Forget about climate change – the recent rise of populism is a greater threat, according to a prominent political scientist.

Fueled by job displacement, public anger now threatens the legitimacy and stability of countries in the first world, said Eurasia Group President Ian Bremmer at the 2016 Schwab IMPACT conference.

“We increasingly don’t think our leaders are very legitimate,” Bremmer said, adding that populism is more than a political problem. Populations are also distrustful of CEOs, bankers, the media, and academics.

Populism has most recently been driven by globalization. As global trade flourished, middle and working class jobs flowed from the first world to emerging and developing markets, said Bremmer.

Anger among the displaced working and middle classes is channeled into political movements like the candidacies of Donald Trump or Bernie Sanders and initiatives like the Brexit vote, said Bremmer. “Brexit was not about improving the British economy, these people were Palestinians with rocks. The reason this really matters for investors is because it is not going to stop in the developed world.”

Technology is going to displace labor across the world, said Bremmer, leaving large swaths of people unemployed and underemployed.

Most governments will struggle to respond to the changing social order.

“Things blow up when suddenly the social contract doesn’t work anymore,” said Bremmer. “This is happening fast, you’re going to see this in virtually every sector: this sector, the legal profession, services, fast food, trucking, shipping, manufacturing, this job transfer is going to be dramatic.”

Bremmer identified three ways governments could address the problem. The first would be to dramatically change the social contract to support a “gig economy” system of partial employment with public benefits. While countries such as Denmark, Sweden and Singapore have already adopted this model, Bremmer says that most big governments will eventually do so, too.

The U.S. is unlikely to expand the national welfare state, said Bremmer, but many states will probably move in to provide a social safety net for their citizens.

The second solution would be to do nothing.

“The government doesn’t deal [with it], people get more agitated, the government becomes weaker, people revolt and then the government collapses,” Bremmer said. “This is the Syria model, the Yemen model, and probably the North Korea model with the added bonus of nuclear weapons."

In the third option, the government doesn’t change the social safety net nor does it become weaker. Instead, it becomes more powerful and separates the people to prevent social unrest.

“Wealthier countries will either get it right or they’ll go to walls; poorer, weaker countries will build walls or fall apart,” Bremmer said. “The problem is big enough and urgent enough to solve.”

As populism delegitimizes governments in the developed world, demographic and political stress is coming from failed states caused by a geopolitical recession.

This recession will be marked by the end of American hegemony and the decline of globalization, said Bremmer.

"The last time the geopolitical order fell apart and changed was after World War II," said Bremmer. "The U.S. was the last country left standing, and we rebuilt the order"

While many states could collapse as the balance of power shifts globally, countries like the U.S., China and Japan will be less affected by the changes.

The rest of the world, however, faces a string of crises, said Bremmer. OPEC can no longer effectively control the price of oil. As oil-based economies in the Middle East, Asia and Africa collapse, nearby countries and regions like Europe will experience a surge of refugees and a rise in terrorism.

At the same time, technology allows the public to express their anger.

“The populations are a little less happy about being badly governed,” Bremmer said. “They have smart phones, they’re empowered, and they have the ability to say no. As a consequence, we have failed states in Syria and Libya and Yemen and Iraq and Afghanistan.”

While the U.S. is buffered because of its geography and Japan is protected by its homogeneous culture, China’s political system acts as a bulwark against instability.

“Because it’s not a problem for the U.S., China and Japan, there’s little pressure on those governments to do much about that,” Bremmer said. “Don’t you feel that in the election right now? It’s all about us first, not supporting the TPP.”

After long wars in Iraq and Afghanistan, American voters are less likely to support military or financial aid abroad. Thus the U.S. can no longer intervene as states begin to collapse.

China, on the other hand, is building a sphere of influence through rapprochement like the establishment of the Asian Infrastructure Bank, Bremmer said. “Our global footprint globally is decreasing, our allies are looking for alternatives, and at the forefront is China.”

Despite painting a bleak picture of the geopolitical situation, Bremmer allowed for some optimism regarding the future.

“This is a fascinating time to be alive and invested, it’s just a little more uncertain and volatile,” Bremmer said. “The more you understand these risks, the more you’re going to be willing to take risk and put money into play… these aren’t black swan risks, these are knowable risks and I suspect we’ll be talking more about them in our future conversations.”