Doing the same things and expecting a different result

Does our current economic and social model need to change ?

I guess I had not thought about it too deeply, maybe having a few blind spots, hidden data and unknowns that stop my connected thinking.?However, when I presented at the New Energy conference in London and then listened to new UK budget, I had one of the moments when I realised that the world’s energy demand had risen by over 1800% between 1900 and 2020 ( just 120 years) the worlds overshoot day had gone from zero to July 27th between 1973 and 2023 (just 50 years) and finally, CO2 had increased from less than 300 ppm to over 420 ppm between 1950 and 2020 (just 70 years). We know we are heading for dangerous levels which will affect both social and security stability, but still the growth machine marches on.

If we then overlay?this with human psychology where attitude and behaviour is mainly driven by immediate and certain consequences, (fight or fight reflex) and that change is mostly seen as threat rather than opportunity, then with the enormous changes over the last 120 years, the immediate threats that we face, and the current economic/social model that we use, no wonder countries, organisations and individuals are struggling to understand and adapt to the changing world around us today and able to find the right path ahead with the challenges and complexity we face.

Part of the problem is the amount poor information, misinformation, overwhelming data and incomplete analysis. ?Connected competencies and interconnected capabilities are required to argue a balanced approach to maintaining social infrastructure with commence/growth against the climate change/sustainability requirements. ?Viewpoints are becoming more disconnected, and the gap is widening between them.

So why is this a major issue. We need to look back a few years to understand this.

In 1900, the global population was much lower (only 1.6 billion as apposed to 8 billion today), energy for most people was nearly non existent and we were seeing the kick-start of major growth after the industrial revolution period (1760 to 1840) when rapid economic growth really started to develop around 1870.

For the UK, the advent of the coal mining and cheap power, saw the UK become an economic powerhouse where coal consumption grew to nearly 300 million tonnes per year between 1900 and 1940.?In 1900, the population was 41million, which grew to around 50 million by 1950 (25% increase in 50 years) and then has grown to around 68 million people today.?But that is not the whole story because in 1950 the percentage of over 65’s, were around 7% who lived on average 10 years past retirement age, and today it is more like 16% that live on average for 24 years past retirement age.?If we look at this retirement years, then in 1950 it would have been 35 million years and today it is more like 217 million years, so a 600% increase in pension years in just 70 years that must be funded. This is compounded by major cost increases in all other government spend areas. So how can quality of living and social stability be balanced with climate change and sustainability??The answer is with just a short-term focus in today’s society it can’t.

Going back to 1947 at the end of the second world war.?The UK was economic power house, cheap energy from coal, lower population and a lower number of people in retirement.?Along with this, the workforce were highly skilled, mainly manual workers, with less than 10% of the population going to university. This gave the United Kingdom real ability to grow rapidly and create wealth.

At this time (1945 to 1950), the new social security act was introduced in the UK in 1948.?Also, in 1948 the National Health Service was formed and already free education up to university level was in place and given to local council authorities to control.?The UK became one of the top five places in the world to live with a good quality of living, affordability and a social network that could look after all of its citizens. World war two had finish and the future looked rosy.

Since then, change has become exponential, we call it dis-continuous change, but this rate of change has a consequence.?It makes the future scenario modelling much more difficult, sustainable change much more challenging and embedding the changes in the population nearly impossible.?As humans maybe we are now on the ride as a passenger, rather than the driver in terms of directing our future safely and sustainably.

If we move forward to today, there are few interesting thoughts about both our social and economic model.

·??????Increasing pay for people just accelerates the costs of living and reduces affordability.

·??????Energy costs will continue to rise as the demand of electrical power increases by another 400% in the next 80 years.

·??????The countries infrastructure contains a high proportion of ageing assets that require either more capital / investment to maintain or replacements.

·??????Education needs major improvement and cash injection to create more connected competencies and interconnected capabilities to ensure we have a new breed of leaders to take us through the enormous challenges ahead

·??????The cost of managing our older citizens is continually increasing above any inflation or growth figures.

·??????With potential global conflicts, security needs to be beefed up.

·??????More debt means even more interest payments and more cashflow to try and reduce the debt.

·??????It becomes a wheel that we cannot get off.

To ensure the books can be at least partially balanced, the government has four choices.

·??????To push growth and profitability of the economy so it can generate higher levels of GDP.?This affects the environment and future resources.

·??????Increase taxes on both individual and businesses so it can generate higher levels of GDP. This affects potential political conflict and value flight.

·??????Continue to borrow more money which is a double edge sword against the increased interest due.?This affects more costs for the debt repayments.

·??????Reduce the expenditure of running the country by looking at each cost area carefully and changing how we provide social support, security, infrastructure, health, education etc.?This affects voting, social unrest and power erosion.

The trouble with democracy and capitalism together along with human behaviour means it is a difficult equation to balance.?The short-term immediate consequences in term of our attitude and behaviour will normally trump those longer-term future uncertain consequences. So the question is – can we imagine a real alternative that maintain social and security stability whist delivery sustainability for the next generations.

If we continue to focus on growth, it ultimately leads to failure due to lack of global resources, conflicts and competition for those resources, climate change / impact, lack of affordability and several other unintended consequences

If we substantially increase taxes, the motivation to take the risk to develop new businesses, new wealth and new jobs in the UK might reduce and some even more to more tax efficient provinces causing bigger issues with balance of payment. We need the skills to develop the wild cards for 2030 and beyond and get them into very day life.

If the government continues to borrow more money, it just becomes a bigger and bigger money pit with no way out, potentially leading to country bankruptcy or being held hostage to the lenders in the first place.

If the government takes a hard look to reduce many of the services it provides, this just increases social unrest, protests, other conflicts, and the citizens will just vote that government out in favour on one that we give them more of what they want.?

It is like a catch 22, if we push growth in the economy, ?then sustainability and our environment are at risk, ?power demands increase, the overshoot day gets worse and CO2 levels rise. This will increase the risks we face each day whether from the climate risk, social risk, or international conflict.?However, if we try to deal with the challenge of climate change and the reduction in costs to run the country to rapidly, this will create major social unrest, demonstrations, conflict and voting out the government for another party. Again, not a great outcome.

So, the key question is how can we move forward positively?

We firstly need to cut though the misinformation and have a fully connected competency and interconnect capability assessment looking at the last 100 years and then with excellent leadership look and vision what the next 100 years could be like.?We can do this by having a robust risk management approach which at the front end requires balanced objectives to be clearly set, a clear framing period given and in focus decisions are clear, a comprehensive risk assessment and finally, scenario models on the whole system rather than just one component.?Only after the system alternatives are fully identified can a longer-term plan be developed backwards from the year 2200 to today as a workable solution to today’s challenges.

So the two key things every good risk manager knows are

1.?????Why are we really trying to do this?

2.?????How will we exactly do this?

The world needs a new model as the existing one maybe sending us in the wrong direction.?The environmentalist groups are at one end of the argument and the growth groups at the other end of the argument. We need a movement that can sit dead centre and steer us through the storm to safety – A sustainable future in the 22nd Century can be achieve but it takes a global transition over the next 100 years and not just an energy transition over the next 30 years.

A long term approach is always difficult as it the future and uncertain and we may use blindness and denial to justify our actions today.?But there is a 95% correlation between the decisions we make today and tomorrows’ performance. Lets make sure we make the right ones or at least increase the probability of 50% or our decisions being right to 75% of our decisions being correct.

Leadership is clear, there is no point being a leader and finding that no-one is following you or following you down a dead end.?However yesterday’s and todays leaders vision only had to be 5 to 10 years out, but tomorrow’s leader are going to need to think 100 year out to ensure the 22nd century remains as good as the 20th and 21st century.

As a final quote?“ someone once told me, all that stuff is well and good, but I have to delivery today, right now I have a war to fight” If we all think like that then how can we sail the ship through the storm to safety?

?

Any thought?