Finding solutions to 2016’s shockers

BIZLINKS - Rey Gamboa - The Philippine Star

More uncertainties seem to define 2016 at the end of the annual five-day meeting of top business leaders, international political leaders, selected intellectuals, and journalists a few days ago at that now famous Swiss mountain resort called Davos.

The World Economic Forum (WEF), on its 45th year, has announced its “prediction” that many would find mind-blowing: it says the world is about to enter a new stage that it calls the Fourth Industrial Revolution.

If we were to believe this forecast from that impressive think tank founded and chaired by Professor Klaus Schwab, a visionary German-born business professor at the University of Geneva, landmark change could be upon humanity as early as 2020.

Schwab best describes the new era as “a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.” He calls it a technical revolution that will change the way people live, work, and relate to one other.

He says the signs of this exponential shift in perspective has been with us for quite some time, but had only recently manifested its latent power on human life.

Schwab did not venture to give specific details of just how this change would affect the world, although he did give a few bold brushstrokes of the impending emergence of a fourth industrial revolution.


He had specifically mentioned the growing presence of artificial intelligence or AI and the Internet of Things that is increasingly dominating everyday life. Think of those drones that take aerial photographs, cars that can self-park, cleaning robots, remote sensors, and so many sensational tools that help people in accomplishing work.

Coupled with the fact that more and more people are utilizing the power of connectivity and their smartphones to do more than just call, text or browse, the new industrial age – which is quite distinct from mechanization (first industrial revolution), mass production (second), and automation (third) – becomes believable.

Thinking this new age is about to unfold during our lifetime elicits some sort of awesome feeling like watching a good sci-fi movie. And even if the possibility that such changes may cause a wider rift in the haves and have-nots of the world does not diminish the excitement.


However, such exhilaration was not the perceived mood that enveloped Davos during the last WEF. The reality that all is still not well with the world, in spite of the signs of a much-improved US economy, had cast a pall of gloom that no technological glitz could lift.

If there is such a thing as wrong timing, this was it. For starters, the threat of another global financial breakdown, not dissimilar to what the world saw in 2008, made itself felt as the Dow Jones Industrial posted its worst 10-day performance.

As the WEF was starting, the Dow index was down almost nine percent from a year ago, making it one of the worst performances of a January ever. Talk about a breakdown of the European Union was once again stoking fears as Greece’s economy continued to perform with uncertainty.

The icing was China, and while some economists argue the slowdown is manageable, the cooling down of the world’s second largest economy and consequential measures by the Chinese government to adapt to the changes was shrouded in vagueness.

Not surprising, though, since China has always chosen to remain mum about its internal affairs, no matter if it had gigantic repercussions on the global economy. And keeping a seemingly closed mind on how to handle the situation was enough to drive economists to the brink of a nervous breakdown.


The symptoms of an economic Armageddon cannot be denied, and this was most apparent during the weeks leading to Davos. Stock prices were plunging. Companies were reporting decreased revenues, with production levels dropping steeply and consumer spending still dulled.

Investments continued to be on hold, and reports of bond defaults in the energy sector were alarming. Finally, with the US Fed raising interest rates in December, the world-acknowledged financial wizard George Soros had to deliver the doomsday message the move was a big, big mistake.

Thus, the excitement (and anxiety, in the case of any negative effects) of the dawning of a new industrial was drowned by all the immediate uncertainties facing the world this year.

If some are pointing their fingers at China for all the troubles, there is now a growing rumble the US, particularly with the Fed’s quarter-point rise in interest rates, has provided the pin prick that is now deflating the stock bubble and plunging the world economy into another recession.

It seems  the medicines given during the 2008 crisis – quantitative easing and zero percent interest rates – are not delivering the results. Much like a sick patient whose treatment has been to control fever but not the cause, the world economy has become addicted to its prescription and can’t quite figure out what to do next to be able to get back on its feet.

Not invincible

On the home front, the Philippine economy continues to show impressive strides despite all the turmoil. But this does not mean this will be sustained should a second global financial crisis erupt this year.

Our biggest assets – Filipinos working overseas and sending home their salaries, and a dominance in the global business process outsourcing industry – are all dependent on the world’s economic health.

And even if the Fourth Industrial Revolution would indeed materialize in the near future, despite a downturn in the global economy, such technological transformation is seen to restructure at least 5.1 million jobs to give way to the better capability of AI.

That would really translate to some negative parameters that could adversely influence positive Philippine economic growth.

Overall, on top of wars, terrorism threats, dislocation of more people affected by the war and terrorist activities, climate change and global warming, humans are feeling overwhelmed, so much so that dodging the problems becomes a more appealing recourse than finding solutions.

This time, it seems that luck would run out on all of us.

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We are actively using two social networking websites to reach out more often and even interact with and engage our readers, friends and colleagues in the various areas of interest that I tackle in my column. Please like us at www.facebook.com and follow us at www.twitter.com/ReyGamboa.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.

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