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Global Crisis/Innovation Blog

Geopolitics & Innovation: Leveraging Three Crises?

By Shlomo Maital

   As I write this, at least three major geopolitical crises are unfolding.

  • In Britain, the new Conservative government is announcing spending cuts in civilian spending, after announcing defense cuts.  The result may be redundancies (euphemism for firing and layoffs) among Britain’s public sector works.  Some 60% of Britons accept PM Cameron’s statement that spending cuts are necessary.  But many public sector workers, facing loss of their job, may migrate abroad.  Economists are divided on whether the cuts should be zero (continue to stimulate a weak economy), small (avoid tipping the economy into recession) or big (achieve fiscal stability to reassure capital markets). 
  • In France, unions continue to blockade refineries and fuel dumps.  President Sarkozy has called out France’s tough anti-terrorism squads to break these ‘illegal’ blockades. (“You have the right to strike,” the Interior Minister says, “but not the right to prevent others from working” – a very fine line).  Unlike in Britain, 70 % of France’s citizens oppose Sarkozy’s mild proposal to raise the retirement age in the public sector to 62 from 60.  The French Parliament will vote on this law this week. It will pass.  It remains to be seen whether the union protests will grow and become violent, or shrink and fade away. 
  • On Nov. 11-12, the G20 nations meet in Seoul Korea, and the main topic will be the weakening dollar, the undervalued yuan, and the American Fed’s plan to blast huge additional amounts of dollars into world markets, many of which will immediately flee America to assets in emerging market countries.  Can China, the US and the remaining nations agree on a consensus plan for exchange rates, similar to the Plaza Agreement on Sept. 22, 1985, [in which nations agreed together on a controlled devaluation of the US dollar, to reduce America’s current account deficit, which it was felt destablized world markets]?   Or will nations engage in unilateral acts that destabilize capital markets and ruin world trade? Right now, consensus action a la Plaza looks highly doubtful.

  In our new book Global Crisis/Global Opportunity, I and my co-author D.V.R. Seshadri note that true innovators with global vision can see opportunities where others see only crises.  Innovators:  Can you see opportunities in these three emerging geopolitical crises?  What are they?  How will you implement them?  And will they create true value, by mitigating the crisis, and mitigating the impact they have on ordinary working people?  I believe our book will help you find some answers.   

 

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Blog entries written by Prof. Shlomo Maital

Shlomo Maital
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