PODCAST: combatting the next decade’s crises

Prosperity crisis bites

The crisis of prosperity spans the generations, causing many to worry about the future. Worldwide, people within a decade of retirement have pensions and savings which will only sustain them for one-third (or less) of their life expectancy.

According to the World Economic Forum (WEF), the average Australian man will outlive his savings by more than 10 years while the average Australian woman will outlive hers by nearly 13 years. Recent debates about increases to compulsory superannuation in Australia demonstrate the highly connected crises of trust and leadership at play with the crisis of prosperity.

Meanwhile, new graduates worldwide face a bleak and uncertain future. Many emerge from education saddled with debt and enter a weak job market in a country with massive debt and tax burdens. Many are paid much less (proportionally) upon graduation than previous generations. And many are confronting a housing market with prices they can never imagine affording in their lifetimes.

Stuck in the middle is the wage earner who, in most countries, has accrued more and more personal debt while facing potential job loss due to AI or automation.

PwC analysis determined the world only has a decade to address these crises because:

• Older people without pension support are within 10 years of retirement.
• In Africa, there are 500 million young people needing education and employment in the next decade.
• Job automation will only accelerate over the next 10 years.

One example that encapsulates these challenges is the technology crisis as it relates to climate. The industrial system humans created over the past 100+ years is entwined with economies and daily lives. Agriculture and food, transportation, manufacturing and construction are overwhelmingly driven by the same primary energy source: carbon-based fuels.

A major unintended consequence of this technology system is that carbon dioxide (CO₂) equivalents have been pumped into the atmosphere for decades. The chart below from the Intergovernmental Panel on Climate Change shows the primary causes are a product of everyday actions by billions of people. Australia’s bushfires and coral loss are just two of the many consequences.

So why do we have only 10 years to address this?

As the world’s lungs - forests and coral – continue declining, northern areas of Canada and Russia are enduring longer and hotter summers. The Canadian and Russian tundra contain vast quantities of methane which, when released into the atmosphere, are 30 times more ‘efficient' at capturing heat than CO₂.

Reduced capacity to process atmospheric CO₂ combined with increased methane in the atmosphere is incredibly hard to reverse - it will require extensive technological change to respond. After 10 years, it will probably be impossible to turn back the clock.

Climate change is just one aspect of the crisis of technology which also includes the new economy created by ubiquitous technology platforms (e.g. Google, Apple, Alibaba, and social media) and the unintentional harms this creates such as greater concentration of wealth and job loss; increased polarisation; rising mental illness in adolescents; and the invisible consequences of AI.

Institutions in crisis

The world’s 20th century institutions are founded on concepts that no longer appear as relevant and are beginning to creak under the weight of the 21st century’s booming populations, shifting global economic power and accelerating technology.

Evidence can be found wherever you look. From the Black Lives Matter protests in the US, to the Gilets Jaune in France, to Brexit in the UK. The 2019 Edelman Trust Barometer found only 18 per cent of respondents felt the system was working for them. In Australia, Edelman found 50 per cent of respondents questioned whether capitalism did more harm than good.

The problem with failing institutional trust is that institutions (e.g. legal, education, financial and political systems, ‘experts’) are to people what water is to fish: they allow us to navigate life without thinking. Lost trust makes life extremely difficult and will eventually result in wholesale change.

The crisis of leadership

The crisis of leadership is apparent in the world’s inadequate response to the climate crisis. According to Climate Action Tracker, of the 197 countries that signed the Paris Agreement, only two (Morocco and Gambia) are on track to limit warming to 1.5°C. (Australia’s efforts are rated as “insufficient”.) This crisis of leadership has multiple causes but, at the heart of it, lies polarisation and the inability to reach a consensus, exacerbated by increased nationalism in this time of global crises.

In 2021, we must unite

As outlined in Ten Years to Midnight, addressing crises of this magnitude will require all parts of society – governments, institutions, business and citizens – to reimagine the possible and, in particular, to solve massive problems fast. The speed with which viable COVID-19 vaccines have been developed shows this is not impossible.

We have 10 years.

Blair Sheppard is Global Leader Strategy & Leadership at PwC

He is the co-author of Ten Years to Midnight: Four urgent global crises and their strategic solutions