#4 The quinquennial of hope?
We almost lost five years in this decisive decade
Hi all,
This week, I came across several publications that assigned different names to this decade. In 2020, it was designated as the decade of action or the decisive decade, encapsulating the idea that if we are to utilise this period to mitigate climate change and align with the global sustainability strategy outlined in the Sustainable Development Goals, we have ten years. A recent Oxfam report on global inequality has labelled this decade as the decade of division. The World Bank, in releasing their economic forecasts, referred to this decade as a lost decade for the world economy. However, we could also dub it the decade of generative AI that transforms our economy.
In total, this decade has slightly less than six years remaining. Can we transform it into a decisive decade with a positive outcome? Perhaps, but society and activists must take the first step and turn the last part of this decade into the quinquennial of hope.
To conclude this edition, you'll find some links and highlights from the past week.
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This will be the focus of the newsletter this week. Enjoy!
The decade of division
This week marked another instalment, likely not the last, in the ongoing discourse surrounding escalating inequality. The latest release from Oxfam, titled "Inequality Inc.," casts a light on recent years, exposing the soaring wealth of billionaires globally, with the disparities reaching unprecedented levels. The fortunes of the world's five wealthiest men have more than doubled, surging to a staggering $869 billion since 2020, while the world's poorest 60%—comprising nearly 5 billion individuals—have grappled with financial setbacks. It's a stark reality: five individuals triumph, while 5 billion people endure losses.
Contrary to the overarching global objective outlined in Sustainable Development Goal 10 to reduce inequality, these metrics indicate a disheartening ascent. Some may highlight counter developments, citing alternative metrics to assess income inequality trends. Without delving into the intricacies, it is undeniably evident that:
Based on measures like Gini or Palma ratios, income inequality is fairly stable in Europe. For the top 1%, there are some increases in many countries, although it is difficult to get the right data.
Wealth inequality is rising, driven, in addition to corporate power, by loose monetary policy, causing asset price inflation, inheritance
In countries with weaker institutions (e.g. Russia), political power is the largest explanation of wealth accumulation (see below).
These data probably don’t tell the whole story. It is extremely difficult to gather the right wealth statistics, where biases are generally on the downside because the incentive for the wealthy is to hide money to avoid taxes.
The case of the Netherlands is particularly interesting, showing a decrease in top wealth inequality based on the statistics of WID.world, while Dutch research and more detailed research show the opposite.
So, the decade of division on wealth inequality is here. According to the Oxfam analysis, the foremost corporate power leads to that huge division. Too powerful companies, in the hands of a few people, can construct defence mechanisms that shield them from adverse economic effects and policies that harm them.
Consequences of excessive corporate power include:
1️⃣ Rewarding the wealthy, neglecting the workers
2️⃣ Evading taxes
3️⃣ Privatising public services
4️⃣ Driving climate breakdown
The root causes of this corporate power, not explicitly outlined in the report, involve technology (especially tech and data monopolies and oligopolies), lobby power (as companies amass influence, successful lobbying for self-interest becomes feasible), and worldviews (if the public normalizes an abundance of billionaires equating to individual success, it becomes a reality).
There are ways to solve this, but it requires a lot of regulatory action. The options in the report:
❇ Revitalise the state: Enhance quality basic services and emphasise that the government's role extends beyond facilitating the market.
❇ Regulate corporations: Counter corporate lobbying and curb monopoly power.
❇ Reinvent business: Advocate for alternative ownership structures (e.g. social enterprises, steward-owned cooperatives) where primacy isn't solely for shareholders.
There is much more to it! Other crucial concepts, like limitarianism (see also my previous post on this), the role of finance, and sufficiency futures, are equally vital.
Let’s conclude for now that we have not made any progress on reducing inequality.
The lost decade
The World Bank starts on a very negative tone with the Global Economic Prospects published this week. The bearish nature of the content is so pronounced that quoting, rather than attempting a rephrasing, seems more prudent. Otherwise, there is a risk of creating an impression that it originates from my own perspective:
“The end of 2024 will mark the halfway point of what was expected to be a transformative decade for development—when extreme poverty was to be extinguished, when major communicable diseases were to be eradicated, and when greenhouse-gas emissions were to be cut nearly in half. What looms instead is a wretched milestone: the weakest global growth performance of any half-decade since the 1990s, with people in one out of every four developing economies poorer than they were before the pandemic”
The World Bank always write their Outlook from an emerging markets perspective. Therefore, I can understand their emphasis on economic growth, because it is important in the Global South to get people out of extreme poverty. But there is a contradiction in it: we can not have the same kind of economic growth and reaching green house gas reduction or even lift people out of poverty. If the institutional context in many countries does not change, the only persons that gain by more of the same kind of economic growth are the richest people. Put it very simple: if countries do not have strong institutions, economic growth will not make a difference for any sustainability agenda.
This fact is also apparent from graphs in the text (see above): the change in per capita income compared to the richest country since 2019 is negative on average for all emerging markets except for India and China (figure left-hand side). Especially countries that are Fragile and in conflict-affected situation (FCS) are expected to have lower GDP per capita in 2024 than five years ago.
This is extremely worrisome, at least for two reasons. High debt, weak growth, and elevated interest rates pose considerable challenges especially the poorest countries, given the resulting increase in debtservicing burden. Several countries have entered debt restructuring in the past year, but progress toward adequate resolution has been slow in many cases. The problem with too stringent debt restructuring is that is stalls any sustainability agenda, leaving populations further behind.
Another, relatively new, phenomenon is the effects of climate change now hitting especially those poorer countries. Without strong institutions, own budgets and lacking international solidarity, this might become a bigger problem in this lost decade.
Not a positive read from the World Bank.
The decade of AI
Is it all bad then, this decade? Not all, I think. Generative AI can a a force for good. As the International Monetary Fund reported this week: AI will definitely change labour markets, with some goods and bads. But another research article also showed how gen AI can accelerate a sustainability transition.
First, on labour markets. Advanced economies will encounter both the advantages and challenges of AI sooner than their emerging market and developing counterparts, primarily due to their employment structures that lean towards cognitive-intensive roles. Patterns in AI exposure are discernible, with women and those with a college education being more exposed yet better positioned to harness the benefits of AI. Conversely, older workers may face challenges in adapting to this new technology. If the complementarity between AI and high-income workers is strong, there is the potential for an increase in labour income inequality, and capital returns could amplify wealth disparities. The main reason for the increase in capital income and wealth inequality is that AI leads to labour displacement and an increase in the demand for AI capital, increasing capital returns and asset holdings' value. In other words: it is very likely that generative AI will accelerate the decade of division. Therefore, policies are needed to restrict the effects of negative outcomes from AI in society (which is a different argument than saying that AI has to be regulated based on the ethical risks).
Is there also something good to find here on gen AI? Yes, there is. A recent article explores the trade-offs between AI for good (such as realising the SDGs) or (gen) AI for bad. A quote:
“The links between AI and the SDGs remain ambivalent because the same technology can be used for conflicting objectives. For example, AI systems can be used through remote-sensing algorithms not only to analyze satellite imagery, gather information on agricultural productivity, or predict the energy consumption of buildings but also to accelerate oil and gas exploration”
Or, as a very relevant addition at this moment, for warfare.
But there are possibilities (as always) to use technology for good. This can only happen with a holistic approach, looking at all stakeholders, processes, intent and consequences (see below).
To achieve this, the authors contend that two key actions are imperative:
The necessity for regulation at both the policy level and the establishment of industry standards.
Conceptual implications: a requirement for research and contemplation on the interdependencies among sustainability-related impacts.
Is this easy to implement? The answer is likely affirmative. This stems from the initial lack of awareness among political actors regarding the risks and consequences associated with AI. Furthermore, the private interests of technology owners may lead them to shield their processes from scrutiny, making it challenging to assess any project in advance.
This will likely be the AI decade. But it is too early to judge whether it is good or bad.
The quinquennial of hope
With all this pessimism, there must also be some room for hope. Let me be clear: hope is different from optimism. You can be very pessimistic but still long for a better outlook. Because without hope, we all turn into cynics. We must bend this hopeless trend of the last years into a coming quinquennial of hope.
Many long for better times. Hope. And the more hope, the happier, research shows. Now, this hope can be dissected into several pieces. Some people only have 'the past' as a reference. It's a vague notion, but that past is usually followed by 'it was better.' Another fragment comprises those eagerly anticipating the future for the change they hope for sustainability transitions and technological breakthroughs. The promise of tomorrow being better. The more control one has over one's hope, the more content people are with the present.
Finally, for some, hope or expectations are so unrealistic that it becomes more of an ingrained disappointment. Even if you achieve that increase in income, it's not enough; perpetual dissatisfaction is a recipe for unhappiness.
If hope is to contribute to well-being, realism helps. The more realistic, the better for one's state of mind. Young people in Japan who have only experienced a period of limited economic prosperity appear happier than an older generation yearning for the era of tumultuous economic growth. So, happiness is possible in a degrowth society. Additionally, hope is aided by providing people with certainty. You make plans for the future by not having to worry about food, drink, warmth, and sudden bankruptcies. Only then can you focus on shaping your role and that hopeful future.
So, hope is what we need. And if we have hope, we can start to act. We can strive for that future and be activists. Activism is not only demonstrating. It is also about speaking up, making the right choices in research, building the right products or financing the right stuff. Activism is also about sacrificing some financial gains. Or careers. Activism is also about daring to be controversial,
And if the scale of this movement becomes large enough, it will also lead to a social tipping point, commonly referred to as a critical threshold at which a small perturbation can push a system over the threshold; a new collective norm emerges to which people will begin to adhere. Fly-shaming, meat-shaming, and shop-shaming are the beginnings of this. You need somewhere between 25% and 50% of the population to achieve a shift, requiring behavioural changes.
There is also a logic in achieving those Social Tipping Points (see figure below), with seven feedback loops to accelerate these tipping points (see here for the detailed explanation).
But, in the end, the big accelerator is activism. Activism is not only demonstrating. It is also about speaking up, making the right choices in research, building the right products or financing the right stuff. Activism is also about sacrificing some financial gains. Or careers. Activism is also about daring to be controversial, to do things differently, and to articulate unpleasant truths.
But in the end, changing the world also needs a strategy. I believe a strategy for hope is an activist strategy, leaning partly on radical pragmatism: Radical in calling for a systems change that leads to a prosperous life for all people on a thriving planet, now and in the future. Pragmatic in acknowledging that achieving significant change will demand time, compromise, and inclusivity to accommodate the diverse needs of our society.
A strategy can be inferred from the recently published book by Deepak Bhargava and Stephanie Luce, Seven Strategies to Change the World. Their strategies are base-building, disruptive movements, narrative shift, electoral change, inside-outside campaigns, momentum, and collective care; see also this interview.
Is this hope enough? Maybe for this week, but not for the coming quinquennial.
In the news
It is no longer left or right: Five crisis tribes that five crisis-tribes that will determine the outcome of the European elections: Climate change, The war in Ukraine, Covid-19, Immigration Global economic turmoil (financial crisis, eurozone crisis)
The era of climate denial innovation is here: Climate sceptics can no longer hide behind the "climate change isn't real" curtain, so they've unleashed a new wave of strategies, according to eye-opening research from the Center for Countering Digital Hate. The study, which scrutinized YouTube content, revealed a clear shift in tactics. Videos spouting climate denial claims racked up 325 million views, thanks to cutting-edge artificial intelligence tools analyzing content uploaded from 2018 to 2023.
World's largest asset managers turn their backs on people and planet with worst voting performance yet: The ShareAction report last week clearly showed that shareholders do not powerfully bring sustainable change to companies. The support for shareholder resolutions peaked in 2021 but took a nosedive in 2022 and 2023. In the latter year, a meagre 3% of evaluated resolutions saw the light of approval, with only eight out of 257 resolutions cutting. This marks a significant decline from the 21% approval rate observed in 2021. The heavyweight champions of the financial realm, the 'big four' asset managers (BlackRock, Vanguard, Fidelity Investments, and State Street Global Advisors), bear the brunt of blame for this backslide. In 2023, on average, they threw their support behind a mere one-eighth of the proposed resolutions—starkly contrasting their more generous backing in 2021.
That’s all for this week.
Take care.
Hans