Antoine van Agtmael: Stagflation and Race for Clean High Tech
- January 31, 2023
Antoine van Agtmael is a legendary investor who came up with the term “emerging markets” and was the Chair of the Board of Trustees of the National Public Radio (NPR) Foundation. His distinguished track record as an investor and his rich professional career make him uniquely suited to read the tea leaves for the global economy and the future of clean tech.
With Fred Bakker, van Agtmael is the author of The Smartest Places on Earth: Why Rustbelts Are the Emerging Hotspots of Global Innovation. Earlier in his career, van Agtmael authored The Emerging Markets Century: How a New Breed of World-Class Companies Is Overtaking the World. Few understand the big trends shaping the world better than van Agtmael. Given his track record, his views on the future of our planet are immensely important.
The financial world waits with bated breath to see how 2023 will transpire. Technology companies have been firing thousands and investment banks are now following suit. Wall Street trouble is reflected on Main Street. Rising costs of living, slowdown in growth, the continuing effects of the COVID pandemic and turbulent global crises have most pundits anticipating a global recession. Van Agtmael thinks we are headed for stagflation.
While most pundits are praying for a soft landing and a gentle recession, van Agtmael makes a compelling case for stagflation. Rising prices, slowing growth and several national and international crises have left markets reeling. All this, van Agtmael notes, has chilling parallels to stagflation in the 1970s. However, there are key differences that could negate the worst aspects of this stagflation and offer a way out.
Yet van Agtmael also points out that the clean energy sector will be a bright spot. Trends in energy generation, technological breakthroughs and a growing clean energy market are ripe with potential. In a world that is moving away from carbon, the cost of wind and solar is dropping yearly. This means clean energy is becoming more accessible to regular consumers. Nuclear fusion is also on the cards. Van Agtmael sees an era of incredible growth for clean energy.
Having said that, Uncle Sam needs to catch up. While the US thinks of itself at the cutting edge of technology, China has made more progress in clean energy. Its own nuclear fusion experiments have surpassed America’s. China has poured talent and resources into clean energy technologies. They are leading in many sectors and the US has to pull up its socks to compete.
The US is certainly a leader in wasteful energy consumption. Buildings in the US are designed inefficiently and the American fixation with cars is well-documented. Singh and van Agtmael examine how other countries conserve energy and explore how the US could become more energy efficient.
The Green Top-Bottom Feedback Loop
Some believe in top-down government regulation. Others swear by bottom-up innovation. Van Agtmael thinks differently. This insightful Dutchman argues that there is a “feedback” loop between top-down government regulation and bottom-up innovation. Both are important to bring long-lasting change.
Historically, bottom-up movements raise public awareness and put pressure on larger institutions such the government and large companies to change track. In turn, government policy can mandate big changes such as higher emissions standards for cars or regulations to make buildings more energy efficient. Governments can also allocate large resources for research and development and/or give incentives to private players to do so.
The combination of public enthusiasm and government policy can lead to major changes as Germany, Israel and the US demonstrate. Socially, politically and economically liberal countries have the advantage when it comes to innovation. The change in energy generation, distribution and consumption will be both a bottom-up and top-down affair in these countries, and will transform the world.
[ Matthew Knudson wrote the first draft of this podcast description.]
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.