Agenda-Setting Foresight

Bitcoin is not about to challenge established currencies and is a poor store of value to boot. However, central banks are right to worry about tech giants such as Amazon or Facebook issuing their own private digital currencies. They are all but certain to preempt this by introducing central bank digital currencies (CBDCs) and obstructing the spread of private ones.

Simon Tilford argues that while CBDCs will have various advantages, they will also concentrate unprecedented power in the hands of central banks (and by extension states). While democracies should be able to ensure accountability and privacy, the introduction of a Chinese CBDC will further hinder attempts to limit the power of the Chinese authorities.

Financial markets are in a bubble. Valuations are out of kilter with economic reality and risk. However, past examples provide few clues as to when the market will crash, because this bubble is different – it is happening at a time of economic gloom rather than rapid growth.

Simon Tilford argues that bringing valuations back into line with fundamentals without a major bust will not be easy. Governments will have to address the underlying reasons for weak growth and excessively low inflation. Failure to do so and central banks will have no option but to pump yet more liquidity into the system, postponing but increasing the severity of the eventual day of reckoning.

Victory for Jo Biden and China’s announcement of a net zero target by 2060 are seen by many as game-changers. Simon Tilford argues that this is misplaced.

The ‘climate agreement’ between the US, China and Europe that the world needs will remain out of reach. Without it, market forces can only achieve so much. As carbon dioxide concentrations in the atmosphere continue to rise, governments will start to panic. At this point, achieving strongly negative emissions will require both technological breakthroughs and fundamental shifts in how we live. Countries will also need to work together to drive rapid diffusion of these technologies and practices.

Many people at home and abroad are breathing a sigh of relief with the election of Joe Biden. Mat Burrows argues that the new administration faces multiple challenges in an America deeply divided along urban/rural lines and by levels of education. While the new president has had the reputation of hammering out compromises with Republicans, he has inherited a poisoned chalice, not least combatting COVID-19 and vaccine distribution. He will come under pressure from within his own party for even more ambition on climate change and the test of the mid-term elections.

The future is uncertain and the flow of people particularly so. Trends can shift unexpectedly. ‘Weak signals’ of future change may flare up – or fade. Though the impact of ‘wild cards’ such as pandemics is quite predictable, their precise nature, timing and systemic repercussions are much less so.

Philippe Legrain argues that while the dynamics of future migration patterns may be uncertain, they are likely to be shaped by at least eight big factors: demography, economic disparities, geography, technology, conflict, climate change, politics and government policy. Whether the world ends up in a high-migration scenario or a low-migration one depends largely on the complex interactions between those factors – and especially on government policy.

Fears that mass automation might drive unemployment and converge with low labour mobility have haunted policymakers for more than a decade. COVID-19 is driving ‘The Great Acceleration’: businesses have greater incentives than ever to exploit big data, artificial intelligence and robotics. There is a problem: state tax systems encourage investment in machines, rather than people. At the same time, pressures to raise taxes and deliver safety nets are growing. Ryan Abbott explores a possible win-win: inventive changes in tax systems, creating neutrality between people and AI.