In an exclusive interview for The Australia Today, Dr. Peter J. Middlebrook, a well-known Geo-strategist, Political scientist, Development economist, and Philanthropist spoke with senior journalist V. Kumar and gave vital insights into a number of global issues facing the world today. He is of the view that a crisis like Coviid-19 could bring interesting opportunities for future-ready firms.
He says India has done all it could to face this unprecedented health and economic crisis and is quite bullish on India bouncing back as a world leader.
What is the impact of Covid-19 on the global economy?
The impact of the COVID-19 pandemic and agenda have set many economies, firms, and households back years if not decades. Of course, a crisis creates both winners and losers, and given the rise in online and automated systems, future-ready firms have already reaped the benefit. For a large range of legacy industries, however, the long term impacts are probably devastating. In terms of government fiscal futures, increasing debt levels will reduce government spending on growth and employment enabling investments. For poverty, remittances, and foreign direct investment the results are also negative; over the near term.
COVID-19 will lead to a fresh surge in digitized services. Linked to AI, the emergent problem will be how to automate services without creating a spike in unemployment. In this context, COVID-19 is in some ways linked to the Fourth Industrial Revolution (4IR), which is why the biggest impact of COVID-19 on the global economy is not health related; its digital transformation.
In dealing with what I would now call the emerging COVID-19 agenda, the impact on the global economy over the long term will be how we respond to the virus, in order to build a better future. If we can do that – for example moving towards a universal basic income – it will have been a price worth paying. For those in society who cannot adapt and innovate, this crisis will last a lifetime.
Over the last few years there seems to be a perceptible shift, if only so slightly, towards reverse globalisation and the return of some form of protectionism to local businesses. How has Covid-19 changed the world in this aspect?
I see no reverse in globalization – globalization is unstoppable and in the aggregate it is desirable. If anything, I see globalization being accelerated; depending upon how you measure it. The question is what is being globalized? Banking – yes! Telecoms- yes! Vaccination – yes! Social media – yes! Travel – yes! Food – yes! Technology – yes! Culture – yes! Sports – yes! Blockchain – yes! Music – yes. Governments?
A couple of years ago I was a key expert to the Commission on Global Security, Justice and Governance. We realized that the future of globalization will be a hybrid model; what we called a hyper global and hyper local arrangement. In other words, globalization can only succeed when global rules are adopted locally and local rules are respected globally.
A common mistake analysts often make is by asking, you know, what does the UK or the US want? What does China, or India want? The truth is that nation states are no longer the currency of transaction that they once were, and globalization is therefore being run – and organized – by capitalized interest groups; most of which are not necessarily sovereign in the way most people think. Moreover, some of these wealthy groups are not necessarily only motivated by money, but also by trying to shape society to be – for example- more respectful of natural capital.
I see the future of globalization having multi-nationals and not nation states at the forefront. Like former religious states, nation states are in decline and a vast percentage of the services they currently provide to their citizens are going to be automated. Perhaps 30-50 per cent of what governments do, could be automated. Taxes could be lower, allowing incomes and consumption also to be reduced.
If you can imagine what we call a future ready world, and project out 20-30 years, each individual will have their own digital ID and all core services will be bundled around that. This is the next generation of globalization. Your digital ID will link to healthcare, financial services, food and sustainability, travel, insurance, mobility, eCommerce, eGovernment, social media and the telecoms and perhaps even your own personal carbon footprint will be measured; and perhaps one day taxed.
How would you evaluate the Indian response to economic hardships put forth by Covid-19? Do you think the response from the government has been adequate or more needs to be done? Where do you see Indian economy in the next few years?
I did my doctorate on India and lived there for many years. I think Indian poverty is something that pre-existed COVID-19 and the question is whether the pandemic will improve government policy to overcome such challenges. The response has been fine – all governments have been unsighted – and I expect India to re-emerge as the global powerhouse that it once was. India has land, capital, integrity, diplomacy, brilliant technical imagination and is strategic well placed. India will continue to grow, and play a more vocal role on the things that matter, including mother nature.
Has the pandemic brought the world together collaborating to fight the challenge, or do we see the divide widening further?
I think at the level of global leadership there has never been greater consensus that we need to collaborate more, and that Agenda 2030 and Global Environmental Concerns can only be achieved through a common agenda; in support of a common future. The pandemic is however chipping away at the social contract between citizens and the state; but many governments are not very good; so perhaps that is about time.
What trend do you foresee in global economy in the next 3-5 years as the world navigates the long-term impact of this pandemic?
The new normal as people refer to it will in my mind be the old normal but a major shift in the way technology is used to provide services and to track human impact on the environment. I see greater integration, crypto currencies (sovereign) increasing their domination and the blockchain emerging central to smart contracts and smart consumption. Global growth will remain low, central bank interest rates will remain low and in some cases will be negative, and levels of unemployment (particularly among the youth) will likely worsen. The current model of neo-liberal economies will need to evolve to better address environmental concerns, and the new Terra Carta may form part of that solution.
How can economies look to move beyond “recovering” from the crisis, and towards “thriving” in the long run?
There are probably far too many people in the world, and in Africa – where the population is likely to increase to 4 billion by the turn of the century – countries will struggle just to maintain standards of living, before bouncing forward. Governments need to establish socio-economic recovery programs and integrate these into the national budget process; and they need to execute ‘digital-by-default’ policies across all services and to fundamentally change the way investments affect natural capital, nature and our wider ecosystem. The most progressive governments – increasingly the City and Gulf States – will lead this drive be ahead of the pack – as they are not slowed by democratic traditions that require broad consensus before actions can be taken.
About Dr. Peter J. Middlebrook: He is a well-known British geo-strategist, political scientist, development economist, philanthropist, and businessman. He has worked in Central Asia for the US government leading projects in regional economic development and cooperation. He has also worked for the World Bank and the European Union in Afghanistan for a number of years. He is the CEO of Geopolicity Inc., as well as Chairman of a number of other companies. He specialises in emerging markets in the Middle East and North Africa, Central Asia, and the Horn of Africa and is a keen observer on issues related to globalisation. He is best known for his work as an economic, security, and political adviser to multilateral and bilateral organisations including the World Bank, European Union, United Nations, Government of the United Kingdom, as well as global corporations covering energy, infrastructure, mining, and water. Middlebrook currently resides in Dubai, United Arab Emirates.