Saturday, January 1, 2011

Stepping into the uncertain decade

Hopeful. Exuberant. Bullish.

It was the 31st of December 2000. There was abundant enthusiasm all around. The world economy was on a roll, with the USA leading the charge as usual. Dotcoms were bubbling all over, with mind-numbing valuations. Risk was contained neatly inside properly designed mathematical models that now governed a lot of stock market trading. Despite the LTCM debacle, rock-hard optimism about a pink future had steamrolled all objections from naysayers. Mainstream media, as usual, played along and magnified the sense of well-being and promise of prosperity.

Not a single soul - apart from the planners sitting inside Afghanistan - had an inkling that September of the first year of the fresh decade will bring havoc. That it will rewrite all rules of global diplomatic and military engagements. That it will force the 800 pound gorilla that's the US to actually flex its muscle militarily in faraway lands, in engagements that were potentially capable of bankrupting it monetarily and for a short while, even philosophically.

That's uncertainty for you. While the immediate physical pain of the horrific 9/11 incidents has subsided substantially, the learnings derived from the same poke fun at every human attempt to create some amount of predictability out of the utter chaos that's human life now. And the entire decade of the 2000s was spent with one crisis spilling into another, piling all along, and so on. Political crises completely overshadowed the various technological and economic gains made through sheer enterprise of innovative companies the world over.

Here's what really went wrong with the 2001-2010 decade :
Blackest of the Black Swans
  1. Asymmetric terrorism: a whole new genre of terrorist reach and impact was created with the Al Qaeda creating missiles out of commercial passenger aircraft. American defence establishment - armed with the most sophisticated batteries of assault weapons and satellites - watched helplessly as this asymmetry engulfed their entire existence for a short period of time. It was clear to everyone that a new chapter had begun, with absolutely new levels of destruction now possible inside home territories. No nation was safe anymore. No shred of intelligence was extra anymore. No suspicion was unwarranted anymore. All this meant that the basic threads of civility that tie our modern civilisation into what it is came under attack. The impact was to be felt throughout the decade.

  2. Unrealistic overseas adventures of the US: Though it was morally obliged to do so, the US overstretched itself in the overseas military adventures through 2001 till date. Iraq and Afghanistan bled the coffers profusely, and visible victories were far and few in between. Many allies were also sucked into the whirlpool of "with us or against us" rhetoric, only to pay their own price in terms of terrorists attacks (England, Spain etc.). The terrorist organisations proved flexible and robust enough to survive the direct attack by the US army over several years. This drained the international enthusiasm for more direct military action, and the good-old strategy of peaceful diplomacy suddenly started looking like a viable option!
  3. Is greed still good, Mr Gekko?
  4. 3. Capitalism's excesses: This surely would have given Bin Laden & Co. maximum satisfaction. It was amazingly sad to see capitalism's infallible promise of prosperity being torn to pieces, by the merchants of greed and excesses. The Federal Reserve of the US failed completely in its mandated task of maintaining monetary macro-stability in the US, as it allowed a giant housing bubble to build, through its loose monetary policies. The inevitable collapse of the mortgage markets (and the CDOs/CDSs) spread panic in lands as far as Iceland and Australia. It was obvious that the biggest names were morally and financially bankrupt. For a while, communism's vendetta seemed coming to fruition! Hopefully, through the right policy mix, over the next decade, capitalism's captains will be able to create a system that'll no longer be held hostage by a bunch of greedy idiots.
    Who says we don't care
    about human rights?
  5. China's clarity of purpose! There is no doubt about it - the Communist Party has no intention of easing its vice-like grip on any aspect of Chinese life. They intend to keep the economy, the exchange rate, the diplomacy, the social setting and the global adventures firmly under the unique influence of Chinese brand of Socialism (which is basically state directed capitalism!). This was clear from the various incidents and exchanges, from the annual posturing towards Taiwan, to the aggression against the Japanese (the fishing boat incident). Whatever little hopes the stray statements of luminaries like Wen Jiabao raised, were quickly quashed by the brutal state machinery. China repeatedly reminded other global powers to mind their own business - most notably in the Liu Xiaobo Nobel peace-prize incident. So the writing on the wall is clear - Tibet or Tiananmen, the Communist Party is in no mood to relent.
  6. No major breakthroughs on global issues: Humanity lost another decade in its fight against the spectre of global warming, with both Copenhagen and Cancun turning out to be almost dud events. The urgency with which we must act in unison NOW so our future generations may have a planet worth living, is missing. That's very sad. We are running out of time.
    Fit for the decade ahead
  7. 6. The Russian monster: Vladimir Putin destroyed whatever little democracy there was in the world's largest country, with a systematic undermining of the judicial machinery. This was evident in the Mikhail Khodorkovsky trial where the second (and latest) judgement has again put him away for another cool 14 years. Mr Putin, it seems, is here to stay for another decade. You can image what that means for Russia, and its relations with an already uneasy West. A quick survey of Russian economy over the past 10 years reflects the state clearly - stagnation in all major indices. But the political reality of the Kremlin is so stark, that even the Wikileak expose claiming the "Kremlin being at the centre of a large mafia operation" does not seem to cut much ice with anyone in a decadent state. Poor Mr Medvedev - he can only wait and watch while his master prepares for the eventual takeover as the next President of the Russian state. Interestingly, his fortune is directly tied to the oil prices - much like that of Venezuela's Hugo Chavez.
  8. Growing ethnic and racial tensions in Europe: While Europe gradually started to sink into its demographic decadence, immigration was on the rise. As the natives' fertility rates drop alarmingly below 2.1 (replacement rate), original "white" populations have started to shrink. This inevitably will lead to significant amounts of immigration in most European nations, leading to cultural, racial and ethnic clashes. The Turks inside Germany have already started facing the heat. It will only grow.
  9. Easy now, dear friend, easy
  10. The intractable Israelis: As one of the world's hottest political flashpoints, the middle east tensions refuse to ease out. Israel's position hardened through the decade, and in response, the frustrated Palestinians responded in kind. While it is obvious to the rest of the world, the Israelis refuse to accept the inevitability of the two-nation solution. Until that happens, we must prepare ourselves for an explosion anytime. Iran won't miss the opportunity to inflict collateral damage, in such a case. The overhang of the Nazi brutality on the Jewish mind is so severe, that they measure all other races in the same context.


And this is what went right :
    I'm not 30 yet
  1. Social media revolution: In an almost unprecedented manner, social media came into being, then dominated the internet scene, and is now threatening to overturn established monarchies (Google, etc.). Till 2000, most of us had no idea what the internet could offer other than an email ID and a great search engine. Today we know. This will surely count as the decade when humans around the world came together through the social media websites, that evolved so fast that all predictions of pundits failed. I find it extremely painful that while social media websites brought far-flung people together quickly, cheaply and 'lovingly', the political situations (mentioned above) acted to tear them apart.
  2. Only a recession, not a depression: It was good that the US economy used the first stimulus to avoid a massive depression, and escaped only with a recession. Had the economy plunged into the depression (which surely would have been worse than the 1930s one), the consequences for other nations, including India, would have been catastrophic. A minor bout of IT projects slowing down was enough to throw corporate India into total panic (through late 2008, entire 2009 and first part of 2010).
  3. India and China on a high growth trajectory: It was interesting to note that for entirely different reasons, both India and China maintained a robust 7-8% per annum GDP growth rate throughout the decade. That surely was very important, given that close to 40% of humanity resides here. Though India failed to generate employment on the scale that the Chinese manufacturing juggernaut did, this is what Indian policy makers will surely focus on in the 2010s. The honeymoon with Services sector growth has taught India one thing - there ain't nothing like good old smokestack manufacturing when it comes to generating millions of jobs quickly!

Questions for the decade that's upon us :  (and my estimates)
  • How quickly will the US influence decline?   (steadily throughout the decade)
  • Will the Chinese, tied down as they are due to the trillion dollar worth of US paper they hold, get reckless and ruin the relationship?   (in newer ways, yes they will)
  • What of Taiwan? Will China finally annexe it?     (yes; the incoming President Xi Jinping will try that)
  • Will Pakistan disintegrate into pieces due to internal friction amongst the major power centres - the government, the judiciary, the army, and the ISI?   (perhaps yes)
  • Will China allow democracy to flower?   (Certainly no, barring some radical asymmetric development)
  • Will Talibanis rise again in Afghanistan?  (Yes)
  • Will India's maintain its high GDP growth rate?    (Yes)
  • Will job creation for young workers in India happen at the pace required?   (Perhaps no)
  • Can terrorists try to go for a big kill - using nuclear weapons?   (They will try their best)
  • Will Kashmir break apart?   (No)
  • Will the Naxalite problem in India be solved?   (It will be contained, not solved)
  • Will quantum computing become a reality?   (Almost near the end of 2020, yes!)
  • Will Facebook destroy Google's dominance?  (No, they'll go their own ways)
  • Will corruption in Indian public life reduce? (No, unless some radical movement shapes up)

Circumspect. Tentative. Unpredictable  - adjectives that define what's coming up.

So tighten your seat-belts friends! It's going to be a rough, bumpy and enjoyable ride. After all, what's human life without its share of uncertainties. My best wishes to everyone for a great decade ahead!
~

9 comments:

SB7 said...

awesome read!

Sandeep Manudhane said...

Mahendra K Patidar -
Fantastic Sir.......!!!! Great

Jasvinder Singh Hora -
Very Thoughtful and far Sighted Thoughts !!

Krutika Dave -
Awesome blossom!!

Anindhyaa Tougde -
Awesome!!!!!!!

Sunil Rajput -
very true sirji

Nidhi Agarwal -
Such a finest piece of exceptional writing and a wholesome summary of the entire decade! Should be published in editorial pages of top national newspapers & in the magazines as the main story.

DIVYESH said...

Splendid start of the new year with a global perspective. I am really thankful for such precious gift and really proud to be your student.

Thank you Sir It was really amazing and worth reading.

With regards,
Divyesh Shah.

Akhil said...

Respected SIR,
This particular problem is a very serious problem as we know that in this global scenario we people are too much busy we never think about it?
We must follow -"K.K.D."
or something like SUBHAS CHANDRA BOSE did in past or BAGHAT SINGH did or youngsters had to do zara hat ke.
good recap
thank you so much SIR

Abhishek Singh said...

great sum for the entire decade...thanks sir for giving such a broad perspective and nice build up of what to expect ahead in the coming decade

zimi surana said...

This is an ultimate insight Sir. And all credits to the LTS Sessions that it was so easy to decipher each point that was conveyed in the article. I can feel that these sessions were indeed Life Transforming. Thank you Sir!

Akhil said...

"The best way to answer your critics is to wake-up" so please just don't Read it like a story it's time to do it and do it in style because we all are student's and we always follow some one in our life? Who is my Role model none other than "MANUDHANE SIR".\
Thank u so much SIR

Akhil

vhjamdar said...

Thank you very much, Sir.

Manish said...

Good Morning SIR,

Although, I read this blog very late but I feel it as a decade News Paper which comprises of all debacle and historic moves.

I have jotted down all important points and headings, which I feel is the Paneer Tikka Masala for my brain on any and every day.

Thank you for writing such informative blog.