Is a loss of general trust looming from AI?
General expectations around the globe are that the climate will cause even more extreme events this year than in 2023. This will also increase the extent of global climate-related migrations.
Both events can affect parliamentary elections this year. 2024 is a so called super election year. No fewer than 41% of the global population will be heading for the election ballots this year. Voters normally cast their votes based on information leading up to the election.
Can AI affect our choices?
World leaders are thus concerned about how best to protect from the risk of disinformation. This is strongly exacerbated by AI. A broader theme can however also be on the rise.
- Op mod åbningen af World Economic Forum i januar, skrev Klaus Schwab således i en åben kronik til globale medier, at “den aktuelle bølge af pessimisme er uden fortilfælde, og dens mulige effekt forværres af, at globale mediers og kommunikationsteknologiers indflydelse er større end nogensinde. Det giver grobund for ekstremisme og demagoger”.
- Schwabs centrale pointe er, at vi “for det første ikke længere har et narrativ for, hvordan vi genskaber dynamikken i vores økonomier, som i dag er belastede af uholdbare gælds- og inflationsrater, der underminerer den enkelte forbrugers købekraft. Traditionelle penge- og finanspolitikker har tabt momentum og de politiske initiativer, der skal skabe større udbud øger gældsbyrden”.
- Schwab's point is unusual and very relevant. Among african nations south of the Sahara only Botswana today has an investment grade. There have always been debt spirals, but for single countries at a time. Today it applies for entire continents.
- In the end, Schwab refers to the devastating effect from climate changes and refers to AI. He fears that this can produce a confidence crisis from misinformation and disinformation. This is particularly a result of an ever increasing AI development. Our cyber security tools, precautions and general awareness of potential risks far lack the AI development. This warping can lead to social polarisation within democracies (e.g. in the US) and between countries (wars etc.).
Are we heading towards a new paradigm?
Klaus Schwabs concerns are in sync with e.g. the World Banks' annual report on wealth inequality. This concludes a.o. that things are not progressing. The drop in the number of extremely poor has levelled out. Secondly, the general wealth inequality is rising, also within developed countries. This produces a squeeze for poor countries. Their economic growth is now falling but raw materials prices are expected to remain elevated until around 2025.
This is globally worsened by the end of the era of free and ample liquidity. Financial spreads (i.e. risk premiums) rise globally, both within countries between IG and HY, but also between countries. It has become more expensive to be poor and thus have a low rating. This increases the liquidity risk for many EMDE's, i.e. the risk of not beeing able to attract funding at any cost, because the return on investment is hollowed out by rising interests. Since mid 2021, the big central banks (PBoC, Fed and ECB) have tightened credit terms towards EMDE's. Loans to these countries fell by 5% during 2023. At the same time however, the need for funding (FDI) increased.
Er verden generelt på vej i en brydningstid? Ifølge IISS’ Armed Conflicts Survey 2023, er der f.eks. det største antal regionale og nationale konflikter på kloden i tre årtier. I takt med øgede gældsspiraler i mange udviklingslande, giver det risiko for, at antallet og omfanget af væbnede konflikter vil stige over de kommende år.
