Saturday, May 12, 2007 4:51 PM
Very long, but extremely interesting. Worth reading.
is a superb, crisp, and to the point piece on the future. While it portends the
decline of societies, it clearly identifies what we as
Americans need to preserve and what we need to
grow as a society. This is a presentation by Herbert Meyer. He was the first
U.S. Government official to forecast
Soviet Union's collapse. For this, he awarded
U.S. National Intelligence
Distinguished Service Medal, the highest honor that can be received from within
intelligence community. This presentation was made to a symposium of Chief
Executive Officers of several large international corporations, and as such, is
directed at questions and answers for business. However, the points he makes are
very much in tune with the points being made in many other discussions in the
international political arena, and has some impact on the Shaping and IW issues.
The business and demographic sections are pretty good.
L. STOUDER Director Technology Development and Deployment
National Security Directorate
Joint Forces Command, Joint Futures Lab.
Subject: Four Major Transformations
there are four major transformations that are shaping political, economic and
world events. These transformations have profound implications for
American business owners, our culture and our way
of LIFE. "
are three major monotheistic religions in the world: Christianity, Judaism and
Islam. In the 16th century, Judaism and Christianity reconciled with the modern
world. The rabbis, priests and scholars found a way to settle up and pave the
way forward. Religion remained at the center of life, church and state became
separate. Rule of law, idea of economic liberty, individual rights, human rights
all these are defining points of modern Western civilization. These concepts
started with the Greeks but didn't take off until the 15th and 16th century when
Judaism and Christianity found a way to reconcile with the modern world. When
that happened, it unleashed the scientific revolution and the greatest
outpouring of art, literature and music the world has ever known.
which developed in the 7th century, counts millions of Moslems around the world
who are normal people. However, there is a radical streak within Islam. When the
radicals are in charge, Islam attacks Western civilization. Islam first attacked
Western civilization in the 7th century, and later in the 16th and 17th
1683, the Moslems (Turks from the
Ottoman Empire) were literally at the gates of
Vienna. It was in
Vienna that the climatic battle
between Islam and Western civilization took place. The West won and went forward.
Islam lost and went backward. Interestingly, the date of that battle was
September 11. Since them, Islam has not found a way to reconcile with the modern
terrorism is the third attack on Western civilization by radical Islam. To deal
with terrorism, the
U.S. is doing two things.
First, units of our armed forces are in 30 countries around the world hunting
down terrorist groups and dealing with them. This gets very little publicity.
Second we are taking military action in
Iraq. These are covered
relentlessly by the media. People can argue about whether the war in
Iraq country-region is right
underlying strategy behind the war is to use our military to remove the radicals
from power and give the moderates a chance. Our hope is that, over time, the
moderates will find a way to bring Islam forward into the 21st century. That's
what our involvement in
is all about.
lesson of 9/11 is that we live in a world where a small number of people can
kill a large number of people very quickly. They can use airplanes, bombs,
anthrax, chemical weapons or dirty bombs. Even with a first-rate intelligence
service (which the
U.S. does not have), you
can't stop every attack. That means our tolerance for political horseplay has
dropped to zero. No longer will we play games with terrorists or weapons of mass
of the instability and horseplay is coming from the
Middle East. That's why we have thought that if
we could knock out the radicals and give the moderates a chance to hold power;
they might find a way to reconcile Islam with the modern world. So when looking
Iraq, it's important to look
for any signs that they are modernizing. For example, women being brought into
the workforce and colleges in
is good. The Iraqis stumbling toward a constitution is good. People can argue
about what the
U.S. is doing and how we're
doing it, but anything that suggests Islam is finding its way forward is good.
last 20 years,
China has moved 250 million
people from the farms and villages into the cities. Their plan is to move
another 300 million in the next 20 years. When you put that many people into the
cities, you have to find work for them. That's why
China is addicted to
manufacturing; they have to put all the relocated people to work. When we decide
to manufacture something in the
U.S., it's based on market
needs and the opportunity to make a profit. In
China, they make the
decision because they want the jobs, which is a very different calculation.
China is addicted to
Americans are addicted to low prices.
As a result, a unique kind of economic
codependency has developed between the two countries. If we ever stop buying
China, they will explode
China stops selling to us,
our economy will take a huge hit because prices will jump.
We are subsidizing their economic development;
they are subsidizing our economic growth.
Because of their huge growth in manufacturing,
China is hungry for raw
materials, which drive prices up worldwide. China is also thirsty for oil, which
is one reason oil is now at $60 a barrel. By 2020,
China will produce more cars than the
China is also buying its way
into the oil infrastructure around the world. They are doing it in the open
market and paying fair market prices, but millions of barrels of oil that would
have gone to the
U.S. are now going to
quest to assure it has the oil it needs to fuel its economy is a major factor in
world politics and economics. We have our Navy fleets protecting the sea lines,
specifically the ability to get the tankers through. It won't be long before the
Chinese have an aircraft carrier sitting in the
Persian Gulf as well. The question is, will
their aircraft carrier be pointing in the same direction as ours or against us?
Shifting Demographics of Western Civilization
countries in the Western world have stopped breeding.
For a civilization obsessed with sex, this is remarkable.
Maintaining a steady population requires a
birth rate of 2.1. In
Western Europe, the birth rate currently stands
at 1.5, or 30 percent below replacement. In 30 years there will be 70 to 80
million fewer Europeans than there are today. The current birth rate in
are even lower at 1.2.
At that rate, the working age population declines
by 30 percent in 20 years, which has a huge impact on the economy.
you don't have young workers to replace the older ones, you have to import them.
The European countries are currently importing Moslems. Today, the Moslems
comprise 10 percent of
Germany, and the percentage
is rising rapidly because they have higher birthrates. However, the Moslem
populations are not being integrated into the cultures of their host countries,
which is a political catastrophe.
France don't support the
Iraq war is they fear their
Moslem populations will explode on them. By 2020, more than half of all births
Netherlands will be non-European.
design flaw in the post-modern secular state is that you need a traditional
religious society birth rate to sustain it. The Europeans simply don't wish to
have children, so they are dying.
Japan, the birthrate is 1.3.
As a result,
Japan will lose up to 60
million people over the next 30 years. Because
Japan has a very different society than
Europe, they refuse to import workers. Instead,
they are just shutting down.
Japan has already closed
2000 schools, and is closing them down at the rate of 300 per year.
Japan is also aging very
rapidly. By 2020, one out of every five Japanese will be at least 70 years old.
Nobody has any idea about how to run an economy
with those demographics.
Japan, which comprise two of the world's major economic engines, aren't merely
in recession, they're shutting down.
This will have a huge impact on the world economy, and it is already beginning
to happen. Why are the birthrates so low? There is a direct correlation between
abandonment of traditional religious society and a drop in birth rate, and
Europe is becoming irrelevant.
second reason is economic. When the birth rate drops below replacement, the
population ages. With fewer working people to support more retired people, it
puts a crushing tax burden on the smaller group of working age people.
As a result, young people delay marriage and
having a family. Once this trend starts, the downward spiral only gets worse.
These countries have abandoned all the traditions they formerly held in regards
to having families and raising children.
U.S. birth rate is 2.0, just
below replacement. We have
an increase in population because of immigration. When broken down by ethnicity,
Anglo birth rate is 1.6 (same as
while the Hispanic birth rate is 2.7. In the
the baby boomers are starting to retire in massive numbers. This will push the "elder
dependency" ratio from 19 to 38 over the next 10 to 15 years. This is not as bad
Europe, but still represents the same kind of
Western civilization seems to have forgotten what every primitive society
understands; you need kids to have a healthy society. Children are huge
consumers. Then they grow up to become taxpayers. That's how a society works,
but the post-modern secular state seems to have forgotten that.
U.S. birth rates of the past
20 to 30 years had been the same as post-World War II, there would be no Social
Security or Medicare problems.
most effective birth control device is money.
As society creates a middle class and women move
into the workforce, birth rates drop. Having large families is incompatible with
middle class living. The quickest way to drop the birth rate is through rapid
After World War II, the
U.S. instituted a $600 tax
credit per child. The idea was to enable mom and dad to have four children
without being troubled by taxes. This led to a baby boom of 22 million kids,
which was a huge consumer market that turned into a huge tax base. However, to
match that incentive in today's dollars would cost $12,000 per child.
India do not have declining
populations. However, in both countries, there
is a preference for boys over girls, and we now have the technology to
know which is which before they are born. In
India, many families are
aborting the girls.
As a result, in each of these countries there are
70 million boys growing up who will never find wives. When left alone,
nature produces 103 boys for every 100 girls. In some provinces, however, the
ratio is 128 boys to every 100 girls.
Russia is so low that by 2050 their
population will be smaller than that of
has one-sixth of the earth's land surface and much of its oil. You can't control
that much area with such a small population. Immediately to the south, you have
with 70 million unmarried men - a real potential nightmare scenario for
major transformation is a fundamental restructuring of
Today's business environment is very complex and competitive. To succeed, you
have to be the best, which means having the highest quality and lowest cost.
Whatever your price point, you must have the best quality and lowest price. To
be the best, you have to concentrate on one thing. You can't be all things to
all people and be the best.
A generation ago, IBM used to make every part of
their computer. Now Intel makes the chips, Microsoft makes the software, and
someone else makes the modems, hard drives, monitors, etc. IBM even outsources
their call center. Because IBM has all these companies supplying goods and
services cheaper and better than they could do it themselves, they can make a
better computer at a lower cost. This is called a "fracturing" of business. When
one company can make a better product by relying on others to perform functions
the business used to do itself, it creates a complex pyramid of companies that
serve and support each other.
American business is now in its second generation.
The companies who supply IBM are now doing the same thing, outsourcing many of
their core services and production process.
As a result, they can make cheaper, better
products. Over time, this pyramid continues to get bigger and bigger. Just when
you think it can't fracture again, it does. Even very small businesses can have
a large pyramid of corporate entities that perform many of its important
functions. One aspect of this trend is that companies end up with fewer
employees and more independent contractors.
has also created two new words in business, integrator and complementor.
At the top of the pyramid, IBM is the integrator.
As you go down the pyramid, Microsoft, Intel and
the other companies that support IBM are the complementors. However, each of the
complementors is itself an integrator for the complementors underneath it. This
has several implications, the first of which is that we are now getting false
readings on the economy. People who used to be employees are now independent
contractors launching their own businesses. There are many people working whose
work is not listed as a job.
As a result, the economy is perking along better
than the numbers are telling us.
Outsourcing also confused the numbers. Suppose a company like General Motors
decides to outsource all its employee cafeteria functions to Marriott (which it
did). It lays off hundreds of cafeteria workers, who then get hired right back
by Marriott. The only thing that has changed is that these people work for
Marriott rather than GM. Yet, the headlines will scream that
has lost more manufacturing jobs.
All that really happened is that these workers
are now reclassified as service workers. So the old way of counting jobs
contributes to false economic readings.
As yet, we haven't figured out how to make the
numbers catch up with the changing realities of the business world.
Another implication of this massive restructuring
is that because companies are getting rid of units and people that used to work
for them, the entity is smaller.
As the companies get smaller and more efficient,
revenues are going down but profits are going up.
As a result, the old notion that "revenues are up
and we're doing great" isn't always the case anymore. Companies are getting
smaller but are becoming more efficient and profitable in the process
Implications Of The Four Transformations:
some ways, the war is going very well.
Afghanistan and Iraq have the ' start' of a
modern government, which is a huge step forward. The Saudis are starting to talk
about some good things, while
are beginning to move in a good direction.
A series of revolutions have taken place in
Georgia. There will be more
of these revolutions for an interesting reason. In every revolution, there comes
a point where the dictator turns to the general and says, "Fire into the crowd."
If the general fires into the crowd, it stops the revolution. If the general
says "No," the revolution is over. Increasingly, the generals are saying "No"
because their kids are in the crowd.
to TV and the Internet, the average 18-year old outside the
U.S. is very savvy about
what is going on in the world, especially in terms of popular culture.
There is a huge global consciousness, and young
people around the world want to be a part of it. It is increasingly apparent to
them that the miserable government where they live is the only thing standing in
their way. More and more, it is the well-educated kids, the children of the
generals and the elite, who are leading the revolutions.
At the same time,
not all is well with the war. The level of
much worse and doesn't appear to be improving. Itís possible that we're asking
too much of Islam all at one time. We're trying to jolt them from the 7th
century to the 21st century all at once, which may be further than they can go.
They might make it and they might not. Nobody knows for sure. The point is,
we don't know how the war will turn out.
Anyone who says they know is just guessing.
place to watch is
If they actually obtain nuclear weapons it will
be a terrible situation. There are two ways to deal with it. The
first is a military strike, which will be very
difficult. The Iranians have dispersed their nuclear development
facilities and put them underground. The
has nuclear weapons that can go under the earth and take out those facilities,
but we don't want to do that.
The other way
is to separate the radical mullahs from the government, which is the most likely
course of action.
Seventy percent of the Iranian population is under 30.
They are Moslem but not
Arab. They are mostly pro-Western. Many
experts think the
U.S. should have dealt with
Iran before going to war with
The problem isn't so much the weapons; it's the
people who control them. If
Iran has a moderate
government, the weapons become less of a concern.
We don't know
if we will win the war in
Iraq. We could lose or win.
What we are looking for is any indicator that Islam is moving into the 21st
century and stabilizing.
It may be
that pushing 500 million people from farms and villages into cities is too much
Although it gets almost no publicity,
is experiencing hundreds of demonstrations around the country, which is
unprecedented. These are not students in
These are average citizens who are angry with
the government for building chemical plants and polluting the water they drink
and the air they breathe.
Chinese are a smart and industrious people.
They may be able to pull it off and become a very successful economic and
military superpower. If so, we will have to learn to live with it. If
they want to share the responsibility of keeping the world's oil lanes open,
that's a good thing. They currently have eight
new nuclear electric power generators under way and 45 on the books to
build. Soon, they will leave the
U.S. way behind in their
ability to generate nuclear power.
can go wrong with
China? For one,
you can't move 550 million people into the
cities without major problems.
China really wants
Taiwan, not so much
for economic reasons, they just want it. The
Chinese know that their system of communism can't survive much longer in the
21st century. The last thing they want
to do before they morph into some sort of more capitalistic government is to
Taiwan. We may wake up one
morning and find they have launched an attack on
Taiwan. If so, it will be a
mess, both economically and militarily. The
U.S. has committed to the military
Taiwan, will we really go to
war against them? If the Chinese generals believe the answer is no, they
may attack. If we don't defend
Taiwan, every treaty the
U.S. has will be worthless.
China won't do anything
Japan are dying because
their populations are aging and shrinking.
These trends can be reversed if the young people start breeding. However, the
birth rates in these areas are so low it will take two generations to turn
things around. No economic model exists that
permits 50 years to turn things around.
countries are beginning to offer incentives for people to have bigger families.
Italy is offering tax breaks
for having children.
However, it's a lifestyle issue versus a tiny amount of money.
Europeans aren't willing to give up their
comfortable lifestyles in order to have more children.
general, everyone in
Europe just wants it to last a while longer.
Europeans have a real talent for living. They
don't want to work very hard. The average European worker gets 400 more
hours of vacation time per year than
don't want to work and they don't want to make any of the changes needed to
revive their economies.
summer after 9/11,
France lost 15,000 people in
a heat wave. In
August, the country basically shuts down when
everyone goes on vacation. That year, a severe heat wave struck and 15,000
elderly people living in nursing homes and hospitals died. Their children didn't
even leave the beaches to come back and take care of the bodies. Institutions
had to scramble to find enough refrigeration units to hold the bodies until
people came to claim them. This loss of life was five times bigger than 9/11 in
yet it didn't trigger any change in French society.
rates are so low, it creates a tremendous tax burden on the young.
Under those circumstances, keeping mom and dad alive is not an attractive option.
That's why euthanasia is becoming so popular in
most European countries. The only country that doesn't permit (and even
encourage) euthanasia is
because of all the baggage from World War II.
economy is beginning to fracture.
The Euro is down. Countries like
Italy are starting to talk
about pulling out of the European Union because it is killing them. When
things get bad economically in
Europe, they tend to get very nasty politically.
The canary in the mine is anti-Semitism. When
it goes up, it means trouble is coming. Current levels of anti-Semitism
are higher than ever. Germany won't launch another war, but
Europe will likely get shabbier, more dangerous
and less pleasant to live in.
has a birth rate of 1.3 and they have no intention of bringing in immigrants. By
2020, one out of every five Japanese will be 70 years old. Property values in
Japan have dropped every
year for the past 14 years. The country is
simply shutting down.
U.S. we also have an aging
population. Boomers are starting to retire at a massive rate. These retirements
will have several major impacts:
Possible massive sell-off of large four-bedroom houses and a movement to condos.
An enormous drain on the treasury.
Boomers vote and they want their benefits, even
if it means putting a crushing tax burden on their kids to get them. Social
Security will be a huge problem.
As this generation ages, it will start to drain
the system. We are the only country in the
world where there are no age limits on medical procedures.
An enormous drain on the health care system.
This will also increase the tax burden on the
young, which will cause them to delay marriage and having families, which will
drive down the birth rate even further.
Although scary, these demographics also present
enormous opportunities for products and services tailored to aging populations.
There will be tremendous demand for caring for older people, especially those
who don't need nursing homes but need some level of care. Some people will have
a business where they take care of three or four people in their homes. The
demand for that type of service and for products to physically care for aging
people will be huge.
sure the demographics of your business are attuned to where the action is. For
example, you don't want to be a baby food company in
Demographics are much underrated as an
indicator of where the opportunities are. Businesses need customers. Go
where the customers are.
American business means we are coming to the end
of the age of the employer and employee.
With all this fracturing of businesses into different and smaller units,
employers can't guarantee jobs anymore because they don't know what their
companies will look like next year. Everyone is on their way to becoming an
independent contractor. The new workforce
contract will be, "Show up at my office five days a week and do what I want you
to do, but you handle your own insurance, benefits, health care and everything
wives are becoming economic units.
They take different jobs and work different shifts depending on where they are
in their careers and families. They make tradeoffs to put together a
compensation package to take care of the family. This used to happen only with
highly educated professionals with high incomes. Now it is happening at the
level of the factory floor worker. Couples at all levels are designing their
compensation packages based on their individual needs.
The only way this can work is if everything is
portable and flexible, which requires a huge shift in the
U.S. is in the process of
building the world's first 21st century model economy.
The only other countries doing this are
The model is fast, flexible, highly productive
in that it is
always fracturing and re-fracturing. This will increase the economic gap between
U.S. and everybody else, especially
At the same time, the military gap is increasing.
China, we are the only
country that is continuing to put money into their military. Plus, we are
the only military getting on-the-ground military experience through our war in
We know which high-tech weapons are working and which ones aren't.
There is almost no one who can take us on
economically or militarily. There has never been a superpower in this position
On the one
hand, this makes the
U.S. a magnet for bright and
ambitious people. It also makes us a target.
We are becoming one of the last holdouts of the
traditional Judeo-Christian culture. There is no better place in the world to be
in business and raise children. The
U. S. is by far the best
place to have an idea, form a business and put it into the marketplace. We take
it for granted, but it isn't as available in other countries of the world.
it's an issue of culture. The only people who can hurt us are ourselves, by
losing our culture. If we give up our Judeo-Christian culture, we become just
like the Europeans. The culture war is the whole ballgame. If we lose it, there
to pull us out.