PESTLE

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...

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.

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...