7gen Bloc

On the second day of the World Economic Forum in China, I sat in on a session where three Internet gurus—Jimmy Wales (founder of Wikipedia), investor Esther Dyson, and Mitchell Baker (chairman of Mozilla)—pondered what’s next on the Web. Jimmy Wales gave us an honest answer: “Who knows—it’s impossible to guess.” He then went on to say: “I believe we’ll see Wikipedia-type collaboration in video, music, and community building.”

Mitchell Baker expects to see “the customized manipulation of small, highly specific data to communicate to select networks of people [photos, maps, data]. We will begin to control the information that exists about ourselves…”

Peter Bakker, the visionary CEO of TNT, the Netherlands-based global transport company, delivered a riveting talk on climate change. First, he gave us some facts: Two of TNT’s Boeing 747s emit more CO2 than its fleet of 35,000 trucks on their short-haul journeys through Europe. Hard to believe. But when it comes to CO2, the US military is the world’s largest consumer of jet fuel and one of the world’s largest contributors to global warming.

Then, Bakker gave us a forecast: The cost of $200 for a barrel of oil, plus the cost of CO2 that will soon result from cap and trade expenses, will largely wipe out the economic advantage of manufacturing US and European consumer products in China. Bakker predicts that most manufacturing will become increasingly decentralized.

The impact of climate change on supply chains and logistics means that globalization will give way to “regionalization” and even “localization,” as producers move closer to consumers. If Bakker is right, we will see a reverse migration of some manufacturing jobs from China and India to the US and Europe, as Western countries build new plants on their home turf. Could outsourcing in the manufacturing sector be on its way out, and “insourcing” be on its way in?

In Bakker’s view, China still remains a huge competitive threat. TNT found that the Chinese can make an electric truck for 30% less that the EU can manufacture a diesel truck. Ironically, going electric is the one way that China can penetrate the EU market, because the country lacks the technology to meet the EU’s emission standards for diesel. TNT is supporting the development of the manufacturing infrastructure to help China build electric trucks. Governments aren’t doing enough to promote alternative energy, but business will—so long as there’s a business case for it.

Elsewhere at the Forum, the conversation turned back to the US economy. There’s a growing consensus that the US economy is about to enter a prolonged, Japan-like recession, driven by a contraction in consumer spending that will likely drop from the 14-year average growth gate of 4% to 2%, and in some years even 0%.

How do you reconcile the fact that the US will sell “toxic” assets in the form of financial instruments to anyone in the world willing to buy them, but refuses to sell hard assets like its ports to companies that are judged to present too great a risk to the country’s security? The shock to America’s financial markets will no doubt be followed by yet another shock, as we realize we must court foreign investments that we once shunned.

Click here for Part 5

photo: Jim Gordon