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Thursday, Jan. 19, 2012

Facing a dystopian future


Special to The Japan Times

HONG KONG — Japanese were being optimistic when they chose "kizuna"* (bond) as the word of the year for 2011, referring to people coming together after the triple disasters of earthquake, tsunami and nuclear plant meltdown.

We should regret that Prime Minister Yoshihiko Noda is going to skip the annual meeting of the World Economic Forum (WEF) next week in Davos. That is because he might hear some uncomfortable home truths about the lessons of Great East Japan Earthquake and its aftermath. He would also learn that one of the words of 2012 is "dystopia," and Noda might reflect on how he may be helping to create a modern dystopia.

"Dystopia" is the key word in the "Global Risks 2012" report just issued by the WEF. The main message of the report is that economic turmoil, financial stringency and social upheaval could not only roll back the gains the world has made from globalization but also could lead to a "dystopian future for much of humanity."

The report explains that: "Dystopia, the opposite of a utopia, describes a place where life is full of hardship and devoid of hope." The risks are not single, but come from the "constellation of fiscal, demographic and societal risks. ... The interplay among these risks could result in a world where a large youth population contends with chronic, high levels of unemployment, while concurrently, the largest population of retirees in history becomes dependent upon already indebted governments."

It gets worse: "Both young and old could face an income gap, as well as a skills gap so wide as to threaten social and political stability." This could jeopardize the social contracts between states and citizens and then, "In the absence of viable alternatives, this could precipitate a downward spiral of the global economy, fueled by protectionism, nationalism and populism."

But that is only one set of risks. Another set comes under the headline, "How safe are our safeguards?" The report judges that, "The constellation of risks arising from emerging technologies, financial interdependence, resource depletion and climate change exposes the weak and brittle nature of existing safeguards — the policies, norms, regulations or institutions which serve as a protective system. Our safeguards may no longer be fit to manage vital resources and ensure orderly markets and public safety."

"Global Risks 2012" is based on a survey of 469 experts from industry, government, academia and civil society who examine 50 global risks across five categories. This year, the top two risks in terms of likelihood are economic, as are three of the top five in terms of impact.

In too many places the report reads as if it has been written by risk assessment geeks — as indeed it has. In contrast to a report by economists — where if you laid all the economists in the world end to end, they wouldn't reach a conclusion — this report positively blooms with risks. It contains diagrams of ornate spiders' webs of interconnected risks, artistic to look at, but complicated to follow. The central "map" (as WEF calls it) has global governance failure at the center. Some of the outlying, though still connected, risks are too hard to read because the print is small and grey.

The WEF report sets out the risks but has no answer to the central challenge facing the world. How do you persuade political leaders to tackle serious problems when they are behaving like squabbling children in a playground? The world is a dangerous place, but business and political leaders seem unable to get together to tackle clear and obvious problems, let alone interconnected ones or constellations of risks.

This was seen recently. Reports from London said that Bob Diamond, the head of Barclays Bank, dubbed "the unacceptable face of capitalism," is in line to collect a £10 million (¥1.2 billion) bonus.

The depressing fallout continued after Standard & Poor's took away France's triple A rating and downgraded other EU countries. Supposedly responsible adults in charge of the French government yelled that the United Kingdom too should be downgraded. How is that going to help anyone? The London correspondent of the respected French daily Le Monde claimed that the U.K. should lose its triple A rating, and so should Germany. For good measure he applauded moves by Scotland to seek independence because this would create a new country friendly to France and cut England down to size.

Children indeed! Bawling from Paris reached Washington, where World Bank chief Robert Zoellick suggested that the French should cool it. The (French) head of the IMF was silent.

S&P had telegraphed clearly that a French downgrade was imminent — and the rating agency could be accused of throwing petrol on the fires of eurozone crisis — but Asian stock markets acted as if taken by surprise and fell sharply. Meanwhile, Europe's chief schoolmarm, German Chancellor Angela Merkel, repeated that she was sticking to her plan that austerity was the only way out of crisis, even though this is going to dig Europe and the world into the deeper hole of recession, unemployment and social tensions that can only lead to dystopia.

What has this got to do with Noda? Unfortunately, Noda has also got religion about the need to raise consumption tax: He and finance minister Jun Azumi repeated their determination to ram through a tax rise in the face of public opposition — 75 percent against, according to some polls — to save Japan's credit rating and damn the economy.

Yes, the tax will have to rise and Japan will have to cut government spending and take a closer look at health, social welfare and pension burdens. But it is shortsighted, stupid and self-defeating to raise taxes and slash spending without them being part of a positive package to reform the economy, boost growth and maintain hope. Noda's self-righteous determination risks taking Japan to its own dystopia.

He should remember "kizuna," the bonds that keep Japan together. He might also reflect that the Japanese government and its friends in Tepco badly betrayed the people hurt in the disasters.

Dystopia may not be the worst of the perils facing the world. The WEF risk experts listed a string of "X factors," somewhere beyond the "world of unknown unknowns and known unknowns," including the dangers of constant connectivity (dimming the brain's ability to deal with complexity and uncertainty — an appropriate warning when new research says the brains of people who spend a lot of time online show similarities to those of drug addicts), epigenetics, financial illiteracy, miseducation, misinformation, neotribalism and volcanic winter. Since our leaders haven't a clue, perhaps prayer is the only salvation.

Kevin Rafferty is editor in chief of PlainWords Media. * The word of the year for 2011 chosen by the American Dialect Society was "occupy," though some radical spirits recommended "assholocracy," which they defined as rule by multimillionaires. Assholocracy won the award for the outrageous word of the year.


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