Our world is in the initial phases of deglobalization. We are transitioning into a multipolar world with a competitive landscape of powers. The world of automation and technology are changing the future of productivity and work. But how did we get to this point?
Jacob Shapiro, Director of Geopolitical Analysis with Cognitive Investments identifies key geopolitical forces expected to shape the next five years. But first he describes what a multipolar world even is.
“A multipolar world is basically just the idea that there’s going to be rising and falling great powers in the rest of the world and there’s not going to be either one or two dominant powers that call all the shots,” explains Shapiro. “For the last 30 years, we’ve been in a unipolar world where the United States has called all the shots and for the 50 years before that we were in a bipolar world. It’s this idea that we’re moving away from globalization and one size fits all.”
We think of the last multipolar era in a negative sense because it ended with World War One and eventually World War II. But the 1890s and the early 1900s were an incredible time as trade increased, there was more integration between different regional economies, there was incredible technological innovation, and cultural effervescence and artistic expression. The old way of doing business, is going to have to change and we’re going to have to think about the future differently.
Shapiro adds, “As human beings, we are programmed not to do that. We like patterns. We like to be set in our ways, but we’re going to have to get rid of that. If you can get past that and can lean into the uncertainty, those companies are probably going to be the ones that succeed.”
Shapiro says that we are moving away from one global trade network and in place of that we’re getting regional spheres of influence and that includes economic and trade influence too. He believes that there will be more integration between the United States and Latin America, between China and Asia, and more. So while the world may be deglobalizing, it’s also re-globalizing again within those regional blocks.
“I’m fairly optimistic about lower energy prices towards the end of the decade, but I think for at least the next two and probably more like three years, buckle your seatbelts, it’s going to be a very unpleasant ride,” says Shapiro. “The United States is blessed with a lot of energy resources that most of the world would be jealous to have on their own and I think that’s going to put pressure on the U.S. Energy exporters.”
Shapiro continues that he thinks the world will be at a deflationary moment for energy towards the end of the decade but right now and for the next couple of years, you could see things continue to tighten and a lot of volatility.
For the last hundred years, U.S. Farmers have steadily increased their yields and their productivity. Shapiro says that the way that the U.S. Government has helped farmers deal with them being so good at their jobs because they’re producing more and they’re getting paid less, is exporting abroad.
“If I’m right about the deglobalization thesis and I’m right about the dollar thesis as well, in some ways the best export market for U.S. agricultural goods might be the U.S. first and foremost,” says Shapiro. “That might be where GDP per capita and consumption is going up the most and then maybe around the margins, you can find countries that we ignored in a globalized world because we focused too much on China and use those opportunities to build relationships there.”
Part of the future is also adapting to new technologies and thinking about rural electrification. In the 1920s and the 1930s, U.S. power companies did not want to electrify the rural portion of the country because it didn’t pay to do it. You had to put up all these power lines just to connect one house in the middle of nowhere. However, once Franklin D. Roosevelt was elected, the U.S. Government funded the electrification of the rural parts of the United States, and that’s how electricity was brought there.
“We’re headed towards that kind of moment, I think, with data in general, because cities are well served with data, and all this technology is being rolled out in cities, but connectivity in rural parts of the country is poor,” explains Shapiro. “If you’re a farmer, it means you can’t actually apply any of these smart tractors or things that all these different companies want to sell you that tell you they’re going to increase yields. So that really has to be a public private partnership.”
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