At the German Marshall Fund’s Atlantic Dialogues conference in Morocco in late October, I moderated a panel on managing disruptions. I asked my distinguished panel a simple question: What was the most disruptive event in the last five years and why? My mind went to natural disasters, terrorism and mass immigration. The audience had similar thoughts. When polled, they put “economic security” and climate change at the top of the list.
The answers I got from the three panelists were not at all what I expected. But those answers and their implications for people around the world have stuck with me since our conversation in Rabat. And you’d do well to start paying attention to them, too (assuming you aren’t already, of course).
Just this month China surpassed the U.S. as the [largest] importer of hydrocarbon products in the world, and the U.S. surpassed Saudi Arabia as the [largest] producer of hydrocarbons in the world. If you check the Energy Information Administration report, at the beginning of 2012, so we are talking about 18 months, they were expecting that the U.S. will surpass Saudi Arabia, but they were expecting it around 2017.
So in the last 16-18 months, the energy production in the U.S. has reshaped what I would say [is] a new global energy order. And that’s a disruption . . . a positive disruption from the perspective of the U.S. economy.
But what would happen to a country like my country, like Mexico? Eighty percent of our exports go to the U.S. Our main market for our energy products is the U.S. What would happen to political stability in a place like Saudi Arabia without the resources coming from oil and energy? This new energy global order will affect the lives of so many people in so many ways that only imagination could really help us to foresee the consequences of this new global order.
For Jane Holl Lute, president and chief executive of the Council on Cybersecurity and a former deputy secretary at the Department of Homeland Security, the rise of the Internet and the decline in trust were two trends affecting nations globally.
In the past five or 10 years, to me, the most significant disruption, bar none, is really the intersection of two trends, a trend of growth and a trend of decay. . . . The trend of growth is an unmistakable cyber awakening that’s accompanying the penetration of the internet. . . . [W]e are all now instantaneously aware and connected, not only to information but to others who share our cause.
The trend of decay, which is contributing to the disruption that nations are facing, is the near total collapse of public trust in public institutions, and it’s true globally. So what we are seeing fundamentally is the rise of the human being taking matters into their own hands, and, one might only say, it’s about time.
And for Alfredo Valladao, professor at the Paris School of International Affairs of Sciences Po, the major disruption centered around advances in technology and manufacturing.
I think the most disruptive thing that happened in the last few years was the silent convergence of all the new information technologies, like big data, cloud computing, Internet things that are coming up, 3-D printing, modern tracking, all this that people start to call Internet of everything.
And we are passing from an economy that since Henry Ford was based in mass production for mass consumption to a new digital economy that is made by distributed production to customized mass consumption. And this means that the way we consume our products, the way we produce them is going into an enormous revolution. The life of a product will be shorter and shorter. Supply chains will be shorter and shorter, and this will have extreme consequences on the whole chain of value and the geo-economic distribution of wealth.
Ever since that conference, I have been paying closer attention to what the panelists talked about. And over the last two months, there has been a slew of stories touching on each of the disruptions they mentioned.
In November, USA Today reported that the Energy Information Agency revealed that “[t]he United States tiptoed closer to energy independence last month when — for the first time in nearly two decades — it produced more crude oil than it imported.” Another story that same week from McClatchy DC reported that a forecast from the International Energy Agency showed that “The United States will surpass Russia and Saudi Arabia to become the world’s largest oil producer in 2015.”
Not only that, according to the McClatchy DC story, the agency said, “America’s ascendancy as the world’s oil king is coming sooner than expected, and that North America’s need for oil imports will all but disappear by 2035.” And, in his last press conference of 2013, President Obama took an opportunity to crow. “When it comes to energy, this year is going to be the first year in a very long time where we’re producing more oil and natural gas here in this country than we’re importing,” he said. “That’s a big deal.”
The breakdown in public trust in public institutions that Lute talked about is everywhere. As Lute said during the Q&A, “[P]eople around the world are angry. . . . This is an anxiety-based anger. And I think it stems from the fact that, you know, we don’t trust the media, we don’t trust the markets, we don’t trust our governments in many cases.”
Ukrainians have been protesting for more than a month because President Viktor Yanukovych suspended integration talks with the European Union. Since June, millions of Brazilians have taken to the streets to protest everything from fare increases for public transportation to government corruption and access to higher education. The Turkish people have been demonstrating in Istanbul against government corruption since spring. And here in the United States, we’ve had the tea party and the Occupy Wall Street movements express mistrust of public institutions from the right and the left, respectively.
In a piece late last month with the fitting headline “In No One We Trust,” Joseph Stiglitz wrote specifically about income inequality and its impact on trust. “[T]rust is becoming yet another casualty of our country’s staggering inequality: As the gap between Americans widens, the bonds that hold society together weaken,” Stiglitz wrote on the New York Times “Opinionator” blog. “So, too, as more and more people lose faith in a system that seems inexorably stacked against them, and the 1 percent ascend to ever more distant heights, this vital element of our institutions and our way of life is eroding.”
Pardinas, the panelist from the Mexican Institute for Competitiveness, told the audience that General Electric was pushing to use that technology to manufacture a refrigerator in three hours. “[So] if you could imagine a fridge built with three hours of labor,” he said, “maybe you could imagine a car built with 25 hours of labor.”
According to Pardinas, this is going to force all of us to reconsider our assumptions about industrial production. With 3-D printing, “[W]e could foresee a world that the cost of producing a car would be more or less the same if it happens in Detroit, if it happens in Stuttgart, if it happens in Mexico,” Pardinas said. “What would that mean for the concept of industrial outsourcing?
“We have to find a big drawer in our mental desks and put all the cliches that explain the world of the past and try to find new ones to explain what’s going on,” he continued. “We foresaw or we were comfortable in a world where China was the hub of industrial manufacturing, but with 3-D printing, any part of the world could become a new hub of industrial manufacturing.”
Technological advancements led to many questions about the inequality they will inevitably foster within nations and between nations. But Lute, in what I soon recognized as her signature style, reminded everyone of their role in all this.
“So certainly through the lifetime of everyone in this room we — the world — has possessed weaponry that can destroy the planet. And the only thing that has stood between mankind and oblivion is our judgment,” she said. “Do we remove human agency from the impacts of technology? No. I mean, God willing, no. We need our judgment now more than ever. We need the judgment of the empowerment that technology brings and for the majority that may have access to it [to have] a responsibility for the minority that does not yet.”
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