A grim forecast for the future from Paul Mason, economics editor at the UK’s Channel 4 News, writing at The Guardian
One of the upsides of having a global elite is that at least they know what’s going on. We, the deluded masses, may have to wait for decades to find out who the paedophiles in high places are; and which banks are criminal, or bust. But the elite are supposed to know in real time – and on that basis to make accurate predictions.
Just how difficult this has become was shown last week when the OECD released its predictions for the world economy until 2060. These are that growth will slow to around two-thirds its current rate; that inequality will increase massively; and that there is a big risk that climate change will make things worse. Despite all this, says the OECD, the world will be four times richer, more productive, more globalised and more highly educated. If you are struggling to rationalise the two halves of that prediction then don’t worry – so are some of the best-qualified economists on earth.
World growth will slow to 2.7%, says the Paris-based thinktank, because the catch-up effects boosting growth in the developing world – population growth, education, urbanisation – will peter out. Even before that happens, near-stagnation in advanced economies means a long-term global average over the next 50 years of just 3% growth, which is low. The growth of high-skilled jobs and the automation of medium-skilled jobs means, on the central projection, that inequality will rise by 30%. By 2060 countries such as Sweden will have levels of inequality currently seen in the USA: think Gary, Indiana, in the suburbs of Stockholm.
The whole projection is overlaid by the risk that the economic effects of climate change begin to destroy capital, coastal land and agriculture in the first half of the century, shaving up to 2.5% off world GDP and 6% in south-east Asia.
The bleakest part of the OECD report lies not in what it projects but what it assumes. It assumes, first, a rapid rise in productivity, due to information technology. Three-quarters of all the growth expected comes from this. However, that assumption is, as the report states euphemistically, “high compared with recent history”.
There is no certainty at all that the information revolution of the past 20 years will cascade down into ever more highly productive and value-creating industries. The OECD said last year that, while the internet had probably boosted the US economy by up to 13%, the wider economic effects were probably bigger, unmeasurable and not captured by the market. The veteran US economist Robert Gordon has suggested the productivity boost from info-tech is real but already spent. Either way, there is a fairly big risk that the meagre 3% growth projected comes closer to 1%.
And then there’s the migration problem. To make the central scenario work, Europe and the USA each have to absorb 50 million migrants between now and 2060, with the rest of the developed world absorbing another 30 million. Without that, the workforce and the tax base shrinks so badly that states go bust.
[continues at The Guardian.]