Let me take you back to 1995
It is January 2015! Our future lies ahead of us, but is there anything we can learn from our past? In this blog, let me take you back to 1995 and let’s reflect on what happened then and what this could mean for us now. In 1995, we were in a honeymoon period in SA post the first democratic election in 1994. Globally, we were facing a brave new post-cold war world. So much has changed and so much has stayed the same.
Global demographics and economics
In 1995, the world population was 5.7bn vs. the more than 7bn we have today. However, over the past 20 years, we also saw a marked reduction in extreme poverty (more than halved from 43% in 1990 to 17% in 2011) and in hunger (805m people suffered from hunger in 2014, 209m fewer than in 1992). More needs to be done, especially in the Indian subcontinent and Africa, but it is hoped that superior economic growth will help to narrow the gaps.
The success in reducing global poverty over the past 20 years has been helped by very healthy global economic growth. The global economy has expanded by an estimated 180% over the past 20 years, which makes this the second highest 2-decade growth period in the past century (with only 1955-1975 being higher). What makes this period different is the increasing contribution to the global economy from developing countries.
Unfortunately, the World has been much less successful on the violent conflict front.Prior to 1995, we saw a large spike in deaths from violent conflicts due to the genocide in Rwanda. During the remainder of 1990s violent deaths were much lower despite the conflict in the Balkans. This picked up again during 1999 and 2000 due to the conflict between Ethiopia and Eritrea. Despite the Afghanistan and Iraq wars, violent deaths declined during the first part of the 2000s compared with the 1990s. However, the Syrian conflict has again caused a spike. We can only hope that the long-term trend in reduced conflict deaths will continue going forward.
In 1995, the European Union (EU) started expanding with the addition of Austria, Finland and Sweden. In the wake of the Balkan conflict, which reached a crescendo with the Srebrenica massacre during the same year, the EU continued to increase membership. Prior to 1995 there were 12 members and today there are 28. The expansion of the EU has led to increasing tensions between the West and Russia, which escalated in 2014 with pro-Russian Ukrainian rebels coming into conflict with the pro-EU Ukrainian government. This could be a major feature in our lives over coming years.
In March 1995, the United Nations (UN) peacekeeping mission in Somalia ended. The mission was a failure and was followed by the Somalian conflict with Eritrea, the failed state that Somalia is now and the rise of piracy in the Indian Ocean. Despite some successes during the past 20 years, the UN notably failed to prevent or decrease conflict in many parts of the world such as Iraq, Libya, Syria, Ukraine, Gaza, etc. Can we expect the UN to become a more effective force for peace going forward? I really hope so.
March 1995 was the first time in 26 years when no British soldiers patrolled the streets of Belfast, Northern Ireland. The peaceful transition in Northern Ireland which followed is one of the success stories of the past 20 years.
During the course of 1995, the Sri Lankan civil war was escalating and the situation deteriorated during the late 1990s. However, this is another success story with peace breaking out in 2002.
Unfortunately, the same cannot be said of Israel and Palestine. The assassination of Israeli President Yitzhak Rabin in November 1995 largely spelled an end to a peace process that had gained meaningful momentum. The Gaza conflict in 2014 highlights the ongoing strife in the region with no clear end in sight. We can only hope that the future holds the same prospects for peace in this region as was seen in Northern Ireland and Sri Lanka in the past 20 years.
In November 1995, the Nigerian playwright and environmental activist Ken Saro-Wiwa and 8 others were hanged by government forces. This event and the global reaction to it arguably represented a turning point in Nigeria, which was ruled by military juntas from 1970. The country finally democratised in 1999, which ushered in a period of healthy economic growth (with the help of rising oil prices). In 2011, Nigeria’s GDP surpassed that of South Africa for the first time. Despite declining oil prices and increasing violence from Boko Haram, Nigeria has meaningful potential to remain one of the most important drivers of African economic growth.
Global financial markets
In 1995, the Dow Jones Industrial Index (a measure of the US stock market) passed 4000 for the first time. Over the following 20 years, it increased by 4.5 times to almost 18000 today, despite the bursting of the tech bubble in the early 2000s and the global credit crisis in the late 2000s. Are we likely to see the same expansion over the next 20 years? Considering the substantial liquidity created by central banks since the credit crisis and the positive impact this has had on the recovery in equity markets subsequently, this may be difficult. However, we don’t know what unexpected technological advances may occur and the positive impact this may have on industries, economies and stock markets.
In February 1995, Barings Bank collapsed after one of its employees (Nick Leeson) lost $1.4bn speculating on the Tokyo stock exchange. This was but a small taste of what was to follow in the next 20 years. There was the Asian financial crisis in 1997, the collapse of Long-Term Capital Management in 1998, the Russian financial crisis in 1998, the Argentine economic crisis from 1998-2002, the Ecuador banking crisis, the Uruguay banking crisis, the Venezuelan banking crisis and then the big one, the sub-prime mortgage crisis starting in 2007 and the spill-over effects this has had. The latter led to the collapse, near collapse and fire sale of many longstanding banks in the US and the rest of the world. It is not yet clear whether the increased regulation following these crises will help to avert recurrences going forward. I am betting no!
Two meaningful terrorism events occurred in 1995, namely the Sarin gas attack on the Tokyo subway in March and the Oklahoma bombing in April. Both were domestic terrorism events. How the world has changed over the past 20 years with most of the terrorism we see now being ideological, based on a narrow interpretation of Islam and fuelled by Middle East conflicts far away from the countries where the attacks are perpetrated. We cannot be satisfied with the way that governments have dealt with terrorist threats, dealing with the symptoms rather than the causes and in many cases exacerbating the causes through their actions in far-flung countries. We can only hope that they have learnt from their past mistakes and find better solutions. Brute force has not worked!
In 1994, SA had its first democratic election and during 1995 the country was firmly in its honeymoon period. Nelson Mandela was our president, we had a government of national unity and we were hopeful.
In January 1995, SA signed a number of historic agreements with India, setting the stage for our eventual inclusion in the BRICS (Brazil, Russia, India, China and SA) group in 2010. Our membership in BRICS could mean a great deal for this country going forward, although progress has been somewhat muted (as can be seen with the delays in launching a BRICS Development Bank).
In June 1995, SA won the Rugby World Cup which went a long way in unifying the country. During the following 20 years, sport continued to play a significant role in SA in uniting people from different backgrounds, with the 2010 World Cup being a clear highlight. May we continue to find sporting success and may it continue to bring us together.
In November, Desmond Tutu was appointed as chairperson of the Truth and Reconciliation Commission. This body was instrumental in helping this country heal the wounds of the past. We must be sure not to forget what we went through to be where we are today and be grateful of the miracle that is SA, despite the concerns we may still have about our country.
In 1995, the JSE All Share Index (a measure of our stock market) starts the year at 5000. Today, it is almost 50000, a 10-fold increase. This, together with a rampant property market, healthy economic growth and falling inflation has made South Africans much wealthier than they were 20 years ago (in constant dollar prices GDP per capita in SA increased by almost 30% over the period). But, this is a topic to be explored in more detail in another blog.
Other events of 1995
A 6.8 earthquake occurred in January 1995 near Kobe, Japan and the busiest hurricane season in 62 years began in June. Over the next 20 years, we hadnumerous devastating natural disasters, including the Indonesian and Japanese tsunamis and the earthquake in Haiti. Specifically, the 1995 hurricane season record was equalled 3 times and exceeded once in 2005 when there were 28 storms (19 in 1995). Global warming certainly appears to be having an impact on our climate and the response by governments appears to be totally inadequate. We can only hope that our scientists can find a way to reverse the trends or to help us deal better with them.
In February hacker Kevin Mitnick was arrested by the FBI and charged with penetrating some of the US’s most secure systems. During the following 20 years, hacking as grown exponentially globally in line with the expansion of the internet. Electronic warfare is likely to be a large feature in our future.
In March 1995, the first Internet search engine, Yahoo! was founded, in August Microsoft launched Windows 95, in September the DVD was announced and in November the first full-length computer animated feature film, Toy Story was released. The next 20 years offered the most amazing technological advances, including the explosion of the internet, smart phones, social media, data storage, computing power and so many more. One thing I am confident of is that there is much more in stall for us going forward. Hats off to our scientists!
In October, OJ Simpson was found not guilty of the murder of his former wife Nicole Simpson and Ronald Goldman. In 2014, Oscar Pistorius was found guilty of culpable homicide of his girlfriend Reeva Steenkamp and Shrien Dewani was found not guilty of the murder of his bride Anni Dewani. Not much has changed, especially for the wealthy.
Also in October 1995, the first extra-solar planet was identified. By 2014, more than 1800 exoplanets have been identified and scientists have executed a successful landing on a comet. I cannot wait for more discoveries about our universe.
Another event in October was the Quebec independence referendum where the no’s prevailed. In 2014, Scottish voters similarly decided to remain a part of the UK. In my opinion, we are likely to have fewer countries in the world in 20 years than we have now, rather than more.
And finally, in November 1995 a budget standoff between Democrats and Republicansforced the federal government to temporarily close national parks and museums, and run most government offices with skeleton staff. Once again, so little has changed, but we can only hope that the US’s democratic system improves over the next 20 years. I remain hopeful and a strong supporter of democracy as the best system to improve the lives of citizens.
To my readers, what are your memories of 1995? Do you think we live in a better world? What are the main areas you think we need to address? Please let me know what you think.
In the mean time, keep your talk straight!