The Economic Megathreats That the World Has No Answers To | Economics Explained with Dr. Roubini
Summary
TLDRThe video explores the multifaceted role of economists as advisors in global contexts, emphasizing their importance in forecasting and advising on economic scenarios despite the inherent unpredictability of economies. It delves into the challenges posed by globalization's reversal, escalating debt crises, and the threats of artificial intelligence and climate change to economic prosperity. Highlighting the significance of international cooperation and adaptive strategies, the video seeks to shed light on the potential mega threats identified by economists and the urgent need for viable solutions to safeguard the future economic landscape. The global economy's resilience and growth potential, despite these challenges, are also underscored, offering a balanced perspective on the complex dynamics at play.
Takeaways
- ๐จโ๐ป Economists primarily serve as advisors to decision-makers in global companies, organizations, and governments, using their understanding of social sciences to project outcomes of significant decisions at various levels.
- ๐ฎ Good economists, like good lawyers, don't predict the future but outline likely scenarios and how to navigate them, focusing especially on potential risks and mitigation strategies.
- ๐ A major role of economists involves discussing worst-case scenarios, which often leads to their reputation as eternal pessimists; however, this cautionary approach is crucial for preparing for potential economic challenges.
- ๐ Key global economic threats identified include the end of globalization, the return to national self-sufficiency, stagflationary crises, the mounting global debt crisis, challenges posed by AI, and climate change.
- ๐ซ Globalization has been a significant wealth creator by facilitating the exchange of goods, services, technology, and labor among countries, but recent trends show a shift towards de-globalization, risking economic prosperity.
- ๐ธ The 'mother of all debt crises' looms as global public and private sector debt levels soar, challenging economies, especially emerging markets, as interest rates rise.
- ๐ Climate change poses a complex economic threat, requiring significant investment in alternative energy or carbon capture technologies, with poorer countries facing the most severe consequences.
- ๐งฎ The rise of technologies like AI could potentially render human labor redundant in various industries, posing an existential risk to the labor market.
- ๐ Economists advocate for proactive measures against these mega threats despite the costs, emphasizing long-term benefits over short-term sacrifices.
- ๐บ The global economy's resilience and growth underscore the importance of addressing these challenges to maintain and enhance economic prosperity worldwide.
Q & A
What roles do economists play in global decision-making?
-Economists spend most of their time as advisors to decision makers in global companies, organizations, and governments, using their understanding of social science to make projections about how big decisions could play out at various levels.
Why is it important for decision makers to consider worst-case scenarios according to economists?
-Economists focus on worst-case scenarios to prepare decision makers for potential negative outcomes of their plans, earning them a reputation for being pessimistic. However, this approach is crucial for identifying risks and developing strategies to mitigate them.
How has globalization contributed to global economic growth?
-Globalization, through the sharing of goods, services, labor, technology, and information among countries, has made all participating countries wealthier by leveraging comparative advantages and fostering the transfer of innovations and efficient production techniques.
What are the predicted consequences of a reversal in globalization trends?
-A shift away from globalization could lead to higher costs for consumers, reduced collaboration between countries, less sharing of resources and technology, and potentially lower economic growth rates as countries move towards more self-sufficient, national economies.
What are some of the major economic threats identified by economists for the next century?
-The major economic threats include the end of globalization, a stagflationary crisis due to the end of easy money, a significant debt crisis, challenges posed by artificial intelligence to worker and consumer-based economies, and climate change.
Why is global debt considered a potentially critical issue?
-Global public and private sector debt has significantly increased over the decades, posing a risk especially as interest rates rise. While high debt levels can be sustainable with low interest rates, rising rates can lead to servicing challenges and potential crises.
What impact could climate change have on global economies, particularly poorer countries?
-Climate change poses a significant threat by potentially increasing natural disasters and requiring large investments into alternative energy sources, carbon capture technologies, or emission reductions, which could disproportionately impact poorer countries.
What are 'zombie companies' and how do they relate to the current economic climate?
-Zombie companies are firms that produce no real economic value and are only kept alive because of artificially favorable market conditions, such as low interest rates. These companies may face significant challenges as borrowing costs rise.
How does the concept of comparative advantage relate to globalization?
-Comparative advantage refers to the principle that countries benefit from specializing in and trading goods and services that they can produce more efficiently than others. This concept underpins the economic benefits of globalization.
What solutions are proposed by economists to address the major threats to economic prosperity?
-Economists propose understanding the costs and sacrifices of solutions, investing in infrastructure and technologies, international cooperation to enforce emission reductions, and preparing for the impacts of artificial intelligence on labor markets.
Outlines
๐ง The Role of Economists and the Unpredictable Future
Economists primarily serve as advisors to key decision-makers across global entities, leveraging their insights into social sciences to project outcomes of significant decisions at various levels. While precise future predictions are beyond their scope, economists are crucial for outlining possible scenarios and preparing strategies to navigate them. The segment highlights the inherent uncertainty in economic forecasting but underscores the value in examining worst-case scenarios and potential mega threats to global economic prosperity. These include the decline of globalization, stagflationary crises, escalating debt levels, the challenges posed by artificial intelligence, and climate change. The narrative emphasizes the importance of understanding potential economic downturns and the strategic responses required to mitigate these risks.
๐ Impact of Diminishing Globalization and the Global Pandemic
This section discusses the negative impacts of declining globalization, exemplified by Brexit and its resultant economic downturn in the UK, contrasting with the relatively stable economies of Continental Europe. It touches on the global pandemic and geopolitical tensions exacerbating cautiousness in trade relations and supply chain management, leading to a shift from 'just-in-time' to 'just-in-case' strategies. This shift, while increasing geopolitical security, incurs higher production costs and reduces the efficiency of global trade, potentially impoverishing economies on average. The dialogue with Dr. Nouriel Roubini underscores these challenges, highlighting the broader economic repercussions of a move towards nationalism and away from global economic integration.
๐ The Looming Debt Crisis and Economic Vulnerabilities
Focusing on the burgeoning global debt crisis, this paragraph outlines the unsustainable increase in debt levels among governments, businesses, and households. It discusses the unique challenges faced by countries that borrow in foreign currencies and the impending difficulties as interest rates rise. This situation is particularly perilous for emerging markets, which are at risk of experiencing severe economic downturns. The narrative also explores the concept of 'zombie' companies and countries, sustained through artificially favorable market conditions, and the potential fallout as those conditions change. The discussion includes insights from Dr. Roubini on the sustainability of debt levels and the transition from a period of low interest rates to a reality where debt servicing becomes increasingly burdensome.
๐ฅ Climate Change and Economic Inequality
This segment addresses the significant threat of climate change, especially its disproportionate impact on poorer countries. It explores the dilemmas facing emerging economies, which must balance the need for economic growth with the imperative to reduce emissions. The text delves into the challenges of implementing global solutions to climate change, including the 'free rider' problem, where countries might eschew cooperation to gain economic advantages. Dr. Roubini's book offers insights into potential solutions, emphasizing that addressing climate change requires short-term sacrifices for long-term benefits, though political and economic realities often hinder these necessary actions.
๐ Global Economy Overview and Future Outlook
The final paragraph provides a summarized assessment of the global economy's status, leveraging a playful approach with an 'Economics Explained National Leaderboard'. It gives high marks for the global economy's size, diversity, and growth, reflecting on the unprecedented economic expansion over recent decades. Despite the playful tone, the summary underscores the significance of current economic challenges, highlighting the need for serious consideration and action to address them. It concludes by reminding the audience of the enduring value of economic growth and the potential of collaborative efforts to sustain and enhance global prosperity.
Mindmap
Keywords
๐กEconomist
๐กGlobalization
๐กDebt Crisis
๐กComparative Advantage
๐กClimate Change
๐กArtificial Intelligence
๐กSupply Chain
๐กStagflation
๐กZombie Companies
๐กEconomic Prosperity
Highlights
The role of economists in advising decision-makers in global companies, organizations, and governments.
Economists cannot predict the future but can offer valuable advice on handling likely scenarios.
The importance of understanding potential risks and worst-case scenarios in economic planning.
The impact of globalization on economic growth and the sharing of technology and resources.
Concerns over the reversal of globalization and its potential to make everyone poorer.
The shift from just-in-time to just-in-case supply chain strategies due to recent global challenges.
The role of debt in the global economy and how it has evolved over time.
The potential crisis emerging from high levels of public and private sector debt.
The differing impacts of economic policies and debt levels on various countries.
The threat of climate change to global economic stability and growth.
The challenge of balancing economic growth with environmental sustainability.
The economic implications of artificial intelligence and automation.
The importance of preparing for and mitigating so-called Mega threats to maintain economic prosperity.
The global economy's size, growth, stability, and industrial diversity.
A call for global cooperation to address the challenges posed by globalization, debt crises, climate change, and technological advancement.
Transcripts
the role of an economist is something
that most people even career economists
themselves don't always fully understand
people that actually become career
economists spend most of their time as
advisors to decision makers in global
companies organizations and governments
economists are relied on to use their
understanding of the social science to
make projections about how big decisions
could play out in an individual National
or occasionally even a global level now
you probably already know what I'm about
to say nobody can predict the future
least of all economies but that doesn't
mean that their advice on these
decisions is not worth listening to and
we'll see a perfect example of that
later in this very video good economists
are kind of like good lawyers they can't
tell you exactly what's going to happen
in the future and any that claim that
they do know exactly what is going to
happen are either really dumb or really
dodgy now while they can't predict the
future what they can do is present some
likely scenarios and then offer advice
on how to deal with those scenarios if
and when they happen but the thing that
most of these big decision makers want
to know more than anything from their
lawyers and economists about their
potential plans is what could possibly
go wrong and how do I fix it if it does
it's for this reason that economists
spend a lot of their time talking about
worst case scenarios and they get a
reputation for being Eternal pessimists
but that's what they're meant to do you
wouldn't get a divorce lawyer to write
your wedding vows just like you wouldn't
get an economist to tell you about how
great the future could be so in the
spirit of being good economists it's
worth exploring some of the so-called
Mega threats that could genuinely reduce
quality of life for almost everyone even
if they don't end up coming true it's
better to know what is worrying some of
the greatest economists of our time and
what they are proposing as solutions to
the problems that we could be facing in
a not too distant future so instead of
answering a series of questions in this
video we're going to look at what most
economists have highlighted as the
biggest threats to our economic
prosperity in The Next Century and those
are the end of globalization and the
shift towards more self-sufficient
National economies the end of easy money
causing a stagflationary crisis the
mother of all debt crises that's been
slowly growing in the background of the
global economy the threat to worker and
consumer-based economies posed by
artificial intelligence and of course
climate change in our economic response
to fixing ads and I guess we also need
to ask one question which is of course
what are the solutions to these problems
after we've done all of that and just
for a bit of fun we can put the global
economy on the economics explained
National leaderboard
globalization is the process of
countries opening up to one another
building relationships based on the
transfer of goods and services labor
technology Investments and information
by sharing these precious resources
around all of the countries involved in
globalization can become wealthier
overall if for example a country invents
some new technology that allows twice as
much food to be grown on the same piece
of land but they could share that
technology with all the other countries
in the world and suddenly the global
supply of food would double this is
obviously great for all of the other
countries that benefited from receiving
that technology that they wouldn't have
otherwise in a totally closed off global
economy but it can also benefit the
country that invented the technology as
well if that country sells that
technology they could make much more
money than they would have by just
farming and selling their excess food
supply separately they can use this
money to import other stuff so that
everybody ends up with more resources
overall one of the biggest reasons why
countries like Japan China Taiwan and
South Korea were able to grow so rapidly
over the past five decades as compared
to countries like the UK and the USA
which took centuries to fully
industrialize is because they did not
need to create everything from scratch
China didn't need to invent modern
electrical grids and production lines
you could just import the technology
from countries that already had the
expertise in making these tools so they
get straight to business making cheap
consumer goods to kick-start their
economy even outside of sharing
technology certain countries just do
certain things better than others my
home of Australia has some of the
largest deposits of natural resources in
the world but we have a tiny population
that demand very high salaries so
refining those resources and turning
them into end products is possible but
they would be very expensive and not
very plentiful it's much more
economically advantageous for us to
harvest those resources and sell them
directly to countries that can cheaply
and efficiently turn them into stuff
that then can be sold all over the world
including back to Australia Australia
will make more money and end up with
more resources than if they tried to do
everything themselves this is the basic
concept of comparative advantage it's a
big reason why the world has become so
much wealthier as we've started trading
more but this process is starting to
reverse while making this video we were
lucky enough to speak to Dr nuriel Rubin
who was a senior Economist in the
Council of economic advisors for the
Clinton Administration a senior advisor
to treasury secretary Timothy Geithner a
professor at Yale and a consultant to
the World Bank Federal Reserve and the
international monetary fund during his
time working for these organizations he
was one of the few voices that warned of
the economic threats posed by the
financial processes that led to the 2008
Global financial crisis he has also
published a series of books and academic
papers including Mega threats the 10
trends that imperil our future and how
to survive them which was a big
inspiration for this video he's not
paying us to say this but it is
genuinely a great read if you enjoy
having a nerdy economics existential
crisis before heading to bed anyway if
anybody in the world had a front row
seat to global economic Trends it would
be this man and he signed warning about
this reversal of globalization it thrown
their way from globalization actually I
think it's going to make an average
everybody poorer and their more specific
example I can give is the following one
you know in Europe the UK decides to go
for brexit and do they
inflation in the UK is already double
digits and even the bank of England
expects that the UK is going to have six
quarters of negative economic growth so
there'll be in circulation recession and
inflation so while Continental Europe
and Eurozone are also challenged their
inflation is lower and so far they've
avoided an outside recession while in
the UK there is recession and inflation
if you want to get access to our full
unedited interview with Dr rubini you
can listen to it on Spotify by searching
for economics explained and we'll leave
a link to it in the video description as
well the global pandemic an active war
in Europe and escalating tensions
between the world's two largest
economies and making governments and
corporations much more careful about who
they trade with and where they set up
their supply chains companies have had a
lot of problems in these past three
years getting supplies to complete
products are put on shelves the most
efficient way to supply goods and
services to any Market is the
just-in-time approach this is where
goods and services are produced and
delivered at the very moment they are
demanded a concept that sounds simple
enough in theory is actually incredibly
difficult because a lot of the products
that we take for granted have components
from dozens of countries made from
resources extracted from dozens of other
countries these raw materials and
component parts also have to be
delivered just in time so there's a lot
of things that can go wrong here if
supply chain Engineers can get this
delicate ballet just right though it can
be truly magical just in time means that
resources aren't wasted on storage
things don't expire and when
improvements are made to components
around products they can be changed
instantly instead of having to wait to
sell out or just discarding outdated
Goods the global pandemic in a series of
large economic shocks like the war in
Ukraine brexit and ongoing trade
tensions has made coordinating this
fragile system basically impossible
governments and companies have had to
adopt a just in case strategy where they
order enough goods and services in
advance to run their operations no
matter what happens
going away from a world of fear of free
trade to a world of fair trade or secure
trade going away from a world of
offshoring the world of French shorting
or resorting going away from just in
time Global Supply chains to just in
case in redundance May provide you
greater geopolitical security but it
comes at a cost because you're going to
be producing goods and services not
where its cities are most efficient less
costly but where is more expensive just
in case is much more expensive than just
in time but when the alternative is
empty shelves it's a cost most companies
are willing to pay and by pay I mean
obviously pass along to their consumers
now you might just think this sounds
like an inconvenience for businesses
that are going to have to rent out more
warehouse space but those costs are
going to be passed along to Consumers as
higher prices and this shift in strategy
is also going to mean less collaboration
between countries which means less
sharing of resources technology and
everything else that is made by World a
richer place in recent decades there are
some people that are celebrating the
idea of less globalization because it
means less jobs being sent overseas and
more stuff being done in their own
country in our upcoming video on
Zimbabwe we will explore how the country
is trying to make sure all the
lithium-bit mines is refined in the
country before it's exported overseas so
that more evaluating takes place in its
economy and hopefully more jobs are
created the example from earlier with
Australia exporting its raw materials is
also a hotly debated issue and many
people don't like the idea that we're
selling iron ore to Japan just so it can
turn it into cars and sell it back to us
at a one thousand percent markup this
animosity towards globalization is
understandable but it is still something
that has on average made us all a lot
wealthier a shift away from the
globalization is going to have a
meaningful impact on potential growth is
one of those as declarationary shocks
that can reduce potential growth and
increase the cost of production
it's true that the globalization has had
you know winners and losers the economic
ties become bigger but some workers some
firms have been better off some of them
have been worse off but a trend away
from globalization actually I think it's
going to make on average everybody
poorer this breakdown of global Commerce
is also coming to us when we can least
afford it all while we're staring down
the barrel of the mother of all debt
crises
Global public and private sector debt
has grown from around 100 of global GDP
in 1970 to 200 in 2000 to 250 today now
growing debt levels are something that
are often thrown around by people trying
to claim that our entire economic system
is on the verge of collapse and normally
these concerns are overblown countries
like the USA can get away with
maintaining relatively high levels of
government debt because they control
their own currency it's also the world's
Reserve currency which means that having
a healthy level of debt allows large
institutions and other governments to
hold their reserves as government bonds
instead of Straight Cash Japan for
example has trillions in US dollar
foreign currency reserves but they don't
keep those reserves as cash in a vault
or even digits in a bank account they
keep those reserves as government bonds
the bonds are much easier to keep at
that sort of scale and they even pay
some interest which is nice it would be
much harder for a country like Japan to
keep US dollars as straight cash if the
US government didn't have debt then
there wouldn't be government bonds which
would make it harder to use those US
dollars as a medium of economic exchange
and I could potentially lead to
International institutions looking for
Alternatives that did have active debt
markets so that was a quick little side
lesson as to why debt can be good but it
can also be very bad for starters and I
know this might shock my American
viewers but there are other countries in
the world apart from the USA and apart
from maybe a dozen other advanced
economies most of them can't borrow
money using their own currency countries
like Pakistan and Sri Lanka have found
themselves in serious economic trouble
because they have taken on massive loans
in American dollars and Chinese RMB and
then temporarily lost their ability to
receive those currencies from abroad
while the USA in places like Japan can
get away with borrowing more than their
GDP a country like Pakistan has run into
problems with government borrowing that
is only 88 of their GDP now we've
already covered this topic extensively
in our two videos on Pakistan and Sri
Lanka so I don't want to repeat too much
here but these two examples are just the
tip of the iceberg and borrowing in
Emerging Markets has grown significantly
in the last two decades taking on lots
of debt to make vital investments into
infrastructure and economic Services was
a strategy adopted by a lot of emerging
economies wanting to emulate the success
of other high growth countries two
decades of low interest rates meant that
there wasn't much risk with these loans
but now these fragile economies have
record debt burdens and interest rates
are on the rise the story of Pakistan
and Sri Lanka are just the first
chapters in what Dr rubini called the
mother of all debt crises
what the level of debt is sustainable
not depends on many factors but the
point I make in the book was that while
that ratios in principle were
unsustainable until two years ago that
servicing ratio of the interest you paid
on your debt was very low because you
had zero policy rates negative policy
rates quantitative easing and credit
easing keeping even long-term profit and
public rates low if not negative you
know two years ago it was 18 trillion
dollar equivalent of public debts within
Europe and Japan that they yield it was
negative in nominal terms and maturity
up to 10 years in Scandinavia like
Denmark mortgages long-term mortgages
had a negative yield because you know
you have negative policy rates and the
spread of mortgages over that implied
negative interest rates on your
mortgages so of course that ratio were
unsustainable but that surfacing ratio
were so low that it looked like that
were sustainable
and we actually reacted to the GFC and
the covet crisis with more monetary
Fiscal Credit using zero eighth negative
even more aggressive quantitative and
credit easing but now the party is over
and it's over because all this easing
LED not only to asset inflation but now
finally
because of negative Supply shock and
excessive aggregate demand has led to
goods and service inflation and central
banks now have to increase interest
rates to fight inflation governments are
not the only ones that have been taking
on lots of debt businesses and
households are also holding on to record
amounts business debt has often been
considered by economists as a good type
of debt because businesses normally only
take out loans if they think that they
can use the money to make returns that
are higher than the principal plus
interest rate payments the problem with
this conventional assumption is that a
lot of businesses also got used to cheap
debt so it became more and more
commercially advantageous to take on big
loans to fund expansion or sometimes
even just to buy their own shares back
from the market which made their
investors very happy not many of these
companies expected the cost of borrowing
to Triple in two years and now they're
in a position where consumer demand may
be waning at the same time that they
need to make much larger repayments on
their loans rubini spoke about the rise
of zombie companies and even zombie
countries which provide no real economic
value to the global system but have been
kept alive simply because market
conditions have been artificially kept
so favorable we cannot generalize even
within Emerging Markets or Frontier
economies there are countries with
better macro and structural policies
their country that are much more fragile
you know the IMF and the World Bank have
identified about 80 countries mostly
poor developing countries some of them
Emerging Markets like the one you
mentioned uh that are Lebanon Pakistan
Zambia Sri Lanka that are having attack
prices
um but there are about 80 countries 11
debt servicing problems and we'll have
to restructure orderly or otherwise
there's betterations so there will be
attack prices in many countries these 10
global companies and emerging economies
are exactly the same group that is going
to be hardest hit by a move away from
globalization as well most countries
start their Economic Development by
providing low-cost manufacturing or
services to larger and more advanced
economies if the trend is to bring
manufacturing and services back onshore
they're going to miss out on that source
of income at the same time that their
record debts start to become very
expensive if that wasn't bad enough then
there are still the economic unknowns
climate change is a major economic
threat that is going to affect us all
but once again it's likely to be the
poorest countries that bear the brunt of
the burden no matter how it plays out to
reduce the effects of climate change we
need to reduce emissions to reduce
emissions we either need to make large
investments into alternative energy
sources and storage infrastructure
reduce output or make even bigger
investments into carbon capture
Technologies or some really wild ideas
like space Shades to block a small
portion of sunlight hitting the Earth
poor countries can't afford to make
large investments into new technologies
and for now economic growth still does
depend heavily on burning fossil fuels
to power industry it's also not fair to
tell emerging economies that we're
giving up economic growth to control
emissions people in advanced economies
could live just fine if economic growth
stagnated but billions of people in the
world right now are on the cusp of
getting access to a lot of luxuries that
we in the west take for granted
consistent electricity clean running
water efficient Transportation access to
the internet machines to make domestic
duties less labor-intensive Advanced
Medical Care and good quality housing
it's stuff that people in advanced
economies don't even think about but we
only got to that point by growing our
economies mostly by burning fossil fuels
even if for some reason these economies
did got on board with the idea of
slowing economic growth for the greater
good there is still a problem of how to
enforce it if all other economies slowed
down their Industries or make big
expensive investments into Renewables
that would be great but a few
opportunistic countries might just take
advantage to grow their Industries with
cheap fossil fuels and out-compete their
Rivals by providing cheaper goods and
services to the global economy and their
own domestic markets economists call
this the freerider problem and it's one
of the biggest reasons that progress on
a lot of these issues has been so slow
in the book for each one of the 10 mega
threads I discussed the Solutions in
detail but I make the point that the
economy recognized there is never a free
lunch the solution of any kind of issue
implies costs and sacrifices in the
short run for the common good and the
benefits of a society aren't we on the
wall over the medium long term and many
times it's hard to make those sacrifices
in the short run because they're
individually costly because we discount
the future we hope that maybe some
miracle of technological resolve the
problems and politicians there will need
to be related and even in authoritarian
country they need that legitimacy uh you
know the time to keep the can on the
road because the political economy
reform is that the costs are in the
short run the benefits are medium long
term and you might not be empowered if
you do pay for reform you know then I'll
disgrace the former chancellor of
Germany Schroeder when he was in
parading the reform including of the
labor market that let German to become
Uber competitive but guess what the next
election is kicked out of power and the
last and foremost
politician is Don't Rock the Boat don't
do pain for reform because they're gonna
lose power nobody wants to be the world
leader that made their people sacrifice
their economic prosperity for the good
of other countries that are doing
nothing to help themselves the other
alternative is to do nothing but the
scientific consensus is that this will
result in an increase in natural
disasters which we are already starting
to see these again hurt developing
economies more than established
economies they don't have the tools and
resources to defend themselves from
these events and pay for the damage once
it's been done one of the reasons that
the economy of Pakistan is on the verge
of total economic collapse is because of
a flood that killed 1700 people and did
30 billion dollars worth of economic
damage in an economy with a total
economic output of only 348 billion
finally there is the rise of
technologies that could replace labor
typically economists believe that labor
was the only thing that could produce
output the other factors of production
capital and land only made it possible
for labor to produce more output but
without labor nothing got done Capital
advancements like machinery and even
robots didn't replace labor so much as
they made possible for the same amount
of Labor to produce more stuff but some
are now speculating that new
technologies can so comprehensively
emulate the function of human labor that
we could make actual people totally
redundant nobody can predict the future
least of all economies and all of these
predictions are exactly that predictions
Dr rabini the person that we consulted
with to make this video has his fair
share of critics that say he's just
overly pessimistic earning him the
nickname Dr Doom but that's really the
role of a good Economist it's better to
do something about a false alarm than to
do nothing about a building on fire the
solutions will not be fun for anybody
but the Alternatives will be worse and
hoping for new technology to save the
day is a risky bet to make when the
stakes are this high
okay just for fun after a not so fun
video it's time to put the global
economy on the economics explained
National leaderboard starting with size
the global economy has a GDP of 96
trillion dollars and it's probably going
to reach a hundred trillion dollars this
year now my zero to ten scale wasn't
really made for this so let's give it a
10 out of 10 but only because it can't
go any higher GDP per capita is uh well
unsurprisingly right in line with the
global average of 12 234 this is more
than double what it was just two decades
ago and goes to show just how valuable
economic growth can be to people less
fortunate than ourselves a doubling of
output means that the average person now
has twice as much General economic
Prosperity as they did a generation ago
but since the global average is exactly
in line with a global average it gets a
5 out of 10. stability and confidence is
high because of the general diversity of
including every single economy in the
world in the same way that a portfolio
of stocks and bonds will be more stable
than any one stock picked individually
it gets a 9 out of 10 only because it's
still susceptible to Global trends that
some select economies can ride out
growth has been shockingly good the rise
of China has boosted the average but the
last two decades have been the most
intense period of economic growth ever
in history and with all the Doom and
Gloom in the world it's probably worth
reminding ourselves that we are living
in a golden age of economic prosperity
in the year 2000 global economic output
was 34 trillion dollars today it's
triple that and almost a hundred times
what it was in 1960. in the last 10
years despite everything that went on
the world the economy still grew by 50
percent it gets a 7 out of 10. finally
industry this is an interesting one
modern industry has been the driving
force of that growth but some of our
most important resources still rely on
low-cost labor from people using basic
hand tools even still global Supply
chains and modern technology it would
have allowed countries to participate in
this overwhelming growth Trend obviously
some have benefited more than others but
the global economy gets a 7 out of 10.
altogether that gives the Earth an
average score of 7.6 out of 10 which
puts it way up here again this scale is
definitely not made for ranking the
entire global economy but hey nobody's
using this list throwing things serious
so I hope you all forgive me for having
a little bit of fun with it thanks for
watching mate bye
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