• Dr. Timothy X. Merritt

Foresight Scenario Testing - Part 2

Scenario Report Background

The scenario report that will be used to stress test PIRA’s six strategies is titled “Global Governance in 2030” and was prepared by the Center for the Implementation of Public Policies for Equity and Growth (CIPPEC), a non-profit organization dedicated to anticipating future dilemmas through applied research, and in conjunction with the Think 20 (T20) engagement group that gathers leading experts from around the world to make policy recommendations (Pomares & Abdala, 2018).

Scenario Report: Global Governance in 2030

Axes of Uncertainty demonstrate Strategic Foresight principles of Futurism, Systems Thinking, Systems Thinking Examples, and Scenario analysis
Axes of Uncertainty prepared by CIPPEC

This particular scenario report is an excellent backdrop against which to gauge the potential effects of PIRA’s strategic objectives because disasters recognize no artificial boundaries, yet the political structures and climate of the affected nation will directly impact any efforts to provide humanitarian relief. The Global Governance in 2030 scenarios recognize that some countries practice international cooperation, while others are swept up by nationalism, fragmentation, expansion or decline; and PIRA will have to have the means to operate within any of these possibilities.

Three megatrends affecting the entire world inform this scenario report; emerging technological breakthroughs, dramatic changes in global economic power, and a general aging of the global population. Building upon these trends generates a set of four distinct scenarios which describe a range of alternative futures that PIRA may encounter and ought to prepare for. Scenarios are not predictions or forecasts but instead seek to provide new perspectives and to potentially anticipate previously "unthinkable" possibilities that seem to occur with the highest frequency, and to even define, catastrophic events.

Axes of Uncertainty

The interaction of the three megatrends of technology, economic power, and demographics was discussed through a series of workshops designed to elicit participant’s perspectives about the most important issues affecting global government. This subjective process separated the forces that have both the highest relative impact as well as the highest relative uncertainty (Chermack, 2011). The resultant Axes of Uncertainty (Figure 2) is a shared mental model in which the critical variables are displayed in relation to one another.

Vertical Axis

Big Firms: There has been a recentralization of many industries resulting in “fewer than 10% of the world’s public companies accounting for 80% of the world’s profits” (Pomares & Abdala, 2018). Technology has led to the creation of “Tech Giants” like Google, Apple, Alibaba, and Amazon that have a virtual monopoly within their sphere of influence. These few companies have grown rapidly in part by destroying competition.

Small Firms: Despite the trend towards concentration of economic power within a small number of firms, technological innovation is a counter-trend that is transforming the size and distribution of firms. The internet enables goods and services to be exchanged between parties that are not physically close to each other. Decentralization implies the absence of a clear direction for the economy resulting in more companies to adopt more flexible and decentralized operations as well as invest even more in innovation to keep pace with a rapidly changing environment.

Horizontal Axis

Local Governance: The trend towards local governance describes the increasing involvement of the private sector in global governance structures and policies. This trend leads some to consider the possibility that the traditional model of centralized government is outdated and that the future will bring about a state-led multi-polar model in which government is provided through a network of local private companies, states, and civic groups.

Global Governance: Pulling in the opposite direction are the forces of Big Data and predictive analytics technology that may increase participation in government by making it easier and cheaper. “The progress of digital technology could radically change the funding models for international organizations and enable a new ecology of data governance” (Pomares & Abdala, 2018). The outlook for this approach is generally positive, but it also comes with significant risks to privacy and freedom.

Scenario Sign Posts / Conditions

The Axes of Uncertainty provides a mental framework from which to forecast four distinct, yet plausible, alternate futures provided by the Global Governance in 2030 scenario report (Pomares & Abdala, 2018). The conditions PIRA may encounter can be described through a series of megatrend “sign posts” that allow us to compare similarities and differences between alternate futures. All six of PIRA’s strategies will be stress-tested against each of the following four scenarios.

World 1: Big foot in a local world occurs when economic power is concentrated while global political power is fragmented.

  • Sign post 1: Power. Regional differences increase, and local leaders will have difficulty negotiating with big firms. Tensions threaten societal cohesion, likely leading to social breakdown. Cities and countries compete against each other for the few big firms, which in turn demand accommodation from local governments. This reduces governmental redistributive policies and leads to instability for younger people, coupled with disaffection in older people. The system described is very inefficient.

  • Sign post 2: Technology. The inefficiency of this scenario results in a low level of technological breakthroughs; however, this may be offset if large firms offer incentives for local entrepreneurs to invest in technology. With private sector forces leading development, regional differences will increase, and technology and information sharing will decrease, resulting in inequality of access to the benefits of technology.

  • Sign post 3: Demographics. Businesses will be mobile at the global level, while individuals will not be mobile. Local identities will be threatened by large homogenizing corporations, leading to migrations from rural to urban areas to secure employment. Developing countries will have a harder time developing, resulting in greater numbers of poor people without the ability to move to more prosperous areas.

Scenario Summary: There are substantial risks associated with business-led decision making, which will be driven by private capital rather than public policy. This is considered to be an inefficient scenario that is filled with inequality.

World 2: Big Friendly Giant – big firms in a global scenario occurs when big firms couple with global government to provide stability.

  • Sign post 1: Power. Big firms and big government are allies. Tensions emerge primarily with western nations (accustomed to holding the reins of international power) have to share power with global governing bodies. However, they may be able to compensate to some degree by investing in soft power, or influencing, strategies. Consolidated political power infers increased regulations that in turn, require highly efficient politicians to manage. It is highly likely that international cooperation and solutions are possible with this scenario, but it requires effective checks and balances between the power of firms and of government.

  • Sign post 2: Technology. Technological innovation is most likely in this scenario due to the high degrees of funding, coordination, and information sharing. However, this scenario describes a world of robots and big data, resulting in an unequal distribution of knowledge and access to technology by individuals.

  • Sign post 3: Demographics. Government and business will work together to regulate migration, ensuring people move to where industry needs them Government will address social issues such as the aging population by raising global taxes to finance redistributive programs such as universal income.

Scenario Summary: This scenario depicts a balanced world in which government and business check each check the power of the other; with less individual liberty as a byproduct of this balance.

World 3: Small is beautiful occurs when small firms operate in societies that are governed locally.

  • Sign post 1: Power. This scenario relies on a strong sense of community to foster political legitimacy. The local focus will increase regional competition, forcing both local governments and small firms to turn into specialized units that cater to the needs of local communities. Implied in this scenario is the disintegration of the global world order. Therefore, there is less chance for any kind of international cooperation, and solutions to global problems will be much harder to address and solve.

  • Sign post 2: Technology. Data and technology are unlikely to be shared, and the lack of cooperation will result in fewer technological breakthroughs. Cities will compete against other cities and will lack the means to enforce redistributive policies, thus leading to increasing regional inequality and access to technology.

  • Sign post 3: Demographics. The emergence of strong nationalistic and protectionist ideologies will generate exclusionary forces that result in fewer opportunities for immigration, and strong interregional disparities will lead to high levels of poverty.

Scenario Summary: In this scenario, small local governments face the challenges of demographic shifts, migration, and other international problems with few resources and without much international cooperation. This scenario has the highest level of individual liberty, but success will be regionally haphazard and rely on compelling narratives and skilled local leadership.

World 4: The small under global rule occurs when global governance structures regulate and coordinate the existence of small firms.

  • Sign post 1: Power. Smaller firms will have greater diversity, but also smaller participation in government policies. Large government entities will incur costs of coordinating small firms, and policies will be required to deal with tensions between them. This will be accomplished through the collection of global revenues and should result in the efficient distribution of both local goods and services while retaining the ability to address and solve large-scale global problems.

  • Sign post 2: Technology. Government policies will ensure that the benefits of technological breakthroughs are shared through regulatory diffusion. Technology will be broadly accessible as well as universally easy to use.

  • Sign post 3: Demographics. This scenario relies on the emergence of a global consensus regarding the optimal location of demographic populations, thus enabling global management of migration flows. Government efficiencies at both the global and local levels will ensure that global problems are addressed while local identities prosper and thrive.

Scenario Summary: This scenario represents a "win-win" at both the global and local levels. However, the dominance of government forces could also generate a world of less social security due to the weakening of family ties and in less individual liberty.

Stress Test Next Step: With both the six PIRA strategies and the four alternative future scenarios for Global Governance defined and in place, it is now possible to compare each strategy across each scenario to determine their susceptibility to either success or failure under various conditions. We will emerge from this exercise with a better understanding of the conditions PIRA may face in the future, as well as new ideas about strategies that may not have been considered before.

Continue to Foresight Scenario Testing - Part 3

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