5 questions for Mauro Guillén on how the world will change by 2030

By James Pethokoukis and Mauro F. Guillén

How will declining birth rates and longer life expectancies affect the economy? In what ways will Africa change as the 21st century unfolds? How has the COVID pandemic altered the long-term trends shaping the world? Recently, I explored these questions and more with Mauro Guillén.

Mauro is the Zandman Professor of International Management at the University of Pennsylvania’s Wharton School. He is also the author of 2030: How Today’s Biggest Trends Will Collide and Reshape the Future of Everything, released in August of last year.

Below is an abbreviated transcript of our conversation. You can read our full discussion here. You can also subscribe to my podcast on Apple Podcasts or Stitcher, or download the podcast on Ricochet.

In your book, you discuss declining birth rates and longer life expectancies. How will those developments change the economies of advanced or rich nations in the next 10 years?

They will change them to a large extent, as longevity and declining birth rates have huge implications for consumer and labor markets. For consumer markets, by the year 2030 the largest segment of the market in Asia, Europe, and here in the US will be the population above age 60, as each new generation is now smaller due to falling birth rates. Therefore, brands — which have previously focused on people in their twenties and thirties — are going to have to rethink the way they approach the market.

This also has effects on the labor market. People are living longer — on average, 60-year-olds are living another 24 years. They can’t be in retirement all of that time because they don’t have enough savings. They’re also staying in good mental and physical shape much longer. So they will keep working until 65 or 70, which will change the labor market. Once you start connecting the dots across all of these trends, you realize that the economy, consumption, and labor market will absolutely change.

What’s the optimistic Africa story for the next decade?

Africa is changing by leaps and bounds. The middle class is growing — in some places there, it’s already 20 percent of the population. And that’s just the beginning. Africa is a young place with a growing population, even if that rate of growth is slowing down.

Via Twenty20

Africa is also innovative. For example, Africa is ahead of the curve when it comes to mobile payments because they never had banks or ATMs. They leapfrogged all the way to mobile payments using their phones. They’re also leaders in telemedicine.

I think the challenge for Africa is the following: 70 percent of the population still lives in the countryside. But the easy solution for that is to start producing more food more efficiently, which would create jobs for those in the countryside. If Africa has a twin agricultural and industrial revolution over the next 20 years, I think they will become the largest market in the world.

A lot of people think climate change is a huge existential threat and thus support cutting back energy usage. Yet it seems to me that we’re going to need more energy in the future. What do you think?

I devote an entire chapter in the book to climate change in the context of cities because of three facts: Cities occupy 1 percent of the dry land in the world, they’re home to about 55 percent of the population — by 2030 it will be 70 percent — and, though home to only 55 percent of the population, cities contribute 80 percent of the carbon emissions. So there’s no solution to the problem of climate change unless we fix cities. We need to make cities more energy-efficient and less wasteful, and we need to become more environmentally conscious as consumers. If we can do that — combined with technological breakthroughs and the action of governments and companies — then I’m optimistic that we can still save the world from climate change.

As to energy, since the oil crisis of 1973 the US has reduced the carbon intensity of the economy by 80 percent and become much more efficient. But there’s only so much we can do just by reducing carbon emissions or using fossil fuels more efficiently. When it comes to energy, we need to switch it up and embrace solar, wind, and other sources of renewable and green electricity. Of course, we should also continue to invest in biomass, fuel cells, and all of these other technologies that, hopefully in the very near future, may help us overcome this problem.

Will AI cause unemployment? More broadly, what impact do you think technology will have on labor markets in the future?

Well, technological change destroys jobs — it even destroys entire occupations or professions. But it also creates jobs, so really what I think we need to worry about is taking care of those who are displaced by technology. They lose their jobs at a time when it’s very difficult for them to retool and learn a new occupation or profession — typically, these are people in their forties or fifties. We need to create mechanisms so that those people can go back to school (maybe online) and find new ways of living. Also, the time has come for the US to have a national debate about basic income for those displaced by technology (during the time it takes them to train for another profession). We are a consumer-oriented economy, and if not everybody has a job then that creates an issue.

But there will be job losses because of technological change, there’s no question about it. The problem is that you cannot stop technological change. We cannot say that, here in the US, we’re going to stop innovating while the rest of the world continues to do so. We have to keep moving, but we also have to pay attention to those who are being displaced.

You started writing this book before the pandemic. How did the pandemic alter some of your predictions?

The pandemic, for the most part, just accelerated pre-existing trends. For example, the pandemic accelerated technological change, automation, population aging, and the rise of the emerging markets in Asia because they haven’t had as many cases and deaths as we have.

However, there are some exceptions, like cities. Some people now prefer to live farther away from the downtown area because they can work remotely and want to be in a more sparsely populated area.

The pandemic has also put on hold women’s progress. Before the pandemic, women were making steady economic progress both in this country and in many other parts of the world, which was a good trend. Unfortunately, the pandemic has slowed that down or brought it to a halt. That was a development I did not see coming.

James Pethokoukis is the Dewitt Wallace Fellow at the American Enterprise Institute, where he writes and edits the AEIdeas blog and hosts a weekly podcast, “Political Economy with James Pethokoukis.”Mauro Guillén is the Zandman Professor of International Management at the University of Pennsylvania’s Wharton School.

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Source: aei.org

5 questions for Mauro Guillén on how the world will change by 2030