GARY RYNHART: Turbulent times signal a once-in-a-generation change

A further signpost that a nasty global recession is on the way comes as shares in technology companies continue to fall and advertising revenue is collapsing as brands react to consumer trends.

Facebook’s parent Meta has massively dropped from all-time highs just two years ago. Its share price has dropped by more than half. Elon Musk’s purchase of Twitter at $54 a share when most analysts price it closer to $13 looks like the worst deal of the century. The big tech companies have this allure of being new and edgy, and maybe that is starting to date. Apple is nearly 50 years old, Amazon is 30 and Facebook is closing in on 20.

While the job markets in many rich countries remain strong, every other indicator is suggesting an economic downturn.  Government debt that’s been building since the 2008 crash and hugely extended during Covid-19, is extraordinarily high. 

The policy choices for governments are limited as the place where they borrow from — bond markets — will dictate options (witness the swift demise of British prime minister Liz Truss and her short-lived radical plans). 

A key difference between now and the 2008 global crash was the Chinese economy’s relative insulation at that time. That’s not the case now as its banks are heavily indebted, its property market is crashing and Covid-19 restrictions are hampering growth. Things look ugly.

Allied to this is the political recession that is in play. The very real retreat of democracy is aided by two complementary narratives.  First is the politics of nostalgia in some rich countries, and second, democracies don’t produce growth or jobs in poorer ones.

The British Labour Party’s election manifesto in the 1980s was called the longest suicide note in history, full as it was of binary ideological commitments. These days, political communication has gone the other way, distilled down to three or four words: “Make America great again” or “Take back control”, and the same communication style is also used to spin easy solutions.  The local flavours have also been effective — “white monopoly capital” and “radical economic transformation”.

The narrative that “autocracies’’ do better than democracies (and are more stable) does not stand up to any rigorous examination. Democracies dominate the list of countries with the steadiest growth. They generally remain the world’s wealthiest societies and the most open to new ideas and opportunities. But that message was not getting traction before the current crisis. It’s led to calls for “something new”, and plenty of political charlatans are ready to respond, “Sure, I have the answer.”

It is a dangerous time for democracy.

Not unrelated to this is the new cold war. The Russia/Ukraine war has accelerated the already deepening rivalry between Russia, China and their allies and the US-led west. This rivalry is happening in multiple areas, in particular, in space. There is already a kind of ongoing “shadow war” in which China, Russia and the US conduct attacks against each other’s satellites with lasers, radio frequency jammers and cyberattacks. There are strong military advantages to be gained in the space supremacy race, but also lots of money. That’s why today’s billionaires are so obsessed with it.

Asteroids contain plenty of metals and minerals. Mining these asteroids could soon be technically feasible, resulting in what some consider to be a space-age gold rush. Asteroids could be the new oilfields of the future. There’s also the potential of sourcing solar energy from space 24/7 where weather patterns are irrelevant. Space solar power could also be deployed to remote areas on Earth where there is not an existing utility grid. This would be an absolute game-changer in terms of climate change, but also for countries that are producing and depend  on fossil fuels. It is the same for countries such as SA, which is reliant on extractive industries.

Solar panels in space are potentially ten years away commercially. Space infrastructure companies received $14.5bn of private investment in 2021, a more than 50% increase from $9.8bn in 2020, according to a report by Space Capital in September. Although trillions of dollars are probably needed.

The level of turbulence in recent years, from the pandemic to cold war, shifts dynamics in major ways.  This current period feels like an inflection point that happens generationally where things seem different before and after. As the saying goes, when you keep hearing something, then it’s not weather, it’s climate.

• Rynhart is senior specialist in employers’ activities with the International Labour Organisation, based in SA. He is author of Colouring the Future: Why the UN plan to end poverty and wars is working.