Irving Wladawsky-Berger

What Might the World Be Like in 2040?

The mission of the National Intelligence Council (NIC) is to lead intelligence integration and long-term strategic thinking across a wide variety of sources, including the US Intelligence Community, policy makers, and experts in academia and the private sector. Every four years, the NIC develops a Global Trends report that examines the key trends and uncertainties that will shape the global environment during the next two decades. This is done to provide the incoming administration with a framework for long-range strategic policy assessment. Global Trends 2040 - A More Contested World (GT2040), the latest NIC report, was published in March, 2021, a few weeks after President Joe Biden’s inauguration. Let me briefly discuss.

Key Recurring Themes

“During the past year, the COVID-19 pandemic has reminded the world of its fragility and demonstrated the inherent risks of high levels of interdependence,” notes the report in its introduction.  Not surprisingly, given that we’ve been living through the most significant global disruption since WW2, GT2040 paints a rather dark picture of what lies ahead.

“In coming years and decades, the world will face more intense and cascading global challenges ranging from disease to climate change to the disruptions from new technologies and financial crises. These challenges will repeatedly test the resilience and adaptability of communities, states, and the international system, often exceeding the capacity of existing systems and models. This looming disequilibrium between existing and future challenges and the ability of institutions and systems to respond is likely to grow and produce greater contestation at every level.” As a NY Times editorial observed, “Experts in Washington who have read these reports said they do not recall a gloomier one.”

Leveraging Cloud Computing to Enhance the Nation’s Cybersecurity

There’s clearly an urgent need to significantly improve the security and resilience of IT systems and applications in light of the growing threat of cyberattacks, which FBI director Christopher Wray recently compared to addressing the challenge of global terrorism following the 9/11 attack. Earlier this week, the NY Times published this front page article - Once, Superpower Summits Were About Nukes. Now, It’s Cyberweapons, that said: “The rising tempo and sophistication of recent attacks on American infrastructure - from gasoline pipelines running up the East Coast, to plants providing a quarter of America’s beef, to the operations of hospitals and the internet itself - has revealed a set of vulnerabilities no president can ignore.” On May 12, President Biden issued an Executive Order to Improve the Nation’s Cybersecurity, a welcome and very important step.

Cloud-based technologies and Cloud Service Provides (CSPs) can play a major role in improving the nation’s cybersecurity. Over the years, CSPs have invested billions in cloud security, hired thousands of top cyber experts, and developed an array of new tools and methods. CIOs generally agree that the security on cloud platforms is superior to that of in-house data centers, a major reason why the top IDC prediction for the post-pandemic new normal was that “By the end of 2021, based on lessons learned, 80% of enterprises will put a mechanism in place to shift to cloud-centric infrastructure and applications twice as fast as before the pandemic.”

“Cloud computing drives innovation and productivity across the economy, just as the electric grid did a century ago - yet it is more capable and dynamic.” This is the overriding message of Secrets From Cloud Computing’s First Stage: An Action Agenda for Government and Industry, a report by Bill Whyman that was recently published by the Information Technology & Innovation Foundation (ITIF). As someone who’s long been following and writing about cloud computing, I found the report quite instructive. It includes a very good introduction to cloud computing, its economic impact and market dynamics, and the areas where cloud particularly excels. But, it also addresses the key challenges that cloud must overcome to fully achieve its benefits, as well as the need for a policy agenda for cloud computing, - a very important area that hasn’t received as much focus.

Cloud’s Trillion Dollars 2030 Potential

“Thanks in part to cloud, Moderna was able to deliver the first clinical batch of its vaccine candidate (mRNA-1273) to the US National Institute of Health for phase one trials just 42 days after the initial sequencing of the virus,” wrote the authors of a recent McKinsey article, - Cloud’s trillion dollar prize is up for grabs. When the COVID-19 pandemic hit, “The company was well positioned to quickly design research experiments and to harness its automated laboratory and manufacturing processes and enhanced drug-discovery pipeline.”

Over the past year, a number of articles have pointed out that, in response to the pandemic, digital adoption by business and consumers has already reached levels that weren’t expected for many years. “More companies are starting to see the real benefits of cloud, which has been long heralded as a catalyst for innovation and digital transformation, thanks to its ability to increase development speed and provide near-limitless scale,” adds the McKinsey article. “While Moderna’s success illustrates the business opportunities that cloud makes possible, it only scratches the surface of the potential value at stake. A detailed review of cloud cost-optimization levers and value-oriented business use cases foresees more than $1 trillion in run-rate EBITDA [an accounting measure of a company’s overall financial performance] across Fortune 500 companies as up for grabs in 2030.”

To quantify cloud’s 2030 trillion dollar potential, - an estimate with a range of $0.7 to $1.2 trillion, - McKinsey analyzed the impact of cloud on worldwide IT spending based on independent surveys of over 1,000 organizations. As part of its research, it assessed over 700 use cases across 19 industries to help them forecast the revenues and financial performance of Fortune 500 companies by 2030.

The research looked at cloud adoption along three dimensions, - rejuvenate, innovate, and pioneer. It estimated the specific drivers of value across the first two dimensions and the likely growth opportunities for the third. Let me summarize the article’s key findings.

The Emergence of Central Bank Digital Currencies

Bitcoin was created in October of 2008 with the release of Bitcoin: A Peer-to-Peer Electronic Cash System, the original design paper which also introduced the blockchain architecture. A decade later, The Economist published a detailed evaluation of Bitcoin which succinctly concluded that “Bitcoin and other cryptocurrencies are useless.”

“Bitcoin, the first and still the most popular cryptocurrency, began life as a techno-anarchist project to create an online version of cash, a way for people to transact without the possibility of interference from malicious governments or banks,” it further argued. “A decade on, it is barely used for its intended purpose. Users must wrestle with complicated software and give up all the consumer protections they are used to. Few vendors accept it. Security is poor. Other cryptocurrencies are used even less.”

But last month, the May 8 issue of The Economist reached a very different conclusion in its assessment of central bank digital currencies (CBDCs), - i.e., e-dollars, e-yuans, or e-euros, - which it called “The digital currencies that matter.”

“Bitcoin has gone from being an obsession of anarchists to a $1trn asset class that many fund managers insist belongs in any balanced portfolio. … Yet, as our special report explains, the least noticed disruption on the frontier between technology and finance may end up as the most revolutionary: the creation of government digital currencies, which typically aim to let people deposit funds directly with a central bank, bypassing conventional lenders. These govcoins are a new incarnation of money. They promise to make finance work better but also to shift power from individuals to the state, alter geopolitics and change how capital is allocated. They are to be treated with optimism, and humility.”