WHERE DO WE GO FROM HERE?

We are all generally interested in what is happening in the short term, whether it is the result of the 3.30pm race in Kempton this afternoon or the weather outlook for next weekend.

Some of us who provide business advice and consultancy services are also very interested in the medium term and primarily the ebbs and flows of the wider economy.

However, very few of us have a time horizon of decades and beyond.

If we look back to where we came from, human history can roughly be divided up into four periods of development namely foraging, farming, industrial revolution and the information age.

At one stage our ancestors were all hunter gatherers and roamed the earth in a nomadic fashion. This period of history lasted 200,000 years up to circa 10,000 BC.

Subsequent to the above came the agricultural revolution which lasted approximately 12,000 years until the middle of the 18th Century. The industrial revolution then followed which has now essentially ended. This period only lasted 250 years to the turn of this Century ending in the year 2,000.

There is a clear pattern here in so far as the major economic cycles in human history have all reduced in duration; beginning with 200,000 years and ending with 250 years.

I am not suggesting that the current cycle, which will be dominated by technological advances, will only last about 25 years. However, the important point is that the pace of change is accelerating rapidly and will continue to do so.

Most of us watched the MP Jacob Rees-Mogg during the many Brexit debates and interviews of 2019. What many people are not aware of is that his father William Rees-Mogg wrote a book called The Sovereign Individual. Tony Blair’s former press secretary Alastair Campbell described this work as the most important book you have never heard of.

The Sovereign Individual was written in 1997 and Rees-Mogg senior predicted that the information age would bring disorder and a huge increase in competition, with the result that the world would become more unequal and unstable. The book was received poorly in the UK in the relative prosperity of the late 1990s and some of the early forecasts (such as Colin Powell becoming the first black president of the United States) were wide of the mark.

In contrast, audiences in the US were much more interested in Rees-Mogg’s work, including Peter Thiel the founder of PayPal who said that the book influenced him more than any other.

THE PACE OF CHANGE IS ACCELERATING RAPIDLY AND WILL CONTINUE TO DO SO.

The book contains general predictions about the potential of the internet along with the following specific forecasts which turned out to be very accurate:

- the development of crypto currencies

- smartphones

- online bots imitating humans

- cyber warfare

In addition, Rees-Mogg predicted that the nation state would reduce significantly in terms of its relevance and that welfare states “will simply become unfinanceable”

The message from William Rees-Mogg, which may not be particularly palatable to a lot of people, is every man and woman for him or herself.

Irrespective of the above predictions, one has to admit that we are living in unusual and fast changing times.

Interest rates remain at a level not seen since before the industrial revolution in the late 1600s, stock markets are at all-time highs and assets generally appear to be fully valued.

The unprecedented pace of change increases the importance of forecasting. What is also very important is the ability to adjust forecasts, predictions and assumptions in a dynamic fashion based on the ever-changing economic environment. Business and individuals have to be nimble and stream line their respective decision making.

Your forecasts can then be used to formulate plans which can be business or lifestyle related.

At Evans Mockler we deal with business plans which can range from short term cashflow forecasts to medium/long term profitability and sales budgets. Small changes in input data can have a large impact on results such as changes in gross profit margins etc.

Whether your plan is to retire in ten years or finally buy that dream holiday home, an up to date forecast can help you achieve these goals. With the increasing speed of change, it has never been more important to constantly review your forecasts and future plans.