- In 1994, journalist Hamish McRae published a book predicting what the world would be like in 2020.
- In today’s piece, Nicholas Vardy analyzes what McRae predicted correctly and incorrectly, such as global wealth, the internet and more.
English journalist Hamish McRae published his book The World in 2020: Power, Culture and Prosperity in the mid-1990s.
When I read it many years ago, I wondered how it would stand the test of time.
Well, 2020 has arrived – if not in the blink of an eye, still a lot quicker than I expected.
I recently went back to my bookshelf and pulled down my yellowing paperback copy of McRae’s book. I decided to put his predictions to the test.
To give McRae his due…
The book was published in 1994. That means McRae did most of his analysis in the early 1990s – almost 30 years ago.
Think of how challenging it would be today to write a book titled The World in 2050.
Describing the world a generation from now takes a great deal of understanding, insight and intellectual courage.
Despite these challenges, McRae’s book has stood the test of time remarkably well.
McRae’s Two Broad Themes
McRae argued two broad themes in this book.
First, he identifies a massive shift toward the emerging world. (Think emerging markets.)
In the 1990s, the developed world generated roughly two-thirds of global GDP.
Fast-forward to today, and that number has flipped. Two-thirds of global GDP is coming from the emerging world, driven in large part by the GDP growth in Asia.
Second, McRae argues technology will have a growing role in the information revolution.
McRae predicted that anyone would be able to access public and private databases linked together. Anyone with a computer would have access to the same quality of information and research as entire research departments did before.
And McRae made this prediction without once mentioning the word “internet.”
What McRae Got Wrong
McRae never claimed he would get everything right.
Still, it’s worthwhile seeing what he got wrong as a window into what futurists were thinking about in the early 1990s.
No. 1: China
China was very much on the radar of pundits like McRae. He wrote, “It is very difficult to see China as anything other than the world’s largest economy in 2010.”
He expected China to overtake the U.S. in 2003 given its pace at the time. He wrote that even if China’s growth rate halved, the country would overtake the U.S. by 2014.
China did neither. And today, the U.S. GDP of $21.44 trillion remains more than China’s, Japan’s and Germany’s combined.
No. 2: Russia
McRae wrote this book just after the fall of the Berlin Wall in 1989 and the collapse of the Soviet Union in 1991.
And like most others at the time, he was overly optimistic.
He expected Russia to endure a difficult time through the 1990s. But by 2020, he thought Russia would have transformed into a Western-oriented economy far less dependent on natural resources.
Instead, Russia experienced a massive stock market boom in the 1990s, leading to the rise of billionaire oligarchs who came to dominate the Russian economy.
And since then, Vladimir Putin’s Russia has hardly morphed into a thriving Western-style market economy.
McRae’s Lessons for Investors
Investors get far too caught up in the day-to-day movements in the financial markets.
A well-thought-out book like The World in 2020 highlights the importance of the opposite: that understanding the big picture is far more critical for investors than tracking Mr. Market’s mood swings.
There are two specific insights I took away from reading McRae’s work.
First, it’s much easier to predict what will happen in 15 or 20 years than it is to predict what will happen in two or three.
I noted above how McRae described linking public and private databases through computers without mentioning the internet. (In fact, I read the book about three years before I even had an email address.)
But this shows that intelligent analysis can guide you in the right direction even if the details are hazy.
Second, there’s probably another paradigm-shifting technological advance around the corner that none of us can predict. And it probably involves taking existing technology and using it another way.
Yes, McRae anticipated the equivalent of the internet. But no one predicted the importance of the iPhone – the internet in your pocket – when it launched in 2007.
Yet this device changed the daily lives of billions of people more than the internet alone ever did.
McRae’s Third Broad Theme
I mentioned two broad themes woven through McRae’s book. Let me add a third.
That theme is optimism. McRae believes that no moment in history has been a better time to be alive than today.
As Alexander Green has pointed out many times… Human beings live longer, are better educated and can control their destinies far more than ever before.
McRae thinks of it this way…
If you had to choose a moment to be born knowing nothing about your circumstances – not knowing whether you’d be born black or white, rich or poor, man or woman – what would be the moment in history you would choose?
The answer is now.
This is not naïve optimism. Nor does it ignore enormous challenges ahead.
It’s just observing the world we live in.
Interested in hearing more from Nicholas? Follow @NickVardy on Twitter.