The Hollowing Of America

This really interesting map came from The Economist of January 19th 2008. It shows how the population of the US has changed, on a county level, between 2000-06. Of course, as demographics are an early warning indicator of future societal changes, a map like this needs to be examined carefully.

For me, the most striking aspect of the graphic is that the centre of the US is losing population, up to 80% at the county level in some cases. The population gainers are the south west and the south east of the US, in some places by 70%. This suggests a degree of migration within the US, in addition to the often reported flow of people into the US. In total, the population of the US grew by 6.4% during the period, but what is more telling is the variation within that average.

From a futures perspective, two questions come to mind. First, does the south west have sufficient water to sustain a period of population growth well above average? The evidence to date suggests that it does not. The local aquifers are becoming quite stressed, river levels are at unprecedented lows, and water supply is starting to become something of an issue. This is likely to continue well into the future.

At present, the US plans to import its water deficiencies from Canada. The Canadians, on the other hand, are being a bit more strategic about this (see story), and are seeking to restrict the supply of water to the US. Whatever is the outcome of the dispute about the supply of water, with the US Dollar falling against the Canadian Dollar, even if future supplies are secured, they are also likey to be much more expensive than today.

Second, if climate extremes are growing as the climate changes, wouldn’t those who have relocated to the south eastern coastal areas find their residences more jeopardised in the future? One would expect so. This night have a number of implications. First, insurance premiums will increase substantially. As insurance costs rise, particularly at a time of economic stringency, more people will be tempted to forego that expense item.

Should a major storm hit this area, with a large population of un-insured or under-insured people, the pressure would be on the Federal Agencies to provide relief. One might ask if the federal response would be adequate for the job. The experience from Hurricane Katrina suggests not. However, even if the lessons from Hurricane Katrina were fully learned, the experience from the flooding of the interior in 2007 suggests another problem coming to the fore. The personnel and equipment needed for disaster relief are in Iraq.

Large population shifts are bound to cause problems with infrastructure. Schools, houses, and shops are all in the wrong place. Just moving this infrastructure from where it is located to where it is needed is likely to give rise to a major boom in construction. One key advantage of new build is that it incorporates the latest technology and design – water conservation in the south west and storm protection in the south east.

Perhaps the future is not as bleak as it might appear to be at first sight?

Science triumphs over Faith?

Science triumphs over Faith?, originally uploaded by Simon_K.

Simon K (Flickr id) writes:

"Winterton, Norfolk
A terrifying prefiguring of the triumph of scientific atheism over traditional religion? Or an ancient landscape disrupted by sops to the eco-fascists? Winterton church from the tower of Martham church, through the Somerton wind farm. That's the North Sea beyond."

What intrigues me is whether or not this is the shape of landscapes to come. At some point, the church would have been built, the tower of which is above the tree line. We can ask if this progress disturbed the natural environment. However, I do like the metaphor of science (and technology) triumphing over faith. Perhaps this is a signal that , as many futurists believe, we are about to leave the Age of Reason?

Local Honey

Local Honey, originally uploaded by EUFO Views.

"Each of these jars of honey has the name and address of the producer. How about that for provenance in the supply chain?"

A poor photo from a shaky hand, but the point is well made. As we want more information about what we buy and what we eat, the logical extension is to put the name and address of the person who made the food on each jar. In this, food production becomes more craftsman like as each jar is its own work of art, with the artist signing each jar.

A Cushioned Fall?

A group of futurists has been discussing the collapse of the American Empire on the Shaping Tomorrow Network site (see discussion). Let us suppose, just for the sake of argument, that America has an Empire. There are many who deny this, but let us just leave that objection aside for the moment. Let us also suppose that the American Empire (which we have just assumed to be) is in long term decline. Once again, there are those who argue that the current malaise experienced by the US is temporary, and that we should expect a resurgence of America over the next decade or so. By assumption, we have an American Empire in decline. If so, then the interesting question is whether or not that Empire is due to collapse.

It is not necessarily the case that imperial decline and regime collapse are inevitable. History can inform us on this. During the First World War, the locus of the world economy shifted westwards, from Europe to the United States. By 1918, three of the four European Empires had collapsed (the Russian, German, and Austro-Hungarian), along with the Ottoman Empire, which was more Asian than European in its nature. Only one Empire remained in Europe – the British Empire. And yet, the First World War had dealt a fatal blow to the British Empire, as witnessed by the flawed return to the Gold Standard in 1925. It took a further forty years for the British Empire to unwind fully.

In this, we have two models of imperial decline – the hard landing of the Russian, German, and Austro-Hungarian Empires, which involved the collapse of the respective regimes; and the soft landing of the British Empire, which involved a prolonged withdrawal from imperial status. The dangers of a hard landing would include the establishment of extreme governments (Stalin in Russia, Hitler in Germany) and the possibility of the anarchy of Central Europe, which directly paved the way for the atrocities recently seen in the former Yugoslavia. History tells us that a hard landing would be best avoided.

If so, then we might ask how a soft landing could be achieved. In the British experience, during the First World War, the British Government financed the war effort by selling bonds to finance houses located mainly in the US. This weakened Sterling to such a point that the “Return to Gold” at pre-war exchange rates in 1925 was unsustainable. It also created a Sterling pool in the US from which other British assets, publicly quoted on the Stock Exchange, could be bought. In this way, the wealth of the British Empire flowed westwards to create ‘The American Century’.

If we move the clock forward about 100 years to today, what do we find? We find that the US is over-borrowed in both the Public and Household sectors and we find that the creditor nations have moved westwards again, to East Asia. As a consequence of long term decline, the US Dollar is weak and set to weaken further. We are now at a point where small actions will leverage into large impacts as time starts to run against the US. The next US Presidency is likely to be instrumental in setting the scene for the US well into the rest of this century. For a soft landing to occur, there needs to be a greater degree of financial integration of the US and East Asian economies. The recent news that the China Development Bank has bought a $9bn equity stake in Citigroup and that the China Investment Corporation has bought a $5bn stake in Morgan Stanley all point towards a soft landing for the US in the long term.

This, however, is not unequivocal. The blocking of the CNOOC bid to purchase Unocal in 2005 on strategic grounds points in the opposite direction. If other nations, particularly China and the East Asian creditor nations, are not allowed to cushion the decline of the US in financial terms, then we can expect the eventual landing to be harder than it otherwise would have been. In this respect, the current US Presidential Election is rather distressing. Applause can be bought cheaply by the candidates by berating Chinese trade and financial policies, but this would make a hard landing much more likely than a soft landing. The consequences of a hard landing should be enough to sober most people.

To put it bluntly, if the US does have a hard landing in the next five to ten years, which of the current candidates would you cast as Stalin or Hitler?

BT Handset

BT Handset, originally uploaded by EUFO Views.

"This telephone handset caught my attention. Note the large buttons for elderly users. It is interesting how the design of products is changing as the profile of consumers ages."

Men Not At Work

This week at the Time Bandits we looked at men not at work.

Overall this did not surprise us; although we were surprised that it has not happened sooner. One male Time Bandit commented that “men are lazy and staying at home and looking after some children would be ideal, there are not certain working hours so you cannot get fired. Also you can eat anything you want.” We thought it was a good idea because there will be a reduced number of macho men around. Also sexism will have to reduce because it is hard to be sexist when you have lots of stay-at-home-dads. But this could all backfire as the boys at the Time Bandits said if that were an option they would stay home and watch TV and play video games.

The article also went into talking about young people working and how after education young people want to take a break. I asked the Time Bandits if they wanted to go to university and straight in to work and only one or two wanted to. Most wanted to travel. I asked the female Time Bandits if they would mind, when they have a family, to be the person earning the salary and for the man to stay at home. We had to discuss this for quite a while and the end results were that it depends. It depended on what qualifications they had, how close they were to their children and what kind of work they would be doing.

The Time Bandits thought that overall this is going to become a more common thing and that it should become a more common thing.

Are There Enough People In China?

Depending upon how you view it, and how you count the numbers, China contains between a quarter and a third of humanity. And yet, one can ask if there are enough people in China to continue driving the Chinese economy at the pace of recent years. In a recent article in ‘The World In 2008’ (see article) The Economist asks precisely this question.

It would appear that the labour market in China is tightening. The tightening is coming from three areas: development (it is easier to poach trained staff than to train them), demographics (the ‘one child policy’ is starting to drain the youth end of the talent pool), and skills shortages (many point to the inadequacies of the vocational system in China). In addition to this, Government policy is distorting the market. By promoting development in the rural heartland, the flow of cheap, unskilled labour to the coastal provinces is starting to abate.

The tightening of the labour market is partly offset by returning Chinese from overseas, but the immigration inflows are insufficient to ease the general labour scarcity. The result of all of this is that wages are starting to rise in China, along with staff turnover. It is stated that factory wages in China are starting to become comparable to Malaysia. However, it is in the managerial and supervisory grades that the shortages are felt most acutely. It would seem that managerial salaries in China are starting to creep up to European levels.

From a futures perspective, this story has a number of points to commend it. If we were asked the identity of China’s China five years ago, we would have guessed at Vietnam. More recently, we would have thought about Africa. It seems that many Chinese have been thinking Malaysia. It is almost as if the Chinese development story is about to write a Malaysian chapter. This is one to watch in the future.

For some time, we have been bullish about China in the short term, but bearish about China in the longer term. At some point in time, we need to cross from optimist to pessimism over the Chinese economy. A tightening labour market is just one of those signals that warns of impending change. In our model, growth is tied to the abundance of cheap labour. If that source dries up – as we expect it to in the near future – then we do question the ability of the Chinese economy to continue growing at about 10% per annum. However, a growth rate appreciably less than 10% per annum may well trigger the political instability that has not been evident in China in recent years.

It is quite easy to talk ourselves into a dark scenario – especially if we add banking instability to the mix. However, it is probably the case that the shine will come off the Chinese economy in the next three to five years as the demographic factors start to take hold. One might wonder what that will mean for those western companies who have invested in China in the expectation of returns over a longer period than that.

Perhaps the next crisis after the current sub-prime crisis will be one involving asset write offs in China?

A Bill Of Rights For 21st Century America

Joseph F. Coates

ISBN 978-1-4196-6532-5

I was first attracted to this book for three reasons. First, the process of building a constitution is one that has dominated Europe for a generation, and is set to dominate the political agenda in Europe for at least another generation. There is much about building a constitution for a continental power that the EU can learn from the American experience. Second, the United States – and its constitution – is very much a child of The Enlightenment. If it is true that we are moving away from Enlightenment 1.0 – possibly towards Enlightenment 2.0, possibly something different – then, given the hyperpuissance of the US, even if the status quo ex ante were to be maintained, we would not expect the transition from one state to another to be without difficulty. Finally, we take the view that Mr Coates is one of the elder statesmen of the futurist profession. If there is an issue that he sees as important, then we are well advised to treat it seriously ourselves. We may not agree with the conclusions, but we ought to consider the issue.

The US is still the major player in global geo-politics and, as such, commands a disproportionate amount of our attention. I agree with Mr Coates that the US Constitution needs an update. As a manifesto for action, this book has much to recommend it. We may not agree with all of the proposals within the book, but it is important to debate them openly. For this reason, it is an important text.

READ the full review.

50 Not Out!

Happy New Year.

This New Year marks the passing of another significant milestone in the development of the European Union. On 1st January 2008, Slovenia takes over the rolling Presidency of the EU. Admittedly, the Presidency is more symbolic than substantial, but what a symbol it is. To mark the extent of this achievement, we have to cast our minds back to the dark days of July 1995.

In July 1995, Yugoslavia was in the process of dissolution. The most severe fighting had spread to the Former Yugoslavian Republic of Bosnia and ethnic cleansing was at its height. The European nations had accepted a UN mandate to protect the Bosnian Muslims in a number of ‘safe havens’. At Srebrenica, they failed abjectly in this task.

This failure had three long term repercussions. First, it led to the direct involvement of the US in the Balkan Question. Second, it led to the realisation that EU foreign policy without hard power behind is was just hot air. Third, it led to a realisation in the EU that the long term solution to the Balkan Question would be absorption rather than containment. Each of these repercussions may come into focus in 2008.

The direct involvement of the US in the Balkan Question managed to resolve the issue in the short term, but at the cost of long term damage to the relationship between Europe and the US. In the post-Srebrenica environment, it was the manner in which Madeleine Albright swaggered around Europe, lecturing the EU nations on how they should be more like the US, which fed the dissonance between the EU and the US that resulted in the US receiving the active opposition of some EU nations in Iraq. In 2008, when the British policy of withdrawal from Iraq is finally achieved, the US will, essentially, be alone.

If the EU could no longer ensure that its foreign policy objectives could rely upon the support of the US, there was also a realisation that the EU would have to develop some form of hard power to enforce its policy, when the need arises. Since 1995, the nations of Europe have been developing EUFOR – a nascent European Defence Force, Eurocorps – a permanent military force, and the Helsinki Force – a more general troop commitment. This is very much a work in progress, but EUFOR is set to be deployed as a peacekeeping and humanitarian force in Chad and the Central African Republic in 2008.

Slovenia is the template for the Former Republics of Yugoslavia to follow. Slovenia was the first Former Republic to join the EU, it was the first to adopt the Euro, and it was the first to join the Eurozone. By accepting the Presidency of the EU, Slovenia in 2008 has arrived at the top table of nations. It also points to an answer to the conundrum of globalisation. We are often asked how a small nation can find a voice in the world of globalisation. We can now point to Slovenia as an example of how to solve that conundrum. With a population of about 2 million, through the EU, Slovenia now punches well above its weight.

Perhaps 2008 will see the greater development of other regional associations along the lines of the EU, such as Mercosur and the African Union?