This post looks in detail at the two top-down scenarios
described in the previous post: Petrified
Forest (sluggish economy) and Atlas
Stands Tall (robust economy).
Both of these scenarios assume that large institutions - big
businesses, industry groups, governments and regional blocs, and incumbent
economic elites - will maintain their leadership positions, despite the pressure
on them from populists, outsiders, and insurgent competitors.
In the case of Petrified
Forest, the recalcitrance of these institutions to accept change creates a
stalemate that prolongs the economic downturn and inaugurates an era of slow
growth and declining opportunities. This represents the predictions of various
groups who claim that the recovery policies proposed in the United States and
elsewhere do not do enough to solve the problem, incur unsustainable amounts of
debt, and/or leave failed strategies and incompetent individuals in place.
Atlas Stands Tall
represents the opposite outcome. In this scenario, the coordinated efforts of
governments and the more-or-less willing acquiescence of incumbent elites to
reform measures successfully reverses the downturn, restores confidence, and
lays the basis for a more sustainable growth model moving forward. Although
this scenario embodies the best-case promises of the Obama Administration and
its supporters, it recognizes that stability also likely means less economic
dynamism, less entrepreneurial innovation, and the kind of "father knows best"
cultural stasis that characterized a similar era, the 1950s.
Ancient oaks stand immobile and immovable in the twilight,
their inner life-force turned to stone, clinging to their old forms because
that is all they know.
Top-down governance, sluggish/stagnant economy.
Large organizations (businesses and governments) refuse to allow change, fight
among themselves to preserve control of a shrinking resource base.
Nearly a decade of flat growth has pushed businesses into an instinctive
defensive crouch where all new investment must be justified by cost-savings.
Defense of market share is the driving imperative, along with a constant search
for cheaper labor and supply. Export-oriented sectors suffer from high tariffs.
Commodity and energy prices continue to escalate, putting more tension on a
frayed global economy.
Employers hold the upper hand as work is scarce. People generally work long
hours and accept reduced pay and benefits. Successful firms are continually
implementing process efficiencies designed to drive greater productivity from
existing people and equipment. Entrepreneurism is on the wane because no one is
willing to risk venture capital.
The consumer is king, as companies terrified of losing market share make every
possible concession to the fickle, demanding market. Price-wars are fierce,
although the high cost of commodities keeps some products out of the reach of
all but the most affluent.
Climate: Governments and big businesses employ every manner of surveillance
and intimidation tactics to keep a surly and resentful public in line. Part of
this is justified by ongoing concerns about security and external enemies.
How We Got Here:
Half-hearted and ill-conceived attempts to reverse the economic downturn in
2009 did not achieve results, but squandered huge amounts of resources and
drove the debt load of developed countries through the roof. This debt overhang
dragged down economic growth for more than a decade, as industrial-age
institutions did everything in their waning power to forestall inevitable
changes. Countries turned inward to address mounting social problems, leading
to increasing international friction, trade wars, and security concerns.
Atlas Stands Tall
In haughty defiance of Ayn Rand's libertarian titan, this
revived Atlas embodies the collective will of the world community and proudly
shoulders the burdens of social, economic and political harmony.
Top-down governance, fast recovery/robust growth.
Coordinated actions of governments, central banks and large businesses lead to
economic recovery. A new cooperative model of capitalism emerges.
Industrial activity is regulated and harmonized by an assertive government that
uses modern IT and management practices to diminish boom-and-bust cycles. Free
trade is vibrant between partners adhering to international environmental,
labor and product safety standards, with non-compliant governments sanctioned
or facing barriers.
Most information workers work for large companies or the government, and enjoy
relatively secure healthcare, pension, and work/life balance benefits, although
wages are highly taxed. Creative class professionals associate easily with
colleagues around the world.
Consumers are empowered but largely satisfied. Companies are on a very tight
regulatory leash and attempt to rebuild trust by being proactively transparent.
Climate: Incumbent world powers attempt to manage the smooth entry of
rising economies into the global system and lean heavily on disruptive players
to reduce conflict. Diversity is celebrated. Political discourse is generally
pragmatic rather than ideological.
How We Got Here:
Cool, steady decision-making by governments and central banks in the heat of
the financial crisis of 2009 paid off in a relatively rapid and robust recovery.
Large institutions and incumbent elites were permitted the time and space to
regroup, in exchange for their support of public investments in healthcare,
infrastructure, and greater regulation. A coordinated international response
defused political tensions in the Middle East and South Asia, building
confidence in the renewed leadership of the United States and its allies.
Next: The Insurgent Scenarios: New Blood Refreshes the System or Old Blood Drowns It?