Part 3 of 3
(CONTINUED FROM ABOVE)
2. China
It may be that pushing 500 million people from farms and villages into
cities is too much too soon. Although it gets almost no publicity,
China is experiencing hundreds of demonstrations around the country, which is
unprecedented. These are not students in Tiananmen Square. 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.
The 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.
What can go wrong with China? For one, you can’t move 550 million
people into the cities without major problems. Two, 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 take over 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 defense of Taiwan. If China attacks
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. Hopefully,China won’t do
anything stupid.
3. Demographics
Europe and 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. Some countries are beginning to offer
incentives for people to have bigger families. For example, 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.
In 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 Americans. They don’t want to work and they don’t want to make
any of the changes needed to revive their economies.
The 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 America, yet it
didn’t trigger any change in French society. When birth 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
Germany, because of all the baggage from World War II.
The European 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.
Japan has a birth rate of 1.3 and has 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.
In the 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.
Make 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
Europe or Japan. Demographics are much underrated as an indicator of where the
opportunities are. Businesses need customers. Go where the customers
are.
4. Restructuring of American Business
The restructuring of 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 the 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 else.”
Husbands and 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 American economy.
The U.S. is in the process of building the world’s first 21st century
model economy. The only other countries doing this are U.K. and
Australia. The model is fast, flexible, highly productive and unstable in that it
is always fracturing and re-fracturing. This will increase the economic
gap between the U.S. and everybody else, especially Europe and Japan.
At the same time, the military gap is increasing. Other than 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 Iraq. 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
before.
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.
Ultimately, 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 isn’t another America to pull us out.
Herb Meyer served during the Reagan administration as special assistant to the
Director of Central Intelligence and Vice Chairman of the CIA's National Intelligence
Council. In these positions, he managed production of the U.S. National Intelligence
Estimates and other top-secret projections for the President and his national security advisers.
Meyer is widely credited with being the first senior U.S. Government official to forecast the
Soviet Union's collapse, for which he later was awarded the U.S. National Intelligence
Distinguished Service Medal, the intelligence community's highest honor. Formerly an associate
editor of FORTUNE, he is also the author of several books.
Herbert Meyer
P.O. Box 2089
Friday Harbor, WA 98250
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