2052 A Global Forecast for the Next Forty Years by Jorgen Randers
Publisher: Chelsea Green Publishing Company
If the challenge we set ourselves as actuaries is to make financial sense of the future, then the author of 2052, Jorgen Randers, has set himself a much bigger challenge: to make a global forecast of how the next 40 years might unfold.
Using a combination of simulations, past experience and expert opinion, the book sets out predictions for how key economic and other variables are likely to develop over the next four decades. Central to the forecasts are the evolution of GDP and population - and already the actuarial reader will begin to feel at home. Randers uses models to analyse possible future paths for these two variables as well as, for example, CO2 emissions, energy use, consumption and investment, and food production. And here is the bonus for the actuarial reader: there is also a companion website with a downloadable spreadsheet model.
The breadth of Randers' forecast is vast. Complementary to the forecasts gleaned from the various models, the book includes predictions by leading scientists, business leaders, economists and others on topics ranging from the use of robots to wage future wars, to the application of gaming skills for collective problem solving and the future for urban living. Despite the reliance on technical detail, the book is readable and provides a fascinating glimpse of a possible future.
Randers has a long track record in global forecasting: he formed part of the team that wrote The Limits to Growth for the Club of Rome in 1972.
In part, then, 2052 is the sequel. This gives the clue to the 40-year forecast period. It is easy to see how we could already be on a 'better' path if the original (1972) forecast had been taken sufficiently seriously.
Despite the interest of a book so close to many aspects of the actuarial world, 2052 makes gloomy reading in many ways. Perhaps most depressing is the prediction that we will provide ourselves with a sub-optimal scenario because our political decision-making processes are rooted in short-termism. This is unfortunately a conclusion that is hard to quarrel with, although some actuaries may enjoy challenging the assumptions underlying the numerical forecasts. The book also includes forecasts of direct interest to pensions and investment actuaries - for example, predictions about rich countries' response to an ageing population and about the way that the changing climate and eventual decrease in reliance on fossil fuels will impact investment choices and yields.
Alert readers will have noticed that at the time of this review we are already two years into the 40-year forecast period. In my view, this adds to the interest of the book: already we can compare some aspects of the forecast against experience. For example, a section on the way Europe might evolve includes a case study on the possibility of Scottish independence.
Randers has clearly engaged in a lifelong struggle to come to terms with the future he has predicted for the world. And so, 2052 closes with a chapter titled "What should you do?". Twenty action points are suggested, covering the personal, financial and political spheres. Some readers may be looking for ways to dismiss 2052 as another hair-shirted volume of doom and gloom, and undoubtedly any suggestion that we would be better to jettison our belief in the desirability of endless growth will be met with opposition from some quarters. But the depth of analysis and breadth of expertise presented in 2052 make this book well worth serious contemplation.
Eleanor Beamond-Pepler is currently on maternity leave. She is manager of the recovery, resolution and redress policy team at the Prudential Regulation Authority