Futurecast: How Superpowers, Populations, and Globalization Will Change the Way You Live and Work - Hardcover
What will life be like in America, Europe, Japan or China in the year 2020? As everyone’s lives across the world are become increasingly interconnected by globalization and new technologies quicken the pace of everything, the answer to that question depends on the fate and paths of the world’s major nations. In Futurecast, Robert Shapiro, former U.S. Under Secretary of Commerce and Chairman/Co-founder of Sonecon, looks into the future to tell us what our world will over the next dozen years. Though that time span seems brief, Shapiro foresees monumental changes caused by three historic new forces—globalization, the aging of societies, and the rise of America as a sole superpower with no near peer— will determine the paths of nations and the lives of countless millions. What jobs will there be for you and your children? What will happen to your health care? How safe will you be at home or abroad? Answers to these questions will depend, even more than today, on where you live in the world: · Even as China expands its military and its economy, America will be the world’s sole superpower for at least the next generation, and continue to lead efforts to preserve global security and stability. · The U.S. and China will be the world’s two indispensable economies, dominating the course of globalization. · Globalization will continue to shift most heavy manufacturing and millions of high-end service jobs from advanced countries like the US, to China, India, Indonesia, Mexico, Romania, Turkey and other developing nations. · Europe’s major nations and Japan will face the prospect of genuine economic decline and critical problems in their retirement pension systems, moving further towards the periphery of global economic and geopolitical power. · Every major country—the U.S., Europe, Japan, China—will face critical problems with their health care systems, and the entire world will face a crisis over energy and climate change. If one adds the wildcard of possible, catastrophic terrorist attacks to this mix, the period between now and 2020 will be as challenging as any in modern times. Taking these deep global developments into account when planning for the future isa necessity. Robert Shapiro’s clear-eyed Futurecast is the knowledge portfolio you need to prepare for the years to come.
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About the Author:
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ROBERT J. SHAPIRO is co-founder and chairman of Sonecon, LLC, a private firm that advises U.S. and foreign businesses, governments, and nonprofit organizations. He served as Under Secretary of Commerce from 1998 to 2001. He also was the co-founder and Vice President of the Progressive Policy Institute, Bill Clinton’s principal economic advisor in the 1991-1992 campaign, a senior economic advisor to Al Gore and John Kerry in their campaigns, Legislative Director for Sen. Daniel Patrick Moynihan, Assoc. Editor of U.S. News & World Report, and economics columnist for Slate magazine. He holds a Ph.D. from Harvard University and lives in Washington, D.C.
Chapter 1
Enormous changes happen to most people over any ten- or fifteen-year period. Your brain and body, wants and desires, circumstances and prospects, all change as you grow from a five-year-old to a young adult of twenty, from a new husband or wife of twenty-five to early middle age, and from a fifty-year-old at the height of your career to a grandparent of sixty-five. Societies usually change less than most individuals over fifteen-year periods. Most societies have much longer lifetimes, too—although occasionally a great event like a war or an exceptional boom can shake up a nation’s conditions and prospects in short order. Broader and more powerful forces, beyond the control of any country or its leaders, can shift the course of development of the entire world. Such developments—some new force changes the way people approach family life, new technologies arise that change fundamental factors in all economies, or a global empire falls—usually happen once in many centuries. We live in a period when three such tectonic developments are all unfolding at the same time.
Three great, global forces are currently reshaping our near future. The first is an extraordinary global demographic shift. Over the last half-century, every advanced society and most developing countries have experienced a baby boom followed by a baby bust. The plague killed one-quarter of Europe’s population in the thirteenth century, and the world wars of the twentieth century decimated the young male population of several countries. But what’s happening today—across most of the world, the greatest aging of national populations ever seen, along with the smallest relative numbers of working-age people on record—is without historical precedent. It will have large effects on both how fast different countries grow and the basic capacity of governments to meet the needs of tens of millions of newly elderly people.
The second great force is globalization, principally, the rapid advance of hugely complex, worldwide networks of money, resources, production, and consumer needs. There have been several previous periods in which world commerce and communications suddenly expanded—especially in the era of exploration in the seventeenth century, and the spread of the telegraph and electricity in the late nineteenth century. The current phase is more far-reaching, with new information technologies affecting more societies more quickly. It’s also more comprehensive, with 151 countries agreeing to the World Trade Organization’s general rules that open each of them to foreign investment and to much greater foreign and domestic competition. Whether most people in Europe, Japan, or America thrive or merely get by will depend on how and whether their governments and societies find a way to prosper under these rules—and to compete with China and India’s unprecedented combinations of advanced technologies and huge numbers of low-wage, skilled workers.
The third great historic development is the fall of the Soviet Union, its European empire, and its political ideology. Empires and ideologies have fallen many times before, but not since the time of Rome has such an event left one global military and economic superpower with no near peer. And the rise of Rome didn’t coincide with a period of world-changing economic globalization. Nor was the fall of past empires accompanied by other seismic geopolitical changes of the sort we see today—namely, the rapid makeover of the world’s biggest country from socialism to a supercharged form of capitalism, and a shift of the center of global politics from the Atlantic nations to the Pacific rim. In place of the cold war and everything it demanded of most countries, the geopolitics of the next fifteen years will be driven by a combination of all of these extraordinary developments.
These developments and their combinations and interactions will have profound effects on the course of every major society and the daily lives of their peoples, and no nation or person can opt out of the consequences.
Strictly speaking, they will not determine anyone’s precise future. Wars and new alliances, booms and recessions, social progress and terrible domestic conflicts will come to pass in the next fifteen years, and each one will arise from countless decisions and events no one can know today. But whatever the near future holds precisely for all of us, it will unfold in a world where these three great forces shape its outset and outcome.
The powerful effects of these forces come from their depth and breadth. The family-planning decisions of billions of people over more than two generations have gradually shifted the demographics of most nations and produced the unprecedented aging of their populations. The roots of modern globalization, and the reason it’s not going away, are similarly elemental. Globalization as we know it today comes out of the responses of tens of thousands of businesses to the new availability of low-cost skilled labor abroad, the growing capacity of developing nations to attract foreign capital and technology, breakthroughs in manufacturing that have enabled producers to break up and distribute the parts of their production process across plants in different countries, and the spread of information technologies to manage and coordinate global networks. And America’s position as the world’s sole superpower has come from not only the epochal collapse of the Soviet Union but also sustained decisions over a half century by America to spend whatever it takes to be stronger than other nations, and by Japan and Europe’s major powers to depend on the United States for security. The deep sources of these developments give them enormous momentum as well as power.
Over time, every nation has little choice but to respond in some way to the pressures created by these historic forces. They can affect the way these forces influence their societies through policies that change the behavior of large numbers of their people or companies. But such changes take time to put in place and more time to affect such deep developments—in our judgment, a good ten to fifteen years. This potential for change limits our foresight to roughly the period between now and 2020.
Over that span, for example, nothing can change the demographic dynamics producing the current aging of all major societies and its impact on a country’s savings and growth rates and the sustainability of pension and health-care systems. Japan or the major countries of Europe could ease restrictions on immigration to expand their baby-bust labor forces and trim their state pension and health-care obligations. If such changes were to come about—and there’s little sign of any of this today—the early economic and social effects might be felt in about a decade. Similarly, France, Germany, or Japan could today undertake the difficult economic reforms necessary to make themselves more successful players in globalization—at least France now talks about it—but it would take at least ten years to see an impact on their growth rates and the incomes and productivity of their people. China’s and America’s strengths in the new global economy also could unravel over time if, for example, China were to confront serious social unrest that slowed its modernization or, even less likely, if America turned inward economically. The key roles the two countries play in globalization, however, are very unlikely to change materially in a decade’s time. In geopolitics, it’s conceivable that China or the European Union could permanently double or triple their military investments, starting today. It’s unlikely because it would slow China’s modernization and redouble the pressures on Europe’s social-safety-net systems. Yet if they did so, it would take a generation of such investments to build the capacity to successfully challenge American superpower on even a regional basis.
Looking further ahead over the next one or two generations, profound changes are certain to unfold in many societies. We cannot know what life will be like in America, Europe, Japan, or China in 2035 or 2050. But the aging of national populations, the opportunities and pitfalls of economic globalization, and the consequences of a geopolitics organized around a sole superpower are forces sufficiently entrenched and far-reaching to provide a unique blueprint of their likely course over the next ten to fifteen years.
The Earthquake of Demographic Change
An historic aging process is taking place in virtually every society today. Across the globe, the average age of the population in almost every nation is rising. This kind of change has occasionally happened in the past to one or a few countries at a time, when a war or epidemic has wiped out part of a younger generation. Germany and France each lost about 10 percent of their young male populations in World War I—more than 3 million between them—and the Spanish flu of 1918–1919 claimed 30 million lives, the majority ages fifteen to thirty-five, from more than ten countries. This time, for the first time in recorded history, almost every country in the world is experiencing an unusually large generation followed by an unusually small one. Both the causes and the economic results, however, differ among countries.
In Western Europe, America, and most of the world’s advanced countries, the initial baby boom came out of decisions by tens of millions of couples to defer marrying or having children during the Depression and the Second World War—and once prosperity and peace returned, they choose to have many more children than their parents did. The same outcome was unfolding at roughly the same time in dozens of less-developed societies, but from different sources: There, tens of millions of young couples discovered that many more of their children were surviving than in the past, principally because of large improvements in basic health and sanitary conditions. A second factor also emerged across Asia, Europe, and North America: Medical advances were increasing life spans, especially at the other end of life. From 1960 to 2000, the life expectancy at birth of Americans, Japanese, and Europeans increased by seven to thirteen years; and reached eighty-three to eighty-five for those sixty-five or older. Over the same period, the life expectancy of the Chinese at birth nearly doubled, from thirty-six to seventy years.
Finally, a separate series of factors brought these baby booms to screeching halts in the following generation, when expanding economic opportunities—especially for women—better infant care, and inexpensive contraceptives led baby boom women around the world to choose to have many fewer children than their mothers. Put together all of these forces, and the neat order of generation succeeding generation—the stable age structure that most countries had since the early 1800s—changed radically across the world.
What would happen to your family if, following a few decades of growing paychecks earned by you and your mate, all at once one of you could no longer work full-time and a relative with no resources had to move in? To begin with, it’s a family crisis, and unless you have a plan to somehow raise your income, the material conditions of your family’s life would deteriorate fairly quickly. Family meals would become more basic and vacations less frequent. The cars you drive would grow older and break down more often. You would have to live with more stress and your general health might well worsen. The time and energy you would have to help out at church or your children’s school could slowly disappear. Ultimately, such a crisis breaks up marriages and, almost always, children suffer both at home and at school.
The results are much the same for a country—when the number of working-age people who produce everything from food and pharmaceuticals to education and supersonic bombers, falls, just as the number of people who need and expect a lot of help from government rises. Over time, the quality of national life may deteriorate, too. With fewer people producing wealth and more older people needing income support and medical treatment, taxes rise and investment slows. Lower investment rates mean that over time, most people’s paychecks will grow more slowly—or stop growing altogether—even as their taxes increase.
Demographic shifts are very powerful forces, but their ultimate outcomes are not predestined. Starting with Thomas Malthus’s famous essay in 1798, people have worried that the aging of a generational bulge like the one so many countries are experiencing today will badly strain a country’s resources and drive down its economy, often long before the baby boomers reach middle age. Malthus is not much read today for his predictions, but his dark scenarios retain a hold on many people’s imaginations. As recently as the 1970s, the U.S. National Academy of Sciences and the United Nations both warned that sharp increases in population around the world would leave most people worse off. A presidential commission of academics and public officials, chaired by John D. Rockfeller III, pronounced that “we have concluded that no substantial benefits would result from continued growth of the nation’s population,” and zero population growth “would ‘buy time’ by slowing the pace at which growth-related problems accumulate.”1 Like Malthus, they overlooked the power of new technologies to create new resources and get more out of those we have, they underestimated the wealth that could be generted by better-educating all those additional people, and they didn’t understand how well some economies and societies can adjust to changing conditions.
A family, like a nation caught between less income and greater expenses, has alternatives, none of them wholly appealing. One of the parents can go back to school and learn a new set of skills that pays more. The family could take in a working-age cousin in similar straits and pool their incomes. Then there are options no one likes to consider, such as asking an aging relative to cut back on his medications. A nation, like a family, has alternatives, too, even if their responses are shaped by other factors. In the United States, the society learned new skills: Government spending and the ambitions of entrepreneurs and scientists promoted the development of computers and software that ultimately raised U.S. productivity, so that even a smaller number of working Americans could produce more. China went further along the same kind of path. There, a new generation of leaders not bound by the 1948 revolution, or Mao Zedong’s perverse ideology, opened their backward economy to advanced western technology and business methods. The United States, China, the East Asian countries, and later much of Central Europe also deregulated scores of industries and opened themselves up to foreign producers.
These changes ultimately cost America about one-third of its manufacturing jobs, as they did in Europe and Japan. One difference was that Europe and Japan generally held on to most of their regulation; while in America deregulation brought on more intense competition, producing economic pressures that created a lot more jobs of other kinds. Another difference was that as the boomer generation aged, the United States opened its borders to more immigrants that supplemented its workforce, while most other advanced countries kept their borders closed. The rapid changes in China and Southeast Asia also cost many tens of millions of people their traditional livelihoods, while other factors opened up economic opportunities in much of Asia. Once falling infant mortality rates brought down the average n...
Enormous changes happen to most people over any ten- or fifteen-year period. Your brain and body, wants and desires, circumstances and prospects, all change as you grow from a five-year-old to a young adult of twenty, from a new husband or wife of twenty-five to early middle age, and from a fifty-year-old at the height of your career to a grandparent of sixty-five. Societies usually change less than most individuals over fifteen-year periods. Most societies have much longer lifetimes, too—although occasionally a great event like a war or an exceptional boom can shake up a nation’s conditions and prospects in short order. Broader and more powerful forces, beyond the control of any country or its leaders, can shift the course of development of the entire world. Such developments—some new force changes the way people approach family life, new technologies arise that change fundamental factors in all economies, or a global empire falls—usually happen once in many centuries. We live in a period when three such tectonic developments are all unfolding at the same time.
Three great, global forces are currently reshaping our near future. The first is an extraordinary global demographic shift. Over the last half-century, every advanced society and most developing countries have experienced a baby boom followed by a baby bust. The plague killed one-quarter of Europe’s population in the thirteenth century, and the world wars of the twentieth century decimated the young male population of several countries. But what’s happening today—across most of the world, the greatest aging of national populations ever seen, along with the smallest relative numbers of working-age people on record—is without historical precedent. It will have large effects on both how fast different countries grow and the basic capacity of governments to meet the needs of tens of millions of newly elderly people.
The second great force is globalization, principally, the rapid advance of hugely complex, worldwide networks of money, resources, production, and consumer needs. There have been several previous periods in which world commerce and communications suddenly expanded—especially in the era of exploration in the seventeenth century, and the spread of the telegraph and electricity in the late nineteenth century. The current phase is more far-reaching, with new information technologies affecting more societies more quickly. It’s also more comprehensive, with 151 countries agreeing to the World Trade Organization’s general rules that open each of them to foreign investment and to much greater foreign and domestic competition. Whether most people in Europe, Japan, or America thrive or merely get by will depend on how and whether their governments and societies find a way to prosper under these rules—and to compete with China and India’s unprecedented combinations of advanced technologies and huge numbers of low-wage, skilled workers.
The third great historic development is the fall of the Soviet Union, its European empire, and its political ideology. Empires and ideologies have fallen many times before, but not since the time of Rome has such an event left one global military and economic superpower with no near peer. And the rise of Rome didn’t coincide with a period of world-changing economic globalization. Nor was the fall of past empires accompanied by other seismic geopolitical changes of the sort we see today—namely, the rapid makeover of the world’s biggest country from socialism to a supercharged form of capitalism, and a shift of the center of global politics from the Atlantic nations to the Pacific rim. In place of the cold war and everything it demanded of most countries, the geopolitics of the next fifteen years will be driven by a combination of all of these extraordinary developments.
These developments and their combinations and interactions will have profound effects on the course of every major society and the daily lives of their peoples, and no nation or person can opt out of the consequences.
Strictly speaking, they will not determine anyone’s precise future. Wars and new alliances, booms and recessions, social progress and terrible domestic conflicts will come to pass in the next fifteen years, and each one will arise from countless decisions and events no one can know today. But whatever the near future holds precisely for all of us, it will unfold in a world where these three great forces shape its outset and outcome.
The powerful effects of these forces come from their depth and breadth. The family-planning decisions of billions of people over more than two generations have gradually shifted the demographics of most nations and produced the unprecedented aging of their populations. The roots of modern globalization, and the reason it’s not going away, are similarly elemental. Globalization as we know it today comes out of the responses of tens of thousands of businesses to the new availability of low-cost skilled labor abroad, the growing capacity of developing nations to attract foreign capital and technology, breakthroughs in manufacturing that have enabled producers to break up and distribute the parts of their production process across plants in different countries, and the spread of information technologies to manage and coordinate global networks. And America’s position as the world’s sole superpower has come from not only the epochal collapse of the Soviet Union but also sustained decisions over a half century by America to spend whatever it takes to be stronger than other nations, and by Japan and Europe’s major powers to depend on the United States for security. The deep sources of these developments give them enormous momentum as well as power.
Over time, every nation has little choice but to respond in some way to the pressures created by these historic forces. They can affect the way these forces influence their societies through policies that change the behavior of large numbers of their people or companies. But such changes take time to put in place and more time to affect such deep developments—in our judgment, a good ten to fifteen years. This potential for change limits our foresight to roughly the period between now and 2020.
Over that span, for example, nothing can change the demographic dynamics producing the current aging of all major societies and its impact on a country’s savings and growth rates and the sustainability of pension and health-care systems. Japan or the major countries of Europe could ease restrictions on immigration to expand their baby-bust labor forces and trim their state pension and health-care obligations. If such changes were to come about—and there’s little sign of any of this today—the early economic and social effects might be felt in about a decade. Similarly, France, Germany, or Japan could today undertake the difficult economic reforms necessary to make themselves more successful players in globalization—at least France now talks about it—but it would take at least ten years to see an impact on their growth rates and the incomes and productivity of their people. China’s and America’s strengths in the new global economy also could unravel over time if, for example, China were to confront serious social unrest that slowed its modernization or, even less likely, if America turned inward economically. The key roles the two countries play in globalization, however, are very unlikely to change materially in a decade’s time. In geopolitics, it’s conceivable that China or the European Union could permanently double or triple their military investments, starting today. It’s unlikely because it would slow China’s modernization and redouble the pressures on Europe’s social-safety-net systems. Yet if they did so, it would take a generation of such investments to build the capacity to successfully challenge American superpower on even a regional basis.
Looking further ahead over the next one or two generations, profound changes are certain to unfold in many societies. We cannot know what life will be like in America, Europe, Japan, or China in 2035 or 2050. But the aging of national populations, the opportunities and pitfalls of economic globalization, and the consequences of a geopolitics organized around a sole superpower are forces sufficiently entrenched and far-reaching to provide a unique blueprint of their likely course over the next ten to fifteen years.
The Earthquake of Demographic Change
An historic aging process is taking place in virtually every society today. Across the globe, the average age of the population in almost every nation is rising. This kind of change has occasionally happened in the past to one or a few countries at a time, when a war or epidemic has wiped out part of a younger generation. Germany and France each lost about 10 percent of their young male populations in World War I—more than 3 million between them—and the Spanish flu of 1918–1919 claimed 30 million lives, the majority ages fifteen to thirty-five, from more than ten countries. This time, for the first time in recorded history, almost every country in the world is experiencing an unusually large generation followed by an unusually small one. Both the causes and the economic results, however, differ among countries.
In Western Europe, America, and most of the world’s advanced countries, the initial baby boom came out of decisions by tens of millions of couples to defer marrying or having children during the Depression and the Second World War—and once prosperity and peace returned, they choose to have many more children than their parents did. The same outcome was unfolding at roughly the same time in dozens of less-developed societies, but from different sources: There, tens of millions of young couples discovered that many more of their children were surviving than in the past, principally because of large improvements in basic health and sanitary conditions. A second factor also emerged across Asia, Europe, and North America: Medical advances were increasing life spans, especially at the other end of life. From 1960 to 2000, the life expectancy at birth of Americans, Japanese, and Europeans increased by seven to thirteen years; and reached eighty-three to eighty-five for those sixty-five or older. Over the same period, the life expectancy of the Chinese at birth nearly doubled, from thirty-six to seventy years.
Finally, a separate series of factors brought these baby booms to screeching halts in the following generation, when expanding economic opportunities—especially for women—better infant care, and inexpensive contraceptives led baby boom women around the world to choose to have many fewer children than their mothers. Put together all of these forces, and the neat order of generation succeeding generation—the stable age structure that most countries had since the early 1800s—changed radically across the world.
What would happen to your family if, following a few decades of growing paychecks earned by you and your mate, all at once one of you could no longer work full-time and a relative with no resources had to move in? To begin with, it’s a family crisis, and unless you have a plan to somehow raise your income, the material conditions of your family’s life would deteriorate fairly quickly. Family meals would become more basic and vacations less frequent. The cars you drive would grow older and break down more often. You would have to live with more stress and your general health might well worsen. The time and energy you would have to help out at church or your children’s school could slowly disappear. Ultimately, such a crisis breaks up marriages and, almost always, children suffer both at home and at school.
The results are much the same for a country—when the number of working-age people who produce everything from food and pharmaceuticals to education and supersonic bombers, falls, just as the number of people who need and expect a lot of help from government rises. Over time, the quality of national life may deteriorate, too. With fewer people producing wealth and more older people needing income support and medical treatment, taxes rise and investment slows. Lower investment rates mean that over time, most people’s paychecks will grow more slowly—or stop growing altogether—even as their taxes increase.
Demographic shifts are very powerful forces, but their ultimate outcomes are not predestined. Starting with Thomas Malthus’s famous essay in 1798, people have worried that the aging of a generational bulge like the one so many countries are experiencing today will badly strain a country’s resources and drive down its economy, often long before the baby boomers reach middle age. Malthus is not much read today for his predictions, but his dark scenarios retain a hold on many people’s imaginations. As recently as the 1970s, the U.S. National Academy of Sciences and the United Nations both warned that sharp increases in population around the world would leave most people worse off. A presidential commission of academics and public officials, chaired by John D. Rockfeller III, pronounced that “we have concluded that no substantial benefits would result from continued growth of the nation’s population,” and zero population growth “would ‘buy time’ by slowing the pace at which growth-related problems accumulate.”1 Like Malthus, they overlooked the power of new technologies to create new resources and get more out of those we have, they underestimated the wealth that could be generted by better-educating all those additional people, and they didn’t understand how well some economies and societies can adjust to changing conditions.
A family, like a nation caught between less income and greater expenses, has alternatives, none of them wholly appealing. One of the parents can go back to school and learn a new set of skills that pays more. The family could take in a working-age cousin in similar straits and pool their incomes. Then there are options no one likes to consider, such as asking an aging relative to cut back on his medications. A nation, like a family, has alternatives, too, even if their responses are shaped by other factors. In the United States, the society learned new skills: Government spending and the ambitions of entrepreneurs and scientists promoted the development of computers and software that ultimately raised U.S. productivity, so that even a smaller number of working Americans could produce more. China went further along the same kind of path. There, a new generation of leaders not bound by the 1948 revolution, or Mao Zedong’s perverse ideology, opened their backward economy to advanced western technology and business methods. The United States, China, the East Asian countries, and later much of Central Europe also deregulated scores of industries and opened themselves up to foreign producers.
These changes ultimately cost America about one-third of its manufacturing jobs, as they did in Europe and Japan. One difference was that Europe and Japan generally held on to most of their regulation; while in America deregulation brought on more intense competition, producing economic pressures that created a lot more jobs of other kinds. Another difference was that as the boomer generation aged, the United States opened its borders to more immigrants that supplemented its workforce, while most other advanced countries kept their borders closed. The rapid changes in China and Southeast Asia also cost many tens of millions of people their traditional livelihoods, while other factors opened up economic opportunities in much of Asia. Once falling infant mortality rates brought down the average n...
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