Ten Years After...

This is the time when “The Year in Review” articles are the order of the day.

And 2024 feels big a big year for news, not least with the return of Donald Trump and the seemingly unstoppable, and super-troubling, rise of Elon Musk.

But for me it is more telling to pause and take stock of what has happened over the last decade.

In the grand scheme of things, ten years is not that long - but if you cast your mind’s eye back to 2014 you will see a very different world.

Obama was in the White House, President Xi seemed friendly enough, Europe was a well-oiled machine powered by Russian gas, AI was just a mystical acronym and we had barely heard of Taylor Swift.

The world has actually turned on its head.

I am going to look briefly at the following key building blocks of change:

• political,
• economic,
• information technology, and
• social media

and then presume to offer some takeaway thoughts.

Political

The rise of the right over the last 10 years has been very striking.

Donald Trump is probably the noisiest example but in Europe we have seen the growing influence of right-wing parties, with UKIP/Reform (seeder of Brexit) in the UK, the National Rally in France, the AFD in Germany and Giorgia Meloni’s Brothers of Italy being obvious examples.

As The Economist said in May this year:

Five years ago right-wing populist parties held office in only a couple of EU member countries. Today they have a share of power in eight…

Across the world we have also witnessed Putin’s inhuman and illegal aggression in Ukraine, the increasingly reactionary approach of Erdogan in Turkey, Xi’s repression in China and subjugation of Hong Kong and Modi’s continuing Hindu nationalist push.

There are, of course, counter examples - the Labour Party in the UK and Donald Tusk’s Civic Platform in Poland - but the reality is that the momentum is with the right. Our tacit assumption ten years ago that liberal democracies would shape the world’s future turns out to have been profoundly naive.

Many have speculated on what has brought this about. I dare to think that there are three key reasons:

1. in the early days, a sense that the elite didn’t really pay for the Global Financial Crisis (2008-10) and the austerity which followed and that a protest vote against the likes of Hilary Clinton and David Cameron was called for;
2. a widening wealth gap between rich and poor (the “Cost of living crisis”). In the UK, interestingly, the Institute of Fiscal Studies find that the issue is not so much around income levels as around asset values where the older generation have benefitted disproportionately: https://ifs.org.uk/articles/income-and-wealth-inequality-explained-5-charts; and
3. insecurity driven by a fear and resentment of immigration - a major populist theme.

Economic

As a recovering lawyer, the word “dominant” gives me goose bumps. However, let’s look at a few telling facts:

1. in 2014 the total GDP of the USA was about the same as that of the EU (then including the UK) at $17trn. In 2024, the USA’s GDP will be around $29trn, compared to around $22trn for the EU plus the UK. So the fast-growing US economy is now one third larger than that of the EU plus the UK;
2. in 2014 the USA was pumping 9 million barrels of oil and condensate per day. That figure is now a stunning 13 million barrels per day, more than any other nation;
3. in late 2014 the combined market capitalisation of the Magnificent 7 (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla) was some $1.5trn. It is now $17trn. By way of comparison China’s total market capitalisation (Shanghai and Shenzhen) is $12trn and the aggregate of the market capitalisation of Europe’s main exchanges (Euronext, London, Deutsche Bourse, Swiss and Nasdaq Nordic and Baltic) is around $17.5trn.

So we can surely say that over the last 10 years the USA has consolidated a commanding position in both hydrocarbons and big tech.

(Very) legitimate concerns around climate change do not seems to cut much ice in the USA (“Drill, baby, drill”) and the tech frenzy does not seem to dissipate (Nvidia Q3 revenues were $35bn, up 94% from Q3 2023).

Meanwhile, Europe is, whisper it, in decline.

There is much commentary that Germany’s business model is broken. Energy is expensive post the rupture with Russia and China, once an important customer for cars, machines and chemicals, is becoming a competitor. Trumpian tariffs and the need, we must assume, to spend more on defence will only add to the challenges.

France has severe budgetary difficulties (and, good grief, no Government) and the UK, as we know, is battling a perennial productivity problem and struggling to restore faith in its capital markets. Time will tell whether listing and pension reforms can rejuvenate the LSE but in the meantime the pull of higher valuations, greater liquidity and more generous executive pay in the USA are proving very tempting for some big corporates.

Gideon Rachman, writing in the FT last year, pointed out that Europe is strong in lifestyle industries, like luxury goods, tourism and football, but he goes on to observe that they will not be enough to reverse the decline. Some profound changes - maybe removal of the debt brake in Germany and an electric shock to UK productivity - will be required.

Technology

In 2104, robotics and machine learning were on the march but it was all quite gradualist. Since the launch of ChatGPT in November 2022, however, the rise of Artificial Intelligence (“AI”) has been a consuming topic in the business, healthcare, education - you name it - world.

It’s exciting and/or worrying of course but there are paradoxes in the middle of all the hype, as outlined in a fascinating recent piece in The Economist entitled “Crunch time for AI”.

The article points out that while one third of employees in America are using AI for work once a week, most companies are still not sure how best to use AI - and only 5% of American businesses say that they are using AI in their products and services. So, the article posits, many employees are using AI quietly to get things done but are wary of telling their bosses, lest that threatens their jobs. Which suggests that there remains a management challenge to encourage openness and experimentation with AI.

There are other challenges, such as the power needed to train large language models (potentially costing $1bn for the next generation of models) and a looming shortage of training data.

The article concludes that 2025 will be a big year for AI - will the bubble burst or will the technologies really start to deliver on their potential?

You have to believe that there is too much invested and too much at stake for the AI juggernaut not to roll on, but there may be more banked turns and chaussée déformée along the way than some of the rosy commentary may suggest.

Social Media

At the end of 2014 there were some 2 billion social media users worldwide - and Tik-Tok had not yet arrived.

At the end of 2024 there are around 5.2 billion social media users. That is 65% of the world’s population. Figures from We are Social suggest that both Tik-Tok and Instagram have 1.5 billion users but they think that the Tik-Tok number could be 30% higher.

These are extraordinary numbers and emphasise that the influence of social media now is impossible to underestimate.

This has wide-ranging implications for:

1. wellbeing - whilst real time information sharing can be positive and efficient there are significant mental health and cyber-bullying concerns: https://www.helpguide.org/mental-health/wellbeing/social-media-and-mental-health;
2. business - there are clearly networking and job-seeking benefits to, for example, LinkedIn but the immediate and unchecked dissemination of price-sensitive but inaccurate information is a risk (remember “Funding secured”);

3. decline of traditional sources of news - 10 years ago there were newspapers on the Tube in the morning. No longer. The digital and social media age has transformed the way in which we access information. This is not a problem if we are talking online newspapers or the BBC or SkyNews websites but it surely is if it is social media. As Fiona Bruce is quoted as saying in this article: https://www.theguardian.com/media/article/2024/sep/10/internet-tv-uk-most-popular-news-source-first-time

   “…it’s worrying that social media is being increasingly used as a news source. It’s not just a problem for journalists, it’s a problem for all of us. And once a fake story is out there, it’s almost impossible to correct. I know, I’ve tried. Good luck trying to get anything taken down from X”; and

4. politics - there was much concern about the impact of malign social media posting in the recent Moldovan elections and now we read the astonishing news that the Romanian Supreme Court has cancelled the current presidential election process because of the work of 100 paid influencers, with more than 8 million followers, promoting Russia’s preferred candidate on Tik-Tok. This is quite something.

As we look to 2025 and beyond, and take account of the importance of social media to Gen Z, we must assume that the influence of social media will only grow.

Takeaways

This is all pretty gloomy, particularly if you are sitting in rain drenched London.

By way of antidote, however, I offer the following thoughts:

• keep in mind the perspectives of history - the world tends to go through cycles as popular sentiment ebbs and flows. Europe went through an acutely right-wing phase in the 1930s, with horrific consequences, but the wheel turned and brought us the prosperity and modernity of the post-war years. So, “this too will pass”;
• institutions can prevail - we should draw comfort from, for example, Matt Gaetz’s short-lived tenure as the presumptive US Attorney General, presumably driven by certain Senate opposition, and the bravery of the Romanian Supreme Court;
• Europe has a lot going for it - we Europeans must avoid over-selling ourselves. We are indeed good at lifestyle but at lots of other things too. We sit in a handy time zone, London is a major professional services hub and Europe is home to many brilliant creatives and engineers (after all, Enzo Ferrari was European);
• AI for good – AI has much to contribute to healthcare. For example, one of the FT’s Women of 24 is Fei-Fei Li who, through her not-for-profit AI4ALL, is developing AI to change lives in tangible ways such as using augmented reality to help surgeons undertake safer, less invasive procedures;
• inequality - the World Bank reports that the number of countries with high income or consumption inequality has fallen from 61 to 49 over the last decade although, more soberingly they believe that the period 2020 to 2030 will see a stalling in the reduction in world poverty; and
• tolerance and thoughtful debate are alive and well - this is evidenced by a balanced and considered discussion in the UK Parliament on the morally charged subject of assisted dying and the fact that Alistair Campbell and Rory Stewart can fill the O2 in London whilst they chat about politics.

Ten Years After

Baby boomers like me may remember the blues-rock band Ten Years After.

They were at their peak in the sixties and early seventies and, although lead singer Alvin Lee is no longer with us, we can surely all take inspiration from the fact that the band is still playing and that the original drummer, Ric Lee, is still drumming https://www.youtube.com/watch?v=wQcTTML1R3k.

Christopher Saul

Christopher Saul provides independent trusted advice to senior executives and key stakeholders within publicly quoted and privately owned businesses and professional service firms. His areas of focus are governance, succession and the moderation of differences.

Send this article to a friend...