1 Geopolitics: 'Rivals will take greater risks against the US'
No balance of power lasts forever. Just a century ago, London was the centre of the world. Britain bestrode the world like a colossus and only those with strong nerves (or weak judgment) dared challenge the Pax Britannica.
That, of course, is all history, but the Pax Americana that has taken shape since 1989 is just as vulnerable to historical change. In the 1910s, the rising power and wealth of Germany and America splintered the Pax Britannica; in the 2010s, east Asia will do the same to the Pax Americana.
The 21st century will see technological change on an astonishing scale. It may even transform what it means to be human. But in the short term – the next 20 years – the world will still be dominated by the doings of nation-states and the central issue will be the rise of the east.
By 2030, the world will be more complicated, divided between a broad American sphere of influence in Europe, the Middle East and south Asia, and a Chinese sphere in east Asia and Africa. Even within its own sphere, the US will face new challenges from former peripheries. The large, educated populations of Poland, Turkey, Brazil and their neighbours will come into their own and Russia will continue its revival.
Nevertheless, America will probably remain the world's major power. The critics who wrote off the US during the depression of the 1930s and the stagflation of the 1970s lived to see it bounce back to defeat the Nazis in the 1940s and the Soviets in the 1980s. America's financial problems will surely deepen through the 2010s, but the 2020s could bring another Roosevelt or Reagan.
A hundred years ago, as Britain's dominance eroded, rivals, particularly Germany, were emboldened to take ever-greater risks. The same will happen as American power erodes in the 2010s-20s. In 1999, for instance, Russia would never have dared attack a neighbour such as Georgia but in 2009 it took just such a chance.
The danger of such an adventure sparking a great power war in the 2010s is probably low; in the 2020s, it will be much greater.
The most serious threats will arise in the vortex of instability that stretches from Africa to central Asia. Most of the world's poorest people live here; climate change is wreaking its worst damage here; nuclear weapons are proliferating fastest here; and even in 2030, the great powers will still seek much of their energy here.
Here, the risk of Sino-American conflict will be greatest and here the balance of power will be decided.
Ian Morris, professor of history at Stanford University and the author of Why the West Rules – For Now (Profile Books)
2 The UK economy: 'The popular revolt against bankers will become impossible to resist'
It will be a second financial crisis in the 2010s – probably sooner than later – that will prove to be the remaking of Britain. Confronted by a second trillion-pound bank bailout in less than 10 years, it will be impossible for the City and wider banking system to resist reform. The popular revolt against bankers, their current business model in which neglect of the real economy is embedded and the scale of their bonuses – all to be underwritten by bailouts from taxpayers – will become irresistible. The consequent rebalancing of the British economy, already underway, will intensify. Britain, in thrall to finance since 1945, will break free – spearheading a second Industrial Revolution.
In 2035, there is thus a good prospect that Britain will be the most populous (our birth rate will be one the highest in Europe), dynamic and richest European country, the key state in a reconfigured EU. Our leading universities will become powerhouses of innovation, world centres in exploiting the approaching avalanche of scientific and technological breakthroughs. A reformed financial system will allow British entrepreneurs to get the committed financial backing they need, becoming the capitalist leaders in Europe. And, after a century of trying, Britain will at last build itself a system for developing apprentices and technicians that is no longer the Cinderella of the education system.
It will not be plain sailing. Massive political turbulence in China and its conflict with the US will define part of the next 25 years – and there will be a period when the world trading and financial system retreats from openness.
How far beggar-my-neighbour competitive devaluations and protection will develop is hard to predict, but protectionist trends are there for all to see. Commodity prices will go much higher and there will be shortages of key minerals, energy, water and some basic foodstuffs.
The paradox is that this will be good news for Britain. It will force the state to re-engage with the economy and to build a matrix of institutions that will support innovation and investment, rather as it did between 1931 and 1950. New Labour began this process tremulously in its last year in office; the coalition government is following through. These will be lean years for the traditional Conservative right, but whether it will be a liberal One Nation Tory party, ongoing coalition governments or the Labour party that will be the political beneficiary is not yet sure.
The key point is that those 20 years in the middle of the 20th century witnessed great industrial creativity and an unsung economic renaissance until the country fell progressively under the stultifying grip of the City of London. My guess is that the same, against a similarly turbulent global background, is about to happen again. My caveat is if the City remains strong, in which case economic decline and social division will escalate.
Will Hutton, executive vice-chair of the Work Foundation and an Observer columnist
3 Global development: 'A vaccine will rid the world of Aids'
Within 25 years, the world will achieve many major successes in tackling the diseases of the poor.
Certainly, we will be polio-free and probably will have been for more than a decade. The fight to eradicate polio represents one of the greatest achievements in global health to date. It has mobilised millions of volunteers, staged mass immunisation campaigns and helped to strengthen the health systems of low-income countries. Today, we have eliminated 99% of the polio in the world and eradication is well within reach.
Vaccines that prevent diseases such as measles and rotavirus, currently available in rich countries, will also become affordable and readily available in developing countries. Since it was founded 10 years ago, the Gavi Alliance, a global partnership that funds expanded immunisation in poor countries, has helped prevent more than 5 million deaths. It is easy to imagine that in 25 years this work will have been expanded to save millions more lives by making life-saving vaccines available all over the world.
I also expect to see major strides in new areas. A rapid point-of-care diagnostic test – coupled with a faster-acting treatment regimen – will so fundamentally change the way we treat tuberculosis that we can begin planning an elimination campaign.
We will eradicate malaria, I believe, to the point where there are no human cases reported globally in 2035. We will also have effective means for preventing Aids infection, including a vaccine. With the encouraging results of the RV144 Aids vaccine trial in Thailand, we now know that an Aids vaccine is possible. We must build on these and promising results on other means of preventing HIV infection to help rid the world of the threat of Aids.
Tachi Yamada, president of the global health programme at the Bill & Melinda Gates Foundation
4 Energy: 'Returning to a world that relies on muscle power is not an option'
Providing sufficient food, water and energy to allow everyone to lead decent lives is an enormous challenge. Energy is a means, not an end, but a necessary means. With 6.7 billion people on the planet, more than 50% living in large conurbations, and these numbers expected to rise to more than 9 billion and 80% later in the century, returning to a world that relies on human and animal muscle power is not an option.
The challenge is to provide sufficient energy while reducing reliance on fossil fuels, which today supply 80% of our energy (in decreasing order of importance, the rest comes from burning biomass and waste, hydro, nuclear and, finally, other renewables, which together contribute less than 1%). Reducing use of fossil fuels is necessary both to avoid serious climate change and in anticipation of a time when scarcity makes them prohibitively expensive.
It will be extremely difficult. An International Energy Agency scenario that assumes the implementation of all agreed national policies and announced commitments to save energy and reduce the use of fossil fuels projects a 35% increase in energy consumption in the next 25 years, with fossil fuels up 24%. This is almost entirely due to consumption in developing countries where living standards are, happily, rising and the population is increasing rapidly.
This scenario, which assumes major increases in nuclear, hydro and wind power, evidently does not go far enough and will break down if, as many expect, oil production (which is assumed to increase 15%) peaks in much less than 25 years. We need to go much further in reducing demand, through better design and changes in lifestyles, increasing efficiency and improving and deploying all viable alternative energy sources. It won't be cheap. And in the post-fossil-fuel era it won't be sufficient without major contributions from solar energy (necessitating cost reductions and improved energy storage and transmission) and/or nuclear fission (meaning fast breeder and/or thorium reactors when uranium eventually becomes scarce) and/or fusion (which is enormously attractive in principle but won't become a reliable source of energy until at least the middle of the century).
Disappointingly, with the present rate of investment in developing and deploying new energy sources, the world will still be powered mainly by fossil fuels in 25 years and will not be prepared to do without them.
Chris Llewellyn Smith is a former director general of Cern and chair of Iter, the world fusion project, he works on energy issues at Oxford University
5 Advertising: 'All sorts of things will just be sold in plain packages'
If I'd been writing this five years ago, it would have been all about technology: the internet, the fragmentation of media, mobile phones, social tools allowing consumers to regain power at the expense of corporations, all that sort of stuff. And all these things are important and will change how advertising works.
But it's becoming clear that what'll really change advertising will be how we relate to it and what we're prepared to let it do. After all, when you look at advertising from the past the basic techniques haven't changed; what seems startlingly alien are the attitudes it was acceptable to portray and the products you were allowed to advertise.
In 25 years, I bet there'll be many products we'll be allowed to buy but not see advertised – the things the government will decide we shouldn't be consuming because of their impact on healthcare costs or the environment but that they can't muster the political will to ban outright. So, we'll end up with all sorts of products in plain packaging with the product name in a generic typeface – as the government is currently discussing for cigarettes.
But it won't stop there. We'll also be nudged into renegotiating the relationship between society and advertising, because over the next few years we're going to be interrupted by advertising like never before. Video screens are getting so cheap and disposable that they'll be plastered everywhere we go. And they'll have enough intelligence and connectivity that they'll see our faces, do a quick search on Facebook to find out who we are and direct a message at us based on our purchasing history.
At least, that'll be the idea. It probably won't work very well and when it does work it'll probably drive us mad. Marketing geniuses are working on this stuff right now, but not all of them recognise that being allowed to do this kind of thing depends on societal consent – push the intrusion too far and people will push back.
Society once did a deal accepting advertising because it seemed occasionally useful and interesting and because it paid for lots of journalism and entertainment. It's not necessarily going to pay for those things for much longer so we might start questioning whether we want to live in a Blade Runner world brought to us by Cillit Bang.
Russell Davies, head of planning at the advertising agency Ogilvy and Mather and a columnist for the magazines Campaign and Wired
6 Neuroscience: 'We'll be able to plug information streams directly into the cortex'
By 2030, we are likely to have developed no-frills brain-machine interfaces, allowing the paralysed to dance in their thought-controlled exoskeleton suits. I sincerely hope we will not still be interfacing with computers via keyboards, one forlorn letter at a time.
I'd like to imagine we'll have robots to do our bidding. But I predicted that 20 years ago, when I was a sanguine boy leaving Star Wars, and the smartest robot we have now is the Roomba vacuum cleaner. So I won't be surprised if I'm wrong in another 25 years. Artificial intelligence has proved itself an unexpectedly difficult problem.
Maybe we will understand what's happening when we immerse our heads into the colourful night blender of dreams. We will have cracked the secret of human memory by realising that it was never about storing things, but about the relationships between things.
Will we have reached the singularity – the point at which computers surpass human intelligence and perhaps give us our comeuppance? We'll probably be able to plug information streams directly into the cortex for those who want it badly enough to risk the surgery. There will be smart drugs to enhance learning and memory and a flourishing black market among ambitious students to obtain them.
Having lain to rest the nature-nurture dichotomy at that point, we will have a molecular understanding of the way in which cultural narratives work their way into brain tissue and of individual susceptibility to those stories.
Then there's the mystery of consciousness. Will we finally have a framework that allows us to translate the mechanical pieces and parts into private, subjective experience? As it stands now, we don't even know what such a framework could look like ("carry the two here and that equals the experience of tasting cinnamon").
That line of research will lead us to confront the question of whether we can reproduce consciousness by replicating the exact structure of the brain – say, with zeros and ones, or beer cans and tennis balls. If this theory of materialism turns out to be correct, then we will be well on our way to downloading our brains into computers, allowing us to live forever in The Matrix.
But if materialism is incorrect, that would be equally interesting: perhaps brains are more like radios that receive an as-yet-undiscovered force. The one thing we can be sure of is this: no matter how wacky the predictions we make today, they will look tame in the strange light of the future.
David Eagleman, neuroscientist and writer
7 Physics: 'Within a decade, we'll know what dark matter is'
The next 25 years will see fundamental advances in our understanding of the underlying structure of matter and of the universe. At the moment, we have successful descriptions of both, but we have open questions. For example, why do particles of matter have mass and what is the dark matter that provides most of the matter in the universe?
I am optimistic that the answer to the mass question will be found within a few years, whether or not it is the mythical Higgs boson, and believe that the answer to the dark matter question will be found within a decade.
Key roles in answering these questions will be made by experiments at Cern's Large Hadron Collider, which started operations in earnest last year and is expected to run for most of the next 20 years; others will be played by astrophysical searches for dark matter and cosmological observations such as those from the European Space Agency's Planck satellite.
Many theoretical proposals for answering these questions invoke new principles in physics, such as the existence of additional dimensions of space or a "supersymmetry" between the constituents of matter and the forces between them, and we will discover whether these ideas are useful for physics. Both these ideas play roles in string theory, the best guess we have for a complete theory of all the fundamental forces including gravity.
Will string theory be pinned down within 20 years? My crystal ball is cloudy on this point, but I am sure that we physicists will have an exciting time trying to find out.
John Ellis, theoretical physicist at Cern and King's College London
8 Food: 'Russia will become a global food superpower'
When experts talk about the coming food security crisis, the date they fixate upon is 2030. By then, our numbers will be nudging 9 billion and we will need to be producing 50% more food than we are now.
By the middle of that decade, therefore, we will either all be starving, and fighting wars over resources, or our global food supply will have changed radically. The bitter reality is that it will probably be a mixture of both.
Developed countries such as the UK are likely, for the most part, to have attempted to pull up the drawbridge, increasing national production and reducing our reliance on imports.
In response to increasing prices, some of us may well have reduced our consumption of meat, the raising of which is a notoriously inefficient use of grain. This will probably create a food underclass, surviving on a carb- and fat-heavy diet, while those with money scarf the protein.
The developing world, meanwhile, will work to bridge the food gap by embracing the promise of biotechnology which the middle classes in the developed world will have assumed that they had the luxury to reject.
In truth, any of the imported grain that we do consume will come from genetically modified crops. As climate change lays waste to the productive fields of southern Europe and north Africa, more water-efficient strains of corn, wheat and barley will be pressed into service; likewise, to the north, Russia will become a global food superpower as the same climate change opens up the once frozen and massive Siberian prairie to food production.
The consensus now is that the planet does have the wherewithal to feed that huge number of people. It's just that some people in the west may find the methods used to do so unappetising.
Jay Rayner, TV presenter and the Observer's food critic
9 Nanotechnology: 'Privacy will be a quaint obsession'
Twenty years ago, Don Eigler, a scientist working for IBM in California, wrote out the logo of his employer in letters made of individual atoms. This feat was a graphic symbol of the potential of the new field of nanotechnology, which promises to rebuild matter atom by atom, molecule by molecule, and to give us unprecedented power over the material world.
Some, like the futurist Ray Kurzweil, predict that nanotechnology will lead to a revolution, allowing us to make any kind of product for virtually nothing; to have computers so powerful that they will surpass human intelligence; and to lead to a new kind of medicine on a sub-cellular level that will allow us to abolish ageing and death.
I don't think that Kurzweil's "technological singularity" – a dream of scientific transcendence that echoes older visions of religious apocalypse – will happen. Some stubborn physics stands between us and "the rapture of the nerds". But nanotechnology will lead to some genuinely transformative applications.
New ways of making solar cells very cheaply on a very large scale offer us the best hope we have for providing low-carbon energy on a big enough scale to satisfy the needs of a growing world population aspiring to the prosperity we're used to in the developed world.
We'll learn more about intervening in our biology at the sub-cellular level and this nano-medicine will give us new hope of overcoming really difficult and intractable diseases, such as Alzheimer's, that will increasingly afflict our population as it ages.
The information technology that drives your mobile phone or laptop is already operating at the nanoscale. Another 25 years of development will lead us to a new world of cheap and ubiquitous computing, in which privacy will be a quaint obsession of our grandparents.
Nanotechnology is a different type of science, respecting none of the conventional boundaries between disciplines and unashamedly focused on applications rather than fundamental understanding.
Given the huge resources being directed towards nanotechnology in China and its neighbours, this may also be the first major technology of the modern era that is predominantly developed outside the US and Europe.
Richard Jones, pro-vice-chancellor for research and innovation at the University of Sheffield
10 Gaming: 'We'll play games to solve problems'
In the last decade, in the US and Europe but particularly in south-east Asia, we have witnessed a flight into virtual worlds, with people playing games such as Second Life. But over the course of the next 25 years, that flight will be successfully reversed, not because we're going to spend less time playing games, but because games and virtual worlds are going to become more closely connected to reality.
There will be games where the action is influenced by what happens in reality; and there will be games that use sensors so that we can play them out in the real world – a game in which your avatar is your dog, which wears a game collar that measures how fast it's running and whether or not it's wagging its tail, for example, where you play with your dog to advance the narrative, as opposed to playing with a virtual character. I can imagine more physical activity games, too, and these might be used to harness energy – peripherals like a dance pad that actually captures energy from your dancing on top of it.
Then there will be problem-solving games: there are already a lot of games in which scientists try to teach gamers real science – how to build proteins to cure cancer, for example. One surprising trend in gaming is that gamers today prefer, on average, three to one to play co-operative games rather than competitive games. Now, this is really interesting; if you think about the history of games, there really weren't co-operative games until this latest generation of video games. In every game you can think of – card games, chess, sport – everybody plays to win. But now we'll see increasing collaboration, people playing games together to solve problems while they're enjoying themselves.
There are also studies on how games work on our minds and our cognitive capabilities, and a lot of science suggests you can use games to treat depression, anxiety and attention-deficit disorder. Making games that are both fun and serve a social purpose isn't easy – a lot of innovation will be required – but gaming will become increasingly integrated into society.
Jane McGonigal, director of games research & development at the Institute for the Future in California and author of Reality Is Broken: Why Games Make Us Happy and How They Can Help Us Change the World (Penguin)
11 Web/internet: 'Quantum computing is the future'
The open web created by idealist geeks, hippies and academics, who believed in the free and generative flow of knowledge, is being overrun by a web that is safer, more controlled and commercial, created by problem-solving pragmatists.
Henry Ford worked out how to make money by making products people wanted to own and buy for themselves. Mark Zuckerberg and Steve Jobs are working out how to make money from allowing people to share, on their terms.
Facebook and Apple are spawning cloud capitalism, in which consumers allow companies to manage information, media, ideas, money, software, tools and preferences on their behalf, holding everything in vast, floating clouds of shared data. We will be invited to trade invasions into our privacy – companies knowing ever more about our lives – for a more personalised service. We will be able to share, but on their terms.
Julian Assange and the movement that has been ignited by WikiLeaks is the most radical version of the alternative: a free, egalitarian, open and public web. The fate of this movement will be a sign of things to come. If it can command broad support, then the open web has a chance to remain a mainstream force. If, however, it becomes little more than a guerrilla campaign, then the open web could be pushed to the margins, along with national public radio.
By 2035, the web, as a single space largely made up of webpages accessed on computers, will be long gone.
As the web goes mobile, those who pay more will get faster access. We will be sharing videos, simulations, experiences and environments, on a multiplicity of devices to which we'll pay as much attention as a light switch.
Yet, many of the big changes of the next 25 years will come from unknowns working in their bedrooms and garages. And by 2035 we will be talking about the coming of quantum computing, which will take us beyond the world of binary, digital computing, on and off, black and white, 0s and 1s.
The small town of Waterloo, Ontario, which is home to the Perimeter Institute, funded by the founder of BlackBerry, currently houses the largest collection of theoretical physicists in the world.
The bedrooms of Waterloo are where the next web may well be made.
Charles Leadbeater, author and social entrepreneur
12 Fashion: 'Technology creates smarter clothes'
Fashion is such an important part of the way in which we communicate our identity to others, and for a very long time it's meant dress: the textile garments on our body. But in the coming decades, I think there'll be much more emphasis on other manifestations of fashion and different ways of communicating with each other, different ways of creating a sense of belonging and of making us feel great about ourselves.
We're already designing our identities online – manipulating imagery to tell a story about ourselves. Instead of meeting in the street or in a bar and having a conversation and looking at what each other is wearing, we're communicating in some depth through these new channels. With clothing, I think it's possible that we'll see a polarisation between items that are very practical and those that are very much about display – and maybe these are not things that you own but that you borrow or share.
Technology is already being used to create clothing that fits better and is smarter; it is able to transmit a degree of information back to you. This is partly driven by customer demand and the desire to know where clothing comes from – so we'll see tags on garments that tell you where every part of it was made, and some of this, I suspect, will be legislation-driven, too, for similar reasons, particularly as resources become scarcer and it becomes increasingly important to recognise water and carbon footprints.
However, it's not simply an issue of functionality. Fashion's gone through a big cycle in the last 25 years – from being something that was treasured and cherished to being something that felt disposable, because of a drop in prices. In fact, we've completely changed our relationship towards clothes and there's a real feeling among designers who I work with that they're trying to work back into their designs an element of emotional content.
I think there's definitely a place for technology in creating a dialogue with you through your clothes.
Dilys Williams, designer and the director for sustainable fashion at the London College of Fashion
13 Nature: 'We'll redefine the wild'
We all want to live in a world where species such as tigers, the great whales, orchids and coral reefs can persist and thrive and I am sure that the commitment that people have to maintaining the spectacle and diversity of life will continue. Over the past 50 years or so, there has been growing support for nature conservation. When we understand the causes of species losses, good conservation actions can and do reverse the trends.
But it is going to become much harder. The human population has roughly doubled since the 1960s and will increase by another third by 2030. Demands for food, water and energy will increase, inevitably in competition with other species. People already use up to 40% of the world's primary production (energy) and this must increase, with important consequences for nature.
In the UK, some familiar species will become scarcer as our rare habitats (mires, bogs and moorlands) are lost. We will be seeing the effects from gradual warming that will allow more continental species to live here, and in our towns and cities we'll probably have more species that have become adapted to living alongside people.
We can conserve species when we really try, so I'm confident that the charismatic mega fauna and flora will mostly still persist in 2035, but they will be increasingly restricted to highly managed and protected areas. The survivors will be those that cope well with people and those we care about enough to save. Increasingly, we won't be living as a part of nature but alongside it, and we'll have redefined what we mean by the wild and wilderness.
Crucially, we are still rapidly losing overall biodiversity, including soil micro-organisms, plankton in the oceans, pollinators and the remaining tropical and temperate forests. These underpin productive soils, clean water, climate regulation and disease-resistance. We take these vital services from biodiversity and ecosystems for granted, treat them recklessly and don't include them in any kind of national accounting.
Georgina Mace, professor of conservation science and director of the Natural Environment Research Council's Centre for Population Biology, Imperial College London
14 Architecture: What constitutes a 'city' will change
In 2035, most of humanity will live in favelas. This will not be entirely wonderful, as many people will live in very poor housing, but it will have its good side. It will mean that cities will consist of series of small units organised, at best, by the people who know what is best for themselves and, at worst, by local crime bosses.
Cities will be too big and complex for any single power to understand and manage them. They already are, in fact. The word "city" will lose some of its meaning: it will make less and less sense to describe agglomerations of tens of millions of people as if they were one place, with one identity. If current dreams of urban agriculture come true, the distinction between town and country will blur. Attempts at control won't be abandoned, however, meaning that strange bubbles of luxury will appear, like shopping malls and office parks. To be optimistic, the human genius for inventing social structures will mean that new forms of settlement we can't quite imagine will begin to emerge.
All this assumes that environmental catastrophe doesn't drive us into caves. Nor does it describe what will happen in Britain, with a roughly stable population and a planning policy dedicated to preserving the status quo as much as possible. Britain in 25 years' time may look much as it does now, which is not hugely different from 25 years ago. Rowan Moore, Observer architecture correspondent
15 Sport: 'Broadcasts will use holograms'
Globalisation in sport will continue: it's a trend we've seen by the choice of Rio for the 2016 Olympics and Qatar for the 2022 World Cup. This will mean changes to traditional sporting calendars in recognition of the demands of climate and time zones across the planet.
Sport will have to respond to new technologies, the speed at which we process information and apparent reductions in attention span. Shorter formats, such as Twenty20 cricket and rugby sevens, could aid the development of traditional sports in new territories.
The demands of TV will grow, as will technology's role in umpiring and consuming sport. Electronics companies are already planning broadcasts using live holograms. I don't think we'll see an acceptance of performance-enhancing drugs: the trend has been towards zero tolerance and long may it remain so.
Mike Lee, chairman of Vero Communications and ex-director of communications for London's 2012 Olympic bid
16 Transport: 'There will be more automated cars'
It's not difficult to predict how our transport infrastructure will look in 25 years' time – it can take decades to construct a high-speed rail line or a motorway, so we know now what's in store. But there will be radical changes in how we think about transport. The technology of information and communication networks is changing rapidly and internet and mobile developments are helping make our journeys more seamless. Queues at St Pancras station or Heathrow airport when the infrastructure can't cope for whatever reason should become a thing of the past, but these challenges, while they might appear trivial, are significant because it's not easy to organise large-scale information systems.
The instinct to travel is innate within us, but we will have to do it in a more carbon-efficient way. It's hard to be precise, but I think we'll be cycling and walking more; in crowded urban areas we may see travelators – which we see in airports already – and more scooters. There will be more automated cars, like the ones Google has recently been testing. These driverless cars will be safer, but when accidents do happen, they may be on the scale of airline disasters. Personal jetpacks will, I think, remain a niche choice.
Frank Kelly, professor of the mathematics of systems at Cambridge University, and former chief scientific adviser to the DfT
17 Health: 'We'll feel less healthy'
Exactly 20 years ago this week, Manmohan Singh, now in his second term as prime minister of India, made, as the greenhorn finance minister of a newly elected Congress government, the most important and far-reaching budget speech in the modern history of his country. In response to an unprecedented balance of payments crisis -- which left India with about two weeks of foreign-exchange reserves -- Singh, with the support of Prime Minister P.V. Narasimha Rao, announced a host of reforms in his inaugural budget speech on July 24, 1991. His two-hour oration left no one in doubt that he intended to turn a crisis into an opportunity.
By dismantling government control over the economy, opening up Indian markets to foreign investment, cutting trade tariffs, devaluing the rupee, Singh broke down, in one go, the walls between the sluggish, protected economy of socialist India and the rest of the world. "I do not minimize the difficulties that lie ahead on the long and arduous journey on which we have embarked," Singh said at the conclusion of his speech. "But as Victor Hugo once said, 'No power on Earth can stop an idea whose time has come.' I suggest to this august House that the emergence of India as a major economic power in the world happens to be one such idea."
Today, Singh's words, which then seemed an implausible dream, are a reality. In absolute terms, India is now the 10th -largest economy in the world; and when figures are adjusted for purchasing power parity, it is the fourth-largest. Since the second half of the 1990s, the economy has consistently posted a growth rate of 7.5 percent or more -- about twice the rate of the years between Independence in 1947 and liberalization in 1991 -- and is now a hotspot on the map of global business. Per-capita income has almost quadrupled compared with 1991. Long starved of access to consumer goods, Indians of all classes have taken advantage of a consumer revolution of colossal dimensions. Economic liberalization has greatly affected Indian attitudes toward money, business, development and politics, and opened doors for the ambitions of millions of young people. A laggard in the world for much of the 20th century, India now confidently inhabits the 21st.
Yet there was less excitement this week about the 20th anniversary of liberalization than there might have been. This points, on the one hand, to the success of something that has now been so thoroughly absorbed that it seems to have always been around, and on the other, to a negative mood in the country and an ambivalence among large sections of the population about liberalization's consequences, whether real or imagined. One reason is that, inevitably, the gulf between the rich and the poor has widened enormously in the last two decades, as those able to take advantage of the opportunities afforded by the new India have raced ahead of those left behind. India's middle-class is growing rapidly, and numbers about 400 million, but it is disconnected from the rural poor and often uncomprehending of its needs and problems. The poor themselves have good reason to be skeptical of a mood that would extol India as a rising economic superpower. While most realize that sometimes inequality must rise for poverty to fall, they say to themselves: not these levels of inequality.
Worst of all, the government -- including, ironically, the UPA coalition in power at the center for the last seven years with Singh at the helm -- largely hasn't kept up its side of the bargain. It failed to adequately fulfill its responsibilities in the fields of infrastructure, health, and education (especially primary education), leaving many citizens weaker and often resentful in the post-liberalization world. India ranked an abysmal 119 among 169 countries in the United Nations Development Program's 2010 Human Development Index. The government also has neglected its responsibilities as a regulator, leading to the mushrooming of crony capitalism. Indian politics retains a backward approach to economics, choosing to offer freebies, subsidies, and special privileges to groups of voters rather than make a case for the advantages of liberalization.
Reforms themselves have suffered because they have been implemented in a piecemeal, stuttering way, without a comprehensive, intellectually coherent "second phase" to follow the advances made by the first. It would appear that, two decades after he first shook the earth beneath Indian feet, Singh doesn't have the energy or the political backing to take his project forward. The most prominent pieces of legislation of the current UPA government have been massive government programs to achieve what it calls "inclusive growth," such as the NREGA plan for employment generation.
Reports and essays in the Indian media took stock of both sides of the liberalization story. In "How the Indian Economy Changed, 1991-2011," the Economic Times presented a set of tables documenting economic statistics over the period. Among the interesting leaps documented in this piece was the extent of India's telecom revolution (telephone subscribers, in the mobile-phone era, are up to 862 million from 0.5 million) and the flow of Foreign Direct Investment into the country (up to $30.3 billion from $0.13 billion). In a piece in the New Indian Express called "Reforms of 1991 a one-fourth revolution," the columnist Shankkar Aiyar wrote:
On this day in 1991, the government lit a bonfire of historic vanities with the Big Bang theory of liberalisation that promised to liberate India from episodic crisis and Indians from perennial poverty. The government dismantled licence raj [the elaborate bureaucratic process for regulating business], opened up trade, unshackled the financial sector and vowed to get government out of the business of business. On their own, the political class would have gladly put off salvation until the next coming but the severity of the crisis -- India was begging NRIs [non-resident Indians] not to withdraw their monies and countries to extend credit -- obliged the political class to act. It is a travesty of fate and a reflection on India that the principal navigators—A.N. Verma, S. Venkitramanan and, of course, P V Narasimha Rao -- have never been accorded their due.
Cause for celebrating the anniversary? Yes and no. Yes because there has been no drastic reversal as in the 1960s, and no because the micro-analysis is not as cheerful. Availability of choice is not matched by availability of incomes to afford consumption. Growth has been asymmetric across sectors and geographies. Services sector growing at 9-plus percent, accounts for more than half the GDP and for 25 percent of the workforce. Rural India, which hosts 75 percent of the population, is growing the slowest. Growth is uneven across geographies too. Of the 30 small and big states, just the four southern states account for 22 percent of GDP and 28 percent of the employment. The most populous states hosting a majority of the poor are the worst off, gawkers in a multiplex economy.
And although the Indian economy as a whole grew at an average of nearly 7 percent between 1991 and 2011, agriculture grew at barely 2.8 percent. Juxtapose the growth with share of national income to appreciate the consequences. Agriculture, which accounted for 29 percent of the economy, now accounts for 15 percent of the economy, while India’s rural populace has shot up from 640 million to 810 million. This means, in 1991 nearly 640 million people or 80 percent of the population lived on 30 percent of the national income and in 2011 nearly 75 percent of the populace or 810 million people live on 15 percent of the national income. Economists may quibble about what percentage of rural populace is dependent on agriculture, but there is no doubt that 75 percent of the populace hasn’t found a place on the gravy train. This makes the 1991 reforms a 25 percent revolution.
Those words were echoed by the popular columnist Swaminathan S. Aiyar in the Economic Times:
The unfinished agenda is huge. Crony capitalism rather than free competition prevails in many sectors, especially real estate, natural resources and government contracts, making politicians millionaires on an unprecedented scale. Government services — subsidised food, employment programmes, education, health — are dogged by massive absenteeism, corruption and leakages. The police-judicial system is corrupt and moribund, and simply does not combat crime or redress public grievances. Criminals have entered politics in unprecedented numbers.
Much economic reform is still needed. India ranks only 134th of 183 countries in ease of doing business, according to the Doing Business series of the World Bank/IFC. But even more urgent are reforms to improve governance. After all, economic reform has sufficed to create miracle growth. Governance, alas, still needs a miracle.
And in Outlook magazine, Kalyani Chawla reprised the crucial role played by Rao in July 1991, and compared the Manmohan Singh of 1991 to the Mahmohan Singh of today:
Manmohan, who has been called the father of India’s economic reforms, could not launch second-generation reforms as prime minister during UPA-1. Vested interests, trade unions and the Left parties combined with votebank politics and populism to scuttle or slow down the pace of reforms. At the state level, regional parties in power delayed reforms. [...] Above all, Manmohan was not able to market these reforms to the masses, as they had failed to generate employment corresponding to the high growth. The opposition parties dubbed the reforms as pro-rich and anti-poor. During UPA-2, the government is drifting and is bogged down by corruption, especially the 2G and CWG scams.
Despite Rao’s contribution to India’s liberalisation drive, the Congress seems reluctant to commend his efforts. On the contrary, it seems as if the party would like to black out the Rao period from its history. For instance, while celebrating its 125th foundation day last December, the party enumerated the achievements of every Congress prime minister—except Rao.
And in London's Financial Times, the economist Vivek Dehejia took issue with the use of the word "neoliberal" to describe India's current economic order, arguing that many of its problems had their roots in too little reform, not too much:
Unfortunately, the case for liberal economic reform has never been properly made in India. Reform, when it happens, comes under the weight of a crisis, as in 1991, or in stealth, as it did subsequently. This “original sin” of 1991 has contaminated all subsequent discussion of economic policy and the roots of our current difficulties.
[...]The bottom line is this: our problem at present is not too much reform, but not enough. And by that I mean not merely the quantum of existing reforms, whether in trade, tax, or foreign investment, or even much-needed “second generation” reforms, such as of labour laws. Rather, I refer to vitally needed regulatory reform which keeps big business at arms’ length from politicians and bureaucrats, and, at the same time, a rationalization of that selfsame regulatory regime to eliminate the incentive for corruption in the first place. In addition, as pointed out by commentators in this and other newspapers, we need a thorough overhaul of electoral finance in India to cut off at the knees the incentive for politicians to accumulate war chests of black money with which to fight elections. As economists are aware, there is both a supply and demand side to corruption, and both must be tackled if it is to be reined in. That would take us a long way toward a truly liberal economic order, a far cry from the unfinished avatar of today, which is being castigated by earnest but misguided critics who see the symptoms but have failed to diagnose the disease.
Dehejia's piece can be usefully read alongside one by Niranjan Rajadhyaksha, managing editor of the Indian business newspaper Mint, who wrote a few months ago in an essay titled "India, Twenty Years Later," in the Wall Street Journal:
[T]he so-called 1991 Big Bang, and the reform process since then, left a lot undone. In the past few years especially, the Congress Party-led government of Prime Minister Manmohan Singh, the finance minister who helped introduce many of the most dramatic reforms from 1991-93, has lost its nerve for liberalization. Several important second-generation reforms, like the introduction of a unified goods and services tax that will finally stop distorting the tax incentives of producers, have not progressed since the Congress came to power in 2004.
More importantly, Mr. Singh has done nothing to liberalize India's labor laws, the key impediment to job creation. A plethora of labor legislation enacted since India's independence in 1947 makes it very difficult for firms to hire and fire people as they wish. Laws to protect existing workers have kept new workers out of jobs. Because of these laws, manufacturing firms have preferred to substitute otherwise cheap labor with capital. So even when India's companies grow, they aren't taking its workforce along.
Meanwhile, the government still struggles to provide basic public services. India is terrible at making sure its citizens have the opportunity to go to schools or hospitals, or even have drinking water. In some cases, it can't even promise law and order. These problems add an edge to the old complaint that the Indian state does too much in the economy and too little in governance. So reordering priorities should involve further economic reforms on the one hand and governance reforms on the other.
The major problem now is that these earlier reform failures are creating political conditions where it may be harder to push forward with more liberalization. India's biggest political-economy puzzle, and also one of its most serious challenges, is that earlier reforms have not created an effective political constituency for further reform. Voters consistently reward candidates promising greater welfare benefits or government intervention in the economy.
Why reformers don't win votes is clearest in the labor market. Even if the potential reform constituency now has phones and consumer goods, it doesn't have steady employment. [...] 93% of working-age Indians, estimated now at 500 million, continue to work informally—outside of the organized sector and without proper labor contracts.
This lack of modern employment opportunities, coupled with poor public services, has denied millions the upward mobility that was seen in most other Asian countries. Unemployed or underemployed Indians, still living an abject life without much dignity, look at the hype surrounding the Big Bang and wonder what was in it for them.
This disconnect between rising aspirations and the inability to meet those hopes quickly enough gives rise to a fault line in Indian politics. Politicians happily exploit it: Rather than summoning the will to push through reforms that would address the roots of the problem, it's easier to pitch illiberal spending and subsidies as an easy "fix."
Although there are many gaps and contradictions in India's liberalization story, there remains little doubt that the decisions of June 24, 1991 have had a greater influence on the lives of its people (including the few hundred million born since) than any other political event in recent history. Perhaps by the time the 30th anniversary of liberalization comes around a second phase of reforms will have evened out some of the imbalances created by the first -- and hopefully this time it won't take a crisis to force action.
(Chandrahas Choudhury, a novelist, is the New Delhi correspondent for the World View blog. The opinions expressed are his own.)
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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