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When it comes to climate change, it won’t be the weather that dooms us.  But an economic and geopolitical downward spiral.  One that is already well underway. And as it stands, tech will not save us.

“Policy discussions continue to centre on inflation, conveying confidence that anticipated monetary easing will heal the world’s economic woes. Meanwhile, the pressing challenges of trade disruptions, climate change, low growth, underinvestment and inequalities are growing more serious.”

UNCTAD – Trade and Development Update Report April 2024

In and amongst the hubris of recent times, punctuated by rising stock markets and underwritten by a consensus that inflation might have been finally quashed on an ever-distant horizon.  And supercharged by a firm belief that AI-led technology will revive economic fortunes and chronic, low productivity, three recent reports by UNCTAD (UN Trade and Development) and the IMF in April 2024 have mostly gone unnoticed or unheeded.[1]

Very much counter-narrative, they paint a dire picture when conflated.  A world where for all the largesse doled out by governments, especially in the developed world to transform energy and industry, and bolster jobs in home markets, the medium-term outlook is of suppressed growth, lower even than the pre-pandemic average.  A global economy largely kept afloat by the same old consumer spending patterns, in services that appear increasingly funded by debt as the pandemic-era savings boon subsides. 

And for all the headlines about AI and semiconductor factories being built in the developed world and a surge in investment in renewable energy and EV tech, private investment flows have hardly budged, and are insufficient to fill the void left by declining industries elsewhere. 

But unlike in the past, we are also faced with startling levels of private and public debt which will have to be serviced at higher interest rates for the foreseeable future. 

But this is just a foreshadowing of the real problem to come.  It is a bleak starting point from which to face the literal and metaphorical whirlwind that will be climate change.   One that to be blunt looks like it will put us on an extremely dark path.  A civilizational end-spiral from which it is hard to see a way back without making some extremely hard choices. 

Why, What, Where & How… December 2016

I thought long and hard before committing all this down.  The conclusions as so dire, maybe even fantastical, it is hard not to cave into doubt and fear of ridicule.  But I have never allowed myself to be swayed by the superficial ebb and flow of fashionable information trends. 

When you look at the raw data it is all there. 

To my rare credit, I have a knack for soaking in and processing information.  More recently, I correctly predicted persistent high inflation – at a time when every institution, from the ECB to the Fed to the IMF said it would subside quickly, as well as sticky inflation in the middle of last year, again very much against the mainstream narrative at that time. And have a reasonable level of conviction that most developed economies are hurtling headlong into an almighty debt crisis in the medium term with no precedent, certainly in the post-second world war period.[2]

But most of all, I saw Putin coming from a mile away, over a decade before the (2nd) Ukraine invasion. It became a bit of a joke amongst friends.  “Go on George, tell us about Putin…again.”  It is the reason I got back into journalism.  If I could see all this when a lot of others couldn’t, then I certainly felt I had something to say. 

In much the same vein, this piece has been a long time in the making. 

It was eight years ago when a panicked moment of clarity in December 2016 left me breathless, shaking and sweating.  I remember the moment as if it were yesterday, seated on my upstairs faded brown suede couch staring up at the mountain that used to be my backyard, acutely feeling the surreal contrast between outer serenity and inner turmoil. 

The Doom Cycle

What I saw chilled me to the bone. 

Climate change had been on my radar, but I hadn’t fully appreciated its consequences.  I thought like many, that the weather would get worse, but we would shore up our flood defences, especially around coastal cities and everything would continue pretty much as normal.  Maybe with a serious insurance bill to contend with and a bit more debt, but not much more than that.  What I started to appreciate was the wider economic and geopolitical consequences it might precipitate that in an interconnected world, each stage would amplify the last.

In its simplest form, I saw a downward spiral that would lead to what I call “central-system failure”.

 Ageing, advanced economies with low-growth prospects and little money to spare would rush to divert resources to renewable industries to avert a worsening climate that would most probably already be upon them, increasing already high and unsustainable debt to achieve it.  In so doing they would draw money away from less developed and even some emerging markets at a time they required money most.  Money that the Global South would by then desperately require not only to avert persistent and increasingly biblical climate disasters and make the green transition themselves but to bolster their economies as advanced ones became more inward-looking reducing the prospects of those on the periphery. 

Fading fortunes for the Global South would eventually spark riots, wars and even see the collapse of some country governments into outright anarchy.  This would all also be fueled by declining agricultural output as the climate impact began to take shape, which would first show up as higher crop prices as agricultural productivity was squeezed. 

Richer countries would have to react by taking some of those limited funds they were using to reduce CO2 and divert them to security and military considerations mainly to stem almighty migration flows that would also have the nasty side-effect of destabilising politics in their countries, regressing into some form of populist NIMBYism (not in my backyard) on steroids and at an international scale.  Unable or politically hampered, developed countries would not intervene at the same intensity as they had in the past to stem upheaval on the peripheries, they would simply withdraw into a shell allowing chaos to spread unhindered, worsening the problem. 

The erosion of economic muscle and political instability would also create geopolitical weakness, eventually destabilising the entire post-second World War architecture that had brought the longest period of relative peace in human history. 

Towards the end, what resources remained would increasingly be diverted to mitigating regular climate disasters at economic hubs, forsaking the rest, and what by then would be insurmountable and urgent geopolitical tensions rather than expensive long-term infrastructure spending to bring down CO2 and that by this stage would probably have dwindled to a trickle.

The truly startling thing is, that the piece I am writing today, I could have written back in 2016 almost verbatim, just backed by actual events and better data.  Nothing has changed.  And if anything, the timeline has accelerated.

It begins in Europe

French President Emmanuel Macron might have been electioneering recently when he proclaimed that nothing less than European civilisation was at stake in a speech at the Sorbonne University on 25th April 2024, but he was also not wrong.  It really is that dire. 

Europe more than any advanced continent has sped down this dark path faster than most. 

It has been racked by an ageing population and subsequently low growth for decades.  And now on the economic front, it has China to contend with that is increasingly winning the battle in sophisticated tech markets, especially in EVs and renewable industries.  In a recent article in the Economist [3] it cited data from the Swiss-based UBS Bank that Europe’s “legacy” carmakers (that is concentrated in Germany, France and Italy) and that currently employs about three million Europeans would lose 23% of its market share by 2030.  According to the Global Wind Energy Council, China already dominates the wind turbine market in Europe with a 60% share. 

Europe’s economy has already been rocked by the geopolitical threat of Russia and the abrupt end to cheap natural gas that has especially hit German industries hard – the bedrock of the E.U economy – and slowed the transition from coal-powered plants there, the Finance Minister expressing doubt last November 2023 that Germany would be able to entirely wean itself off coal by 2030, the previously-set target. 

If Trump were elected too, the U.S. might pile onto Europe’s large list of economic woes by implementing tariffs, 10% or even higher if his capricious pronouncements are to be believed.

Given their already dire predicament, it is understandable that the E.U. recently baulked at increasing military spending by issuing a joint bond to the value of USD$109 billion to bolster military spending in the shadow of Russian aggression.  But the truth is, that this will be a drop in the ocean if the continent is to meet Russia’s current singular focus on military spending that made up 4.4% of GDP last year.  To even meet NATO’s basic 2% annual GDP military spending target would threaten the E.U. already lumbered with startling levels of debt.  In a Bloomberg editorial recently[4], it was put in the starkest possible terms, “A searing political question in the years ahead will be how a remilitarised world can reconcile such commitments with finite tax revenues and growing welfare and health needs.”

The U.K. too is a great case in point, leading the world as it so yearns to do once again but for all the wrong reasons these days. 

Both the current Conservative government and the main opposition Labour Party have scaled back commitments to green spending on infrastructure considerably, the latter which is more receptive to it has signalled it will cut its original pledge by half to around USD$18.75 billion if it forms the next government (which is likely).  As the cycle predicts, the U.K. government has in turn committed to reviving North Sea Oil production by issuing hundreds of new licenses last year, while more recently also committing to nearly doubling annual defence spending from around USD58 billion to USD$108 billion by the end of the decade.  All the while the IMF is warning the country that its debt levels are increasingly unsustainable. 

For now, both the U.S. and China are speeding ahead on all fronts, with both military spending and investment in renewables and new technologies.  But both have daunting debt issues that could easily spiral on the horizon, and both are not immune from the low-growth, low-productivity path the rest of the world is hurtling towards.  They are also competing in finite markets – especially in green minerals and metals acquisition required for the green transition that will further fuel geopolitical tensions between them, exacerbating the same low-growth, high-debt scenario.  Their timelines on the path are simply stretched further out into the future than Europe’s.

As it stands, technology will not save us

“The world economy faces a sobering reality. The global growth rate—stripped of cyclical ups and downs—has slowed steadily since the 2008-09 global financial crisis. Without policy intervention and leveraging emerging technologies, the stronger growth rates of the past are unlikely to return.”

10th April 2024: IMF Blog: “World Must Prioritize Productivity Reforms to Revive Medium-Term Growth

In the current economic climate, what most cannot fathom is a wholesale reversal of increasing economic prosperity that goes back centuries.  The notion that steady, undiminished progress is the only path we can take.  But I humbly suggest that this is not correct.  All indicators point to a sudden and irredeemable downward trend in the near future.

At the heart of this creeping rot is something known as Total Factor Productivity – or TFP for short.  It is a measure of how labour and capital are combined to create a given output most efficiently.  And it is something that tech innovation should in theory supercharge.  TFP though has been flatlining in much of the world, including the U.S. The downturn in emerging markets set in around the time of the 2008 Global Financial Crisis (GFC). But in the U.S. and developed economies it preceded it and began around 2005. 

The reasons proposed for the decline are varied and fascinating (for geeks like myself).  From the widespread impact of an ageing population to the information boom of the 1990s and early millennium petering out as far back as 2005, to a fall in start-ups and entrepreneurial activity that leads to fewer small companies being formed that make up a sizeable share of fast productive growth. 

But when it comes to tech, what is certain is it requires larger and larger sums of capital to achieve breakthroughs that squeeze revenue in the long run and stretch out the timeline by which a company becomes profitable, making capital itself less productive.  Since the 1970s, capital has also slowly squeezed labour as the prime income earner.  In the past, capital spending complemented labour (something known as capital deepening), increasing the latter’s productivity.  But in recent times, capital is simply replacing labour (simply put – think ATMs replacing bank tellers from the 1960s onwards, creating more productive employment for bank employees in terms of bank-client relationship services but that was eventually replaced wholesale by online banking where far fewer bank employees are required and where the entire system is mainly run by a smaller number of IT staff). 

And even worse, the productivity of capital itself has been dropping.   Again, many theories have been proposed.  Such as trauma (known as capital scarring) caused by the GFC in 2008 making investors more cautious.  Or anecdotal evidence that in the low-interest environment in the last decade, companies were simply borrowing to pay out voracious shareholders.  Not exactly the most productive use of capital.  Whatever the reasons though, in the high-interest, high-debt environment we now all find ourselves in, capital is likely to be far more risk averse than in past times, seeking the safest options – not exactly suited to high-risk, capital-hungry tech investment.

Taken from: 10th April 2024: IMF Blog: “World Must Prioritize Productivity Reforms to Revive Medium-Term Growth”

The entire recent stock market bull run is predicated on the belief that AI tech will finally revive a moribund TFP.  Something that until now – even with the recent flurry of tech investment – has not happened.  In 2023 in the U.S. TFP stood at 1.9%[5], well below long-term trends.  And the IMF had some sobering words recently about a renaissance, “Overall the pace of TFP growth is likely to continue to decline, driven by challenges such as the increasing difficulty of coming up with technological breakthroughs, stagnation in educational attainment, and a slower process by which less developed economies can catch up with their more developed peers.  Absent major technological advances or structural reforms, we expect global economic growth to reach 2.8 percent by 2030, well below the historical average of 3.8 percent.”[6]

Geopolitics is already starting to rule the roost in economics

“We have just seen what supply chain disruptions flowing from covid did to inflation, and to households and businesses. Well, you can bet your bottom dollar these disruptions and inflationary impacts will only get dramatically worse, without bolder climate action…. Yet too often we’re seeing signs of climate action slipping down cabinet agendas.”

11th April 2024 : Simon Stiell – Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC) – “2 Years to Save the World”

Further exacerbating this trend is economic fragmentation, especially between Chinese and U.S. production networks.  Investment increasingly no longer goes to the countries that will give the greatest returns and the greatest leaps in productivity, but to those that are closer geographically and that are geopolitically friendly.  The drive to bring jobs back home to many developed countries whose governments have employed costly industrial policies to do so.  And whose aim is to revive a squeezed middle class and counter a rise in the subsequent populist politics – usually on the right – that comes with it, has also increased the inefficiency of resource allocation, only adding to downward pressure on TFP. 

LDCs and emerging markets have suffered consequently.  The share of FDI in developing countries that goes to lower and low-middle-income countries has collapsed by a third in the last decade, threatening to leave a whole swathe of the Global South behind in the push towards new tech and green technologies.

Civilisations are built on agriculture – without it you have nothing

Most worrying of all, TFP has largely flatlined in agriculture since the turn of the century, at a time when it is about to come under immense pressure from an unstable climate and with an ever-increasing population to feed.  It was the large productivity gains in the 19th and 20th centuries in agriculture that freed up resources that helped spark the Industrial Revolution.  As the United States Department of Agriculture (USDA) stated in 2021, “Historical improvement in agricultural productivity led to declines in inflation-adjusted commodity prices of an average of 1 percent a year from 1900 through 2000, even as the population tripled.”[7]

Productivity though in agriculture has been on a steady decline since the early millennium.  A trend that might have accelerated downwards since the pandemic and the Ukraine invasion that saw fertilisers and other inputs skyrocket in price.

Taken From: United States Department of Agriculture (USDA) – 28th December 2021

The slowdown was led by falls in productivity in the developing world.  And comprehensive attempts to stem it seem to also be failing. In Sub-Saharan Africa for example, the Alliance for a Green Revolution (AGRA), was founded in 2006 to do just that, and sparking something akin to the Green Revolution of the late 1960s and 70s.  Heavily funded by the likes of the Bill and Melinda Gates and Rockefeller foundations, it spent close to a billion dollars up to 2021, the project focused on 13 African countries.  And not just that, the wider subsidies given to smallholder farmers for seeds and fertiliser by other projects and governments amounted to about a billion dollars a year during the same period. 

In a piece for The Conversation, an Africa-wide media outlet, researchers from the Boston-based Tufts University summed up their analysis of AGRA’s and the wider push to revolutionise agriculture in Africa[8].  In conclusion, it spelled out in stark terms the project’s failure, claiming “Our research assessed the progress of the Green Revolution as a whole.  This should indeed have produced measurable results in 15 years given the billions of dollars invested in the project.  It has not.”[9]

The result has been that baseline food prices have risen steadily across the board since the turn of the century.  This will be increasingly pressing and problematic, especially in the Global South where food makes up a much larger proportion of spending, about half of it.

From the Trading Economics Data Portal Historic international prices for certain crops

The link between food price rises, especially spikes and civil unrest is not as direct as many assume.  They usually act as a catalyst for other grievances such as perceived lack of freedoms and general inequality in any given country.  In a research brief, Todd G. Smith from a think-tank associated with the University of Texas, Climate Change and African Political Stability (CCAPS) from back in April 2013 was careful to say so.  But his conclusions were anything but anodyne.

In a comprehensive study using monthly data (where available) on domestic food prices (that are usually more unstable than international ones) in 40 countries over 21 years, Smith indeed concluded there was a statistically relevant link.  “Each additional percentage point increase in the domestic consumer food price index leads to a 24.1 percent increase in the odds of unrest.”[10] 

And even worse, what he found was that once the unrest began it tended to spiral out of control. “…. the occurrence of unrest in the previous month leads to a statistically significant increase in food prices of 0.245 percent.  This is evidence of the circular nature of the relationship between food prices and unrest.”[11]

Tough Choices Ahead

All this and we’ve only just begun to understand the real potential costs that climate change will bring with it.  Take that all-important asset class, residential property: A lead article in the Economist recently[11] cited one estimate that predicts damage to homes in richer countries could amount to USD$25 trillion (about the same as the U.S. annual GDP) and wipe about 9% off its value – especially as private home insurance begins to reach unsustainable levels and has to be underwritten with an ever-smaller pile of government funds.

The Big Picture

You don’t hear much about the big picture. 

It doesn’t change much over the years, sometimes decades – not exactly a daily, weekly, or even annual story-seller for media outlets.  And the conclusions here are too bleak for a doom-averse public right now that understandably prefers to dig its head in the sand overwhelmed by a sense of futility.

But it seems increasingly to be the reality of things to come.  And sooner than many might assume.  

Getting through the five stages of acceptance might be a decent enough starting point to begin to face up to the almighty task ahead.


1/ UNCTAD – Global Economic Fracturing and Shifting Investment Patterns – 23rd April 2024

UNCTAD – Trade and Development Report Update 2024

IMF – World Economic Outlook – April 2024

2/ July 2023 – Stagflation, a looming credit crunch and debt crisis: Why inflation and interest rates will stay mostly high this decade and run the very real risk of fomenting the biggest debt crisis in the modern era

August 2021 – Why worries about inflation are missing the point…It’s the debt (and low productivity) stupid… We are in the last days of the post-1945 economic miracle.

3/ 26th March 2024: The Economist “Europe’s Economy is under attack from all sides.”

4/ 9th April 2024: Bloomberg “Balance of Power”

5/ U.S. Bureau of Labor Statistics 21st March 2024

6/ 10th Aoril 2024 – IMF Blog: “World must prioritize productivity reforms to revive medium-term growth

7/ 28th December 2021 – USDA – Economic Research Service (ESR): “Slowing Productivity Reduces Growth in Global Agricultural Output.

8/ 14th September 2021: The Conversation: “Africa’s green revolution initiative has faltered: why other ways must be found

9/  14th September 2021 – The Conversation “Africa’s green revolution initiative has faltered:  why other ways must be found

10/  April 2013 – Todd G.Smith Research Brief – Climate Change and African Political Stability (CCAPS): “Food Price Spikes and Social Unrest in Africa

11/ April 2013 – Todd G.Smith Research Brief – Climate Change and African Political Stability (CCAPS): “Food Price Spikes and Social Unrest in Africa

12/ 11th April 2024 – The Economist “Global Warming is Coming for your Home

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