Ignore the deafening noise – the world is rebalancing and a new golden age of globalisation beckons

Note: This is the transcript (edited lightly for clarity) of the first of a series of investor and policymaker keynote speeches I delivered in February 2025 starting on the 4th of February, 2025 

“I May End Up Being Your Therapist”

Thank you for having me, and I hope to make it worth your while!

By the time I’m done, I’m hoping you might consider having me on as your therapist.

And the reason for that is already becoming clear — and I think it will become even clearer as the discussion unfolds.

We are living amid a constant flood of bad headlines. Domestically — and every time things seem to stabilise in this part of the world — an unexpected grenade gets lobbed from the other side of the Atlantic by our very own cousins.

It’s hard to wake up in the morning, sit down with your coffee, look at the headlines, and not think:

• What crazy thing happened overnight?
• What’s the new bad news?
• Is it civil war in Africa?
• Another phase in the US–China conflict?
• Another horrific escalation in Gaza?

And not feel genuinely depressed — and wonder how on earth we get out of this.

This is personal for me. Most of my family is American. And professionally, in every area I care about — global macro, finance, sustainability, geopolitics — I don’t have the luxury of switching off.

Some of you may have day jobs where you can decide not to follow the news. I can’t.

So let me be clear upfront:
what I’m about to say is not a perfectly emotionally detached, laboratory-pure analysis.

Some of it is a narrative I tell myself to stay sane.

I offer it to you in the same spirit.

Zooming Out: What Actually Drives Prosperity

If you look at the broad sweep of economic history — everything humanity takes for granted, including this rather wonderful building we’re sitting in — it all comes down to a small number of fundamental drivers.

At the deepest level, prosperity is created by combining:

• Human ingenuity and creativity
• with the gifts of Mother Nature

Natural capital in all its forms:

• biodiversity
• agricultural land
• forests
• fisheries
• minerals
• historically fossil fuels, and now lithium and other transition metals

If you zoom out far enough, there are really four fundamental drivers of everything we call economic growth:

1. Human capital
   Skills, ingenuity, creativity.
2. Natural capital
   What nature gives us.
3. Technological / intellectual capital
   The accumulated surplus from ever more creative ways of combining human and natural capital.
4. Financial capital
   Accumulated surplus from successfully combining all of the above — which, after all, is why we’re all here.

Those four drivers explain all prosperity we’ve ever seen — and all we will see.

So how do they look today?

Engine One: Demographics (Sputtering in the Rich World)

Let’s start with demographics — because in our part of the world, this engine is sputtering badly.

In Japan, for more than a decade now:

• sales of adult nappies have exceeded sales of nappies for children
• and they’re now close to being twice as large

Across much of Europe:

• birth rates are perilously close to 1
• in South Korea, fertility has collapsed to 0.8
  • replacement is 2.1

We’re not doing particularly well ourselves either.

A German Anecdote (and a Structural Lesson)

About twenty-three years ago, I was travelling through North Rhine–Westphalia — Düsseldorf, Cologne — during an election campaign.

The CDU slogan was:

“Kinder statt Inder”
Kids, not Indians.

This was in response to early EU discussions about Blue Cards — meant to rival US Green Cards — to attract Indian IT professionals.

Today, when I speak to my German friends about Germany’s economic malaise, I remind them — not always kindly:

Neither the kids came, nor the Indians.

That explains a lot of where Germany finds itself.

Why This Matters for Growth

In the post-World War II reconstruction years, when 5–6% growth felt normal:

• Half of growth came from productivity
• Half came from an increase in the number of workers

We’ve now reached the point — particularly in Europe — where:

• the number of workers is flatlining or shrinking

What used to boost growth will now pull it down.

So even in a good scenario:

• Eurozone growth of 1–1.5% would be a success
• the US might manage ~2–2.5%
• nothing like the post-war heyday is coming back

That first engine is not in good shape.

Engine Two: Natural Capital (In Even Worse Shape)

What about the second engine — natural capital?

Here the picture is darker still.

In my day job, I’m an adjunct professor of climate geoeconomics and finance. I spend a lot of time with scientists.

And the message is unambiguous:

The physical impacts of climate change are arriving sooner, and more violently, than even pessimistic models predicted.

Floods, fires, heatwaves, precipitation shifts — things we expected in 2030 or 2040 are happening now.

And climate is only part of the story.

By 2050:

• roughly one-third of mammal species are expected to disappear

Add to that:

• soil degradation
• water scarcity
• biodiversity collapse

To use an aviation analogy — and we do have a helicopter pilot in the room — you really don’t want to be flying with a sputtering engine.

But that is, uncomfortably, where we are.

So… Is There Any Good News?

Let me try.

The World Is Bigger Than the Rich World

For every European headline about:

• labour shortages
• not enough nurses
• not enough care workers

there are at least two headlines we don’t see.

Between India and sub-Saharan Africa alone:

• 25 million people enter the workforce every single year

As of today:

• Very few of them will ever work in the formal sector

That is:

• a tragedy for them
• a crime against humanity
• and frankly, a crime against economics

Europe has a demographic problem.
The OECD has a demographic problem.

The world does not.

The world has a massive potential demographic tailwind.

Every one of these people:

• is willing to work twice as hard as anyone in this room
• and statistically, several million are far smarter than any of us

The potential is extraordinary.

Climate — This Time, With Optimism

Now imagine a worse world than the one we’re in.

Imagine facing climate collapse:

• without viable renewables
• without batteries
• without electric vehicles

Thankfully, we are not in that world.

For the first time in history:

• solar power is commercially viable
• batteries work
• EVs are competitive

Every year, global energy institutions revise their forecasts —
and every year, reality beats even the optimistic projections.

The same is now true for electric vehicles — particularly those coming out of China. Some are extraordinary value for money.

For the first time, the technologies needed to not destroy the planet are:

• technologically feasible
• commercially viable
• investable at scale

That means:

• climate action can fuel an investment boom
• and investment booms drive growth

COVID’s Unexpected Gift: Remote Work

This is where I become genuinely optimistic.

At peak COVID lockdowns:

• two-thirds of US GDP
• two-thirds of European GDP

was delivered remotely.

If something can be done across the street, it can be done across the ocean.

For nearly 18 years, I averaged 4.5 flights per week.
Today, I work in more countries than ever — and fly roughly once every two weeks.

COVID normalised the remote delivery of high-value services.

That changes everything.

The Next Golden Age of Globalisation?

Between 1989 and the early 2000s:

• inflation was low
• growth was decent
• markets performed brilliantly

And:

• 1.5 billion people were lifted out of poverty

All driven by one thing:

A doubling of workers in globally productive supply chains — in goods.

But today:

• goods are ~30% of GDP
• services are ~70% and rising

And services have never been globalised.

With remote work, they can be.

Our modelling at the LSE and EUI suggests:

• the upside from globalising services is at least twice that of the last golden age

The US: Too Much Headspace

Some grounding numbers:

• US = ~26% of global GDP
• ~4% of world population
• ~3% of under-18s
• ~10–15% of global trade (shrinking)
• ~15% of patents

Yet:

• 65% of global equities
• 40% of fixed income

The US occupies far too much of our mental bandwidth.

Innovation does not only come from Silicon Valley.

Much of it is:

• incremental
• boring
• driven by perspiration, not inspiration
• and often by desperation

A good example:

• Chinese AI firms matching US models using older chips — because they had no choice

That’s how productivity gains actually happen.

Noise, Trump, and Mental Health

Three things to remember:

1. In Trump 1.0:
   • roughly 100 policy pronouncements
   • led to 1 actual policy change
2. Even if Trump 2.0 is worse:
   • maybe the ratio is 30-to-1
3. He has a razor-thin majority.
   Midterms matter.

For your portfolio, you wouldn’t react to every price tick.

Don’t do it with headlines either.

And ask yourself:

Would you rather have bad policies with polite rhetoric —
or loud rhetoric with limited bite?

The bark being worse than the bite is actually the best case.

The Great Rebalancing — and Why It’s Good News

This brings me to where I want to end.

We are likely at the start of The Great Rebalancing in the global economy. It will start with the rebalancing of capital allocation, trade links, innovation, security, governance and headspace away from the United States towards the rest of the world, particularly emerging and developing economies, but also Europe.

Away from extreme geographic concentration and Towards real innovations, real productivity gains and real human potential

Toward places:

• where growth rates of 5–7% are still realistic
• where aspirations of millions create positive feedback loops
• where investment can generate returns rebuild natural capital and catalyse social progress and development

This is not naïve optimism.

Maybe 5% of this is a coping narrative.

But 95% is grounded in fundamentals.

And if it helps you stay sane —
and make better long-term decisions —
I strongly recommend adopting it.

Thank you very much for having me.

And remember:

There has never been a time when so many people had so much potential — and so many opportunities existed — outside the places we normally look.

The Great Rebalancing is not something to fear. It is something to be celebrated, and this rebalancing will boost growth, and increase resilience in the global economy.

It is good news for the world.