In its latest outlook of the global economy, The World Economic Forum Global Risks 2012 report paints a gloomy panorama of the future if world’s institutions –governments, private industry, academic institutions and social organizations- don’t make some radical changes. The report was prepared as a prelude to the Davos, Switzerland, meeting later this month.

Increasing number of unemployed young people, growing number of elderly people dependent on the states and the expanding gap between the rich and the poor are sowing ‘seeds of dystopia’. This term was originally coined by the British philosopher John Stuart Mill as a contrast to utopia. Social critics use the term ‘dystopian’ to condemn negative trends in post-industrial societies.

The findings in the report are based on surveys of 469 experts and industry leaders, and show a shift of concerns from environmental risks to socioeconomic risks which were the focus of the report a year ago. “For the first time in generations, many people no longer believe that their children will grow up to enjoy a higher living standard than theirs,” stated Lee Howell, the World Economic Forum Managing Director and responsible for the report.

This situation exists not only in industrialized countries, beset by economic crises, but also in developing countries that also suffer the effect of those crises. The recent downgrading of France’s sterling credit rating by Standard & Poor’s Corp. followed by a similar measure on other European countries, underscores the seriousness of the situation affecting the countries’ economies. Meanwhile, as the second Greek bailout is looking more complicated, the country’s pharmacies are running out of basic medicines. In addition, some families, unable to take care of their children are abandoning them to be cared for in youth centers.

The report analyses 50 global risks and divides them in three different sets of risk cases to the world’s prosperity and security. The three risk cases describe the links across a selection of global risks, their interplay and how they are likely to develop over the next 10 years.

The first case, called Seeds of dystopia, describes what happens when efforts to build a better world do not go as anticipated. This case deals with how formerly wealthy countries can descend into lawlessness and unrest as they are unable to meet their social and fiscal obligations. In that regard, it warns that developed economies such as those of Western Europe, North America and Japan are in danger of being destroyed. As a result, workers near retirement fear that cutbacks in social entitlements, mainly access to quality health care, will seriously affect their quality of life.

The challenges in emerging economies such as Indonesia, Vietnam, the Philippines, Mexico, Peru and the BRIC countries (Brazil, Russia, India and China) are different since these countries are trying to take advantage of a demographic window of opportunity of a young and large labor force before this population also ages. Rapid growth among these emerging economies has created expectations that improved conditions will benefit all of them, a premise that recent economic developments is unable to sustain. As stated in the report, “…social contracts may not be forged quickly enough to rectify increasingly visible economic inequalities and social inequities.”

The second case discussed in the report is called, How Safe are our Safeguards? In it, the analysis of the Global Risks Survey stated that “…the risk of unintended negative consequences of regulations was tightly connected with many other global risks.” The report stresses that to be effective the safeguards have to strike the right balance on topics such as global finance, transportation networks, emerging science and new technologies, scarce resources, the climate and biodiversity.

One of the main problems is that, frequently, safeguards are inadequate, over-complicated, fragmented and slow to respond to the rapid pace of global change. A change of mentality is necessary, states the report, “…so that policies, regulations or institutions can offer vital protection in a more agile and cohesive way.”

In the third case, called The Dark Side of Connectivity, the report analyses how our daily lives depend on hyper connected online systems, and underscores that new mechanisms are now required to finance private investment in exploring existing system vulnerabilities before they can be abused.

In the last few years, the increasing popularity of the Internet has changed the ways in which we communicate, conduct business and even amplify popular uprisings, as recent events have shown in several countries worldwide. Communication techniques have touched areas such as human rights and made it possible to forcibly prosecute some human rights abusers.

At the same time, recent progress has dramatically increased the possibilities for cyber attacks whose consequences may affect from petty crime to shutting down critical government systems and even potentially triggering physical armed warfare. Cyber espionage, for example, has reached now a high level of technical sophistication and although now is believed to be restricted to major corporations, government agencies and elite hackers, it can have a wider use in the future.

What makes this report particularly valuable is that it stresses the need to develop new thinking regarding private and public responsibilities, and alerts on how some specific risks, if not properly addressed, can be a serious threat to peace and economic progress in the world.

Dr. Cesar Chelala is a New York writer on human rights and foreign policy issues.

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