The year of disruptions

From the US and UK to India, history changed in 2016

This past year has been full of surprises — not all of them pleasant. Many of the unexpected changes ushered in by 2016 AD will reverberate in the years, even decades to come. If anything, this has been a year of disruptions: Many of these changes have interrupted long-running and steady processes, apparently firmly shifting the course of history on to a new and unanticipated trajectory.

Perhaps the most influential such event, surely, is the election of Donald Trump as the next President of the United States. When Mr Trump takes office in January, he will be the first President since Franklin Roosevelt to reject America’s global role. The part that the US has played since the Second World War in underwriting the stability of the global order may be coming to an end. As the US prepares to become isolationist in terms of trade and alliance-building, others will step up in its place; January will also see Xi Jinping becoming the first President of the People’s Republic of China to visit that Mecca of globalism, Davos. A US that has “gone rogue” — rescinding treaties, escaping its global responsibilities, even perhaps testing nuclear weaponry again — will pose a disruptive threat to the global order like no other for decades.

Eclipsed by Mr Trump’s rise, but nevertheless significant, is the British vote to exit the European Union. Brexit reflects some of the same anger at globalism and “elite” politics as the US presidential election. But it also has the power to derail the entire European project, especially if it strengthens anti-EU forces in other large countries in Western Europe. Europe’s ever-closer union, the greatest political experiment since the Second World War, had an air of inevitability about it. That notion, today, lies shattered.

In India, Prime Minister Narendra Modi’s decision to withdraw Rs 500 and Rs 1,000 notes from circulation is nothing if not deeply disruptive. Mr Modi initially suggested that it would deal a body-blow to black money. It may not have succeeded on that front. But, it may well have speeded up the digitalisation of India’s economy — time will tell. What is most pertinent is that it was intended to be a disruptive policy, to create as much sudden change as possible. That was seen as both a policy and a political virtue at the time of its conception. If it winds up being a political success and bolstering the PM’s personal popularity then more such decisions might well follow. 

And finally, in the corporate world, there have been significant disruptions. The power of social media and of deep pockets has combined to make possible the explosive growth of new entrants into some sectors. Telecommunications, for example, has seen Reliance Jio shake up tariffs and offers, and has left the existing majors worrying about their bottom lines. And fast-moving consumer goods have to deal with the Patanjali phenomenon, with its entirely different appeal and way of doing business. Both sectors have been shifted off course this year. The technology world usually imagines “disruption” as a positive. And sometimes, surely, it is. But 2016’s disruptions cannot easily be spun as positive. Even those that wind up having beneficial effects will have significant and long-lasting transition costs. From 2017, the world and India will start counting these costs.