There’s for sure a competition and there’s for sure competition escalating…

SS: But how far can that competition go?

DN: Well, in the worst case, you know, there’s always a danger of a war. But, it is very unlikely listening to any of the two sides, it’s very unlikely that either side would risk such a conflict, because the economics are much more… the fight is much more on the economic side, but nevertheless there’s a lot of political posturing on both sides and China in many ways has to stand up in its new role.

JN: We talked about reliving last century - this century is between the North and the South, the North - the U.S., Europe, is only 17% of the population of the world, and the South, which is 80% of the population of the world - and that is where most of the action is going to be, that is where the growth is going to be, in the emerging economies that constitute 80% of the population here. How that plays out? It’s just the beginning to be revealed.

SS: Talking about that, BRICS countries are on fast-track to establish their own development bank, there’s also discussion over Asian Infrastructure Investment Bank and the Silk Road Fund - so are those going to drive out Western institutions like the World Bank or the IMF?

JN: I hope so!

DN: They may be not, you know, by tomorrow, be driven out, but there’s certainly a counter-balance, because as you well know, this global institutions were built by the West to most of the benefit of the West. So, in regard of the more balanced global community, it is understandable and not even negative that there are counter-institutions, to, maybe, at a certain point then, find a more balanced global regulations.

JN: And I would add to that, that in this new world, those institutions have become cross-the-board dysfunctional. They’re just yesterday, those institutions are yesterday.

SS: But if you look at Chinese economy, it has grown so much because it offered cheap labor force, cheap products to Western clients…

JN: That was yesterday.

SS: Yeah, but now the standard of living is rising and people want more benefits, they want more money, they want to be paid better - will that cause the CHinese to lose their competitive advantage?

DN: China has quite a while ago started a very strong offense to become an innovation nation and to move from workshop of the world to become an innovator. This is not just, as, for example in the EU, a verbal commitment. This is a definite commitment. China is really doing everything to attract foreign talents, where they cannot have the capacity now to really have scientists of Chinese citizenship, so they attract, every city in China, almost every city, really has innovation incubator, where young talents, for example, are supported by about $20,000 per year, they get a studio, they get a laboratory, to really show that they can move something. So, there’s a lot of movement on the ground, to move away, because China knows, first of all, it’s not only the demand that is changing, but also the production methods are changing. There will be less labor force needed to produce more, so there’s a need, coming from many sides, to make a change in this direction.

SS: So you’re saying this “sweatshop era” is also yesterday?

JN: It already has been yesterday for quite a while. China is made up of many-many parts, at some parts it’s over, at some parts it isn’t, the pay has been growing up all over China for years now, it’s not one China, it’s many Chinas and to think that they are making these advances because of the “sweatshops” is really, totally out of date. They have very modern factories and a lot of factories, as you know, are western companies, a lot of computer companies have their manufacture in China.

SS: Let’s talk about the EU, because as of today, EU is the second largest world economy. Yet, you’re saying - and I address the both of you, because you write books together, you give interviews together - you say it’s going to become a theme park for well-off Americans and Asians. Why be so pessimistic?

JN: Look at the figures! EU countries have growing like one tenth of percent - they are so far off, and they are going to continue to decline as they don’t do anything to fix their economies. They are 17% only, as I said, of the world’s output, but every year they go down.

DN: It’s not a question of intellectual capacity, it’s a question of political capacity. The EU has to make up its mind what it wants to be.

SS: Decentralisation is something that you also talk a lot about. You believe decentralisation is the way of the future. Europe is stagnating because of the government, at the same time China has big government, and America’s government is getting bigger, despite all the opposition. So, is that a trend as well?

JN: Not it isn’t, that’s against the trend. China is very different from city to city and from region to region, from province to province. It Is not centralised -for example, most of the policies have to be implemented locally and they are implemented in different ways. It’s really a montage of different energies and different emphasized in various parts of China. That partly accounts for its success - it will continue to grow. you know, it is almost amusing, when China slips down to 7.7 growth - that people say “Oh God, China is really slowing down!” Well, it’s stabilizing and people are getting paid very much better than they were paid in the past, and it’s a stabilisation phenomenon - and it is still, by far, the fastest growing large country in the world.

SS: National currencies competing with alternative and privacy currencies - what exactly do you mean, what is that in the future? Does it mean that dollar will be rivaled by the bitcoin and if so, then when?

JN: I don’t know about bitcoin, but there will be lots of efforts like that as we try to sort out what the new world is all about.

DN: Dollar is still 80% of all global trade, and still is the main currency, so we should not expect that to happen tomorrow. But, in the long run, we can expect that there will be competition. If we see money as a global commodity, there can be and will be competition coming up, but this will be in a timeframe within this century but not in the next 5-10 years.

SS: What are these other currencies that you’re talking about, what do you have in mind?

DN: I think at the beginning we have to see that China is very much in the direction of giving room, of loosening up, opening up its currency, so that the renminbi can become a global player. At first we have to focus on what happens to the established currencies before we can make serious prediction on what currencies like bitcoin can really achieve. As long as the volatility is so high, nothing of really great influence will happen.

SS: Alright. I want to talk a little bit about the labor movement, because it is on the decline, at least in America. You point out at the changing nature of the big business, at the decentralisation once again, and how labor unions are becoming dinosaurs. But it is the labor movement that created this standard of employment that the West now enjoys - how’s that progress? I mean, wouldn’t that lead to a danger of social explosion, maybe?

JN: I don’t know if the labor unions created it, because it’s been an interplay between labor and management and national governments and so on, but there’s another consideration here, and that’s the move to robotics, the lesser need for human beings in manufacturing and so on - it’s a very complicated situation, but the reason in the U.S. to have union membership down below 10% which would have been shocking 30 years ago - it’s because its obviously dysfunctional, it’s obviously not working. There may be other institutions that will arise from that, but that’s , again, the world of yesterday and not the world of today.

SS: Now, according to PricewaterhouseCoopers in 15 years food demand will rise by 25%, 3.5 billion people will experience water scarcity by 2020-25 and at the current rate of consumption we only have half a century worth of oil left - can the world escape armed conflicts over resources?

DN: It depends on the reasonable behaviour. Another estimate - I can’t quote the source now - is making serious estimates that Africa can easily become the breadbasket of the world. Not all water reserves are yet accessible, but we shouldn’t forget that technology has stepped in in many wyas and changed our attitude to problems that once were unsolvable, just like in London, when the horse carriages were… you know, the manure was filling up the streets, and they thought “we can’t fix the problem”, and the automobile came along. So, we cannot on one hand extrapolate into the future with today’s thinking, but then, now you’ve got to have to change in technologies, in opportunities of how to handle the problems. So, there is a danger, yes, absolutely, but there’s also the urgency and the works on solving the problem.

SS: A little bit of urbanistics - today’s cities take up only 0.5% of world’s surface, while they need 75% of resources. Now, how will people keep cities livable even in the nearest future?

JN: We’ve had cities for thousands and thousands of years, and we were dealing with them, as they grow, and we are becoming urbanized and that could be a problem - its becoming a problem in China, already, with huge percent of its population moved into the urban centers - but this is just changes in the world. You’ve asked about labor earlier - only since 1900, 50% of all people working in the U.S. were farmers, and that is shocking if you think how vast that change was. We have to adapt and if we don’t adapt, then we lose, so we got to constantly adapt.

DN: There’s very much of a re-thinking for example in China regarding the pollution that comes along with economic progress. There is some rising awareness in the world that you cannot just go on quantity, but you have to keep quality into account.

SS: Alright, I want to talk about something completely different. I want to talk about virtual reality - this is something that scientists talk a lot about, that scares me a lot - but it is becoming omnipresent with extremely fast internet and it’s inevitable; so, those things are mind-blowing. Are they going to change the way we live to an unrecognisable extent?

DN: Now, well, digitalisation and industry 4.0 will certainly change a lot. But there are always two sides - there are opportunities and there are disadvantages. When you’re becoming addicted to hanging out with computers, that’s certainly negative and that has a lot to do with education: what you learn, how to learn, to use technologies to your benefit and not to let technology run you. Digitalisation, for example, is leapfrogging economies in Africa. African entrepreneurs because of the Internet are able to really to jump to digital age and not to detour via industrial age. So, it opens a lot of doors. It is even playing more and more important role in the governing. People are now on one hand, raising their voices in opposition or in whatever, against or for governments, while governments have the opportunity to communicate to people via Internet. It’s an instrument that is there and we decide, and our smartness and handling of that, will decided whether that will develop to our benefit or to our disadvantage.

SS: So, I’m picturing an interconnected society with machines that are taking care of people’s health, work commutes,, schedules, etc - I can’t help but see a potential for a complete totalitarian control over society. Don’t you see a danger in this?

DN: Certainly, there’s danger.

SS: What do you think, John?

JN: Maybe, not for those reasons - if you look back at the history and the scenarios when we had new inventions coming along, people invented ways that they would destroy humanity and all the rest of world - well, they almost did once - but anyway, we have to manage it, we have pay attention, and we’re not paying attention, sometimes only hole in in the electronic world. Everyone’s looking into his or her own direction, but that will settle down, I think.

DN: It is a danger, and part of it is really our own fault, because we tend to be too naive in how much we are monitoring. And rising awareness of how much you allow the system to run will come as the system matures, because we’re still in a very early stage of internet.

SS: Now, in 20th century surges in technological progress were greatly facilitated by a world wars - mechanics, medicine, communications, computers, space travel - I mean, even the Internet is a Pentagon project. So, can the 21st century evade this method of progress?

DN: No, no, no. I think there’s a big danger of course there; look at the wars of the past - it’s not so much of fighting on the ground, of course, in the Middle East now the situation is different, but in general it seems that there is a shift in the wars from the boots on the ground to the wars via hacking, via all kinds of technological systems. You know, the cyberwar is not so far out - and given the various military budgets, the countries will, of course, invest in new technologies, and hopefully, new technologies, as in the past century, will find its way into economy without people killing each other.

JN: I think one thing we haven’t really thought enough about is that we see internet with many billions of people on the planet being in touch with each other - that is so new, so different from the old days with nations passing messages and so forth. When all the people in the world can be in touch with all the other people - what is that going to mean? What is that going to bring? Are we going to just start bombing people like we just did yesterday? We don’t know what it’s going to be, but it’s going to be a different world.

SS: Thank you so much, to both of you, for being our guests today. That’s always a pleasure. We’ve been talking to John and Doris Naisbitt, future studies expets, analysts, experts. We were talking about the trends that will shape the world in this century, the shifts in the geopolitical balance and the advances in the technology that is driving change. That’s it for this edition of Sophie&Co, I will see you next time.