2009: The Status Quo versus The Long Emergency
Again, stop whatever elese you were doing, like reading things I wrote about 2009, and read Jim Kunstler’s forecasts about 2009. The author of The Long Emergency is experiencing the unenviable task of seeing dire structural change ahead, change that won’t be mollified by new gadgets, and being right about its consequences.
Some highlights:
He’s not a fan of techno-solutions. (not unlike yours truly)
The various tech industries are full of MIT-certified, high-achiever Status Quo techno-triumphalists who are convinced that electric cars or diesel-flavored algae excreta will save suburbia, the three thousand mile Caesar salad, and the theme park vacation. The environmental movement, especially at the elite levels found in places like Aspen, is full of Harvard graduates who believe that all the drive-in espresso stations in America can be run on a combination of solar and wind power. I quarrel with these people incessantly. It seems especially tragic to me that some of the brightest people I meet are bent on mounting the tragic campaign to sustain the unsustainable in one way or another.
He sees Dow 4000:
A consensus in the blogoshpere says that the stock markets will rebound strongly during the first Obama months. This is possible just on the basis of pure “animal spirits,” but the Obama Bounce will occur against a background of continued dismal business and financial news. It will appear to defy that news. By May of 2009, the stock markets will resume crashing with the ultimate destination of a Dow 4000 before the end of the year.
He believes that you’ll actually need positive cash flow to make a business run (old-fashioned, but radical!):
We’ll turn around early in 2009 and discover that we are a much poorer nation than we thought because from now on credit will be extremely hard to get for anyone for anything. The businesses that survive will have to keep going on the basis of accounts receivable…Giant enterprises requiring giant loans to get from quarter to quarter will tend to not make it. Borrowing from the future will become a practical impossibility as past bad debts from previous borrowings continue to unwind, cease performing, and get written off.
Real change. Not new technologies for old philosophies. Nobody will save the day. We’ll need to make workable solutions for many different types of people.
And still - people will need things. Goods and services will be required, perhaps just different types.
Business development will need to be on its toes! Are you ready?
Competitive Futures’ Official Predictions for 2009
I tend to avoid short-term predictions, but these days, six months really IS the mid-term future. So after the response to yesterday’s pithy analysis of the coming year, here are our OFFICIAL PREDICTIONS FOR 2009.
The future is now. No, seriously.
Take it from a guy who talks about the future all day long: there’s going to be precious little interest in the year 2029, and total interest in getting through the next six to eighteen months. That doesn’t mean we shouldn’t plan for the longer term, but most all long-term planning will be through the lens of the next year.
It’s OK. 2009 wil be a nice year to clean house.
Global problems. No global solutions. (Yet)
The bank annihilation of 2008 will show the world something it was learning in a much more abstract way through climate change. While the effects of national policies are truly global, we have no way of really working together. Climate change is an alarming development that has a vaguely defined effect, and thus our initiatives (Kyoto, et al) are equally vague.
The collapse of banking will cause real, immediate economic pain around the world in 2009 - factories closed, jobs lost, countries leveraged to the remaining power brokers. It will require a global partnership, but that’s still difficult in a world of nation-states.
The world will drive more toward some sort of global governance, regulation, or at least monitoring to avoid such problems in the future. This may result in ceding more national power to organizations like the WTO or even the United Nations. The results may not be satisfactory, but institutions will seek some sort of insulation from one country’s lack of financial regulation annihilating eight or ten central banks around the world.
Your uncle who keeps sending those emails about “One World Government” will lose his mind.
Barack Obama will not fix the world in 2009, but will do really boring things to improve the function of the U.S. federal government.
I won’t stultify non-Washingtonians with the details about OMB, CBO, GAO, career versus-political appointees, and other phrases that indicate you’ve lived within the Beltway for too long.
Most of the world is familiar with the problems of the United States government: two interminable wars, collapsing financial infrastructure, skyrocketing debt, etc. But they never hear about the mechanics of federal agencies, which will take much re-engineering after the last eight years. The Obama Administration will spend the majority of 2009 rebuilding the federal infrastructure, especially attracting talent to key agencies and organizing the teams that will carry out the policies of the remainder of the term.
The details of this will be WAY more boring than any conscious human being can handle, so plan on plenty of juicy scandals involving the naming of the White House puppy.
Home prices will continue to fall, because they were never worth as much as we pretended.
Policymakers, mostly American, are bending over backwards to keep the world-record high prices for housing from collapsing and detonating the whole economy. Still, there remain two choices: inflation of all prices to match the doubling of housing or deflation of the housing. Because the houses were never as much as people were pretending. As I have said for five years now, you can’t keep wages stagnant and then increase home prices 38% a year.
Economies will choose between the slow, stagnant suffocation if home prices don’t re-adjust, and quick, terrible pain from returning these houses to their appropriate value, in line with wages.
Neither of these are fun choices, but then again, we thought that paying $780,000 from a two-bedroom condo with granite countertops was never going to turn out well.
Out: Organized labor. In: Communities of labor that happen to organize
Labor unions the world over will come under suspicion, rightly or wrongly, for its association with the collapse of the American automotive industry. Labor unions will be weakened for being as inflexible as their managerial counterparts.
And ironically, more people than ever will be looking for ways to negotiate fair wages and a healthy standard of living with their employers, particularly as developed economies see their social security programs tested. The inequity of wealth distribution is at its highest level since the Gilded Age of robber barons in the 19th century. Standing on the shoulders of 20th century labor and armed with the social media of the 21st century, people will continue to communicate with the institutions of big business, those that remain anyhow. Labor will need to be every bit as agile and open-minded as business and government, not an intractable institution susceptible to the sane weaknesses as all such institutions.
In 2009, it will occur to many Americans how underfunded the pension system really is.
We’ve heard tale of a great number of pension funds that were designed expecting a 5 - 8% return to keep everything in the black. If you can name a fund guaranteed to get 5 - 8% in the next few years, I suspect the next time we see you, you’ll be at your villa in the South of France.
America’s private healthcare system will not ask for a bailout.
That’ll be 2011.
Small entrepreneurial businesses will attract more attention, good will and capital in 2009 than giant world corporations.
This is because small businesses are much better at quickly proposing useful services in response to the panoply of tangible problems we will all face next year.
Also, when small businesses fail, the owners go home, complain to their spouses, feel shame, drink stiff cocktails, and mope around before starting more businesses.
When giant corporations fail, they ask taxpayers for billion dollar giveaways.
This will make small business more popular.
American cars will continue to suck.
Hopefully the 150 mpg (!) Chevy Volt will change that. But otherwise I remain firm in this prediction.
The media business will continue its inexorable charge toward chaos.
2009 will be fascinating for the business of media. The business model for print, music, and television will be disintegrate further, resulting in more layoffs, bankruptcies, and fracturing of giant conglomerates looking to keep something profitable as more advertising revenue heads for Craigslist and Google. At the same time, broadband penetration will continue around the world, and people will have the most awesome televisions and computers in history.
Nobody will know what’s going on, many companies will lose MILLIONS, people who used to make no money will make HUNDREDS, record companies will continue to sue widows and children, television will focus on even more sensationalist nonsense, and Twitter will somehow begin to supplant CNN.
In other words, it’s going to be a lot of messy fun.
Ideas, creativity, humanity, and community will trump authority, power, and control in 2009.
Feeling scared and confused about the world? Feel like it’s all out of control and that the old ways don’t work while the new ways haven’t yet been defined? Guess what - so do the supposed “authorities.”
In 2009, we’ll need all hands on deck - all the creative ideas, broad-thinking, open-mindedness and partnership you can muster. You’re right this new world is too complex to expect a few guys in nice suits to take care of. So, in 2009, get to work!
What else are you going to do? Worry? That’s so 2008.
What’s Out 2008/ What’s In 2009
Folks, we’re in the forecasting business, so we get to have a bit of an early say on what will go down next year. Let’s check back in June and see what really happened.
What’s Out 2008 / What’s In 2009
Out: Authority / In: Community
Out: $4 gasoline / In: $4 houses
Out: Mergers & Acquisitions / In: Hunting & Gathering
Out: Control / In: Imagination
Out: Profit / In: Survival
Out: Credit derivative swaps, financed as a 20-year zero coupon bond by the Royal Bank of the St. Lucia Protectorate, tranched and repackaged as a structured-investment-grade device for Swedish pensions / In: Cash
Out: Hail-Mary Passes / In: Slow, committed strategies
Out: Million dollar CEO bonuses / In: Million dollar CEO bonuses (Huh? Really? Wow. OK.)
Out: Editorials from the New York Times / In: Some dude’s Twitter feed
Out: Copyright protection, lawsuits / In: Pay-what-you-want, guilt
Out: Mass customization / In: Knowing your customers by name
Out: Green business as a PR move / In: Green business because you haven’t got the budget to waste on low-mileage vehicles, inefficient buildings, polluting processes
Out: Size / In: Agility
Out: Speculation / In: Investment
Out: Eye-popping government deficits / In: Not even opening your eyes, for fear of reading about the actual deficit
Out: $30,000 Toyota Prius status symbols / In: Fixing your Toyota Corolla and getting 38 mpg anyway
Out: Dinner at casual restaurants / In: Crockpots, stews, roast chickens that last for three soups and nineteen sandwiches
Merry Christmas to all.
Future Trends 2025: We need better foresight from our government
The following is a response to “Future Trends 2025″ from the Office of the Director of National Intelligence (http://www.dni.gov/nic/PDF_2025/2025_Global_Trends_Final_Report.pdf.)
Despite its goal of looking incisively at the next 17 years, its total inability to provide insight on the future is a danger to all of us. With our institutions failing at around one per week (!) it seems it’s time for a real discussion.
>>>>>>>>>>>>>>>>>
The meltdown of the financial system; the collapse of the automotive industry; the impending bankruptcy of several American cities — these events tell even the casual observer that our institutions are weak when it comes to the ability to perceive and act on future trends. Most people might say that this is part of the human condition, the result of our natural short-term thinking in a complex, rapidly changing world. But this shortcoming of foresight is reaching a dangerous level that can no longer be considered acceptable. We must develop an institutional capability in the public and private sector to have frank, courageous discussions about the implications of strategic trends - and the actions they require - if we are to guide our society safely and prosperously into the years ahead.
A recent release by the Office of the Director of National Intelligence shows how pervasive the lack of a professional method of foresight has become, even in the places where we expect it and need it most. The ODNI just published a report entitled “Global Trends 2025,” a major effort of the nation’s sixteen intelligence agencies and several think tanks, supposedly intended to inform the new presidential administration. Given the resources committed to such an endeavor, one would expect the project to be a tour de force of professional foresight, a foil for stimulating discussion among leaders everywhere. Instead it is a cautionary tale of group think, narrowness of scope, and faulty methodology.
The content of the work offers little insight for those would guide our institutions in uncertain times. The summary of these global trends is: “By 2025, the accelerating pace of globalization and the emergence of new powers will produce a world order vastly different from the system in place for most of the post-World War II era.” In other words, the next seventeen years are unlikely to be like the last sixty years. This is not exactly “actionable intelligence.”
The individual trends detailed in the report are just as weak, combining unexamined assumptions and sclerotic analysis. Other projections in “Global Trends 2025″: include:
• “Russia’s emergence as a world power is clouded by lagging investment in its energy sector and the persistence of crime and government corruption.” Poverty, lack of investment and corruption in Russia has been going on for about 1000 years. What’s new?
• “A worldwide shift to a new technology that replaces oil will be under way or accomplished by 2025.” This is wishful thinking at best. The International Energy Agency’s recent forecast sees fossil fuels continuing to supply the vast majority of the world’s energy through 2030. This report offers vague hopes for biofuels, and assumes oil will be on the way out – a canyon-jumping leap of faith.
• “The likelihood that nuclear weapons will be used will increase with expanded access to technology and a widening range of options for limited strikes.” This forecast has been written repeatedly, on a regular basis, for the past 50 years. What should we do differently?
• “The impact of climate change will be uneven, with some Northern economies, notably Russia and Canada, profiting from longer growing seasons and improved access to resource reserves.” This is a landmark entry in the annals of positive spin, and one that ignores that the most important part of global climate change will be the actions we take in response.
The bland, inaccurate and un-provocative content, shows that while these agencies go through the motions of a foresight methodology, they have lost the spirit of the exercise entirely. It was the threat of thermonuclear holocaust that led these very organizations in the 1960s to invent futures research in the first place. The tools of forecasting and scenarios were designed not for their capacity for prophecy, but to provoke an examination of our cherished - and potentially harmful - unexamined assumptions. To become lost in groupthink in 1960 was to perhaps lead our country aimlessly into nuclear annihilation. Foresight was intended to make us think while there was still time.
The DNI’s latest report seems to show that our intelligence agencies no longer study the future with rigor and intellectual stimulation as the goal. Instead, we see a view of the future that was agreed upon by committee: unoffensive, ambigious, and of minimal utility to leaders attempting to think deeply about the challenges to come.
A rigorous, courageous approach to foresight is no longer a luxury, reserved to times of plenty or relegated to philosophers. Leaders of all organizations - everywhere - must commit themselves to developing an organizational capacity to understand future trends, examine their impact completely, and to motivate others to action. To fail in this challenge is to continue to suffer the fate we see in our critical institutions today.
Bailouts make us ask: what is the future of the corporation?
Next up on the bailout list: car companies, cities, healthcare, schools. I guess nobody’s business model is 
working very well, and now everybody needs money from the U.S. federal government, which of course is half a trillion in the red this year. Companies losing billions want loans from a government that’s losing billions.
I think that a lot of things are going to need a redesign in the next few years, to put it mildly.
Regardless, yesterday’s stars were the automotive CEOs who flew into to Washington DC to plead for the U.S. government to provide aid to its most important companies.
But wait, are they American companies? Chris Kelly at the Huffington Post provides an excellent bit of polemic, reminding us that Chrysler is actually owned by a $60 billion hedge fund called Cerberus Capital which owns, in addition to Chrysler:
A Japanese bank called Aozora
A Japanese real estate company called Showa Jisho
A Japanese golf course company called Kokusai Kogyo
An Israeli bank called Bank Leumi
A German bank called Handel und Kredit Bankhaus
A reinsurance company called Scottish Re, with headquarters in Bermuda
A British TV rental chain called Boxclever…etc.
This is a great point - we’ve spent decades making global capital so fungible, so fluid that it readily cros
s borders, ignores nationality, changes hands without making news. So can a corporation possibly be a national entity for which a certain government (and its taxpayers!) might claim responsibility?
If Chrysler isn’t a potent enough example, how about Citibank, which is getting “trouble asset relief” from the U.S. Treasury but is now is owned to an even greater extent by Saudi princes?
This begs HUGE questions. What is a corporation? To whom does it belong? What is the relationship between a corporation and the nation-states of the world?
If you’re in business today, and plan on staying in business through 2009 and beyond, these aren’t just philosophical discussions. This is your future. Give it some thought.
Business Week: The long-term future is the last refuge of a wrecked economy
For sometime I have been saying that we’re on the cusp of a wave of interest in the long-term future that is not driven by economic bubble or apocalypse per se. The normal cycle is that people are interested in the future when we’re inventing new technologies and profiting, or when we think we’re going to nuke each other. This time, perhaps for the first time, we’ve got a mix of both: technologies will likely be influential, the economy’s a mess, the world is largely peaceful, the climate is changing, etc. People are finally interested in the future not as a gimmick, but as the only way to wise management of public institutions.
Pretty cool.
The most recent edition of Business Week has a great example of this emerging mindset. Michael Porter, the intellectual godfather of competitive analysis, has written an article that is desperately needed today: “Why America Needs an Economic Strategy.”
You should read this in its entirety, but to sum up, Porter says that America has a lot of valuable assets, and no plan whatsoever for long-term prosperity. The United States has a great science and technology engine, the best technology transfer in the world, and a still-vibrant culture of entrepreneurialism. However, we are hobbled by our lacking social net, a mess of a public health system, decaying infrastructure, and creeping neo-mercantilism in the form of giant corporations that distort markets. The only way out is to think long-term, from small businesses up to national policy makers.
We couldn’t agree more! Too bad the economy had to be smashed into flints before we could notice it, but better late than never.
The financial crisis and what it means for leaders
With everything that has happened in recent days, we here at Competitive Futures are really examining what we do as trend analysts.
Trends are the result of decisions human beings have made. Track them all you want - it’s the leaders that count.
What kind of leader are you? Are you thinking about the future?
Yes, it’s a marketing message for our firm, but more than ever we realize that the answer to those questions impact us all.
Mark Penn: I guess macrotrends are the new microtrends
It’s amazing how shaving a few trillion off the global economy can change things. It can even completely flip your view of the world. Just ask Mark Penn.
Penn was brought to most people’s attention as Hillary Clinton’s chief strategist, for better or for worse. This 
probably isn’t a fair introduction to the man, since tenure as a campaign consultant was more due to his work as CEO for public relations giant Burston-Marsteller. There, he specializes in extremely granular market research, defining people by tiny variances in beliefs and purchasing habits. He refers to this as microtrends, saying that tiny movements within a demographic add up to real change. He points to professionals with tattoos, “pet parents,” and protestant Latinos as burgeoning interest groups who will one day cause larger changes.
Pretty reasonable stuff. The only problem has been his tendancy to declare “the era of the megatrend is over.” Penn’s last several years have been dedicated to pushing the notion that these microtrends have primacy over the megatrends, that megatrends were so 1980s.
This made me discount most of what Penn had to say, because to assert that macrotrends in society and technology wouldn’t change the future is horrible, horrible analysis. Water shortage, healthcare expense, immigration, surveillance technology, global warming, skyrocketing national debts, the list of 20 - 50 year macrotrends goes on, and all of them trump the fact that 30 year-old analysts in Mark’s office were getting back tattoos.
It’s been a long couple of weeks, of course, and the effects are readily seen. For example, now Mark Penn is trumpeting the effects of megatrends in today’s Politico. It seems the impact of a collapsing world economic system does reach as far as political campaigns. (That is, if you think that Obama’s lead in NORTH DAKOTA has any significance.) Yes, but Penn unfortunately covers his most recent view of the world with a Monty Python quote, “Nobody expects the Spanish Inquisition!” meaning that nobody could have expected the world economic system to collapse.
Normally, a Python reference would warm my heart, but this is just a cover for the fact that some people would rather study what kind of Starbucks coffee people prefer instead of examining the underpinnings of our economic system.
Mark, since you’re now into megatrends ,check this out. There’s lots more where this came from:
And welcome to the club. We need a hand figuring this stuff out.
South Korean government predicts that by 2018, robots will routinely be doing surgery
OK, I know that’s were likely to be out of 200,000 doctors, but is this really the answer? Apparently the 
South Korean government thinks so.
And who do you sue if the robot messes up the surgery?
Is robot malpractice cheaper than regular malpractice?
Who does follow-up care?
Does this make surgery cheaper in places like Africa and South America?
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