Nouriel Roubini, professor emeritus at the Stern School of Business, has authored a new book entitled Megathreats: Ten Dangerous Trends That Imperil Our Future, and How to Survive Them.
Roubini summaries the book’s key finding in a short article he has written for the Guardian newspaper, in which he outlines why he believes that: “Life as we know it is under threat, as short-term-thinking politicians ignore the signs that point to a dystopian future.”
According to Roubini’s article: “In the coming decades, the world faces megathreats that would imperil not just our global economy and financial assets, but also put at risk peace and prosperity. Some of these megathreats are economic: the spectre of inflation and recession at the same time; the mother-of-all debt crises as private and public debt ratios hit historic highs; an ageing population that will crash our pension and healthcare systems, to name just three. In the years before the 2008 financial crisis, I correctly predicted that our virulent cycles of boom and bust would bring total economic meltdown. I fear we face that prospect once again.”
It is a bleak diagnosis that envisages defaults for so-called “zombie” households, firms, financial institutions, governments and countries as higher global interest rates and inflation force a pincer movement that threaten global economic growth projections. AI, robotics and automation, he warns, threaten to destabilise the fabric of democracy itself since they can be employed as a tools by populist nationalists and demagogues to entrench their power base.
More urgently, Roubini argues in his piece that: “the conflict in Ukraine has increased the risk of a renewed cold war between the West and powers such as China, Russia or North Korea. The rising tensions between the US and China over Taiwan have peaked in recent months and could escalate further. The constant risk of conflict between Iran and Israel could yet destabilise us all.”
The most real megathreat of all in this analysis is the global climate crisis, which will cause: “untold, irreversible economic and human disasters if it continues to be ignored.”
In his worst-case scenario these global megathreats feed on each other in: “a destructive loop, leading to economic chaos, instability, meltdowns and conflict worse than we already know.
In a more optimistic scenario, he outlines a path that leads to: “a less dystopian future: one where domestic and international politicians cooperate on sound policies and solutions to ensure the continuation – however bumpy – of the half a century of peace and prosperity.”
In Roubini’s view, dystopian path looks a more “likely bet.” What is to be done in this dysfunctional, polarised environment? As a starter for ten, Roubini says our leaders must at least be: “aware of megathreats like these so they can be addressed before it is too late.”
He concludes that there will also be a need for “global collaboration”, however wishful this thinking might seem to be today. It is a utopian solution to a dystopian analysis; however, it does partially chime with recent Russell thoughts on connected risk, which require forward-looking connected-solutions, underpinned by market-wide collaboration. (Re)insurers and corporates can play their part by using their imagination to create global threat scenarios, which generate awareness of the impact on supply chains and business viability.
An optimistic view is that the global megathreat picture lies somewhere in the middle between dystopia and utopia, in which (re)insurers and business are granted the serenity to accept the things they cannot change and the courage to change the things they can – and therefore play a small part in driving collaboration across countries and markets.