World Economic Forum Report Depicts a World at Risk

By César Chelala Created: January 16, 2012 Last Updated: January 22, 2012
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(Getty Images)

(Getty Images)

The World Economic Forum Global Risks 2012 report, the Forum’s latest take on the global economy, paints a gloomy panorama of the future if the world’s institutions—governments, private industry, academic institutions and social organizations—don’t make some radical changes. The report was prepared as a prelude to the Davos, Switzerland, meeting later this month.

Increasing numbers of unemployed young people, growing numbers of elderly people dependent on the states, and the expanding gap between the rich and the poor are sowing “seeds of dystopia.” This term was originally coined by the British philosopher John Stuart Mill as a contrast to utopia. Social critics use the term “dystopian” to condemn negative trends in post-industrial societies.

The findings in the report are based on surveys of 469 experts and industry leaders, and show a shift of concerns from environmental risks, which were the focus of the report a year ago, to socioeconomic risks.

Formerly wealthy countries can descend into lawlessness and unrest if they are unable to meet their social and fiscal obligations.

“For the first time in generations, many people no longer believe that their children will grow up to enjoy a higher living standard than theirs,” stated Lee Howell, the World Economic Forum Managing Director and responsible for the report.

This situation exists not only in industrialized countries, beset by economic crises, but also in developing countries that also suffer the effect of those crises. The recent downgrading of France’s sterling credit rating by Standard & Poor’s Corp., followed by a similar measure on other European countries, underscores the seriousness of the situation affecting industrialized countries’ economies.

The report analyzes 50 global risks and divides them into three different sets of risk cases to the world’s prosperity and security. The three risk cases describe the links across a selection of global risks, their interplay, and how they are likely to develop over the next 10 years.

The first case, called “Seeds of Dystopia,” describes what happens when efforts to build a better world do not go as anticipated. This case deals with how formerly wealthy countries can descend into lawlessness and unrest if they are unable to meet their social and fiscal obligations.

In that regard, it warns that developed economies such as those of Western Europe, North America, and Japan are in danger of being destroyed. As a result, workers near retirement fear that cutbacks in social entitlements, mainly access to quality health care, will seriously affect their quality of life.

The challenges in emerging economies such as Indonesia, Vietnam, the Philippines, Mexico, Peru, and the BRIC countries (Brazil, Russia, India and China) are different since these countries are trying to take advantage of a demographic window of opportunity of a young and large labor force before this population also ages.

Rapid growth among these emerging economies has created expectations that improved conditions will benefit all of them, a premise that recent economic developments is unable to sustain. As stated in the report, “…social contracts may not be forged quickly enough to rectify increasingly visible economic inequalities and social inequities.”

The second case discussed in the report is called, “How Safe Are our Safeguards?” This section highlights the role of regulations: “…the risk of unintended negative consequences of regulations was tightly connected with many other global risks.”

The report stresses that to be effective the safeguards have to strike the right balance on topics such as global finance, transportation networks, emerging science and new technologies, scarce resources, the climate, and biodiversity.

One of the main problems is that, frequently, safeguards are inadequate, over-complicated, fragmented, and slow to respond to the rapid pace of global change. A change of mentality is necessary, states the report, “…so that policies, regulations or institutions can offer vital protection in a more agile and cohesive way.”

In the third case, called “The Dark Side of Connectivity,” the report analyzes how our daily lives depend on hyper-connected online systems, and underscores that new mechanisms are now required to finance private investment in exploring existing system vulnerabilities before they can be abused.

In the last few years, the increasing popularity of the Internet has changed the ways in which we communicate, conduct business, and even amplify popular uprisings, as recent events have shown in several countries worldwide. Communication techniques have touched areas such as human rights and made it possible to forcibly prosecute some human rights abusers.

At the same time, recent progress has dramatically increased the possibilities for cyber attacks whose consequences may range from petty crime to shutting down critical government systems and even potentially triggering physical armed warfare. Cyber espionage, for example, has now reached a high level of technical sophistication and although is believed to be restricted at this time to major corporations, government agencies, and elite hackers, it can have a wider use in the future.

The “Global Risks” report is particularly valuable in stressing the need to develop new thinking regarding private and public responsibilities, and alerts on how some specific risks, if not properly addressed, can be a serious threat to peace and economic progress in the world.

Dr. César Chelala is a New York writer on human rights and foreign affairs issues.


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