scenario planning

Thinking the Unthinkable

I will be speaking about RAND Corporation, war games, and scenario planning tonight, 7pm at New York's Museum of Art and Design.

The link is here although be aware that I am NOT talking about Corbusier (well not for more than a few minutes anyway). If you miss the talk, you can see some of the things I will be talking about here or here


Hong Kong, 2047

Jochen Hartmann and I are in Hong Kong again, this time with my spring studio, "Uneven Growth, Hong Kong 2047" which parallels our work for Pedro Gadanho's Uneven Growth show at MoMA, exploring the city and looking for examples of tactical urbanism and uneven growth. It's been a great trip: lots to see and we are gaining a real degree of familiarity with the city. And time for us to share with you some of the work that I did for the Netlab's contribution to the Uneven Growth. 

Using the techniques of scenario planning, I developed the following text, which serves as a basis for the Netlab's contribution to the Uneven Growth show as well as our studio (it's in the syllabus to the studio, but this is a much more refined version). Take this as a work of architecture fiction exploring not only the future of Hong Kong and China but also the future of the global city and the role of tactical urbanism within them.  

Hong Kong, 2047 

“The liberal reward of labour, therefore, as it is the necessary effect, so it is the natural symptom of increasing national wealth. The scanty maintenance of the labouring poor, on the other hand, is the natural symptom that things are at a stand, and their starving condition that they are going fast backwards.”
-Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776) 
2047 is not the sequel to Wong Kar-Wai’s film 2047, but rather the year in which the “One Country, Two Systems,” doctrine that began in 1997 as the former British colony was handed over to the People’s Republic of China is scheduled to run out, causing the city to lose its status as an exceptional zone within China. We hypothesize that instead of Hong Kong disappearing, China will disappear.
We begin with the observation that demographic projections show that the People’s Republic of China (PRC) faces a brick wall created by the one-child policy. The demographic dividend created by the country’s large ratio of effective producers (working age adults) to effective consumers (children and the elderly) was a critical factor in the country’s growth to date. In 2013, however, a turning point was reached and the dividend’s growth rate turned negative, with China now producing more effective consumers than producers.  Within five years, yearly declines in the numbers of new workers fresh from school will become normal in China. Between 2016 and 2026 the population of workers aged 20 to 29 will drop by one quarter. In 2026 the population will peak.  By midcentury, 30% of the country’s population will be over 60  Without young workers dreaming of a better future, productivity will erode and eventually collapse. The result will be a suddenly poor country with a population of aging, bitter men, lacking sufficient pensions, welfare, or other means of supporting themselves. 
China’s demographic crisis will parallel the condition of the vast majority of the world’s developed countries in which population growth has long past the tipping point. At midcentury, in addition to China, Japan, the European Union, the Commonwealth of Independent States, and the United States will all endure major population declines as both poor and rich avoid having too many children. Even stern government measures, such as Vladimir Putin’s 2006 attempt to offer 250,000 rubles (about $9,200 US) to women who will have a second child, will fail to change demographic destiny. Only the southern hemisphere will continue to grow, although by then the days of its growth will seem numbered too. Notwithstanding that population growth has become a problem lately, its seeming inevitability means that our economies rely on it. As populations decline, economies do as well.  
For China, the result will be a catastrophic reversal of course. Most developed countries have pension and social welfare systems in place for retirees, but China has done little in his regard. The loss of hundreds of millions of able-bodied workers will cause massive difficulty for China’s factories. During the first decades of the twenty-first century, China built numerous new cities and hastily filled them with housing, factories, and starchitecture. Lacking in the cheap labor that led to their rapid growth and faced with unsustainable infrastructural needs, these will empty, becoming new Detroits.The countryside, already experiencing major demographic pressure from migration as the disparity between rural and urban life grows, will face growing hardship,  becoming a place of refuge for the elderly surviving on subsistence farming, much as in Russia today. In contrast, even with dwindling population rates, key coastal cities such as Shanghai, Guangzhou, and Nanjing, having demanded Hong Kong-style autonomy from the diminished central government, will continue to thrive as active players in an emerging global network of city-states. 
The emergence of the Chinese coastal cities will accompany the decline of the central government. The result will be the PRC’s devolution into a loose agglomeration of regional states, roughly akin to the Commonwealth of Independent States.  Globalization has been marked by the rise of devolutionary movements. Such movements result in considerable increases in political autonomy for specific territories even though they do not necessarily mean changes in the borders of nation-states (for example, Wales and Scotland in the UK or the Basque country and Catalonia in Spain) .  The PRC has already introduced greater economic autonomy for its provinces and cities as a means of spurring economic productivity, although it has thus far resisted greater political autonomy, with Hong Kong and Macau being the exceptions. Nevertheless, China is a large and diverse country and political forces in certain regions—most notably Tibet, Xinjiang, and Inner Mongolia—have called for greater autonomy or outright secession. For now, the government has maintained a hard line, issuing repressive crackdowns against such movements, but this sort of response has historically been proven to only fan the flames of separatist movements. With the coming demographic decline, the central state’s economic and military power will weaken. Unless carefully managed, political devolution will cause a significant loss of face for the PRC. The Republic of China (ROC) in Taiwan, with whom China has recently begun higher level talks, is a key player in solving this problem. Although the island has increasingly proclaimed its own identity as a culture independent of China, such an autonomous position paradoxically offers a transition out of the dilemma posed by the ROC earlier claims to be the real government of mainland China. At present, Taiwan remains an international outcast needing to defend itself from the potential military threat the PRC poses. The reality is that, lacking political recognition and facing barriers to international trade, Taiwan is increasingly dependent on China, already its top trade partner.  The result is that the island currently exists in a de facto “one country, two systems” condition, lacking only a formal agreement to that effect.  For the PRC, integrating Taiwan will remove any threat of United States military action against China while providing huge ideological support during a time of sociopolitical weakeness. Subsequent absorptions may include the incorporation of Mongolia (with its high birth rate, resources, and strategic significance vis-à-vis Russia). Within the paradoxical logic of 21st century devolution, then, an expanded China, will be go hand in hand with devolution and will find ways of avoiding loss of face while pacifying more difficult provinces. 
Nor will this just be a way of appeasing local provinces. With their international trading power, the coastal Chinese city-states will increase their power against the center in the newly devolved China. Hong Kong’s special status will spread, becoming a model in China. Moreover, it will also spur on megacities worldwide, which have become increasingly disconnected from the territories around them. In some cases these worldwide megacities will also advocate for special status within larger countries, demanding greater autonomy, both economically and in terms of foreign policy. Such super-city-states will band together ever more over time, leaving their nation-states behind.  As the crisis at home becomes apparent, it is further plausible that China will increase its efforts overseas even more substantially, going so far as to create extraterritorial city-states on the model of Hong Kong and Singapore as joint ventures in developing countries worldwide.  
Nevertheless, the demographic pressures will challenge the Chinese city-states as well. Hong Kong is no exception. Since 2000, Hong Kong has had the distinction of being the country with the world’s second lowest fertility rate, Macau having the lowest. This poses a significant threat to Hong Kong’s economic future.  Underscoring the stall in internal population growth, a recent increase in emigration of educated individuals from Hong Kong means that between mid-2012 and mid-2013, the city had more migrants leaving than arriving.     
We hypothesize that with Hong Kong’s history of accommodating migrants from both within China and outside it, the territory will be able to resume growth through migration from other countries in Southeast Asia as well as from Africa which is now becoming extensively colonized by Chinese capital. Notably, arising out of its former status within the Commonwealth, unlike the rest of China Hong Kong has maintained continuing economic ties with India and will be able to draw on the Indian population for labor. With its population bolstered by new migration and its continuing role in global finance and manufacturing ensured by its highly developed business networks and global outlook, Hong Kong remains an incredibly attractive location uniquely suited to lead the Chinese coastal city-states.  
The effect of bringing in more migrant workers will produce even more inequality in Hong Kong, a stress point that has already grown almost insurmountable. As measured by the GINI coefficient, Hong Kong has the highest income inequality of any developed city or country in the world (and likely higher still since wealthy families in China habitually understate their income) and that coefficient has trended inexorably higher over the last two decades.  Thus, it is unlikely that Hong Kong will deal with its own demographic crisis by allowing permanent immigration. Rather, the government will continue to expand the existing two-tier system, allowing poor immigrants to remain in the territory only on time-delimited visas while allowing the wealthy and skilled access to the system.
After the explosion of the demographic bomb, the world will face a new economic reality. Adam Smith observed that continuous economic growth has historically been predicated not only on growing technological efficiencies but also an increase in both population and the amount of raw materials available. Should any of those three variables flag, growth will cease. Under stagnant or falling populations, economies begin to contract, national wealth decreases and capitalism cannot be maintained in such circumstances. Smith himself never argued that growth in the West would be endlessly sustainable. On the contrary, he uses China as an example of a country much the same as five hundred years beforehand when Marco Polo first wrote about it. China, he explained, is a stationary state, going neither forward nor backward, but rather that had “acquired that full complement of riches which the nature of its laws and institutions permits it to acquire.”  China’s past, then, is the world’s future. 
The current economic crisis is a sign that capitalism is already in a stationary state and may soon be in an inexorable slide. Starting in the late 1990s, declining profit margins and radical technological changes led economies and financial markets into a pattern of booms and busts.  Within the next decade, the world’s financial élite turned away from traditional investments, toward increasingly complex and short-term ways to extract wealth such as high speed trading and quantitatively driven arbitrage so as to ensure that returns would continue regardless of the direction of the market.  As a hedge against the ever-present threat of currency collapses, the wealthy also turned to real estate in global cities, helping to drive prices skyward. 
We hypothesize that, booms and busts notwithstanding, these trends will continue. Capitalism itself will have long come to an end, victim of declining resources and increasing levels of complexity, its highest levels being replaced by the algorithmic production of wealth wherever a loophole may still be found. While the system lurches along, global city cores will remain strong. Highly defended, with a huge population of surplus labor to draw on for services, these will continue to be attractive destinations for the élite to work and play in (although only within a geographically dispersed strategy of global hedging that will include idyllic, defended exurban ecotopias should the shit finally really hit the fan). Most rural zones will remain sites of food production, now highly automated while also being sites of subsistence farming and low-level employment for the elderly and impoverished: a landscape of giant agro drones marching amidst a desperate elderly tenders. 
In the city, if high finance will essentially be a game, everyday life for individuals worldwide will follow suit. By 2047, with income disparity high and social mobility low, those unlucky enough to be in the top 1% have little opportunity to better their conditions. Instead, as they eke out a living, they occupy themselves in a world increasingly dominated by the logic of games. The governments of megacity-states, burdened with debt and facing radically limited budgets turn to tactical urbanism as the only possible way to make interventions in the city and to keep the populace away from the barricades.


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