Cyber War

Executive Overview


The threat of severe, debilitating cyberattacks is growing exponentially as the digital world envelops all facets of modern life.

China, Russia, and North Korea pose the biggest risks, with myriad attacks on Western governments and companies daily. The problem is expected to grow more menacing as  terrorists become involved. NATO, the US, EU, South Korea, and Israel are bearing the brunt of the damage, but it could spread easily to encompass entire global systems. Iran has already been the target of at least two cyberattacks on its nuclear program to steal data and sabotage operations, and North Korea disrupted a Sony film that was critical of its leader. 

Protective defenses are being developed, and authorities think the possibility of a “Cyber Armageddon” is less likely than a continuing wave of small assaults that wear away at infrastructure and morale.

Most  Likely Forecast

As shown below, myriad cyber assaults on corporations and governments occur daily. Most are not very damaging, but the global costs run in the US$ trillions. 

  •  Security Cost US$86B and rising  According to Gartner, global spending for information security products and services will reach US$80 billion in 2017 and US$93 billion in 2018. [i]
  •  Cybercrime Will Cost US$8T  Cybercrime is expected to cost global businesses over US$8 trillion over the five years to 2022. [ii]
  •  Cost per Attack Rising  The average cybercrime to US companies costs an average of US$21 million, with the global average being US$11.7 Billion. The costs continue to rise at a rate of over 20 percent year on year. [iii]


TechCast experts estimate a roughly 78-percent probability that a series of attacks launches a cyber war that severely damages the economy, defense, or other crucial sectors of major nations over the next few decades. Experts’ confidence is high (70%) and they think consequences of a major cyberattack could be devastating..


Constant Minor Assaults at Great Cost

The explosive growth of world-wide IT capabilities and antagonism from powerful nations is causing an ever-expanding growth in the scale, frequency, sophistication, and damage done by cyberattacks. A Ponemon Institute survey of 639 IT professionals in the US found that 35 percent had been the target of a nation-state cyberattack. 

  •  US Government Hacked  Thousands of cyber breaches occur at all levels of the US government annually, including stealing top-secret tools and material from the NSA and breaching the Securities and Exchange Commission. [iv] Research from Security Scorecard give government systems one of the lowest security ratings across all industries. [v] The US Government Accountability Office has also identified “consistent shortcomings” in the federal government’s approach to cybersecurity. [vi]
  •  Companies Not Ready  According to an IBM study, 68 percent of companies do not believe their organizations can remain resilient in the wake of a cyberattack, and 66 percent aren’t confident in their ability to recover from an attack. [vii]
  •  Infrastructure Can Be Brought Down  Cyberattacks have been shown to be able to bring down critical infrastructure, such as the malware that caused widespread electricity blackouts in Ukraine in 2015 and 2016. Lloyd’s estimates that a successful cyberattack on the Northeast US electricity grid could result in economic damage of more than a US$1 trillion. Transportation devices from connected vehicles to airplanes have been shown to be vulnerable to hacking, even remotely. [viii]
CyberWarfare Nations

At least 15 countries have been shown to launch cyberattacks; the most active countries are Russia, United States, North Korea and China. 

 Russia  Russian hackers have been very active on a number of fronts, ranging from penetrating Democratic National Committee servers  to hacking into the World AntiDoping Agency medical records. 

 China  The People’s Republic has been responsible for a number of attacks, such as stealing sensitive information about the F-35 Lightning II fighter plane from US Defense Department computers. In 2017, the US National Cybersecurity and Communications Integration Center warned of an “emerging sophisticated campaign” from a group with suspected ties to the Chinese government, affecting a growing number of companies globally. [ix]

 North Korea  North Korean hackers have quickly gained global “respect” as they have become increasingly sophisticated since the Sony hack in 2014. North Korea was, for example, responsible for the widespread Wannacry malware in 2017. [x]

 Australia  While little is known of Australia’s ability to launch cyberattacks, the Signals Directorate has been publicly recruiting “offensive cyber specialists.”


Protection is Coming

Fortunately, some measures are underway to preclude cyberattacks:

 Funding for US Defenses on The Rise  The cybersecurity spending of US Government is rising rapidly, having risen from US$7.5 billion in 2007 to US$28 billion in 2016. President Trump’s first budget blueprint also proposes an additional US$1.5 billion for the Department of Homeland Security specifically to protect federal networks and critical infrastructure from cyberattacks. [xi]

 US−China Cyberspace Agreement  The United States and China agreed on the first arms control accord for cyberspace. The agreement says that each country will not be the first to use cyberweapons to cripple the other’s critical infrastructure during peacetime. There is, however, growing doubt whether the agreement will have any practical effect on China’s behavior. [xii]

Strategic Implications

A major cyberattack could target a developed country’s vital civilian or military infrastructure, terrorizing the populace and making it much more vulnerable to conventional attack. A successful attack on infrastructure such on the US power grid has the potential to cause as much as US$1 trillion of economic damage and significant loss of life. Hiscox Insurance estimates cybercrime is already costing the global economy over US$450 billion annually. [xiii]  

Contrary to the common fear that cyber-attacks would be devastating, James Clapper, the US Director of National Intelligence, told the Senate, “Rather than a ‘Cyber Armageddon’ scenario that debilitates the entire US infrastructure, we … foresee an ongoing series of low-to-moderate level cyberattacks from a variety of sources over time.”  


[i] Gartner, Aug 16, 2017

[ii] Juniper Research, May 30, 2017

[iii] Accenture, 2017

[iv] New York Times, Nov 12, 2017

[v] Security Scorecard, 2017

[vi] GAO, Feb 14, 2017

[vii] IBM, Nov 16, 2016

[viii] Aviation Today, Nov 8, 2017

[ix] Department of Homeland Security, Apr 27, 2017

[x] New York Times, Oct 15, 2017

[xi] Hill, Mar 16, 2017

[xii] Diplomat, Jan 19, 2017

[xiii] CNBC, Feb 7, 2017


The Scourge of Drug Resistance

If antibiotics stop working, medicine will return to the 19th century when people routinely died of a minor cut, burn, or medical procedure. That may be coming as bacterial infections increasingly resist antibiotics and “superbugs” are evolving that can survive all antibiotic treatments. One study noted at the right estimates that by 2050 some 10 million people could die each year and cost the global economy US$60−US$100 trillion. [i]

The reasons include over-prescribing of antibiotics; patients’ failure to take their full prescription, leaving the strongest bugs to breed; and especially the use of low-dose antibiotics to stimulate growth in farm animals. There are no known cures for drug-resistant infections, and few new antibiotics are coming down the pipeline. Other treatments are in the works, but it could be years before they become available.

In the meantime, hospitals lose patients to uncontrollable infections, and periodic outbreaks of drug-resistant disease are becoming a major public health concern. UK chief medical officer Dame Sally Davies calls drug-resistant bacteria a serious global threat. [ii]  

The World Health Organization emphasized, “A post-antibiotic era in which common infections and minor injuries can kill [is] a very real possibility. Without urgent action, we are heading for a post-antibiotic era, in which common infections and minor injuries can once again kill.” [iii] 


Trends Driving Resistance

Antibiotic resistance is caused by a number of unsafe health practices and conditions that have encourage this problem. In some countries, antibiotics are available over the counter without a prescription. Farm animals are fed antibiotics to promote growth. Animals in close quarters are an ideal breeding ground. Drug-resistant bugs have been found in pigs, chicken, rabbits, birds, and even pets.  Superbugs were once confined to hospitals and nursing homes, but the use widespread air travel have created outbreaks in healthy people. Hotel rooms often test positive for drug-resistant bacteria. Superbugs are found in sewage plants where effluent is treated for use in irrigation and as fertilizer.  They survive purification, so even higher levels are found in dewatered sludge used as fertilizer. 

Some illnesses are more prone to drug resistance. Overall, 23,000 people die each year of antibiotic resistance in the US alone. The US CDC already lists multiple drug-resistant diseases as one of the biggest threats to medicine. The World Health Organization estimates that multi-drug resistant tuberculosis accounts for more than 650,000 deaths annually. [iv]

Infections caused by an antibiotic-resistant strain of E. coli have undergone a dramatic increase since 2008. Scientists recently learned that the deadliest infections, which kill 20 to 40 percent of patients, are caused by the same fast-growing strain of bacteria around the world. Parasites that cause Malaria long ago learned to survive chloroquine and they are becoming resistant to artemisinin, the current drug of choice, and there are few replacements in the pipeline. [v]

New Antibacterials  Being Developed

Fortunately, preventive measures are being implemented in various ways. Advances are being made in developing alternatives to antibiotics, but the pace is slow. Only 30 or so drugs are in trials, compared to hundreds under development for cancer. Here are programs underway:

  • Making Drugs More Potent  Preliminary results show that modifying existing antibiotics, such as vancomycin, can make them up to 25,000 times more potent. [vi]
  • Immune Booster  Researchers have found a drug that mimics a harmless virus and helps the body fight off antibiotic-resistant bacteria.
  • Mass UV exposure  One plan to diminish infection is to massively deploy UV-C lights in operating theatres, food preparation areas, schools and other locations of high risk. UV-C can kill viruses and bacteria but cannot penetrate the skin and is thus less harmful to humans than other forms of UV light. The practical challenges are enormous at a scale to be effective, and  prolonged exposure has been shown to damage the eyes. [vii]
  • Quantum Dots  Scientists have tailored particles 1/20,000th the size of a human hair to kill drug-resistant infections without harm to the patient. The technique is suited to treatment of infected cuts and of systemic infections, which can be especially hard to cure. [viii]
  • Phage Therapy  Doctors experimented with phage therapy, which uses viruses that naturally destroy bacteria to eliminate an infection. One bacteriophage specifically targets Clostridium difficile, which kills some 14,000 hospital patients in the US each year. Possible improvements include using only selected parts of the phage for therapy and genetically engineering phages to target specific infections.
  • New Drug Discoveries  Advances are leading to a new generation of drugs that tackle infections resistant to antibiotics.  An Australian team’s discovery of the structure of the “masking protein” responsible for the resistance is hailed as a “breakthrough.” [ix] 
  • World Health Organization  WHO has helped all members of the UN to form plans to combat anti-biotic resistance. They recently announced a list of all pathogens posing the greatest threat. [x] 
  • US Government  The US Food and Drug Administration asked drug companies to stop using antibiotics on farm animals, banned triclosan from consumer antiseptic washes, and they have a task force for new drug development. The US Centers for Disease Control has an Antimicrobial Resistance program and response teams. [xi]  
  • Big Pharma  85 pharmaceutical companies have pledged to work together to combat drug resistance. A major approach is to develop new business models that encourage innovation, like awarding big prizes for new antibiotics. 


Most Likely Forecast

One-third of the global population carries drug-resistant germs on their skin or in their nostrils. Outbreaks of Klebsiella, Salmonella, Shigella, and E. coli have risen four-fold over 10 years, and resistance is spreading from animals to humans in China. [xii]

In the US alone, 2 million people contract serious drug-resistant infections each year; 23,000 die. Another 25,000 a year die in Europe. Various studies estimate antimicrobial resistance to cost the global economy between $2 trillion and $100 trillion by 2050. 

A WHO analysis of 114 countries found “very high” rates of resistant infections across all regions, including “alarming” rates in many parts of the world.

A new WHO initiative Global Antimicrobial Surveillance System (GLASS) has revealed widespread antibiotic resistance levels across the 22 countries. In some countries, as many as 82% of patients with a bloodstream infection had bacteria resistant to at least one of the most commonly used antibiotics. [xiii]

The TechCast Expert Brain Trust estimates a high probability of about 55 percent that superbugs would break out in the few decades, and they think the social impact would be severe.


Strategic Implications

Drug-resistant superbugs could bring new opportunities for makers of disinfectants and related hardware and services. For example, a company called Xenex Disinfection Services secured $11.3 million in investor funding to make high-powered UV lights used to disinfect whole rooms and are now being deployed by various hospitals. [xiv]

The effects of widespread superbugs would be devastating to health care systems, spread incurable disease, and savage economies. If antibiotic resistance spreads out of control, people will routinely die as they did in previous centuries, of untreatable infections after minor medical procedures and everyday cuts, burns, and scrapes. Medical facilities would be overwhelmed with untreatable patients. Drug-resistant infections cost the US health-care system more than US$20 billion annually, in part because patients require more than 8 million extra hospital days.

[i]Washington Post, May 31, 2016

[ii]The Drugs Don’t Work: A Global Threat.New York, Penguin

[iii]World Health Organization, Oct 2016

[iv]US Centers for Disease Control & Prevention, Jan 26, 2017

[v]UN World Health Organization, March 2017

[vi]Guardian, Oct 23, 2017

[vii]TED, Apr, 2017

[viii]Huffington Post, Jan 20, 2016

[ix]ABC, Feb 15, 2017

[x]Washington Post, Feb 26, 2017

[xi]New York Times, Jan 18, 2017

[xii]Financial Times, Feb 18, 2017

[xiii]World Health Organization, Jan 28, 2018

[xiv]Yahoo! Finance, Mar 31, 2017

China Falls


Will China Collapse Like the USSR?

Although China has been one of the world’s fastest-growing economies, averaging 10 percent growth in GDP for nearly three decades, it began losing momentum in 2012. As a result of emphasizing manufacturing and exports rather than consumption, poor quality control, and lax banking practices, China is now experiencing a housing bubble, high unemployment, severe  pollution, and growing social unrest. These have caused a ripple effect throughout the economy. Could China—once called the next superpower—collapse? James Fallows reports that “China is less free, less open, and more belligerent that it was five years ago, or even ten.” [i]

On the other hand, China is also implementing its “One belt one road” policy that carries forward the growth momentum to establish trading partners around the world. It is cracking down on internal dissent and corruption as well as espousing globalization and a leader in taking steps to reduce global warming. Its leaders plan to eliminate absolute poverty by 2020 and become the dominant developed country by 2035.


Signs of Decline

The signs of trouble in China are serious: slowing growth, mounting risk and debt,  poor quality, increasing unemployment, environmental pollution.The central bank chief has recently warned of ‘Sudden, Contagious and Hazardous’ financial risks that the Chinese financial system is facing due to easy credit and high levels of debt. [ii]

More than 13 million tons of crops harvested each year are contaminated with heavy metals, and 22 million acres of farmland are contaminated by pesticides. Although no scientific proof is available, it is suspected that numerous cancer deaths are linked to industrial waste in the food chain. Some 400 cities in northern China suffer water scarcity. More than half the region’s groundwater is so polluted it should not be allowed to contact human skin.[iii]

The existing oversupply of peasant and college-educated manufacturing labor is being worsened by automation. Foxconn, an electronics manufacturer, aims to replace 1 million workers with robots in this decade, and robotics are projected to expand at over 18 percent annually in the coming years. These changes will save money and reduce waste but will eliminate many jobs. 

China became the world’s leading car manufacturer with the purchase of Volvo from Ford in 2010. However, to reduce congestion and air pollution, the government is limiting car registrations in Chinese cities, which will further slow economic growth. 

The ratio of old to young in China is decreasing from 5 to 1 to 1.6 to 1, making this one of the oldest societies in the world. The preponderance of old people is decreasing savings and economic growth. 


China’s Strengths

But the Chinese economy has great strengths that could withstand crisis. Economists estimate 10 to 20 percent of China’s economy is off the books. Many companies keep three sets of accounting records—one for official purposes, one for investors, and one for themselves. Private consumption in China continues to rise, reflecting the increasing affluence of the households. While growth has moderated in recent years, consumption expenditure per capita continues to grow at nearly 7 percent per annum.[iv]

China is the world’s largest exporter, with the highest revenues in textiles, electronic equipment, agriculture, and chemicals. It is also the world’s second largest importer. Recent estimates suggest the new consumer-led economy could generate 36 trillion renminbi (US$5.6 trillion) of additional GDP by 2030, compared with continuing the present export path.

Five-Year Plans have brought over 500 million people out of poverty since 1980. Large-scale surveys indicate a majority of Chinese people support the government, which has stoked nationalism to promote unity and inhibit dissent.  The government also owns much of the land, which has the largest reserves of precious metals in the world. 

Most Likely Forecast

There a few guides to estimating a highly uncertain event like the fall of a superpower. The best example is that nobody foresaw the collapse of the USSR. It is clear thatChina’s GDP growth has been below 7 percent recently, with further weakening to 6.4 percent forecasted by 2019. [v]

Such conditions of high uncertainty are exactly where the TechCast system of collective intelligence excels.  Pooling the judgment of our Global Brain Trust of experts over this issue produces the following a consensus. They collectively estimate a low probability of China’s collapse over the next few decades, about  15 percent. Of course, that could change as conditions develop, and we could be surprised by a sudden catastrophic tumble anytime. In the event of a China collapse, the impact is thought to be serious, -3 on a ten-point scale. 

Strategic Implications

The cost in world economic growth could be considerable. The economies of China’s largest trading partnersthe US, Europe, Korea, Japan, Russia, Australia, Brazil, Canada, Chile, Peru, and South Africa—would also suffer from lost export revenues. 

China has gone from receiving aid to providing needed loans to the US and Europe. An insolvent China would hinder global recovery from future economic downturns, increase the cost of borrowing money, and inhibit the world’s economic growth for years to come.

Regime change would alleviate much of the social unrest by the lower class and emerging educated middle-class dissidents. Economic and political reforms could result in more personal freedoms and democracy within China.

[i]Atlantic, Dec 2016

[ii]Bloomberg, Nov 4, 2017

[iii]CNN, Apr 20, 2017

[iv]BBVA Research, March, 2017

[v]OECD, Nov, 2017