What Mattered in the World in 2023

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2023 y’all, it has been a wild ride.  It’s overwhelming to think how much has happened in a single year, and it’s hard to comprehend how much change we are experiencing now.  And as much as people seem to have nostalgia for simple times, it seems like change is only going to accelerate.  A BBC article from earlier this year explains some of the feeling of chaos.  

That’s why year-in-reviews can be important - to take stock of where we came from and where we are now. We can appreciate things that got better, trends to be aware of that can impact us, and foresee potential opportunities and risks in the future.  

This post will focus on the big picture - in geopolitics, economics, technology, and science.  This is a broad-strokes summary, and I will only get to touch on a select few stories that made a difference in 2023.  

Global Geopolitics

It has become really clear that global geopolitics are becoming more present in corporate agendas, domestic politics, AND in our personal lives.  While we can’t control most of what is happening, at least we can be aware, discuss with others, and be prepared to respond if we are affected somehow personally.  

Major Conflicts

Confict-driven violence is increasing globally - even before the Hamas terrorist attack on Israel and Israel’s brutal retaliation, societies across the globe, particularly in Europe, the Middle East, Central Asia, and Sub-Saharan Africa, are slipping further into violence. 2022, the latest year where data is available, saw a 96% increase in deaths, to 238,000 globally.  This is the continuation of a troubling trend over 15 years, with more potential flashpoints coming in 2024.  

The Institute for Economics and Peace in June 2023 published the latest index and commented, “The economic impact of violence on the global economy in 2022 was $17.5 trillion in purchasing power parity (PPP) terms. This figure is equivalent to 12.9 percent of the world’s GDP or $2,200 per person, increasing by 6.6 percent from the previous year.”  

Highlights: 

• Israel-Hamas War and Atrocities on Palestine: As of December 2023, it is estimated that 1,300 Israelis have been killed, and over 20,000 Palestinians, almost 70% of which are thought to be women and children, and 7,000 of which are thought to be Hamas.  Global outcry for a ceasefire, accusations of genocide, and changes in tactics are creating immense pressure on the US and Israel, although there are no obvious political and security solutions ready.  There are risks of the war spreading, with the Houthi rebels a current risk but others like Hezbollah not out of the question.

• Russia’s War on Ukraine: Almost in its 3rd year and after a disappointing Ukrainian offensive, the war is largely in a stalemate.  However, domestic US and European politics are holding up funding and arms support to continue assisting Ukraine. NATO has expanded to include Finland (with Sweden waiting), and the EU is reviewing Ukraine's application. Europe is coming to terms with an expansionist Russia under Putin.

• Sudan’s Civil War: The two warring factions, the Sudanese Armed Forces (SAF) and a powerful paramilitary group known as the Rapid Support Forces (RSF), remain locked in a deadly power struggle for control of the state and resources. The conflict has killed more than 10,000 people and displaced 5.6 million, 80 percent of whom are internally displaced and hundreds of thousands of whom have fled to unstable areas in Chad, Ethiopia, and South Sudan. 

Global and Domestic Governance

Power

The United States is clearly in decline from its former status as the global hegemon, 2023 including very key events. 

According to Oxford historian Peter Frankopan, we are witnessing the unraveling of the global order. In a period of history marked by a Western financial crisis, a global coronavirus pandemic, war in Europe, rising government debt, and political instability across advanced democracies, the global order has been steadily moving toward a 'post-American World' or 'post-Western World'. 

While we have grown used to thinking of globalization in terms of liberal democracy and Western-led multilateralism, globalization within a multipolar order will increasingly favor regional autonomy and a struggle to define a new balance of power. Taken together, China, India, Russia, Turkey, Iran, Indonesia, Saudi Arabia, and Brazil are becoming regional powers within a loosely coupled global system.”

China particularly, although facing some economic headwinds, has made dramatic moves to jump onto the world stage, from its very public Belt and Road Initiative to brokering a peace deal between Iran and Saudi Arabia.  

Democracy

According to the democracy index, 2022-2023 was a mixed year of democratic retreat across the world, and at one of the lowest points since the beginning of data collection in 2006.  Only 8% of the world’s population lives in full democracies (by the way, even the US is not considered a full democracy).  In a global perception survey representing about 75% of the world’s population, “only 57 percent of respondents believed they lived in a democracy, though 84 percent felt as though democracy was important…Worldwide, respondents noted economic inequality and corruption as the two largest threats to democracy.” 

According to the Council on Foreign Relations, “2024 looks to be the mother of all election years. More than three dozen countries, with a total population of four billion people, will see their citizens head to the polls in major countries like the US, India, Taiwan, Bangladesh, and 63 more countries, with the consequences as great as ever.  

New Political Leaders

Across the world, more radical political leaders are winning elections (particularly Geert Wilders, a far-right politician in the Netherlands, and a “chain saw” libertarian Javier Milei in Argentina) and there were 2 more coups in Africa - Gabon and Niger (since 2020, there have been nine coups in West Africa, Central Africa, and the Sahel region).   

People are tired of governments that are not serving them and want immediate, simple, and more radical solutions to issues they face every day.  This is fertile ground for more extreme politicians globally that stoke fear and nationalism, reducing multilateralism and global cooperation on complex issues.  

US-China Relations

Inside a context of already bad relations, the US shooting down of a spy balloon in February and the

subsequent cancellation of high-level talks with China was perhaps one of the lowest points in relations in a long time.  There are signs that relations are finding a floor, but tensions will remain as they relate to Taiwan and the South China Sea.  This relationship will continue to reverberate around the world, widely feared to be the flashpoint of the next potential world war.   

The COVID-19 Pandemic

Around the world, countries are returning to “normal” in terms of their public health precautions, opening up economies, and removing restrictions.  In the US, COVID ceased to be an emergency back in May, although still COVID is going around (especially now in the winter) and perhaps might be endemic.  That does not mean that COVID hasn’t had a lasting impact - aside from the death toll, COVID majorly impacted people’s wallets, long-term physical and mental health, trade, government balance sheets, remote work, social habits, and much more.  These effects have been much more and will continue to be longer and more pronounced in poorer and more vulnerable countries.

Economics  

The economic words of the year would be inflation and interest rates.  According to the IMF’s World Economic Outlook, “Global headline inflation is expected to fall from 8.7 percent in 2022 to 6.8 percent in 2023 and 5.2 percent in 2024” - better, but inflation is highest in poorer countries.  People across the world are feeling the pinch of the higher price of everyday goods.  

Many economic leaders are also using the terms “de-risking” and in some cases “de-coupling” of supply chains (all together, a potential “de-globalization”).  This means supply chains that are more resilient to different types of shocks like wars, trade disputes, sanctions, and climate-related events. There are a lot of leaders in the US and China (and to a lesser extent Europe) advocating to de-couple dependence on each other for certain goods.  

Countries are also resorting to protectionism and populist economic policies, like the USA’s Inflation

Reduction Act, which provides enormous subsidies for bringing manufacturing for renewables and electric vehicles back home.  Industrial policy is back. All indicators point toward increasing government spending around the world (climate, social welfare, and military spending), with higher interest rates leading to unsustainable government debt loads.  Global government debt is projected to hit an astounding $97.1 trillion this year, a 40% increase since 2019 (about ⅓ from the US!).  With rising interest rates, the cost of servicing this debt now accounts for 20% of government spending.  

In the crypto world, although there were some high-profile crimes like that of Sam Bankman-Fried, “the total cryptocurrency market cap increased during 2023 to reach over $1.4 trillion (+70.7% YoY growth). A swell of optimism surrounding spot Bitcoin and Ether exchange-traded funds (ETFs) in the latter half of 2023 was likely a major driver of the industry.”  

Environment 

2023 set records for the hottest year in recorded temperatures, and will most certainly continue to climb. 

The continued warming means extreme weather events — which have already worsened — will become even more frequent and intense, exacerbating the damage and loss of life from droughts, flooding, hurricanes, and wildfires. The average global cost of extreme weather-related events reached $383 million PER DAY for 2010-2019 – almost eight times higher than the $49 million per day taking place in 1970-1979.

In positive climate and environmental news: 

• 2023 set a record in renewable energy, with a surge of both investment and deployment, much of this thanks to China 

• COP28, the annual climate conference, brought about the first global agreement to “transition away” from fossil fuels

• Also at COP28, a loss and damage fund was created for countries that got rich off fossil fuels to compensate for damages to countries most vulnerable to climate change

• A global pact to protect the oceans was signed by over 60 countries, representing a step toward a larger agreement to protect 30% of land and sea by 2030

• Climate protests and litigation are getting more frequent, bigger and louder, building more support around the world for real and immediate solutions

Migration 

The United Nations Refugee Agency’s most recent figures counted 108.4 million forcibly displaced people around the world at the end of 2022, up from 89.3 million in 2021. This probably increased due to even more conflict in 2023, including the new wars in Israel/Palestine and Sudan, and continued conflict in Ukraine and Ethiopia. Among the 2022 numbers were 35.3 million refugees and 62.5 million internally displaced people. 

Central and South America have seen record migration to the US, with 2.5 million crossings in 2023 alone, due to impacts of the pandemic and recession, instability, and internal violence that followed.  Latin America was hit harder than almost anywhere else in the world, plunging millions into hunger, destitution, and despair.

With increased migration, anti-immigrant sentiment is rising globally, especially in the rich Western world, as political leaders are doing more to deter and prevent immigrants from arriving in their countries.  With more violence, instability, economic hardship, and extreme weather events, this is only going to increase.  

Technology 

Whether we like it or not, technology will continue developing at a furious, dizzying pace.  It’s important to also understand that these technologies will be increasingly seen as geopolitical and military tools.  From the Centre for International Governance Innovation:  “In the decades ahead, frontier technologies including artificial intelligence, robotics, quantum computing, 6G (sixth-generation) telecommunications, genetic engineering, renewables, and nanotechnology will be the basic building blocks of a competitive multipolar order.” 

While the metaverse hype died down in 2022, we are still seeing advances in augmented/virtual reality, with Apple’s release of the Vision Pro.  Even bolder is Humane’s announcement of the AI Pin, a potential challenger to the smartphone category. 

Cybersecurity is becoming a concern everywhere with the advent of generative AI.  Newer, more sophisticated phishing attempts and other scams are proliferating.  It is estimated that cybercrime cost the world 8 trillion dollars (!!!) in 2023 alone.  More than half of all cyberattacks are committed against small-to-midsized businesses (SMBs), and 60% of them go out of business within six months of falling victim to a data breach or hack.

Perhaps out of the news but extremely important - governments and big tech firms that wield enormous resources and technological advantage (think of AI algorithms) will only increase in power and influence around the world.  Think about companies like Meta, Amazon, Google, TikTok, Nvidia, and OpenAI - these firms are deploying technologies that permeate every part of our lives, and they will be able to collect staggering amounts of data. 

Artificial Intelligence

AI is marching through board rooms, classrooms, and living rooms, as the pace of innovation continues.  2023 was a big year for large-language models like ChatGPT, including the introduction of multi-modal (text, image, video, etc.) capability.  Another equally astounding breakthrough was by Google’s DeepMind, whose AI model predicted more than 2 million protein structures of new materials.  This is potentially a huge leap forward for all types of “applications such as energy storage, solar cells, and superconductor chips.”

The impact of AI is still being studied, with some of the first elections using AI in campaigns, AI being used for scams, and huge companies like IBM deciding to institute a hiring freeze due to AI.  Union workers are scared of being replaced.  One winner of an international photography contest admitted (and rejected the award) that he used AI to produce his image.  While productivity gains are assured, we are less and less sure of what is real as AI is becoming our new search engine - and with that, AI is a filter for the truth.  AI can generate content indistinguishable from humans, and sound oh-so-convincing even if it’s spewing BS.  

I could go on forever about AI, but what is certain is that 2024 will continue to heat up.  Europe instituted the first major set of regulations for AI (Biden signed an initial executive order) and Bill Gates thinks we’re within 2 years away from widespread adoption in the US.    

Science 

The incessant march toward scientific progress continues.  

NASA’s first collection of samples from asteroid Bennu was a huge feat and will allow for much more research into the formation of the universe.  India became the first country to land a spacecraft near the lunar south pole in August.  

In the area of clean energy, we are seeing breakthroughs in fusion energy. From The Independent: "Scientists have managed to repeatedly produce nuclear fusion ignition for the first time, marking a major milestone towards achieving near-limitless clean energy at scale. A team at the Lawrence Livermore National Laboratory (LLNL) in the US achieved fusion ignition last December 2022 producing a net energy gain from a fusion reaction for the first ever time."

On December 8 the U.S. Food and Drug Administration approved the first CRISPR treatment for sickle cell disease. The treatment, called exa-cel and made by the companies Vertex and CRISPR Therapeutics, edits a gene involved in red blood cell shape and function. 

The pace of innovation in medicine is advancing - breakthroughs in treating Alzheimer’s, cancer, yellow fever, and more.  We are “seeing a pace of progress that has not been witnessed for 100 years,” said Bertalan Meskó, director of the Medical Futurist Institute in Budapest.  

Conclusion

After putting together this summary - I would surmise that while there is enormous opportunity to create a shared prosperous future, we have more difficult times ahead.  Global indicators are moving in the wrong direction, while at the same time, there are fast-moving changes that will make it difficult to adjust.  

A 2023 UN report on progress toward the Sustainable Development Goals says that we made weak and insufficient progress on 50% of indicators, and 30% were stagnant or deteriorated.  

“According to the report, the impacts of the climate crisis, the war in Ukraine, a weak global economy, and the lingering effects of the COVID-19 pandemic have revealed weaknesses and hindered progress towards the Goals. The report further warns that while lack of progress is universal, it is the world’s poorest and most vulnerable who are experiencing the worst effects of these unprecedented global challenges.”    

The world needs a new generation of leaders who have a “rising tide lifts all boats” attitude, willing to see past national borders and understand that we are all connected and that human prosperity comes with the prosperity of mother nature.  It’s important never to give in to cynicism, we must keep hope and optimism that we can get back on track for the future.  

For Learning and with Love (and Happy New Year!),

Chris