Navigating a World in Flux
Interview with Parag Khanna
Parag Khanna is Founder & CEO of AlphaGeo and the internationally bestselling author of seven books. In the following interview, the renowned geopolitical futurist shares his insights on topics including flows of wealth, the rise of Asia, climate change and the implications of artificial intelligence – and how he copes with today’s challenges.
To what extent are current geopolitical dynamics driving the movement of wealth around the globe? How is this process altering the geography of prosperity – and which regions are likely to emerge as the biggest winners or losers due to these flows of private capital?
Geopolitics – broadly defined – captures the relationship between power and space. The diffusion of power away from the bipolar and unipolar orders of the post-World War II period has been accelerating in recent decades. This has generated enormous wealth in formerly peripheral (non-G7) regions of the world economy, including East Asia, South Asia, the Middle East, Latin America and Africa. There are underlying geopolitical drivers that are often forgotten: Engaging China to thwart the Soviet Union, the Middle East conflict driving up oil prices, China’s search for alternative resource supplies, and so forth. The vast pools of capital accumulated in these ascending regions are now mobile, as evidenced by the movements of ultra-high-net-worth individuals. There are structural drivers such as China’s centimillionaires expatriating their capital to safer harbours in
light of Beijing’s increasingly firm grip on the economy, but also episodic triggers such as Russia’s war in Ukraine and the capital flight from Russia to numerous markets, especially the UAE. In the medium term, I expect well-regulated and relatively neutral safe havens such as Switzerland and Singapore to continue to be the main beneficiaries. People often ask me: “Who will win the coming war?” And my response is usually: “Those who stay on the sidelines and welcome investment from all sides.”
The financial industry is set to witness the largest wealth transfer in history in the coming years. In your view, how will the focus of the next generation of wealthy individuals be different from that of their parents and grandparents?
One of the key realisations I had while researching my most recent book “MOVE” is that millennials (Gen-Y) and Gen-Z are the first in history to share values more horizontally across geographies than vertically within their own national culture. This is, of course, owed to the universal reach of digital technology as well as the recognition of common planetary challenges such as climate change. Surveys across the world reveal that this generation widely subscribes to three specific global values: connectivity, sustainability and mobility. So it is not surprising that as we see this generation of wealth inheritors and creators dedicate both professional and philanthropic resources to positive change, their initiatives tend to fall into these categories, whether they are promoting financial literacy or refugee rights or combating greenhouse gas emissions.
Do you believe they can really move the dial on issues like environmental challenges by investing for impact?
I am a pessimist about collective action, but optimistic about generation. From the time I have spent with such up-and- coming figures, I am glad to see that they spend less time at COP summits and more time on impact investing. It is not the young generation’s fault that the climate crisis has become so severe and that underdeveloped regions are already bearing the brunt of its consequences. But their advocacy on behalf of and interventions in these regions are very significant and meaningful.
In 2023, the Intergovernmental Panel on Climate Change (IPCC) issued a “final warning” about the need for swift and drastic measures to keep the 1.5°C climate target within reach. How optimistic are you that the global community can be mobilised sufficiently and take action to halve emissions by 2030 and realise the goal of net zero by 2050?
At AlphaGeo, we take the high-emissions SSP 8.5 scenario (the worst-case future scenario outlined by the IPCC in its 2021 report) as our baseline, not because we believe that emissions cannot be capped before the end of the century but because average global temperatures are very likely to cross the 2°C threshold much sooner than expected and the negative chain reactions have already begun. We must remember that total carbon emissions are reaching 60 gigatons per year and are cumulative, so we have a very long way to go before even our best efforts will genuinely register in the climate itself.
You previously expressed the view that the 21st century world is being “irreversibly Asianised” as a powerful new Asian system of shared economic and governance models emerges. How is this likely to impact the global economy, society and governance in the next two to three decades?
It is important to point out that the present is already Asian, not just the future. This is a demographic, economic and strategic fact, even if some mental models are governed by legacy inertia. And indeed, the world will only become more Asian in the decades ahead as Asia’s growth rates outpace the rest of the world, its populations grow and its commercial reach expands worldwide. I have documented how Asian approaches to governance, which are more technocratic than democratic, and Asia’s mixed capitalism approach to political economy, are both gaining ground worldwide.
In the increasingly Asia-centric global economy that you refer to, what advice would you give to business and finance industry leaders in Europe seeking to harness new business opportunities in Asia?
In my first book “The Second World” I noted that by the mid-2000s, Europe had already returned to Asia not as a coloniser but a commercial partner. Europe’s high-value products remain both role models and status symbols. At the same, as European industry is painfully experiencing, China in particular has managed to equal European quality in electric vehicles and other categories, becoming a global industry leader and eroding Europe’s core economic base. I strongly advise European business executives to go local, to increase their presence on the ground, to undertake more joint ventures, and to compete as locals in local markets.
There are clear signs today that globalisation is now giving way to a more multipolar world. Do you believe we will eventually witness the emergence of a truly balanced global system of shared responsibilities across America, Europe and Asia − or is this an unattainable vision?
Multipolarity does not automatically denote a violent balance of power dynamics. There are other scenarios, such as spheres of influence and a global equilibrium among key regional power centres. I have written about “spheres of responsibility” whereby core powers lead in managing their regions according to certain agreed principles, as well as about how superpowers could not only pursue their military and economic grand strategies but also a mutually agreed “global strategy” related to common objectives such as environmental stewardship and stabilising fragile states.
In your acclaimed work “How to Run the World” published more than a decade ago, you said the world was entering a “perfect storm of calamities” – with financial instability, environmental pressures and failing states. We have since seen many of your predictions materialise. Other topics, such as the rise of AI, are now dominating discussions about the future. Do you think AI will be a game changer for the labour market, corporate productivity and even geopolitics, as many experts believe?
AI is certainly already playing a growing role in all of these domains, most notably in the labour market, where even higher- value white collar jobs are being automated. It is certainly also raising productivity at the same time. And with AI at play in cyberwar and autonomous weapons systems, it is certainly a playing field in the new geopolitical arms race as well. But we must remember that technological prowess alone doesn’t guarantee diplomatic success. Furthermore, the iron law of history may well be the rapid diffusion of technology, which gives even weaker societies the power to resist. The result is a world not necessarily of entrenched hierarchies but one in which everyone is a price-taker.
And looking ahead to 2035, are you more optimistic or pessimistic about where the world will stand compared to today?
We can be fairly confident that a decade from now there will be near-total saturation of our physical world with digital technology, that states that can afford to offer some universal basic income or welfare will need to do so as a safety net for their populations, that some states will be rendered vacant by conflict and climate change, and that we will have undertaken certain significant geoengineering schemes to combat global warming. It is therefore a mixed picture, one ever more divided between what I call “islands of stability,” meaning well-governed enclaves, and more disorderly zones unable to cope with global complexity. This is what I call “neo-medievalism” – a term that naturally has negative connotations in Europe yet harkens back to a golden age for other regions of the world. That said, I am actually very bullish on Europe itself, given its climate-resilient geography and good governance!
What is the single most important lesson you have learned during your career to date?
Always go there. See everything first-hand, immerse yourself, absorb local knowledge, see the world from the most local and native view possible. Build your world view in this way from the bottom up and inside out. Embrace complexity and contradictions. In this age of conspiracy theories, third-hand information and fake news, what could be more important? Travel trumps Twitter!
You have gained a global reputation as a futurist, given the accuracy of your forecasting. How successfully have you been able to apply this skill to your own life – and how far ahead do you plan?
One of the most important decisions is choosing where to live. In 2011, I was often asked why we decided to move from London to Singapore, and I replied: “To live in the future and in the capital of Asia.” And indeed, Singapore is a futuristic global city and has emerged as the de facto capital of the megaregion of Asia. I am always looking for ways to “future-proof” myself and my family to become more “anti-fragile” − whether in terms of what our children study to diversifying sources of income to hedging against supply chain disruptions or geopolitical events. This is sometimes referred to as being paranoid, but there is also a saying that “only the paranoid survive!”