By Adrian Wooldridge
The end of win-win. In recent years, businesses have been shaped by the beguiling mantra of “win-win.” When confronted with any difficult choice— sustainability or efficiency? excellence or equity? stakeholders or shareholders?— their chieftains have kidded themselves into thinking that you can have both.
Sustainability leads to efficiency in the long term; equity is the best way of securing excellence; pleasing all the stakeholders leads to higher share prices.
This will be the year that finally brings an end to the idea that you can have your cake and eat it. Companies will have to make tough decisions that they’ve been putting off as long as possible. Consumers will no longer wear the idea that, say, the green transition is cost free.
Win-win was an affordable luxury in an era of free money and rampant virtue signaling. But higher interest rates will make both companies and consumers more cost conscious.
And virtue signaling is far from cost free, as several chief executive officers have discovered. Companies will tell their young recruits to put their noses to the grindstone rather than working from home. The yoga classes and pizza parties will be canceled. The Business Roundtable will soft pedal the talk of stakeholder capitalism.
The search for talent. Elite companies have gotten into the habit of subcontracting much of their talent selection to elite universities. The companies’ job is simply to run the last lap: Send recruiters for an annual trip to Harvard Yard or Kendall Square and then take their pick from the assembled brains.
The current crisis gripping America’s elite universities will force them to think again. The Supreme Court’s affirmative action decision has raised doubts about the constitutionality of corporate diversity programs. The pro-Palestinian demonstrations that have convulsed many campuses have also provoked a backlash from some employers, a reaction that has been intensified by Harvard University’s inept handling of plagiarism accusations against its president, Claudine Gay.
Bill Ackman, the founder and CEO of Pershing Square Capital Management, a giant hedge fund, has launched a furious series of attacks on his alma mater, Harvard, including pledging that his company won’t hire students who signed a joint letter blaming Israel for the Hamas attacks.
Edelson PC, a major law firm, has written to Harvard to say that it will no longer recruit students from Harvard Law School.
This is all to the good. The mystique of the Ivies have blinded US companies to the wealth of talent that is available outside these institutions. They’ll be encouraged to develop more innovative recruitment methods.
Smart companies have already come up with some useful new ideas: Palantir Technologies Inc. is one of several tech companies that target students who came at or near the top of their undergraduate classes at state universities and then got admitted to elite universities for graduate work. But companies might well go further. Why not forget about university labeling entirely and recruit on the basis of IQ and other objective tests? And why not use those tests to discover poor but talented children early and sponsor their time at university? A long period of stagnation in elite talent recruitment is about to give way to a period of innovation.
The Trump comet
The biggest economic event in 2024 could well be the reelection of Donald Trump. If it happens, this will send shock waves through the global economy, as markets digest the fact that Americans were willing to reinstate a man who— among his alleged crimes— sanctioned the invasion of their own Capitol.
It will also inaugurate a period of global turmoil, as Trump puts up global barriers, surrenders Ukraine to Vladimir Putin and likely withdraws from NATO.
A second Trump administration will be much more radical than the first. The Heritage Foundation has produced a “Mandate for Leadership,” a 1000-page document detailing a program for the next Trump administration, distilled from recommendations from dozens of “conservative” think tanks. It has also compiled a list of Trump loyalists to staff the new administration— activists who are marinated in the culture of populism and have nothing but contempt for “Rinos” (Republican in Name Only”).
A supercharged presidency will then be free to impose a Trumpist agenda without the checks and balances that intervened last time. Admittedly, such an agenda depends to some extent on the president’s ever-changing moods.
The political environment will be nothing if not volatile. But it is almost certain to feature important policy changes: a sympathetic stance to Putin’s expansionism, hostility to the EU and other liberal regimes, a predilection toward increasing protectionist barriers and a surly indifference to the rules based international order.
And even if Trump loses in 2024, he will continue to cast a shadow over US politics. For whatever happens to him in 2024 and beyond, the GOP is still a Trumpist Party on the lookout for a new populist hero and a novel way to bring down the decadent liberal order.
The domestication of AI
So far, most regular people have mainly encountered AI when they search for things on Bing or try to cheat in exams; 2024 will be the year in which they encounter it in a far wider range of circumstances, with virtual assistants scheduling appointments, sending routine letters, planning trips, sorting out incidents of fraud, and buying tickets.
The growth of AI as a trusted virtual assistant for everyman and everywoman will calm the more excited talk about an apocalypse. This has already happened in the world of translation, where the practical application of large language modeling is most advanced: Rather than seeing their jobs disappear, translators have seen their jobs upgraded, with AI doing the boring work of producing a first draft and the translators then handling the more satisfying work of tidying first drafts.
We can expect lots of former skeptics enthusing about how their personal digital assistants or other smart machines have improved their lives. But we shouldn’t allow small practical improvements to blind us to the immensity of the change that AI involves.
The small developments will come thick and fast. And the impact collectively will be civilization-transforming, improving our individual lives in innumerable ways but also concentrating economic power in fewer hands and doing to many knowledge workers what the handloom did to weavers.
The threat of war
The US has enjoyed a false sense of military security since the collapse of the Soviet Union in the late 1980s, which has been reinforced, in recent years, by the coincidence of two events: the strength of the West’s collective response to Putin’s invasion of Ukraine February 2022, and China’s growing economic problems. This year won’t be any less worrying.
The West’s willingness to back Ukraine's Volodymyr Zelenskiy will continue to weaken and may well collapse completely if Trump regains the White House.
The West will continue to be shaken by Chinese advances in important technologies, such as facial recognition software, space lasers, drone swarms and hypersonic missiles. (China possesses hypersonic missiles that can travel five times the speed of sound while dodging air defenses, a technology that has eluded the West.)
The debate about America’s ability to counter China’s rising power will intensify both inside and outside the Pentagon. The defense agency will come under mounting pressure first to explain why it spends so much with so little effect and, second, to open up many of its processes to outside companies and venture capitalists.
This will create a once in a half-century opportunity for entrepreneurs to pry contracts from the hands of dinosaurs such as Raytheon Co. and for smart innovators to get a share of the Pentagon’s gigantic innovation budget.