PESTLE

Welcome and introduction

It is my intention to attempt to forecast developments in the next five years in the following sectors:

• Political
• Economic
• Social
• Technology
• Legal
• Environmental

I hope to show my work so that, agree or disagree, readers can see why I think the way I do. I've been doing this for a living for several years now--it's time I did it for fun, without the need to consider client concerns or political... not correctness, but... well, okay. Political correctness.

I will try to cover more than the U.S. and Europe, but given their weight in most of these categories, it may take a while for a true international representation to appear. Please be patient with me. Please correct me when I err. 

Climategate: The CRUtape Letters

I have co-authored a book about the global warming scandal regarding the leaked emails from a UK university. I would be pleased if you would consider buying it. My next question is, would you like to see a book called '2020 Vision: A Look at the World Covering the Next 10 Years?'

The title is Climategate: The CRUtape Letters. It is available on Create Space here, on Amazon here, on Kindle here, and as a PDF from Lulu here.

"The Climategate scandal covered from beginning to end--from 'Hide the Decline' to the current day. Written by two authors who were on the scene--Steven Mosher and Tom Fuller--Climategate takes you behind that scene and shows what happened and why.

For those who have heard that the emails were taken out of context--we provide that context and show it is worse when context is provided.

For those who have heard that this is a tempest in a teacup--we show why it will swamp the conventional wisdom on climate change.

And for those who have heard that this scandal is just 'boys being boys'--well, boy. It's as seamy as what happened on Wall Street."

New Forum For My Writing

Hi all,

As you may have noticed my output has slackened. This is not due to a lack of interest in PESTLE topics, but rather to the fact that I have started as a columnist for Examiner.com. I will be writing more frequently there, as I actually get paid to do so.

I welcome your visit there--bookmark me and check back. I get paid by number of visits...

Here's my Examiner home page.

I will continue to post on this weblog--and will probably get back to a semi-regular schedule after the newness of the new toy wears off a bit. Besides, some of the stuff I write here probably wouldn't make it into a daily newspaper column, right?

More trouble for China

...as noted in the Economist. "This year 6.1m students will graduate from Chinese universities, nearly six times as many as in 2000. Next year the figure is expected to rise to about 7m. In 2011 it will reach a peak of nearly 7.6m according to Beijing Evening News, a state-owned newspaper." But where will they all work?

"In 2006 the government was already trying to find something useful for graduates to do by encouraging them to take up jobs in villages as assistants to rural officials. They were promised preferential treatment after three years in the countryside when applying for civil-service jobs or for places in graduate school. Beijing municipality, which includes a large rural hinterland, says it has already fulfilled its goal of installing two graduates in every village. Last year there were 17,000 applicants in the city for 3,000 such posts."

China needs these people--they are graduating engineers only at the same pace as their economy has been growing--they're not stockpiling them for a rainy day. The anniversary of Tianemen Square is just around the corner.

China's Dilemma (3)

In the previous 2 posts I identified two desperate needs for China--they need for America to recover quickly and they need their citizens to replace export earning by consumer spending. It must be galling for the Chinese government to realise their fate is in the hands of the Yanks and their own consumers--they've been sober and conservative in their management of China's macro-economy and just got swamped in the tidal wave. But because they are autocratic and cruel, and more concerned with self-preservation than their country's future, I can't muster up much sympathy for them.

But even if both their desperate needs are satisfied (and I do think the American economy will recover quickly), China is still due for what is essentially the same disruptive period that happens in the transition to developed economies that has afflicted all of their predecessors, from the UK to South Korea, and most definitely including the U.S., which had several break points. And here is where Chinese leadership is failing China.

China has other desperate needs. The stimulus they are injecting into the economy is failing to address them. They need clean energy generation far more than the worried West--Chinese people are dying every day due to air and water pollution, and it is saving up trouble for the future to ignore it now. China is introducing a national healthcare scheme--if they don't fix their pollution problems, this scheme will be overwhelmed just dealing with the effects of pollution.

The demography of China is going to start working against them quite soon, as the one child per family rule works through the population figures like a pig through a snake, and China incredibly starts to look like Japan. Preferential abortion to insure that that one child was male will exacerbate this issue starting now. Increasing unemployment makes the idea of bringing surplus males into the military a fairly sane option. Having a larger military will create pressure to justify its existence. And war is not good for developing countries. It slows down useful development and creates a warped sense of priorities.

The consensus shared between Chinese citizens regarding the central government is entirely an economic transaction. We let you rule if we can better our lot dramatically. If the Chinese government does not keep its end of the bargain, this consensus will disappear. I think this will happen over the next 5 years, and considerable turmoil will be the result.

China's Dilemma (2)

According to Nationmaster, 22% of the world's poor live in China. I don't know if that percentage will increase--times are tough all over--but the raw number most probably will. And this isn't China of 1978, when the entire population was poor. Now, the 100 million who are living on less than $1 a day have middle class neighbours and rich Chinese people on TV.

Why am I so pessimistic about China regarding the next 5 years? These are smart people, industrious and entreprenurial. Well, partly it's because the rest of the world will let them down. In 2007, China's exports were $1.2 trillion. That compares to their total GDP in 2008 of $4.84 trillion. So far this year, exports are down by a quarter. So far during this recession, worldwide job losses are 50 million. Of that number, 20 million are Chinese.

So we have a deteriorating financial situation in a country with brand new access to communications and growing inequality. Sound like a recipe for social unrest? Add in government corruption. China is ranked at the same level as Romania. China is embarrassingly and publicly failing in its efforts to control corruption--this article in Asia Times is just more of the same. And Chinese people now see and hear this every day--and not just in the newspapers, as China has the most internet users in the world, at 300 million.

China desperately needs for its citizens to spend more and save less to compensate for reduced exports. Chinese people are famous for saving. This is the most publicized economic downturn in history, being covered like an American Super Bowl or the World Cup. Does anyone think the Chinese are going to pull their yuan out from under their mattress and buy a Haier TV on the heels of 20 million job losses and 10,000 factory closures? I do not.

More on China later.

China's Dilemma

China's manufacturers desperately need America to buy Chinese goods. China's government desperately needs America to become more conservative in its economic behaviour, the better to protect Chinese holdings of American debt.

So far, it's the worst of both worlds. America has quit buying Chinese goods, but it hasn't started acting conservatively enough to protect Chinese holdings of Treasuries.

It's a real dilemma. One of several Catch 22's that China faces over the next 5 years. We're going to focus on China for a bit.

We can start with a bit of a contrary view, one written by James Fallow for the Atlantic. Read it. He doesn't really disagree with me that China is going to have a rough 5 years--but he's considerably more optimistic about China's future after that. Well, I am, too, depending on how you define 'after that.' In 25 years, maybe, China will be back on the road to superstardom. But this five year period is going to be so tough for China that it will take 20 years to recover.

Sunday update

Time to look around the intertubes and see if anything is new on subjects I've covered so far.

The Decline of Russia: Well, if anyone needs a second opinion on Russia, I'd refer you to World Affairs, and an article by Nicholas Eberstadt called Drunken Nation: Russia's Depopulation Bomb. Eberstadt takes a much longer and closer look at the demographics destroying Russia today.

Green Technology: Venture capital investment in green technology fell 48% in the first quarter of 2009, to a paltry total of $1 billion in 82 countries. (No comment on how poorly VC investment is doing in other sectors--I'd be surprised if Green Technology fared any worse than anbyody else.) But nobody will even notice, I imagine, as governments around the world have earmarked $400 billion for various green technologies.

Nanotechnology. Two story leads here, reported without comment: 1. An article in the April 2009 The Lancent Infectious Diseases, highlights research being conducted using nanotechnology to prevent, diagnose and treat infectious diseases. Saying that progress in this field is moving at an exponential pace, the author quotes Karin Forsberg-Nilsson, chair of the EuroNanoMed Network Steering Committee, as urging industrial players to collaborate more closely with scientists and clinicians, to shorten the delay from patents to patients. 2. The European Parliament's Environment Committee this week adopted a report that calls for nanotechnology products already on the market to be withdrawn until safety assessments can be made.

Robotics: ADAM is the first robot—but maybe not the last—to have independently discovered new scientific information, according to scientists who recently built themselves the mechanical colleague.

Genetics: Gene mutations that cause infertility in men could point the way to a male birth control pill, American and Iranian researchers say.

That's it for Sunday--more rigorous work on tap for tomorrow.

Recession, depression, what's going on?

In the U.S., factory orders and the Dow are climbing. So is unemployment and homelessness. What's really happening right now?

We've just looked at 8 countries that account for half the population and two-thirds of the GDP in this world. They certainly can serve as a proxy, as they include the BRICs, the U.S., France, the United Kingdom and Japan.

The U.S. looks schizophrenic right now, as companies are laying off workers at the same time their order books are filling up. To say this is typical is to be too kind. US managers have never yet gotten this right, and it doesn't look like they will this time, either.

China's manufacturing seems to be reacting favorably to the huge stimulus package of the government, with sentiment rising into expansionary territory. But there, too, unemployment is rising and set to rise faster. It's hard to track homelessness in China, due to migrant workers who will return to the farms and also to the quake last year that left millions homeless. But they are doubling the number of urban homeless centers, so it must be an issue.

India is just diving into the hard part of the recession, and stronger family ties may cushion the worst of unemployment rates there. But there's no question it's increasing. And although they're trying to put a brave face on it, India's manufacturing activity is decreasing. It could be a lot worse, however.

In Russia, manufacturing output was down 20% year on year in January and 13% in February. Stocks rose! Bloomberg forecasts unemployment in Russia to rise to 12%. That is just going to be really tough--inflation at 13%, unemployment at 20%, and the government having to bail out the oligarchs right and left. Hey, but stocks rose...

In Brazil, manufacturing slumped 17% last month year on year. Unemployment jumped to 8.5%.

In the United Kingdom, manufacturing dropped 4.5% for the quarter after falling 1.8% the previous quarter. Meanwhile, unemployment skyrocketed at the fastest rate in history there, to 6.5%. I think the UK will be first in, last out of this recession.

France's PMI (Purchasing Manager's Index) is at a dismal 36.5, compared to China's 51. French unemployment is at 9.9%, and expected to rise another percentage point this year.

Japan's PMI is even lower than France's, at 33.8, and even that is an improvement over Februay. Manufacturing activity has declined in Japan for 13 consecutive months. Wow. Unemployment rose to 4.4%, which is high for Japan and a 10% increase in one year.

So yeah, I guess you'd call it anything short of a depression. Countries massage their figures to make them look better. There are a lot of people in really tough times right now. Considering that it looks like it's going to get worse before it gets better, I think my comment in a previous post--that world GDP looks set to decrease for the first time since WWII may actually come true.

What have we learned from our Pestle summaries (2)

According to the Economist, the 8 countries I have selected for further analysis will contribute a negative $648 billion to the world economy this year. The only two countries on my list that they think will grow in 2009 are India (at 5%) and China (6%). The Economist forecasts that all but two (the UK, at -1.1%) and France (0.0%) will return to positive growth the next year. It's the second worksheet in this file, titled The 8. Download Top 10 in 3 categories

I don't really agree with the Economist's numbers for individual countries, but it could be that the net difference is small--as I roughly agree with the numbers for USA and Japan, the big difference is that I think China will go in the tank, but that's for another post.

But if 8 countries wipe more than 1% of world GDP off the board this year, the other 200 countries are going to have to make up for a lot of ground if world GDP is to grow at all in 2009. And I don't see where that growth is going to come from.

So it looks as if, for the first time in a very long time, world GDP may decrease this year. That's big news.

Eight Pestle Summaries--What have we learned?

The 8 countries I have chosen for Pestle analysis have 50% of the world's population, 66% of the world's military spending and account for 69% of the world's GDP. We will be developing further statistics on these 8 over the next--indeterminate--period of time, which depends on my work schedule.

The first look shows three countries--USA, France and Brazil--as being in pretty good shape for the next five years, at least in a macro sense. There is no shortage of problems everywhere you look, but there are relative differences. One country, Russia, appears to be a train wreck in progress, while China looks to me like it's heading off a cliff. The United Kingdom appears to be shooting itself, but I can't tell yet if it's shooting itself in the foot or the head. And India--trying to figure out what's going to happen in India is going to be a lot of work. (Anybody want to help?)

We'll take a short break from this type of post for a while, as there are some current event-y type of topics I want to explore. Some of them I will try and relate to this analysis--I don't think I'll get famous for my opinions about global warming, Tim Geithner or other headline generators.

Pestle summary: USA

This is the preliminary data collection for a Pestle analysis of the United States, drawn from publicly available information on Wikipedia, the CIA World Factbook and Nationmaster. The United States has the largest GDP in the world, $14.3 trillion. That's almost as much as the next four on the list combined. The United States also spends more on the military than anyone else. A lot more. U.S. spending, at $651 billion per year, is almost 10 times as much as second place China, and about 48% of all military spending is American. It is the third most populous country in the world, with 306 million people. 

There has never been an entity to compare with the United States, and perhaps never will be. My five year forecast for American politics is here. My five year forecast for the American economy is here. My thoughts on why America will be the 'owner' of the 21st Century are here. 

I am not blind to its faults and shortcomings, and have been quick to criticize my home country--and was perfectly willing to live abroad for 13 years--but there aren't adequate superlatives to describe the size and scale of what America has achieved. Just one quick example--in the first Iraq war, George Herbert Walker Bush put together a coalition to drive Saddam Hussein out of Kuwait. The other countries ponied up more money for the adventure than the war itself cost. The U.S. made a profit on their war. His son was not quite so lucky with his misadventure.

If you've been napping, the U.S. has a new president, Barack Obama, and a recession to deal with. President Obama is spending a lot of money to stimulate the economy, and will spend a lot more trying to stabilize the financial system, and a lot more trying to help unfortunate mortgage holders hang on to their properties. Troubled times indeed. And yet, as I write this on March 29, consumer spending has increased for 2 months in a row and the number of houses sold has increased... so how deep is the recession? Well, it's not good--with unemployment pushing 8.5% and set to go into double digits this year, it's a real recession, not a fake. (However, I forecast a return to growth by 4th quarter of this year.) Obama's Democrats have solid majorities in both House and Senate, although Obama is so far trying to tread lightly with his majority.

For Americans who are not poor or black, or both (God help them), access to good education and decent healthcare is at mid-European standards, though certainly not above them. But there are too many poor, and too many disadvantaged blacks. Given the wealth of the country, it is a national disgrace. Immigration is a hot-button social issue, although America would grind to a halt without its immigrants, and the repatriated salaries from immigrants in America dwarf most foreign aid efforts (and probably do more good). One issue that needs to be dealt with in this decade is the total number of people in prison (mostly on drug charges), and the very high number of young black males behind bars.

American higher education is basically the best in the world, and this pretty much guarantees that America will do well in the future. About 99% of the population is literate, most people get 15 years of education, 7 of the top 10 universities are American--but most importantly, 168 of the top 500 universities are American.

 The list just doesn't stop. 153 of the world's largest 500 companies are American. (Second is Japan, with 64.) The U.S. is first in patent applications.

But there is a price to pay. Americans don't live as long or as well as  Europeans or the Japanese. They have to fight for their healthcare--a debilitating struggle that consumes too much time and too many resources for both individuals and businesses. Violence in America has subsided, but it is still an everyday fact of life. And the mobility of the American labor force has fragmented the nuclear family structure in ways that will take 100 years to analyse. It's great that America created MySpace and Facebook. It's not so great that America needed them so badly.

America has done more about the environment than almost any other country, instituting cap and trade on SO2 to fight acid rain, and many more measures to fight air and water pollution. There are land use and water use policies that will need to be revisited soon, due in no small part to growing population, but those types of struggles will not be new to America.

For by art is created that great Leviathan...

Pestle Summary China

Well, I guess this is where I get controversial, at least a bit. There are others who have predicted that China was in for a tough ride over the past few years, but they mostly got ignored, or were proven wrong by events. And, to a certain extent, if you cry doom long enough you'll always get proved right, given the laws of entropy. So this is a bit 'faux' controversy...

This is the introductory note taking exercise for a Pestle analysis of China, drawn on conventional internet sources such as Wikipedia, the CIA World Factbook and Nationmaster. China is the most populous country in the world, with 1.34 billion people. It has the third largest GDP, with $4.84 trillion, behind Japan and the U.S. Like India, the currency and conditions make it useful to look at some statistics using Purchasing Power Parity, which bumps up China's GDP to $7.8 trillion, which would move it ahead of Japan. It also is the second in the world in annual military spending, although that needs a bit of context, as the world's number two spends about 15% of what the world number one (USA) spends. But with PPP, that looks like more money, and insofar as it is used to pay salaries, rather than buy Israeli rocket parts, PPP is valid in this context too.

China is badly governed by the Communist Party, and in my five-year Pestle forecast I will be making the case that misgovernance will prove to be the root cause of a downward spiral that will cost China dearly. It will mark the end of an unprecedented run of growth and opportunity that began in 1978, and for the past 25 years it has averaged 10% growth per year. The record stops this year, sadly. It really is a pity--China's growth has done more to reduce world poverty than any program, aid initiative or growth in the rest of the world combined. The moral of this story is, to get rich may be glorious, but not if you trash your house and alienate your family while doing so.

China is pouring money in to the domestic economy to keep it from going sour, accelerating infrastructure development. It will help. It is unlikely to be enough. Exports have fallen by over a quarter in the last three months, and a lot of businesses have locked their doors. Unemployment is rising rapidly, and China may end up paying poorly trained workers to dig holes and then refill them.

Last year, there were 87,000 'incidents', which in other countries would have been called protests, demonstrations or riots. China is barely keeping the lid on internal unrest, much of it caused by regional and local government corruption, turfing people out of their houses or off the farms without compensation. Again, in the deeper analysis, I will try to make the case that if you get 87,000 riots with 25 years of 10% growth, what you get during a recession may look suspiciously like revolt.

China is either first or second in emitting CO2, and the overall air pollution in China's urban centers is staggeringly bad. 16 of the 20 most polluted cities in the world are Chinese.  Their water isn't so good either. They also have a problem with desertification.

There are pluses. China has 86% literacy, they lead the world in internet users, they are 4th in the world in patent applications for residents (2nd for non-residents), and have 4 of the top 100 universities in the world (and 8 of the top 500). Unlike India, they actually use half the human race (the female half) which effectively doubles their talent pool.

But it's not going to be enough, as we'll see when we dig deeper.

Pestle Summary: India

Once again, these are the topline notes to kick off a Pestle analysis of India--this is very basic stuff culled from Wikipedia, CIA World Factbook and Nationmaster. India is the largest democracy in the world, the second in population, with 1.16 billion people, and 12th in GDP, with $1.23 trillion. India is a country that benefits from having its GDP converted to purchasing power parity, and given the much lower cost of goods and services there its probably accurate to use this, whereas it's not much use for the countries we've looked at so far. At PPP, India's GDP is $3.39 trillion. A lot of that money gets spent on the military--India is 10th in the world with $32.7 billion in annual spend on defence, in no small part due to its nuclear weapons programme.

The first item that gives me pause when talking about India is its neighbors. India will struggle to maintain stable and peaceful borders with the likes of Bangladesh, Bhutan, China, Myanmar, Nepal and Pakistan. And a clear precondition for development is peace. India is not lucky in its choice of neighbors, and this is important. It has been in 5 wars since 1947. Another precondition is either called stability or internal coherence. Wikipedia says there may be as many as 1,652 dialects in India--they have two major families of languages, and 14 recognised major languages within India's borders. More than 13% of the population is Muslim. The caste system still divides India, despite laws designed to prevent it.

India is poor, unequal in income distribution, and growing. It did better with the Golden Decade than many of the other countries we are looking at, reducing poverty by 10%, but their public debt is sadly 78% of GDP. It will be higher soon.

On the other hand, it has a large and growing middle class, one of the best predictors of ongoing development. India is number 3 in the world for internet users, with 80 million. India is 10th in the world for patent applications, both for resident and non-resident filers. And it's a young country, with median age of 25. But, they don't have good drinking water through much of the country, and they have big, big problems with air and water pollution, deforestation, desertification and soil erosion. 

India's lucky to have Manmohan Singh at the helm during this period. He understands macro-economics and how public policy can interact with economic forces for good or ill. There will be a lot of ill. India has just lowered its growth estimate from 7.1% to 6.5% for 2009, which really means they are still being overly optimistic. They will be lucky to end the year with any appreciable growth.

India's society is beset by tension, only part of it coming from unequal distribution of the growth of the past decade. Terrorism by and against Muslims, persecution of Christians, blatant corruption in regional government (that seeps into Parliament) all make India a fertile ground for unrest over the next five years.

If my horizon was 25 years, I would be writing poetically about India's future. But, as we're talking about 5 years, my prediction will be considerably less optimistic.

Pestle summary: Japan

Once again, this is just note gathering for further analysis, taken from Wikipedia, the CIA World Factbook and Nationmaster. Japan is 10th in the world in population, with 127 million people, 6th in the world in military spending, with $48 million per year, and either second or third in GDP, depending on how you measure it, with $4.84 trillion.

Well, after the lost decade of the 90s, Japan had a brief interlude of mediocre economic performance, to be followed by what looks to be another lost decade. What they've lost is their people. Japan is by some measures one of the richest countries in the world. Their population peaked in 2005 and declined by about 200,000 last year. That decline is set to continue. Their population is also getting older--their median age is 44, compared to 28 for Brazi, and 22% of their population is 65 or older.

Japan has developed a two-tier workforce, with the salaryman in protected jobs with established companies, and temporary workers everywhere else. This second category, almost 30% of the workforce, is getting massacred with the recession going on now.

Their politics is entangled--they've had the same ruling party for 55 years, although that looks set to change, and that's just too long. There is corruption within government, business and even the Yakuza is getting old, fat and lazy--but still powerful. Their signature corporations, the Sonys, Canons and Mitsubishis, got fat and lazy too. Toyota is still getting it done, but doesn't have enough company.

The Japanese live forever, it seems. Their life expectancy is 81 and climbing, and they have 36,000 centenarians 32,000 of them female). With an aging population that is insular and conservative, their attitude towards much-needed immigration is skeptical at best.

The Kyoto Protocol was signed in er, Kyoto, and Japan takes global warming seriously. They lead the world in developing patents for alternative energy generation, and have paid a lot of attention to pollution since Minamata's mercury tragedy.

It wasn't supposed to be like this for Japan.

Pestle Summary: France

Okay, here we go with our initial look at France (just a topline summary of major facts, drawn from Wikipedia, CIA World Factbook and Nationmaster). France is 5th worldwide in GDP, with almost $3 trillion, and 3rd (why?) in military expenditure with $61.6 billion, and 22nd in population, with 61 million.

France is the best-positioned of all the countries we will look at here to deal with the economic crisis facing the world. Their ingrained habit of dirigisme will bail out their industry, their nuclear power plants will protect them from energy shortages, while giving them all the street cred they need for global action against greenhouse gases. They have a beautiful geographic location, brilliant public transportation, excellent education and one of the few growing populations in Europe, thanks to generous subsidies for mothers.

One of the key questions going forward will be how France tries to take advantage of this perfect positioning. Their tendency has been to try and control the European Commisssion and get over-represented in multi-national organisations. If they could figure out how to work softly and not piss everybody off, they could really work wonders. But they've never managed to do that, and I'm not sure they'll start now that they are in a privileged position.

France has just rejoined NATO, which should help them militarily and may give them cover to reduce defense spending. Their foreign policy is essentially to work behind the scenes maintaining covert control of the DomToms, their former colonies. Suspicions abound that they were heavily involved in the recent coup in Madagascar, as only the latest example. But they are pretty ham-handed about it all, and what would in a more congenial climate be a source of international support from the DomToms ends up being grudging acquiescence.

Domestically, France grumbles and strikes a lot, but has it pretty good. They have essentially 100% literacy, great schools, very productive workers, and although they can't count ethnicity, there is a tacit assumption that most unemployment occurs amongst the immigrant population stranded in the banlieues.

Nicolas Sarkozy is fortunate in his choice of enemies, as the left has formed a circular firing squad. There has been some high level corruption in France, and continued disclosure may prove embarrassing for the government, although not for Sarkozy. Embarrassment for him tends to be purely personal, as the hot rabbit has ex-lovers all over the place and word gets around.

Pestle summary: Brazil

It could be that fifty years from now people will be saying how blessed it was to be Brazilian in 2014. I don't think they'll be saying that in 2014, however. This is the starting point for a Pestle summary of Brazil. It is drawn on information from Wikipedia, the CIA World Factbook and Nationmaster, and will be developed in detail later.

Brazil is roughly the same size as the United States, and has 62% the population of the U.S.--191 million, 5th largest in the world, and growing at 1.1% per year. Its GDP is $1.66 trillion, 10th in the world. It is blessed in that it does not need to be in the top 10 in military spending, spending a very European 2.6% of GDP on the military. It is energy independent, has a very respectable inflation rate of 6%, and its public debt is an equally respectable 40% of GDP. Rich in natural resources, Brazil is placed to be the major competitor to the United States for owner of the 21st Century. Its people are young, with a median age of 28, with average education of 14 years, and a literacy rate of 88%. So, look out world?

There are a few bumps in the road ahead for Brazil. They are cursed with oil, doubly cursed in that they have had to deal with corruption for quite a while (67% of managers say corruption in Brazil is a major business constraint). Lula da Silva has done a magnificent job since 2003, but he has not been able to clean out the stables completely, and having a history of corruption and a windfall discovery of oil has been a curse for countries ranging from Russia to Nigeria. They are also stuck with the Amazon, in the sense that the rest of the world will demand they take good care of it, but probably won't pay Brazil to do so. Perhaps most importantly, Brazil is in a part of the world that is almost guaranteed to be troubled, fractious and even combative over the next few decades, and this will bother Brazil more than it would after a few more decades of development.

With Embraer and a few others, Brazil is beginning to develop indigenous technology suppliers, though they need a lot more. They need to work on their higher education, but are coping for the moment by sending the children of the elite abroad for education. They have class and racial issues, but seem to be coping with them far better than many other countries.

The oft-repeated joke about Brazil is that it is the country of the future--and always will be. I think this is the last period that that joke will be relevant.

Pestle Summary United Kingdom

Again, this is a first sort--just an overview that will back up further analysis. The United Kingdom is 23rd in world population, with about 61 million people. It is 6th in GDP, with about $2.9 trillion. And it is 4th in military expenditure, with about $61 billion per year. (Statistics as usual compiled from Wikipedia, CIA World Factbook and Nationmaster).

Politically, it seems as if the string has run out on Labour, and the Conservatives will in all probability take over in late spring of 2010. David Cameron, a pleasant man who sadly just lost a son, will inherit a mess. In the same way that current Prime Minister Gordon Brown has tried to micro-manage his government, his government has been trying to micro-manage the United Kingdom. There are local councils in England that put microchips on people's garbage bins to check if they are throwing out the right stuff. Scotland's National Party's long term plans to split off from the UK are on indefinite hold due to the economic downturn.

Economically, the UK had too many eggs in one basket--too much of their economy is based on complex financial services--read U.S. sub-prime mortgages... and they are taking a worse hit to their economy than most developed countries. The recession will bit deeper and last longer here than in most countries.

Socially, this class-conscious society will carry on, with too big of an underclass being supported by too small of a middle class. One tends to think it will boil over at some point, but the stolidiy and placidity of England seems never ending. Immigration has subsided as the issue, replaced by the recession and its effects on home prices. The NHS, the state-supported healthcare system, has improved dramatically, although it could still get a lot better, and people know it.

Technologically, the UK is still a hotbed of innovation and still resolutely unable to exploit it. Oxbridge (Oxford and Cambridge) still are 2 of the top 10 universities in the world, and the Russell Group of universities rival the Ivy League in America. The UK government makes a real effort to encourage entrepreneurs, up until the time they actually invent something, at which point they almost all sell out to foreign companies with capital. In that, they are only following the example of too many larger UK companies.

Legally, the UK has more problems than they care to admit. There is corruption in high places--witness BAE's dodgy deal with the Saudis some years back, a deal that still goes uninvestigated. There are also worrying signs of the UK backing away from important freedoms, such as jury trials. Terrorism is being used as an excuse for taking away too many liberties.

Environmentally, the UK is clean and green and worried about CO2. They have made some of the most ambitious pledges about going even greener, and nobody knows how they are going to pay for them.

It is easy--maybe too easy--to predict a return to the era of moth-eaten sweaters and shabby bedsits for the UK. They're actually too smart and too hard working for that to be a guarantee. But the middle classes need to develop a mechanism for expressing political will--right now, the only voices heard are the protestors. There is no real voice for most of England. Until that develops, they will flounder.

Pestle summary Russia

For each of the 8 countries we're covering, we'll start off with topline statistics as sort of a summary, or more of a launching pad for further exploration. We'll start with Russia, partly because this may be the last 5-year period that it is included in the top 10 international powers. Out of all the 8 countries I will look at individually, Russia faces the most daunting challenges. They have faced worse--I would hate to be a centenarian from Russia--but I doubt if they have the resources or leadership to avoid a sharp general decline over the next five years.

Most numbers here are from Wikipedia or the CIA World Factbook, with a little Nationmaster thrown in.

GDP: 8th in the world 2009, 1.75 trillion

Population: 9th in the world, 142 million

Military expenditures: 5th in the world, $50 billion

The Russian Federation just finished a spectacular decade, averaging 7% annual growth since 1998. But at the end of that spectacular decade, their average income is $640 per head, their life expectancy is 66, and they only average 14 years of schooling. They really needed to make better use of the Golden Decade.

Russia is extremely dependent on exporting natural resources, especially natural gas and oil. The price of those are falling. So is their population--it's declined 5% since 1993 and although it is slowing it shows no sign of reversing. Alcoholism, drug addiction and AIDS are taking a heavy toll on Russia. Inflation is high, at 12%, and unemployment looks to increase from its current 6%. They've already blown through a good chunk of the petro-dollars they had put aside, and the current economic crisis is not going to be kind to Russia.

Seems pretty clear that Vladimir Putin is very much running the show, with President Medvedev along for the ride. This suits the Russians just fine--but it shouldn't. A decade of rising oil prices made Putin look a lot better than he really is.

Their levers of power are the energy they supply to much of the EU and their stockpile of nuclear weapons (They are 5th in military spending, with $50bn annually, less than 10% of the U.S.). On the perceived corruption index, they rank #129, between Niger and Sierra Leone. On business efficiency, they are ranked 45th out of a total of 51 countries, and sit between Italy and Romania.

Their environment's a bit of a mess, with a lot of leftover waste from the Cold War, the oligarchic exploitation of resources, and some stuff left over from WW2. As Nationmaster lists them, "air pollution from heavy industry, emissions of coal-fired electric plants, and transportation in major cities; industrial, municipal, and agricultural pollution of inland waterways and seacoasts; deforestation; soil erosion; soil contamination from improper application of agricultural chemicals; scattered areas of sometimes intense radioactive contamination; groundwater contamination from toxic waste; urban solid waste management; abandoned stocks of obsolete pesticides". They can survive this because the country's so big.

As for technology, they can't run their oil companies without Western help--but they're trying. They export nuclear technology and have good competence there. But Russia only has one university in the top 100, so long term prospects for entreprenurial excellence are dim.

I hate to be so bleak--maybe when we look in greater depth we'll see reason for hope for this country--they certainly have shown themselves to be resilient, if nothing else. 

Defining the universe

When looking at international trends, it doesn't make sense to look at 295 different countries. If you want to look at economics, the top 10 countries make up about 75% of world GDP at nominal rates. Similarly, the top 10 countries hold about 59% of the world's population (note that it's not the same 10 countries). And for military spending, the top 10 account for 75% of the total. If you capture strong trends in these, it will have a marked influence on the total--especially as the big spenders for military are also the big exporters, and the top GDP producers also account for a good chunk of FDI.

Five countries are in the top 10 in all three categories: The United States, China, India, Russia and Japan. (Hmm. Three from Asia... fits right in with current thinking about the Asian century...). Those five should occupy most of our time, then. We should also look at Brazil because of its potential, and France because of its achievement--and I like to throw in the UK, because of its history and the Commonwealth. Which gives us eight countries to explore in depth. Adding those extra three also increases the total percentage of world activity covered on this weblog. I will try to look at each of these under each of the PESTLE categories, and then I'll tend to look at regions to try and give a bit of decent coverage overall.

But! I do take special requests. A lot of people visiting this blog are using country specific search terms and PESTLE. Toss a request my way and we'll see what happens.

American Politics, 5 year forecast

Well, for those readers who have been slightly numbed by the technology focus of recent posts, this may be a welcome change. It's time to look at American politics over the next 5 years.

The key political change has been Democratic control of the levers set in motion by the 2010 Census. The passing of state legislatures into Democratic hands, the ability of Congress to move towards inference instead of enumeration in some instances will tend to make Democratic districts stronger and some fence-sitting districts lean leftwards. Spoils of victory and all that. The effect will be that Democrats will be able to continue to control much of the machinery of government despite what I predict will be a 10% loss of 'countable' popularity--countable meaning various outputs including, but not limited to, voting.

The Democrats would be crazy not to factor in this 10% loss in popularity--there is no magic wand to fix the economic mess America's in, and they are the party in power during a downward slope in the economy. But the Democrats are not crazy--the Democratic leadership is experienced, savvy and saw Republicans play the same game twice during their careers. They will maintain working control with the grudging assent of a thin majority.

At the top, President Obama seems sure to be re-elected, mostly due to the lack of a qualified candidate on the Republican side. There does not seem to be one Republican or even independent candidate who could move the polls significantly, and the most likely nominee, Romney, will not exactly unite the Grand Old Party.

There are 16 senators over the age of 74, so nature will change the composition of the Senate more than will the next two elections. Those 16 are split evenly between Democrats and Republicans, so no predictions here. The oldest members of the Supreme Court are liberals or moderates and will probably allow President Obama to name their replacements during his term. But they will be hoping its his second term.

The 2010 elections are a threat to Democrats, as the only event that they can use as leverage is the state of the economy. I do believe the economy will be recovering by election day, but perhaps not enough to help Democratic incumbents--especially if conservatives find effective talking points, and voices to utter them. Democrats will be happy if Rush Limbaugh and Anne Coulter continue to be the mouthpieces for conservative doctrine--but they are unlikely to be so lucky. Fortunately for Democrats, 8 Republicans have already decided to retire by 2010, compared to only 4 Democrats (so far--both numbers are likely to grow).

The external factors most likely to influence the political situation in America are narco-war in Mexico, the disintegration of Pakistan and/or Afghanistan, and the follow-on effects of severe problems in China. I would suspect the third as being the most likely cause of political problems in the U.S.

Alternatives to alternative energy (1)

(If like me you're a geezer, you'll be seeing the fine hand and inspiration of a certain Jerry Pournelle in all of this--what hat tip could be big enough?)

Five years from now we will be spending prodigious sums of money on alternative ways of generating power. Today, most people think that means building more windmills and installing more solar panels--and that may end up being the case. 

But if that is all it means, it will also mean we have missed the bus. If we don't look seriously at systems that produce serious amounts of energy, then this will have been an exercise in ego-stroking and vanity, the equivalent of using a butterfly fan to cool ourselves as we reach for a cocktail on a summer afternoon. Neither windmills nor solar panels will get us to where we need to be. We are apparently too stubborn to license expansion of nuclear power. So what's left on the table?

There are two robust systems that don't get talked about enough: One is OTEC (which when I heard about it was OTS, but times change). OTEC stands for Ocean Thermal Energy Conversion, and it exploits the temperature differential between the surface of the ocean and the much colder water x number of feet below. (The bigger x is, the greater the differential and the more power is delivered). You could put thousands of them unobtrusively all over the world. 

They've been in existence since, oh, 1930, and there was a pilot plant near Hawaii that produced 50,000 watts during a trial. 

Someone will have to explain to me why we are not jumping all over this. It also provides free air conditioning, fish love it and it produces desalinated water. Join the org and see what's up.

The second source is solar power satellites that collect energy and beam it to Earth as microwaves at about 85% efficiency. Now it has an acronym, too SBSP or SSP, for Space Solar Power. Japan's looking at it, the Pentagon says they want to use it, and (finally) a company has been formed to provide it commercially. Again, this has been talked about since 1968, and although numerous engineering problems would need to be solved, nothing new would have to be invented to make this work. Where is the government contract for energy that would kick-start this thing?

If we are going to be serious about alternative energy, let's focus on schemes that will provide an adequate bang for our buck and do not require the invention of new ways of converting and storing energy. Just sayin'.

Green technology and hype

Well, many of you may have been surprised to learn that the number of new patents in medical technology has been declining for years. I was. But now we learn, thanks to WIPO, that the same is true for environmental technology. Every year the decline has been 1.1%. If we actually do need to save the world, you'd think it would be growing. In the sexiest areas of technology, new patents can grow by 5% per year or even more.

So, with all the hype about how alternative technology is needed to replace fossil fuels, which country is actually doing the most work about making alternative technology a reality? For solar, it's Japan, head and shoulders above the crowd--between 2001 and 2005, Japanese companies filed over 9,000 patents for solar energy technology. Second place, with only 2000 patents, went to South Korea.

Japan's lead is even greater in fuel cell technology patents--over 12,000 patents in the same time frame. The U.S. was second--with 2,900 patents.

For wind power, the leader is... Germany! in the 5-year span, they generated 1,383 patents, narrowly edging out--Japan, with 1,336.

So who is serious about alternative energy technologies?

Five year forecast healthcare technology

Although a lot will happen in the next five years regarding technology used in healthcare, to some it will seem like small beer. An annual 2% decline in patents in medical technology makes it less likely that some stunning breakthrough will arrive soon. Although patent activity is more promising in biotechnology and pharmaceuticals, business and politics conspire against us all in these fields. Hope I'm wrong...

Both the EU and the US will be focussing on interoperable healthcare records and more efficient data interchange. Expect breakthroughs in areas like greater use of software to detect potentential drug interactions and improvements in automated diagnostic tools. This is important and will save lives, as will improved communications between health care stakeholders.

Many improvements will feed through into healthcare after being invented and piloted outside of healthcare environments. This will include the routinely miraculous improvements in ICT efficiencies overall, but pay special attention to work being done in voice recognition software and automated translation tools, which will further improve communications.

Assisted living should get easier on a steady curve, with more intelligent devices to summon care and take care of household logistics, mostly via the internet. And stay tuned for surprises from the world of robotics--there may be domestic robots used in healthcare, both off hospital grounds and in the wards themselves.

Nanotechnology will play its part, mostly in terms of coating materials for stents, implants and devices, but to a certain extent in drug deliveries--but the major breakthroughs in that seem further out than five years.

Genetics and biotechnology will continue their tortuous mating dance with pharmaceuticals, but the courtship will be painful and the adjustment period long. Individual advances will continue to go unexploited and we will all continue to hold our breaths waiting for the big one. Maybe 10 years out. Maybe 20.

Overall good news, solid improvements--but everyone in the developed world is waiting for the big one. Not this time around.

Choices, technology and healthcare (4)

The great ICT explosion of the past 25 years did not happen because of one invention or innovation. It was literally thousands of incremental improvements in circuit design, chip fabrication, software, batteries, fans, mobile technology, etc., etc., that have created this new world.

The same will be true in healthcare technology--if we let it. At the Kaiser Family Foundation website, we find this:How Changes in Medical Technology Affect Health Care Costs

"Heart disease and its consequence, heart attack, is the leading cause of death in the U.S. and a good example of how new technology has changed the treatment and prevention of a disease over time.  In the 1970s, cardiac care units were introduced, lidocaine was used to manage irregular heartbeat, beta-blockers were used to lower blood pressure in the first 3 hours after a heart attack, “clot buster” drugs began to be widely used, and coronary artery bypass surgery became more prevalent.  In the 1980s, blood-thinning agents were used after a heart attack to prevent reoccurrences, beta-blocker therapy evolved from short-term therapy immediately after a heart attack to maintenance therapy, and angioplasty (minimally invasive surgery) was used after heart attack patients were stable.  In the 1990s, more effective drugs were introduced to inhibit clot formation, angioplasty was used for treatment and revascularization along with stents to keep blood vessels open, cardiac rehabilitation programs were implemented sooner, and implantable cardiac defibrillators were used in certain patients with irregular heartbeats.  In the 2000s, better tests became available to diagnose heart attack, drug-eluting stents were used, and new drug strategies were developed (aspirin, ACE inhibitors, beta-blockers, statins) for long-term management of heart attack and potential heart attack patients.  From 1980-2000, the overall mortality rate from heart attack fell by almost half, from 345.2 to 186.0 per 100,000 persons." It wasn't any one thing that made the dramatic change--it was everything.

If you followed the ICT revolution, you would normally feel very optimistic about a similar path to revolution in healthcare. There is a robust community of suppliers and inventors, there are ample rewards for the winners, there are pathways to success being charted out--we should expect to see a power-law logarythmic curve to technology making us immortal, or something like this (from Ray Kurzweil, of course):

And yet. Somehow, as governments get more involved with healthcare (usually at the express request of their citizens), something seems to get lost. The overall number of medical technology patents declined by 2% annually between 2001 and 2005--the same period that saw a 5% annual increase in patents for optics, of all things. What incentives are being changed?

And yet. Countries tend to specialise in specific areas. It shouldn't surprise anyone to discover that Singapore, Japan and South Korea specialise in semi-conductors, for example. But consider France, a respectable generator of patents and overall research. They do good things there. But they punch above their weight in patents for telecommunications, and punch under their weight for medical technology, pharmaceuticals and biotechnology. What's up with that? The United States punches above its weight in all three, while countries with very active government involvement in healthcare are not really leading in healthcare innovation. 

If we provide direction and incentives to cut administrative costs and reduce paperwork, that's where companies will focus their efforts. Intel has a medical division that is working on a large variety of hugely useful products and services, but their big headline winner to date is a joint venture with MCA to produce a tablet PC that helps doctors and nurses... communicate better, reduce information friction and lower the administrative burden of hospitals. It's... worthy. It's valuable. But Intel was born to change the world, not improve on the tablet PC, dammit.

So when I do my five year forecast on this sector, I will be more cautious than hopeful. And that's a mortal pity--I think I'm going to need a few medical inventions to get to my 100th birthday.

Healthcare and technology choices (3)

There is a major split between technologies used in healthcare. On one side are technologies used to increase efficiency and lower costs. On the other side are technologies used to improve care and extend life. The first side will tend to make it easier to increase access and level the playing field. The second side will actually increase costs and probably inequality of access.

President Obama's proposed initiatives for healthcare are all aimed at the first side, at streamlining communications and reducing information friction. This is a good and valid use of government funds and I, at least, support it whole-heartedly.

But we stand on the threshold of a new world--not a Brave New World, but a chance to overcome the hurdles at the end of our days and turn our alloted three score and ten into five score and four. It'd be a shame to delay that new world by ignoring what technology can do. 

So the question that may well control how long you and I live is, will Obama at least provide moral support for the part of technology that makes life difficult for hospital administrators and insurers--new treatments and drugs that extend life at a relatively high cost? It'd be a shame if the answer was no.

Healthcare, Technology and Choices (2)

Why is President Obama trying to convince the world that making the right choices about technology in healthcare can make such a difference in the recovery of the American economy? Well, because he's right, at least from my point of view.

Before I examine evidence and give links, let me state my prior assumptions: First, that the changing demographic composition of the U.S. makes this the most appropriate time to make a major technology upgrade to healthcare. The retiring Baby Boomers (perhaps too aware of surface healthcare issues and perhaps a bit too worried about them) desperately need remote healthcare to avoid clogging up the physical plant of the healthcare system. The desire for assisted living by the Greatest Generation can better be met by remote monitoring and consultations. Meeting both of these 'patient' preferences head on could reduce inpatient and even outpatient admissions. Reducing admissions brings many, many big benefits--huge reduction in costs, blessed reduction in number of errors, lower need for capital expansion, and (importantly, but probably not something that is measured), lower external costs to families.

This is all before examing the potential effects of technology in record-keeping, staff communications, improved performance of wards and rooms, better prescribing practices and avoidance of both over-medicating and conflictual medicating, facilities maintenance, etc. And it is also before examining the potential for technology to help detect, delay and treat medical conditions.

You can see it's a big subject. In 2007, the U.S. spent $2.26 trillion on health care, or $7,439 per person. That's two thirds of the entire GDP of China. It's big enough that small improvements are worth pursuing, and large improvements amount to a holy grail. Currently, a large part of this comes from American companies, a tax on employment that makes them a) less likely to hire new workers and b) less competitive in the world-wide market place. There's a reason car companies have plants in Canada--the Canadian government pays the healthcare insurance costs, not the car companies.

Companies that can provide technology to make these improvements will not just save money for consumers, governments and insurance companies. They will also succeed themselves, and will become additional engines for economic growth--much of it by selling their solutions to the rest of the world.

Armed with these prejudices, let's survey the field. Okay, in the next few posts. It is Saturday morning...

Stress Testing the Third Sector

Before I continue with healthcare technology, let's take a minute to talk about the third sector, the charities, not for profits and non governmental organisations that have assumed such a large role in society over the past decades.

These organisations receive their money from a variety of sources, but all of these sources are facing tough choices--which they will naturally pass on to the third sector when they can. Smart government (definitely not smart governance) would be cutting funding to third sector organisations and letting them decide which of their constituencies must suffer, and there is some evidence that that is happening. Smart management in the third sector (not something the third sector is famous for, but one can hope) would be to get firm commitments for five years at whatever level they can and to publicly readjust their missions accordingly.

How can third sector organisations prepare for the future? They are subject to the vagaries of elected officials, capricious donors and other third sector organisations, not to mention transnational bodies. What would be a good list of practices to have on hand?

1. Have a 5-year business plan for normal operations

2. Have a contingency plan for times of stress that will insure completion of core mission for 1 year

3. Cultivate a group of contingency investors/donors/funders for times of emergency

4. Create contingency agreements with landlords, car companies, food suppliers, telecoms providers, etc.

5. Have something to barter with

Come on, folks--help me out here. Those five points look pretty thin.

Technology, healthcare and choices

Let's look at lung cancer. It is decreasing by 1.8% per year among men and increasing 0.5% per year among women, tracking cessation and adoption rates of 30 years ago quite closely. The overall cost of treating lung cancer was $9.6 billion in 2004, and you can bet it hasn't gotten cheaper since then. Again in 2004, 13.3% of all spending on cancer treatment was on lung cancer.

As 85% of lung cancers occur in smokers (and, sadly for me, in ex-smokers), lung cancer is the poster child for the theory that up to 70% of all cancers are behaviour-related--it is what we eat, drink and smoke that gives us more cancer than anything else.

Hence the healthcare dilemma: New technology will without doubt provide new treatments for lung cancer. But, these new treatments will be expensive. The most cost-effective way of eliminating lung cancer is by persuading people to not start smoking. The second most effective method is by persuading current smokers to quit smoking.

President Obama's healthcare plan intends to use technology to improve communications and reduce errors. But there will also be support for new research. Some of that research will be regarding cancer. So, the $64 billion question is, should research be focussed on changing behaviour or on finding new treatments for cancers? Obviously it will be both, but what should the proportions be?

Organised medicine wants the bulk of money to be spent on changing behaviour. The patient community and some technology providers want the bulk spent on improving treatment. There will probably not be enough to fully fund both. Is there a Solomon in the house?

5 year prediction for American economy

There is obviously some uncertainty about the near term future, but it seems clear that a series of major stimuli will eventually overcome the series of major shocks to the economy and America will begin to recover. So what will the American economy look like in 5 years time?

Assuming that major legislation is passed and a new healthcare regime is installed, and assuming that major legislation is passed and a new energy regime is installed, and assuming that no major changes are made to Social Security,

1. Employment will recover quickly--the number of Baby Boomers heading into the sunset will create large numbers of vacant positions. The unemployment rate will return to 5%. However, the underemployment rate will be surprisingly high, depending on how it is counted.

2. The American economy will get even more lopsided--Obama's plan for healthcare and energy will create opportunities for some very succesful high tech companies. I will tell you who I think the real winners will be after I rebalance my investment portfolio next week.

3. Many elderly would-be retirees will take low-level jobs to supplement their incomes. This will create competition with certain immigrant classes. The American elderly will win this competition.

4. The re-elected President Obama will be struggling as mightily to control inflation as he currently is struggling against recession. It will be close to 10%. (I've explained why in previous posts).

5. The U.S. GDP in 2014 will be roughly $15.5 trillion, and finally gathering steam.

6. The U.S. government deficit will show no signs of being tamed. Total U.S. government debt will be about 88% of GDP.

That's what the crystal ball shows on a Saturday morning. 

The End of Caudillo Capitalism

The most probable outcome of the current economic crisis will be the devaluation of the pools of money that the middle classes have set aside for their retirement. The first blow has already been felt in the sharp decline in stock valuations and interest paid on conventional savings. The second will come in about two years as inflation begins to further erode the value of savings of any type, as inflation will certainly exceed interest rates. As this will be the solution to what government sees as a greater problem than your retirement, complaints will go unanswered. Government's great challenge will be to keep the spread between inflation and interest rates acceptable to foreign holders of US Treasuries, and consumer concerns just won't be on the radar, except at election times. Government will have to use inflation to make its own debt manageable, as other countries will be less able to finance our spending. I consider this to be more or less inevitable.

The effect of this will be to rebalance the working life of the non-rich to resemble the profile of earlier times, that is, retirement will last only about 10% of the average life span, or the final 8 years of an 80-year span. As work has become much less onerous than in times past, it could be worse. However, we will look at the 30-year retirements of the Greatest Generation with more than a bit of envy. There will be an awful lot of us doing wind-down work to supplement our Social Security--and would you like fries with your blog today?

When the dust settles and people once again wish to put money away for this much-reduced retirement, it will become fairly clear that the logical instruments to use already exist--tracker funds and inflation-indexed government bonds. The key feature of both is the elimination of the Wall Street caudillo, the men (and occasional women, but it's mostly men) who are sublimely convinced that they can beat the market and should be guaranteed great riches as a result. People may hold out the occasional exception, such as Warren Buffet's Berkshire Hathaway, but in fact it is a tracker fund to all intents and purposes, with sectors chosen by BH management for intensive cultivation by the insertion of interim management in individual companies. People will certainly note that inflation linked bonds don't exist in anything like the quantity that would serve the needs of the middle class--but that may well change as government financial needs become more pressing. It is certainly something that the middle class could demand of its political leadership to compensate for their loss of wealth over the past 18 and upcoming 10 months.

The goal has to be to take financial decisions about other people's money out of the hands of the individuals who have destroyed so much wealth. The appropriate management structure is the trust, as evidenced by entities such as CalPers and other pension trusts. (And yes, they are taking a savage hit during all this as well.)

We're in a bit of a pickle, actually. Those who invested in stocks have lost all of their gains and some of their original capital. Those who felt safer in bricks and mortar have seen the value of their homes return to historical trends--but there is every chance prices will continue to fall. Those who stayed liquid feel pretty good about themselves, but should be aware that inflation is coming soon. The current fears of deflation are perfectly valid--but they are like the tide rushing out in advance of a tsunami. There isn't a refuge in sight.

I am not an investment advisor, as a look at my personal portfolio will assure you. But:

The sensible strategy is to be brilliant now--to take personal responsibility for your wealth and to be willing to make the major transitions needed. We all should be as liquid as possible now. We should be willing to move at the first sign of inflation into instruments that will stay ahead of inflation. This will be extraordinarily difficult. But the best advice I can give you is not to trust someone who says they can do it for you. That's what got us here in the first place.

Social issues and Recession (2)

Well, this article regarding the 2001 recession reaffirms the common sense idea that immigration doesn't stop in an economic downturn. As I remarked on another subject, hard times are harder for the poor, and the payoff for immigration is high. This report (PDF) from the Migration Policy institute strongly suggests that, while immigration from Central and South America may be slowing (by half--from 1 million per year to 500K), there is no evidence of a massive return to country of origin. The paper strongly suggests that legislation drives immigration flows more than economics, and that anti-immigration legislation may strengthen during recession. In other words, it's what recession does to the host country and their attitudes towards immigration that has the greatest effect.

(hat tip for references above to Two Weeks Notice)

As someone who believes (based on the numbers, which are certainly disputed) that immigration is a net benefit to the host country, I certainly hope that the US does not impose draconian restrictions on immigration--especially not in response to the current economic downturn. But there will certainly be policy tension in the Obama administration, as organised labour did a lot to elect him, and they are rarely advocates of looser immigration policy. On the other side of the battle line will be the large numbers of Hispanics who turned out for Obama and see the issue as considerably more nuanced.

My five-year prediction is that immigration policy in the US will get more entangled and the public opinion of immigration considerably more confused. I think that one of the great idiots on the public scene today is Lou Dobbs, and I think he will experience greater success and achieve greater fame stoking the fires of xenophobia. Worse luck for us all.

More later.

Economic downturns and social issues

Historically, crime goes up when the economy goes down, for obvious reasons. What else changes? Fear of immigration? And do immigration rates actually change? Fear of being uninsured? And do insurance rates actually change?

I'll continue this post later, but what I've noticed is that, where a year ago people were worried about immigration and healthcare, now everybody is worried about keeping their job--except those who have already lost theirs. When I get back to this, I'll bring numbers...

Green Technology Goals

Should policy aim at specific goals or at enabling mechanisms to reach those goals?

I ask because American energy efficiency improves on average by 2% per year. In the past, we have sort of squandered that efficiency by asking motors to carry a greater load and by getting newer and bigger appliances.

If, on the other hand, we simply used these efficiency gains to reduce energy consumption, by 2050 we would be using half the energy we're using today. That's all we would have to do.

Now, if we also started reducing the load on motors, turbines, etc., by driving cars that weighed less and plugging gaps in our homes, we might be able to do it quicker.

And that's where policy should point--we know that new technology is just around the corner, but we don't know which technology will best serve our needs or when it will be of optimum efficiency to adopt it. So why not focus our energy on a proven way of getting to where we want to be? Just asking...

Interesting discussion on the subject here.

In my heart of hearts, I don't think we'll double alternative generating capacity any time soon, although I think we'll make significant progress. In that same black heart of mine, I don't think we'll recycle and re-use much more than we currently do. But I do think we can weatherize houses and buildings a lot. I think we can move a lot of people onto public transport. I think that telecommuting will take people out of the commute.

And in my heart of hearts, I do think we'll get to where we need to be. Not in five years, although I think we'll start being hopeful by then. But in 40 years. And I think that's soon enough.

Green Technology and Pres. Obama's Energy Policy

As Kevin Drum has so succinctly pointed out, President Obama's recently announced Cap and Trade policy, properly executed, will reduce overall emissions without overly tight management of how it is achieved. Further targeting through a modest carbon tax can supplement this. An increase in the gas tax can push consumption down. Investment in alternative generating technologies and in a smart grid for transmission is long overdue and badly needed.

In short, President Obama's energy policy is really, really good. I voted for him and I am still surprised at how good he has been in the past six weeks.

How can technology support his policy? Perhaps I should rephrase the question--how can society use technology to steer towards his policy ends?

Given what he is preparing to spend money on (weatherizing residences and pushing broadband infrastructure, and a more intelligent power grid), it appears that the easy win is broad encouragement of more working (and schooling) from home. This may be a bit easier than it would have been just a year ago, as recessions usually generate a higher start-up rate of small, home-based businesses. Distance learning and distance training are getting easier and more widely accepted, and can reduce education costs for students as well as institutions. Employers can retain more staff by spending less on infrastructure.

What am I missing?

George Will and the Madness of Bloggers

One reason that it's tough to slog through the blogs is that they are susceptible to a rigid madness of dogma, a sort of hysteria that prevents them from looking at an issue with any sort of reason. This hysteria is the same for both 'left' and 'right' wing bloggers, and it means that it's tough to trust what you read out there.

George Will wrote a column in the Washington Post about climate change. (And he offended me in his first paragraph: "Predict catastrophe no sooner than five years hence but no later than 10 years away, soon enough to terrify but distant enough that people will forget if you are wrong." I guess pundits don't need forecasts.) He went on to sound the horn on the recent history of debate on climate change, with the familiar skeptic chorus of the previous debate on global cooling and the more recent news which so obviously served as a hook on which to hang his column, the recent recovery of Arctic ice. Because of the controversy this column caused, he wrote a follow-up piece published February 27.

Liberal bloggers went berserk. Bloggers I have read (and considered reliable) for years--Brad DeLong, Mark Kleiman and many more went on multi-post tirades, blasting Will for having 'invented' the global cooling consensus of the 70s and lying about the Arctic ice recovery. They seized on this as evidence of the moribund condition of the Washington Post and demanded a retraction or, amusingly enough, a factual correction of an opinion piece.

I hold no brief for George Will. He plays the game the same way he's getting played now, and has a bigger stage to play from. But he's right on both of these counts. Will quoted numerous articles in the national press from the 70s on global cooling, and it took me 15 minutes on Scirrus.com to find two dozen scientific, peer-reviewed articles between 1970 and 1975 that mentioned global cooling in the abstract. Download Scirrus search for global cooling . Will didn't call it a consensus, and he was correct about the level of coverage.

More important is the issue of Arctic ice. Will wrote "As global levels of sea ice declined last year, many experts said this was evidence of man-made global warming. Since September, however, the increase in sea ice has been the fastest change, either up or down, since 1979, when satellite record-keeping began. According to the University of Illinois' Arctic Climate Research Center, global sea ice levels now equal those of 1979." Liberal bloggers jumped all over this, saying that ice was lower by a mass the size of California. But at about the time Will's piece was published, the NSIDC had a sensor give out and gave out wrong data on ice levels for a few days. Global warming skeptics had a bit of a field day on this, with some blog commenters (not the bloggers themselves) muttering about conspiracy.

Yesterday, Walt Meier of the NSIDC wrote an open letter to Watts Up With That (a rationally skeptical weblog--one of the good ones), explaining what had happened, why and what they were doing to avoid future incidents of this type. It was an extraordinarily gracious communication, full of good will and the presumption of good will on the part of his readers.

But Meier continued the dialogue in the comments thread of the post, and was drawn into commentary on Will's opinion piece. He cited three mistakes he felt George Will had made (the other two are substantive and well worth a look, but my post here is exactly about the froth on weblogs that deliberately obscures the substance--I strongly advise you to go to Watts Up With That and read his letter and later comments). The first mistake was:

"1. He was factually incorrect on the date that he reported his “daily
global ice” number. However, he was merely out-of-date with his facts (it was true on Jan 1, but wasn’t 6 weeks later). This is somewhat nit-picky, though it illuminates how fast things can change in a relatively short period of time, meaning that one should be very
cautious about drawing any conclusions about climate from an isolated event." (Don't forget to go look at his other two mistakes.)

My clients pay me money to tell them what's going to happen in the environment in the medium term future, the 5 years out that George Will laughs at. It's a pity that I won't be able to rely on Brad DeLong and Mark Kleiman as anything more than weathervanes on environmental topics. It's more of a pity that I will have to treat everything they say going forward in much in the same way they treat the Washington Post.

And because of all this froth, we put off to yet another distant day the serious discussion about global climate change, green technology and Obama's energy plan that we so sorely need to have. Much in the style of Karl Rove, the news cycle got hijacked in the service of jihad. We are all poorer as a result.

But at least I got to use religion as a category tag for this, because that's what this is all about.

Update: Mark Kleiman very classily commented on my post, in a very non-frothy and measured way. Thanks, Mark. His point, that Will is entitled to err, but should correct mistakes when they are pointed out, is quite reasonable, and one that Will has had countless opportunities to ignore in the past.

Kleiman is also correct substantially on the measures he cites--scientific work in the 70s did use a geologic timescale when referring to the next Ice Age, and models did and do predict Arctic ice melting rapidly while Antarctic ice modelling is uncertain.

I'm happy to see and to say that Mark Kleiman is still the gracious writer that I have always seen on the Reality Based Community. Which is not to say that I agree with him 100% on the substance of this. I think we're training a microscope on Will's columns when we should be using a telescope to look at other things. I hope I'm wrong about Brad DeLong as well.

 

Green Technology--part 1 of about a hundred and thirty two posts, I imagine

One symptom of the complicated nature of green technology can be seen in the fact that I assign four categories to this post--economic, environment, politics, and, only lastly technology.

Green technologies can be separated into the following categories:

Generative: Nuclear, biomass, biofuels, solar, wind, tide, and maybe more

Recuperative: Recycling, re-using, retrofitting for insulation, etc.

Distributive: Smart power grids, micro-generation, land-use policy, etc.

The stated goal of green technology is to displace fossil fuels. The politics is fraught. The economics is dubious. The technology needs work. And the environment is waiting.

Just some brief notes from the generative side of things:

This year, the US passed Germany and became the largest producer of wind power. Are people celebrating? Do people even know? Germany, meanwhile, is the largest subsidizer of solar power--in a land that is not famous for being sun-drenched. Do people know or care?

In 2005, the US used about 21% of all energy consumed, about 100 quadrillion BTUs. In 2007, about 7% of US energy production was renewable (mostly nuclear and hydroelectric). President Obama wants to double that in the next three years. This would involve either doubling the number of nuclear power plants, tripling the number of dams, increasing 100 fold the number of windmills and solar panels, or some combination thereof. It's a challenge.

The challenge got bigger when oil prices collapsed (and those who think they will bounce right back should be talking to Brazil's Petrobras about their production plans). And, as nuclear power plants and dams are both contentious and long-term in the planning, we are left contemplating the wind, the sun, biomass and, presumably, our navels.

It seems to me that it would take about the same effort as did gearing up military production for World War II. (This may not be a coincidence--many are writing about how WWII 'cured' the Great Depression).

Windmills cost several million dollars ($4.2 million in 2001, although prices may have declined. They may also have increased, as they are incorporating more technology.) Solar panels are cheaper. America has lots of sun. But any way you slice it, renewable energy doesn't double for $50 billion, the price I heard Obama give. Perhaps he wasn't including nuclear and hydroelectric in his initial calculations? I'll check for the next post.

More later.

Update: Well, the President didn't answer my questions in his speech, but here are the bullet points from the Obama-Biden Comprehensive New Energy Plan for America, published in August of 2008:

Provide short‐term relief to American families facing pain at the pump • Help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future. • Within 10 years save more oil than we currently import from the Middle East and Venezuela combined • Put 1 million Plug‐In Hybrid cars – cars that can get up to 150 miles per gallon – on the road by 2015, cars that we will work to make sure are built here in America  • Ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025 • Implement an economy‐wide cap‐and‐trade program to reduce greenhouse gas emissions 80 percent by 2050

I need to do some more digging, apparently.

China's decline

It's a testimony to something--I dunno, PR, fear, political distaste--that we pay so much attention to China. After 20 years of near double digit growth, their stated GDP is about $2.7 trillion U.S. dollars, compared to the U.S. figure of over $13 trillion. They produce about as many patents as the Netherlands, 19% of their population lives on less than $1 per day, and the average adult has 6.4 years of schooling. (These stats are from Nationmaster.)

China has a lot of what they call 'mass incidents,' which in other countries would be called demonstrations or riots. 87,000 last year. 20 years of double digit growth and 87,000 mass incidents per year. That's not a sign of a governmental system with widespread legitimacy amongst the governed.

Now, no developed country that I know of achieved that status without a hiccup--most countries had several long periods of economic stagnation or decline. Someone will have to explain to me why China should be the exception to this pattern. One such hiccup has arrived for China, and my 5-year prediction is that they will suffer through a depression that makes Western recession look mild. Remember one thing from this post, if no other: Hard times are harder for the poor. China is poor.

Their economy is export driven. People aren't importing their products. Their own consumers have a strong tradition of saving. They are not going to start spending when times get bad. Their economy is not free. There is no band of young entrepreneurs in garages plotting an internet boom. Their country is savagely corrupt. Companies that have invested heavily there will soon find out what that means in times of trouble. This will deter new waves of investment after Western economies start to recover. 

Now, however, their economic problems are also ours. They own a lot of our debt. The US has depended on it in its economic calculations. They will not be able to continue purchasing Treasuries. In another post I will look at the effects on Western politics and economics.

Technology Trends 4

If I were speaking to you face to face, I would now put on a very serious look and speak very slowly.

The next five years will see more innovation and invention than the past 12. That covers the entire life of Google, as well as the invention of Facebook, Twitter, etc., on the web, and the explosion of mobile telephony, the iPod, mobile software as services, etc., in telecommunications. We will see an extra zero on the number of products using nanotechnology, RayBan (or equivalent) head mounted devices that give full computer screen capabilities, an explosion in E-books, and much, much more. Your mobile in 5 years will be more powerful than the latest desktop PC is today.

But the next five years will probably not see a silver bullet cure for cancer, Alzheimer's or heart disease. Nor will genetics provide a detailed future history of your medical outcomes.

Robotics will advance into your home, if not your office.

A child born in the next five years in the developed world will probably have a zero percent chance of ever being lost in his or her lifetime. He or she will at some point not be convinced that's a good thing.

This analysis is based on simple extrapolation of patent filings, and should be (still) considered conservative. The wild and crazy stuff is for another post.

A pretty picture (Technology trends 3)

If you're into picking winners in scientific advances over the next few years, this chart from WIPO should help you:

Technology trends (2)

Think back to the year 2000--the new millenium, the Y2K bug, the looming internet bust. Can you remember what you thought and how you felt back then?

If someone had asked you to predict what technology areas would grow the fastest over the next five years, what would you have predicted? (I'm glad I didn't publish my thoughts then...)

The World Intellectual Property Organisation has kindly catalogued and tabled international patent activity for the years 2001-2005, and has even charted average annual growth.

Perhaps because of the Y2K bug, 2001 saw the absolute peak in patents filed for IT methods for management. There was an annual 10% drop in patent filings in this area over the next 5 years. Most other IT-related patent filings grew by about 5% per year, which is quite robust.

Chemistry did badly. In 11 categories, 8 saw absolute declines, including biotechnology. Only pharmaceuticals saw growth, and it was a paltry 1.7% per year. (In case you're wondering why all the big pharmaceutical companies are eating each other, it's because the IP cupboard is bare...)

Mechanical engineering didn't do much better. Of 8 categories, three showed negative growth and the other 5 grew slowly, with the exception of transport, which managed 3.8%.

So what was the overall winner? The biggest growth? The scientific advances that should now be showing up in the products and services we are buying today?

Second was optics, with 5% annual growth, and 103,390 patent filings in 2005. First, predictably, was computer technology, with 5.3% growth and 144,594 patent filings.

What this tells me as a back-of-the-envelope analyst is that Moore's Law will continue, that there's a bit of hype in biotech, that I don't want to own stock in pharmaceuticals, but the next generation of transportation equipment might change, for the better and the greener. Hasten the day.

Packaging new knowledge

This post is the 'background' post, designed to set the stage for a 5-year forecast of technology trends worldwide. There may be other 'background' posts--remember I'm trying to show my work.

New scientific or technological progress is often measured in discrete packages known as patent applications or academic publications. These are easy to count and give an idea of progress. It isn't perfect, as backlogs in patent offices, copycat patenting and publishing, etc., can throw the stats off a bit, but as these practices aren't new, one hopes that the overall measure of progress is valid.

Growth in the number of patents has, over the past 50 years, been dramatic--but largely driven by the adoption of patent regimes by new countries, such as China. But let's turn the lecture over to the World Intellectual Property Organisation (WIPO) for a moment:

"Worldwide patent activity increased by 4.9% between 2005 and 2006, mostly due to increased filings by applicants from China, the Republic of Korea and the United States of America

The total number of applications filed across the world in 2006 is estimated to be 1.76 million, representing a 4.9% increase from the previous year. Between 2005 and 2006, the number of filings worldwide by applicants from China, the Republic of Korea and the United States of America increased by 32.1%, 6.6% and 6.7% respectively

Patent applicants tend to come from a relatively small number of countries of origin. For example, applicants from Japan, the United States of America, the Republic of Korea, Germany and China accounted for 76% of total patent filings in 2006. Chinese residents increased their share of total worldwide patent filings from 1.8% to 7.3% between 2000 and 2006, mostly due to increases in domestic patent filings.

Although the number of patent applications filed across the world has increased at a steady pace, the rate of increase is less than the rate of increase observed for other economic indicators such as GDP and trade."

Hence my previous post saying that a 1% increase in CAGR in patents would have a dramatic effect on a number of important living conditions.

When was the last time you looked to the law to find hope?

The creators of 130 million creative works in 45 countries have chosen the Creative Commons license to protect and share their intellectual property since 2001. The non-profit organisation that runs CC has a lot to be proud of, not least their expansion into science and education.

The impact of the Creative Commons is only now taking hold. Five years in the future, and remember that five years is what we're looking at for PESTLE, this legal mechanism that allows people to designate the level of protection they desire for their creative work will be having a significant impact. And we're not talking anime and garage bands. Academic researchers and scientists have been desperate for a way of sharing their work without losing all their rights, to help colleagues in developing countries (although it actually works both ways--no real need to be patronizing about it, especially when you look at biology). The Creative Commons license provides this. 

Sometimes, removing an impediment to progress is more important than coming up with the next big idea. Friction free intellectual property. It's bigger than it sounds.

5 year prediction: The number of patents actually increases by 1% over trend as a result of Creative Commons spreading base knowledge around the world.

This is hugely important. According to WIPRO, the average CAGR in patents has been 3.5% since 1960. This 49 year period is widely regarded as having been a good period for innovation. If the CAGR can increase to 4.5%, it reduces the time needed to double annual patents from 20 years to 15. In all probability, that would mean millions of lives saved through better healthcare technology, hundreds of millions of lives improved due to better products and services, and a healthier and cleaner environment. 

Keep it clear, keep it clean

One plank of President Obama's economic recovery plan involves investing in cleaner energy infrastructure and resources. It is good, common sense conservation that we should applaud vigorously. However, it is accompanied by serious discussion of targeting technologies and channeling investment into some things that are greener than they are good. This could be dangerous in a lot of ways--as our recent experience with ethanol subsidies shows, governments can mess things up when they decide to support a technology for political reasons.

And it's not just governments. General Electric, a hard-headed, intelligent organisation that has made profits in almost every way possible, made the decision a few years back to target the green market. If you look at their stock price over the time period since they made that decision, you have to wonder what prompted their decision. To be fair, the recession hammered their stock price along with everybody else's, and the green market may require patience--GE may yet be rewarded for this decision. As a stockholder, I certainly hope so. But I hope they won't be rewarded by misallocated government spending that is targeted by wrong assumptions. In the long run, that will benefit no-one.

We don't yet know what the best way to produce electricity will be in five years' time. It may be nuclear, wind, solar, natural gas, tidal... most likely some combination, which will require serious thought and good planning. We don't yet know the best way to power personal transportation five years out.

We do know how to insulate houses and reduce energy consumption in large buildings.

We do know how to stimulate and finance effective research into best practice regarding energy.

We do know how to reduce energy consumption.

We should start there and wait for science (and yes, market decisions) to lead government investment decisions down the road.

Who will own this century (3)

In 1809 few would have predicted American dominance at any point in that century. The British and the French were battling for supremacy, and the Portugese and the Spanish were, too. It would be only five years before the Brits took time out from their continental struggles to burn the White House, something conveniently papered over by our celebration of the Battle of New Orleans, fought after we surrendered. America had a population of 7.2 million, a GDP of $700 million ($97 per capita--wow--equivalent to $1,303 in year 2000 dollars). We still had a lot of basic history and development in front of us.

The Founding Fathers had already predicted our future, and had pledged their lives, fortunes and sacred honor to achieve it. Not really sure how many people just nodded pleasantly at the notion. 55 years later the American era began.

All of which is to say that picking the owner of this century isn't as obvious as it may seem.

But, if healthcare really does grow to 13% of U.S. GDP by 2050, than the best technology providers will get a good chunk of that. That seems like a big win for American companies to me, and should lead to Americans providing solutions for the rest of the world--exporting added information value, which is what we do pretty well.

Don't know if you're reading it here first, but nanotechnology will change the world in this century more than electricity did in the last. Here again, America is front-running, leading in patent applications and with more than 1500 commercial products already using nanotech. Another big win for us--the Japanese in second and Chinese in third, may have difficulties exploiting this sector.

Genetics will mostly contribute to the healthcare sector cited above, and American companies (that aren't acquired by foreign pharma) will grow rapidly.

Robotics is the other sector that I predict will contribute mightily to human progress this century, and the country that leads here (as with the other sectors) will have a good chance to own this century. The Japanese currently claim the lead--but so do the South Koreans. And in the last linked article, it makes it clear that "The United States, which has the world's best fundamental technology, is currently the leader in developing special purpose robots, and the country is strengthening R&D for developing applied robotics technologies. The United States is consolidating its lead-in defense-robots and concentrating on developing technologies for robots used in space exploration, medical, rehabilitation and other specialized services. The United States is also using its advanced technology in fundamental areas such as artificial intelligence, mobility, as well as sensor and sensing technologies in developing software required to fulfill the conditions of robots with strong capacity for intelligence."

I'll talk about Green Technology in another post. These three are enough to convince me that this century has every chance of being American as the last one.

Who will own this century (2)

I think we'll need a series of posts on this--let's see how much I can get through on a Friday night.

Nationmaster lists 22 countries with over 60 million people. I arbitrarily declare that the minimum for owning a century. Let's rank them on how they score on a set of criteria that I also arbitrarily declare to be the only, the crucial things that will matter (please tell me you understand that I am being ironic...)

Saturday morning. Well, this involved some preparation. The criteria I've chosen include some that are chosen to measure the physical base from which our eager contestants start this contest--population, GDP, etc. It also includes some that try to see which way they are facing--towards the future, the present or the past? Things like corruption and military spending help here. Then we try and look at capabilities for the future--life expectancy at birth, which measures so many different things that it should be a shrine at which we all worship regularly, university enrollment and graduation, etc.

This is specifically what I measured: Ranking on Nationmaster in population, GDP, life expectancy at birth, corruption index, military spending as percentage of GDP, enrollment in tertiary education as percentage of age eligible population, births per 1000 population.

These things are all measured and ranked on Nationmaster. I then perform the magic PESTLE calculations which contain the secret algorhythms designed to divine the destiny of organisations and companies the world over (ed. You mean you count their scores and low score wins? tf. er, yes).

Here are the countries of the future, ranked by potential to lead. Your actual mileage may vary.

Country                 Total
1. United States:             240
2. France:                       281
3. United Kingdom:         312
4. Japan:                        415
5. Germany:                   424
6. Turkey:                      457
7. India:                         464
8. Brazil:                        474
9. Mexico:                      497
10. China:                       512
11. Russia:                      522
12. Egypt:                       536
13. Thailand:                  541
14. Philippines:               568
15. Iran:                         571
16. Vietnam:                   587
17. Pakistan:                  604
18. Ethiopia:                   623
19. Indonesia:                 627
20. Bangladesh:               669
21. Dem Rep Congo:        701
22. Nigeria:                    702

Notice the mathematical precision and uniformity of the columns. Note also that in my previous post on this subject, I wasn't too far out when I just eyeballed the subject, but note also that my cultural point of view probably obscured the potential of Turkey and Mexico. That's why we do this.

If you want me to include other criteria, go to Nationmaster and look up a category and email me and I'll add it in and re-run the total. Or, if you want to check my work and do some of your own from scratch, here's the Excel worksheet I used: Download Who Will Own This Century

Analysis and interpretation in a later post.

Demographics is not destiny (2)

The previous post argues that countries don't really have to play the hand they are dealt in terms of the workforce and social composition of their bodies politic, as they can shape the make-up of their citizenry through immigration policy.

There are other tools at their disposal. The most commonly used tool is incentives for having children, either positive (e.g., France) or negative (China). Both were successful, and both result in unintended consequences.

If a Pestle analyst wants to look at long-term GDP potential, the first place to look is at population trends, looking for bulges in the working age population (Turkey, Iran) which clearly indicate growth potential. Bulges in the over-40s (Europe) are harbingers of decline. Multiple bulges (U.S.) make you have to think. It is easy enough to find the 'average' age of a population, a bit harder to find out what it was for the past decade or so, and see the direction that the national economy wants to head in. Sites like the CIA World Factbook or Nationmaster are helfpul with this kind of thing.

Or does anybody else think it's a bit funny that our current economic situation blew up in the same year that the Baby Boomers started to reach retirement age and almost simultaneously made major decisions about investment/savings/spending priorities? Nah--just me?

Demographics is not destiny (1)

At least it no longer is. I remember reading in a novel once that the vast majority of the human race had never traveled more than 200 miles from their home. I have no idea if that was ever the truth, but it certainly is not today. I commend this site, called Global Issues, to your attention for the ensuing discussion. The demographic composition of some countries is changing--in some countries, quite dramatically.

In many developed countries today, citizens are likely to name immigration as one of the top concerns they have. Although it seems fairly obvious that immigration is a proxy for fears relating to crime, unemployment and large public expenditures, those concerns are neatly encapsulated in high profile news stories about immigrants. It also piggy-backs quite nicely on the atavistic 'fear of the other' that has characterized the folly of our race for so long.

It is claimed that there are 191 million immigrants today, or 3% of the world's population. I think it might be higher, but I also think it is unlikely to be above 4%. If this percentage was spread evenly across the map, I don't think it would be possible to keep the issue alive as a source of political and social discontent. Obviously, however, immigration is lumpy. But these bullet points from the weblog cited above are a bit telling:

• The last 50 years has seen an almost doubling of immigration;
• 115 million immigrants live in developed countries;
• 20% (approximately 38 million) live in the US alone, making up 13% of its population;
• 33% of all immigrants live in Europe;
• 75% live in just 28 countries

In talking about the next five years, there are two important points to remember about immigration: First, most immigrants don't pick up stakes because life is easy where they are. As someone who has lived the past decade in Italy and Great Britain, I can tell you immigration is tough, even for a white American. It is much tougher for a non-white person from a developing country. (Which is why more than a third of immigrants eventually, like me, return to their country of origin). Second, if you cannot feed yourself and your family, at some point failure to immigrate feels like slow suicide and criminally irresponsible behaviour. So people choose an economically viable destination and go there. People move heaven and earth to get to places like the U.S., UK and France because of economic opportunity--i.e., the chance to avoid starvation. It is rarely a political choice. It does have political effects, however, usually in the form of providing ammunition for race-baiting, fear-provoking idiots, mostly on the right.

The next five years are likely to provide more such ammunition for these idiots, as there are two rules concerning immigration. First, poverty drives immigration. Second, recessions and depressions hit the poor more than the rich, and poor countries more than rich countries. Immigration will tend to increase, and move towards countries that have been least affected by the coming Hard Times. Canada and Australia look like prime destinations. Canada, at least, seems prepared to welcome this. Canada is full of people with good sense.

5 year prediction: Immigration will increase from 3% to 5% of the world's population. It will still be lumpy.

Magnificent Fictions

A quick look around should convince you that we are not created equal, and that we have not been endowed by our creator with certain inalienable rights, e.g., life, liberty and the pursuit of happiness. These magnificent fictions constitute a challenge to whatever gods there be, and are testimony to the great hearts of the founders of the American revolution. Salute.

So we'll have to create these rights for ourselves, and work on contracts with each other to render them unalienable. Sigh. A human's work is never done.

 

50-100 years down the road we will choose life in the form of the right genetic profile and uploads. Liberty, always having been a state of mind, will be a default state as mind becomes more autonomous. The pursuit of happiness will get the time and attention it deserves, not because we've run out of work to do, but because the work will be structured as part of the pursuit.

A post about technology can quickly leave science fiction in the dust, and it makes me glad that I've chosen a 5-year horizon for the forecasting here. Just quickly, then:

As always, in 5 years what's on the screamingly modern desktop today will be a ho-hum part of your mobile. 

Your mobile will be wearable.

Screens for your mobile and your e-reader will be sunglasses or butterfly fans.

Solar panels will be sculpture.

Nano-coatings for planes and cars will be about ready to leave the lab and streamline, protect and beautify transportation.

The first artificially designed life form will have a name.

Parents in South Korea will worry about their children forming too strong a bond with their domestic robot child-minders. Parents in America will realize it's a valid concern.

Some government will negotiate with a pharmaceutical company, offering 99 year patent protection for lifestyle drugs such as Rogaine and Viagra in exchange for the right to manufacture generic version of lifesaving drugs.

This is just chapter 1 of the tech story five years down the road. It's the conservative chapter, the one meant to convince you I'm making sober and rational assessments. It's the next chapter that starts to get weird.

Who will 'own' this century?

Although Henry Luce called the 20th Century the American Century back in the '40s, my dilettantish recollection of history places the actual ascension to world power at around 1865, when Prussian military observers realised that the North's industrial military strategy had geo-political implications. America has certainly had a good run, but a lot of writers and commentators have called an end to it. There's even a neo-conservative movement for a new American century, although it seems clear they have absolutely no idea what made America predominant to date. Sigh.

At any rate, this post is about who will own the next century. And by own, I mean be the iconic image, the driving force, the society that will shape events to meet its own goals, the dominant power.

There are almost 300 countries on the modern map, so to pursue this topic it is helpful to exclude societies that, for one reason or another, have disqualified themselves from playing the game, so we can then focus on the remaining societies. So, for demographic reasons we start off by eliminating countries that are too small to actually dominate, such as Norway (which seems a pity--they're doing so much so well), but also Russia and Japan. Countries with declining populations will not dominate this century (perhaps the following one). I think realistically we end up with a list of usual suspects plus the BRICs. I think China will self-exclude due to a severe implosion, probably not too far in the future (in fact, it will be within the 5-year horizon of this weblog and I'll discuss it in another post), and we just tossed Russia for the unforgiveable sin of being in decline during a discussion of ascension. So, on the back of my envelope are the following countries:

• France
• Brazil
• India
• UK
• USA

I include France and the UK because, in addition to being powerful developed economies, they also have relationships stemming from prior empires that could theoretically be useful should they decide to get back in the game and strive for dominance. In fact, it would not be too difficult to convince me that France never left the game, but has been keeping a low profile while it rebuilt after the two world wars.

I will exclude India for reasons to do with geography and demographic composition--being surrounded by Pakistan, China, Bangladesh, having regional conflicts and disparities within the country, these will prove too much of a challenge for India. In addition, like China, they are growing their education and research capabilities only at the same pace as domestic GDP, which means that their technology base will be overly occupied with getting their infrastructure up to snuff, and not occupied enough with the needs of the future.

I will exclude the UK because I do not believe they want to play the game. So, we are left with France, Brazil and the United States.

France and Brazil have the enviable status of energy independent nations, with the edge to France being that nuclear energy requires technology growth, satisfies green concerns (well, some of them), and translates quickly into military capability. Brazil counters with the ability to export both oil and ethanol. Demographics gives a clear edge to Brazil, young and hungry, inventive and ambitious. And France loses primarily because its treatment of the DomToms has been callous enough that they cannot rally their former colonies to actively support French initiatives.

So we're back in the New World. Brazil has been derisorily labelled as the "country of the future--and always will be." But eventually that translates into the present. And America is the hegemon, wounded after a decade of mismanagement and wasteful, almost extravagant misuse of resources, but still the most powerful political entity that has ever existed. Brazil is very much where America was in 1865, and if they rise to dominance it won't exactly surprise me, and probably won't shock other commentators--it's pretty much a vanilla choice, the triumph of conventional wisdom.

But, after a decade in Italy and the UK, looking at America with what I hope are clear eyes, I think the next century will belong to America--even more so than the past 140 years. And I believe so because I think that America is best positioned to respond to the major challenges of this century, which fall conveniently under the headings addressed by the title of this weblog.

Political--America has the oldest representative political system in the world, a huge advantage in terms of allocation of social resources. It doesn't need to invent or reinvent representation, and it has substantial internal legitimacy (perhaps never as much as now, after Obama's election).

Economic--America is the largest economy in the world, and the richest of the populous nations. They can get it wrong a hundred times (as they may well do with their response to the recession) and still be a mile ahead of countries like Brazil. If Brazil makes one strategic mistake they fall by the wayside for decades.

Social--America is growing in population, has high levels of education, literacy, labor mobility, and may soon reach Brazil's level of tolerance for each other.

Technology--this is the key. The key technologies for the 21st Century will be genetics, nanotechnology and robotics. Although America only leads in nano right now, it is easily a close second in the other two. Although Brazil is working in these areas and their leading lights are on a par with the best in other countries, they don't have the depth of field to sustain growth at the same level.

Legal--Another key advantage for America. Although they are no more honest than Brazilians, America's legal system is better at dealing with corruption and organised crime, which are the key issues for development and dominance.

Environment--Both are large countries with abundant natural resources, and are large exporters of these resources. Both face challenges in conservation and husbandry, but both are devoting time and energy to that right now, which should serve them well in future.

So, on the whole, I think this century will belong once again to the Yanks, for good or ill. Not surprising that a Yank should pick his own country, and in a formal Pestle analysis there would be a counterparty picking holes in my analysis. But that's why we have a comments section here...

Fade to black

It seems to me that the green machine will fade over the next five years. I don't want (on this weblog, at least) to get overly involved in the debate over global warming--there are plenty of forums discussing that, such as Real Climate and Gristmill taking the pro position, and Climate Audit and Watts Up With That taking the con.

As has been noted in other contexts, it matters more who's left than who's right. There's no money left, there will be a diminishing of political will, there will be a grand turning to other things. The green agenda will have to sink or swim on the short term viability and easily seen payback of individual projects.

It won't help that there is likely to be a volcanic eruption, probably in the Pacific Rim, that will put enough sulphates into the air to cool things off--nor that other cycles that affect the climate are turning down the thermostat, at least temporarily. These things, which operate independently from any anthropogenic contributions to greenhouse gases, will take the heat off of any urgency to deal with climate change, and there will be other pressing demands on the public purse.

A major recession is not the time to try and convince developing economies to go green. The recent fall in the market price of carbon emission permits in Europe is another sign. President Obama's failure to talk much about the energy proposals in his stimulus bill is a bit telling.

Five year prediction: Whatever happened to Al Gore and climate change?