ULTIMATE GLOBAL DOMINATION

GLOBALISATION:The US presidential election is of more significance than you might think, according to Robert Shapiro, who predicts the US will be the only superpower in existence in 15 years, while European economic and political fortunes will suffer

ROBERT SHAPIRO is talking on the phone from his office in Washington DC when a news alert flashes before him: Barack Obama has secured enough super-delegate support in the Democratic presidential candidacy campaign to push him over the edge and Hillary Clinton out of the race.

For Shapiro, a former adviser to Bill Clinton, Al Gore, John Kerry and other Democrats, the news takes the US one step closer to the November election - an event that will affect the shape of a malleable future.
Shapiro is in the business of making predictions.

His book, Futurecast 2020: A Global Vision of Tomorrow, plots the likely course that the world will take over the next 12 years. In Shapiro's blueprint, the path is already determined by unstoppable forces of change such as demographic shift, globalisation and "petropolitics". But there are also "wild cards" in the deck - technological breakthrough, catastrophic terrorism - that could send the globe spinning in a new direction and add an exponential
number of "what ifs" to Shapiro's futurology.

Charismatic leaders can also inspire nations to follow new routes. To be a "gamechanger", that is to affect global change, is difficult to pull off, Shapiro says. "But I think Obama is a very talented political figure," he adds, and one who has emerged victorious from the Democratic contest because he understood better than Clinton the electorate's hunger for change after eight years of Bush.

"The US is a society that embraces change. As a political matter, I certainly think that Senator Obama represents the possibility of change both internationally and domestically more than [Republican nominee] Senator Mc-
Cain does," says Shapiro. Regardless of whether the US remains Republican after November or gleefully adopts a Democrat, it will still be the world's sole economic and military superpower in 15 years' time, according to Shapiro - one of the main forecasts in his book.

Even as China steadily but surely asserts its economic might, the US will remain not just the sole superpower, but a sole superpower without any near peer, he says. This makes the present era unique in history, he says. And for all of its incompetence and misadventure in Iraq, Shapiro can't see any
fall-of-Rome end to Washington's reign.

But he isn't quite so bullish when it comes to Europe's major economic powers, who he says will enter a period of decline characterised by socially scarring high unemployment rates and a politically "nasty" combination of slashed pension benefits and raised taxes.
France and Germany didn't relax regulation of their labour markets, making it difficult for companies in those countries to take advantage of innovative new technologies and hurting productivity, Shapiro says.

Even with the election of Nicolas Sarkozy, who based his campaign around labour market reforms, France is still not open for business, he believes. But Shapiro is not only unimpressed by the
Sarkozy era thus far, he is also dismissive of the idea that Britain is any more positively disposed to deregulation than France or Germany.

"A lot of it is still just talk," he says. As US under secretary of commerce for economic affairs in 1999, Shapiro was asked to brief Tony Blair's economic advisers on how the US used new technologies to rack up productivity gains.

"Blair's policy wonks" listened and asked probing questions, before eventually conceding that the British public and government alike viewed with distaste "the bare-knuckled competition that globalisation requires".

Shapiro forecasts that it will be a bloody fight. The unwinding of the welfare state promises of social democrats is comparable to the breakdown of the communism, he says. French workers, he notes, have already staged major demonstrations in response to "relatively modest" changes to the public pension system.

In part, the problems faced by the major European economies are repeated around the globe in what Shapiro calls "the earthquake of demographic change".

For the first time in recorded history, he says, almost every country in the world (except in sub-Saharan Africa and the Middle East) is experiencing an unusually large generation followed by an unusually small one. The result: by 2020, there will be substantially fewer workers paying the taxes needed to support the pension income of a larger pool of pensioners.

This leaves countries with both ageing societies and public pension systems with three options: raise taxes, cut benefits or increase retirement age. "That's why I say, it's political dynamite," he points out.
What is likely to compound the problem is that the last of these options - a raised retirement age - is likely to become unviable in countries that cannot even create enough jobs for its young people, he contends. Demographic trends are easy to predict because they are difficult to change. But there is
one obvious way for nations to stop ageing quite so quickly: immigration.

This, combined with less generous welfare benefits, is why the US's demographic time bomb isn't ticking so loudly.

Although it is largely to do with the later timing of the Irish population boom, Shapiro also hails Ireland for creating the kind of healthy jobs environment that encourages workers to come here.

"Immigration is a 'twofer'. You get a young worker, who is ambitious - ambitious enough to have crossed a border to get here - and you don't get the ageing parent."

Shapiro exempts Ireland, along with Sweden and Finland, from his dismal assessment of western Europe's economic prospects and, instead, praises it for offering itself up as the lowest wage English-speaking European gateway for US companies at exactly the right time.

"Globalisation, it's an impersonal, historic process. No one invented it, it arose out of technological advances. But Ireland has been responsive to the forces of globalisation, whereas the major European countries have not," he says. But isn't there a risk that Ireland's open economy might become an open wound? That we are too dependent on foreign direct investment from the US and that it, and the tax-swelling army of immigrant workers, will up sticks and leave?

"Ireland's status as a low-cost launching point into Europe isn't unique any more. In addition, your wages aren't very low so you have got to create other advantages. I think the model that Ireland has chosen is a very sound model, but the model needs to adapt."

Shapiro is somewhere between a cheerleader and an apologist for globalisation.

He writes that economies that are open to the ambitions of its people and the capacities of others are the ones that will prosper, that following this course "is not a matter of right or wrong, but simply the best way the world has at this time to generate growth and wealth". Globalisation, he adds, will "produce tens of millions of winners who follow its rules".

But, on the other hand, he writes that globalisation will dim the prospects for equality - both between the advanced societies that take advantage of globalisation and those who lag behind, and within those societies that go with the flow.

"China and the US, globalisation's two principal drivers, already are the world's two most unequal major societies. It's no accident. Wherever globalisation and its technologies take hold, the return on investment rises and makes the rich richer while more intense domestic and international competition holds down most workers' wage gains even when their productivity increases."

So Irish workers may escape the "shock and sorrow of millions of workers in advanced countries" such as France and Germany who will lose their jobs, he says, but we'll be too busy trying to constantly keep our jobs to throw wads of notes in the air in celebration.

"This is the best of the times and the worst of times," Shapiro paraphrases Dickens.

Probably nothing should be read into the fact that this line originates from a novel about a particularly bloody revolutionary era. But Shapiro's future is not an especially pleasant place, as he sketches the permutations of "the coming crises" in energy, healthcare and the environment.

"The real time bomb is healthcare," he says. Higher healthcare costs are the bi-product of technological advances, and the technological advances themselves are coming at a faster rate as a result of globalisation, because bigger markets encourage companies to spend more on R&D.

But the rate of technological advancement is one of the big unknowns. "I never discount technological innovation. Economists have recognised for a long time that innovation is more important than new capital and education [to driving economic growth] but it's totally unpredictable," he says.

"For example, some nanotechnologists say their technology will make solar energy very sellable and very cheap in a decade. Maybe so, maybe not. Ten years ago, people were talking about cold fusion. That never happened. They said they could cure cancer. That never happened either. There will be technological advancement, but we can't depend on technological breakthrough."

A wholly predetermined future would be odd indeed, but when it comes to climate change it is uncertainty that gets in the way of the solution. "In good times or bad, it's very hard to get people to accept paying a short-term cost in order to avoid paying a long-term cost. People don't want to do it, especially when the timing and the nature of the long-term cost is uncertain . . . Climate is just too complex to model in any computer, but we know it's going to be bad."

This is one example of an issue where Obama will prove more reliable in delivering leadership than McCain, if only because the Democrats "are a little more supportive" of such things, Shapiro argues.

For his part, he believes a strong carbon tax, where the money yielded is used to fund other tax reliefs, is the only means of driving behavioural change.

The Washington think-tank of which he is co-founder and chairman, Sonecon, is due to publish a study on this subject shortly.

The other wild-card, large-scale terrorism involving nuclear weapons, would stop one of the main features of globalisation - the transfer of technology from advanced economies to less advanced ones - in its tracks. Thankfully, he classifies such an attack as "possible" rather than "likely".

"They're hard to get and they're hard to use. In most cases, you have to be the government of an advanced society to do it. But you can get anomalies and it is conceivable that a terrorist group could buy a nuclear device . . . There are lots of loose nukes in Russia."