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Entries in global trends (63)

12:08PM

Making It Hardest For The Most Resilient Among Us

HUMANITY HAS TRANSFORMED THE NATURE OF LIVING OVER THE PAST CENTURY, ROUGHLY DOUBLING LIFE EXPECTANCY AT BIRTH AND THUS SHIFTING THE MEAN AGE RADICALLY UPWARD. This changes the structure of all societies, albeit at uneven paces. Globally, the worker-to-elder-dependent ratio was 12:1 in 1950, dropping only to 9:1 in the year 2000. But with globalization's profound expansion over the last 25 years, we're looking at a ratio of just 4:1 in 2050 (per the UN). That's an amazing burden shift that will be accommodated by people working later in life, technology and productivity advances, and — most crucially — the proper harnessing of youth as future labor. The big problem? Most of those youth are located in the emerging South, where a 10:1 ratio will still exist in 2050, whereas the advanced West will be looking at an untenable 2:1 ratio.

This is why I have advocated, throughout my career, for the West's open borders and active recruitment of immigrants from younger parts of the world. It is the only realistic solution — necessary even as it's insufficient (people will have to work longer and productivity will need to advance). Right now, Westerners seems to be dazzled by the imagery of robots running all and there being no work to be done, but this is a queer illusion that encourages inward-looking perspectives on the future, the classic example being Japan. The zero-sum mindset is also unrealistically greedy — as in, we have ours, so tough on you.

And yes, this generational divide, so well encapsulated in a North-South divide, dovetails quite negatively with the unequal social and environmental burdens generated by climate change, which likewise pits the "old" poles against" young" Middle Earth.

Simply put, we are eating our seed corn.

On this disturbing global trend comes a great editorial in the EconomistSome highlights, with commentary:

Roughly a quarter of the world’s people—some 1.8 billion—have turned 15 but not yet reached 30. In many ways, they are the luckiest group of young adults ever to have existed. They are richer than any previous generation, and live in a world without smallpox or Mao Zedong. They are the best-educated generation ever . . . they are also more intelligent than their elders. If they are female or gay, they enjoy greater freedom in more countries than their predecessors would have thought possible. And they can look forward to improvements in technology that will, say, enable many of them to live well past 100.

Another theme of my work over the years: when America stood up and took on the responsibility of running the world after WWII, it didn't simply replicate the global orders imposed sequentially by Europe's colonial powers over the centuries. Instead, it fundamentally reshaped it to enable global economic integration on an unprecedented scale — and based on our own model of states uniting. This is the primary reason why global standards of living have skyrocketed over the past half century.

But this creates class and generational consciousness on a global scale:

Just as, for the first time in history, the world’s youngsters form a common culture, so they also share the same youthful grievances. Around the world, young people gripe that it is too hard to find a job and a place to live, and that the path to adulthood has grown longer and more complicated.

The primary culprit? "Policies favouring the old over the young."

Last hired, first fired is the most obvious one:

In most regions they are at least twice as likely as their elders to be unemployed. The early years of any career are the worst time to be idle, because these are when the work habits of a lifetime become ingrained. Those unemployed in their 20s typically still feel the “scarring” effects of lower income, as well as unhappiness, in their 50s.

This is very bad news for a planet experiencing rapid demographic aging, the scariest and most self-destructive expression being the tendency of the old to want to "keep out" the foreign or "scary" young. This is a great deal of the emotion behind America's current passion for such slogans as "make our country great again!" It is simply nostalgia for the way things were.

But it denies us sufficient access to the most important resource on the planet — namely, youthful ambition and drive and creativity:

Young people are often footloose. With the whole world to explore and nothing to tie them down, they move around more often than their elders. This makes them more productive, especially if they migrate from a poor country to a rich one. By one estimate, global GDP would double if people could move about freely. That is politically impossible—indeed, the mood in rich countries is turning against immigration. But it is striking that so many governments discourage not only cross-border migration but also the domestic sort … A UN study found that 80% of countries had policies to reduce rural-urban migration, although much of human progress has come from people putting down their hoes and finding better jobs in the big smoke.

The aging of the North is making it brittle, self-centered, and selfish in spirit, and this is being increasingly reflected in government policies, in large part because, on average, 3 out of 5 elders regularly vote while only 1 out of 5 youth do.

The old have always subsidised their juniors. Within families, they still do. But many governments favour the old: an ever greater share of public spending goes on pensions and health care for them. This is partly the natural result of societies ageing, but it is also because the elderly ensure that policies work in their favour. By one calculation, the net flow of resources (public plus private) is now from young to old in at least five countries, including Germany and Hungary. This is unprecedented and unjust—the old are much richer.

This is where the newspaper nails the long-term danger:

That is a cruel waste of talent . . . Rich, ageing societies will find that, unless the youth of today can get a foot on the career ladder, tomorrow’s pensioners will struggle. What is more, oppressing youngsters is dangerous. Countries with lots of jobless, disaffected young men tend to be more violent and unstable . . .

The great challenge of the North's rapid demographic aging is resisting the general political crabbiness that comes with growing old, which eventually turns us all into cranky, get-the-hell-off-my-lawn types.

I don't know about you, but I don't dream of a future of gated communities populated mostly by the elderly who receive "personal care" from robots. That sounds more like the North turning itself into a giant nursing home.

Social resilience is a renewable resource, but it gets renewed generation by generation. We are not promoting that dynamic today in the West/North, and it will come back to haunt us.

 

3:20PM

Western Hemisphere's Shale Men as Oil Industry's New "World Swing Producers"?

 

FASCINATING BRIEFING IN A RECENT ECONOMIST (23 JAN 16) ADDS A NEW TWIST TO AN ARGUMENT I'VE BEEN RECENTLY ADVANCING ON HOW NORTH AMERICA'S EMERGING ENERGY INDEPENDENCE DRAMATICALLY REDEFINES ITS OWN SENSE OF ECONOMIC RESILIENCE AND – ULTIMATELY – AMERICA'S GLOBAL SECURITY PERSPECTIVE. Think of the future as mostly about energy and water, with the latter accounting for food production. Any country seeking to ensure its economic resilience going forward wants to be either rich in both, or rich in secure access to both. This is essentially where China is weakest now and in coming decades (hence the aggressive military behavior on display off its coast), because it must import both food and energy in ever increasingly amounts (and overwhelmingly via seaborne trade). This is also where America (and North America in general) is strongest now and in coming decades, relative to just about every great power out there – save perhaps Russia. But even there, America has little reason to unduly worry about the widely-perceived renewal of strategic rivalry with Moscow, which invariably becomes China's economic vassal on that basis:

China, please meet Russia, an energy-business-masquerading-as-a-government, which is incredibly vulnerable on the subject of lower energy prices but stands as the world's largest exporter of energy.

Russia, please meet China, which is the world's largest importer of energy and the stingiest, most aggressively demanding trade partner in the world.

Please go about you co-dependency with all the respect and friendship that you've each bestowed upon the other's culture and civilization over the years.

As I've pointed out, North America is already the world's de facto swing producer on grains, which gives us an enormous strategic advantage – and power – that we scarcely realize.

We are, in effect, the Saudi Arabia of grain. So, if, in our imagination, they have the world over an oil barrel, then we've got the world over a breadbasket.

Guess who cries "uncle" first?

And yes, we'll maintain that status in spite of climate change, because we're that clever and that resilient and that blessed by circumstances.

But here's where the Economist's analysis of the recent slide in oil prices is so intriguing: what if North America were to become the world's swing producer on energy – as well?

From the piece:

Now the fear for producers is of an excess of oil, rather than a shortage. The addition to global supply over the past five years of 4.2m barrels a day (b/d) from America’s shale producers, although only 5% of global production, has had an outsized impact on the market by raising the prospects of recovering vast amounts of resources formerly considered too hard to extract. On January 19th the International Energy Agency (IEA), a prominent energy forecaster, issued a stark warning: “The oil market could drown in oversupply.”

Amazing what the fracking revolution in North America has wrought, and don't – for a minute – discount how that sense of energy independence influenced President Obama's decision to see a Nixon-like detente with Iran, identified in the piece as "the most immediate cause of the bearishness."

[Iran] promises an immediate boost to production of 500,000 b/d, just when other members of OPEC such as Saudi Arabia and Iraq are pumping at record levels. Even if its target is over-optimistic, seething rivalry between the rulers in Tehran and Riyadh make it hard to imagine that the three producers could agree to the sort of production discipline that OPEC has used to attempt to rescue prices in the past.

But it gets even more disruptive – again, because of the fracking revolution in North America:

Even if OPEC tried to reassert its influence, the producers’ cartel would probably fail because the oil industry has changed in several ways. Shale-oil producers, using technology that is both cheaper and quicker to deploy than conventional oil rigs, have made the industry more entrepreneurial. Big depreciations against the dollar have helped beleaguered economies such as Russia, Brazil and Venezuela to maintain output, by increasing local-currency revenues relative to costs. And growing fears about action on climate change, coupled with the emergence of alternative-energy technologies, suggests to some producers that it is best to pump as hard as they can, while they can.

So we witness the Saudis – yet again – trying to shake out the market, not to mention its fierce regional rival, through an extended period of self-destructive over-production relative to market demand. It will definitely hinder Iran's re-entry into the world and its energy market, but in the US?

Yet there is also a reason for keeping the pumps working that is not as suicidal as it sounds. One of the remarkable features of last year’s oil market was the resilience of American shale producers in the face of falling prices. Since mid-2015 shale firms have cut more than 400,000 b/d from output in response to lower prices. Nevertheless, America still increased oil production more than any other country in the year as a whole, producing an additional 900,000 b/d, according to the IEA.

And here's where US technological resilience gets truly interesting:

During the year the number of drilling rigs used in America fell by over 60%. Normally that would be considered a strong indicator of lower output. Yet it is one thing to drill wells, another to conduct the hydraulic fracturing (“fracking”) that gets the shale oil flowing out. Rystad Energy, a Norwegian consultancy, noted late last year that the “frack-count”, ie, the number of wells fracked, was still rising, explaining the resilience of oil production.

The roughnecks used other innovations to keep the oil gushing, such as injecting more sand into their wells to improve flow, using better data-gathering techniques and employing a skeleton staff to keep costs down. The money is no longer flowing in. America’s once-rowdy oil towns, where three years ago strippers could make hundreds of dollars a night from itinerant oilmen, are now full of abandoned trailer parks and boarded-up businesses. But the oil is still flowing out. Even some of the oldest shale fields, such as the Bakken in North Dakota, were still producing at the same level in November as more than a year before.

No, we don't want to overestimate the economic boost to the US economy from all this. Our economic restructuring challenges are significant – as evidenced by voter anger in this year's presidential race. But others have it far worse:

Unsurprisingly some of the biggest splashes of red ink in the IMF’s latest forecast revisions were reserved for countries where oil exploration and production has played a significant role in the economy: Brazil, Saudi Arabia, Russia (and some of its oil-producing neighbours) and Nigeria. Weaker demand in this group owes much to strains on their public finances.

Russia has said it will cut public spending by a further 10% in response to the latest drop in crude prices (see article).

So where do we go from here? The article discusses "peak demand," something I've long argued would naturally precede the much-feared "peak oil" moment, primarily due to efficiency and environmental concerns.

Then the Economist lays out the crown-jewel argument – from my perspective – of the piece:

More likely, the oil price will eventually find a bottom and, if this cycle is like previous ones, shoot sharply higher because of the level of underinvestment in reserves and natural depletion of existing wells. Yet the consequences will be different. Antoine Halff of Columbia University’s Centre on Global Energy Policy told American senators on January 19th that the shale-oil industry, with its unique cost structure and short business cycle, may undermine longer-term investment in high-cost traditional oilfields. The shalemen, rather than the Saudis, could well become the world’s swing producers, adding to volatility, perhaps, but within a relatively narrow range.

Bingo!

Please keep that in mind when all the politicians and national security experts are trying to scare you to death during our ongoing transition from one president to the next: when it comes to food/water and energy, North America – and America in particular – is sitting pretty.

Why?

Because our national resilience on both continues to contradict the pessimists while amazing even the optimists like me!

 

11:50AM

Apogee of MSM Hyperbole on Global Conflict - Aleppo Battle as "Mini World War"

PERCEPTIONS MATTER WHEN IT COMES TO RESILIENCE – A RATHER NIETZSCHEAN CONCEPT IN AND OF ITSELF (DIFFICULT SITUATIONS FOSTERING SKILL-GROWTH).  One cannot be a Chicken Little and resilient, as problems must be examined with a clear eye toward their scale and surmount-ability. You can't be squealing "game over! game over!" into the camera lens and expect to foster anything but panic – the white flag of resilience.

History, of course, says otherwise. In my lifetime, which began on the eve of the Cuban Missile Crisis in 1962, we've seen wars growing less frequent, shorter, and less lethal. And not by a little bit, mind you, but by a lot. I could throw a ton of stats and sites at you, but the chart above demonstrates the history awfully well. Mind you, that's battle deaths per 100,000 people.  With numbers that just go up through 2013 (of course, they're increasing since then!), we see that the battle death rate, while rising from the early-2000s supreme low of less-than-one-person(!)-per-100,000 to the "disturbing" almost-one-person(!!)-per-100,000, is still lower than virtually all of history since WWII (only the "chaotic" year of 1996 – sarcasm mine – compares, and that was the most peaceful year since 1954, or before decolonialization began).

What else the chart tells us:

  • The "unprecedented" disasters of the Iraq and Afghanistan wars were . . . to be frank, minor compared to the 1990s, which we all collectively remember as being an awfully quiet decade outside of a handful of conflicts/disasters (Bosnia, Iraq, Somalia, Haiti, central Africa).
  • The 1990s themselves were far more quiet than the 1980s, which seemed bad only in comparison to the quiet shadow created by the Indochina wars of the 1960s and 1970s.
  • Those 1960s/early 70s Southeast Asian wars were bad compared to the quiet 1950s (when we only feared total nuclear annihilation – sigh!).
  • But Vietnam etc. was quite a come-down from the scary and destabilized post-WWII/Korean War segment.

What you don't see on the chart:  World War II stretching over roughly a decade and killing - on average - 15,000 people a day for well over 3,500 days.  That, my friends, was a world war.

So, imagine my surprise as an expert on conflict/international relations/global trends to see WAPO this morning declare the battle for a single city in Syria to constitute a "mini world war."

Why mini? Well, I'm guessing that a death rate of 150/day (my best estimate using a lot of other estimates) is a big part of it. That's actually quite high for a war nowadays, because most experts will label any conflict with an average of 3 deaths/per day (1,000+ for year) to be a "war."  But when your last true world war yielded a death rate 100-times higher, even "mini" seems like a wild exaggeration.

No, the reason why WAPO embraces this sort of reckless hyperbole is because Russia is now in the mix, sending Cold War-like chills down our collective spines. Naturally, this raises old fears of "escalation" – presumably to global nuclear war.

Except neither side is talking that, or acting that, or anything-ing that.

Instead, the great "evidence" cited in the piece (besides some self-serving observations by a security contractor working the conflict) is Russian Premier Dmitry Medvedev dropping hints in Europe this week about a new, Cold War-like dynamic between Russia and the West.

The great cause there? Obviously, Russia's land grab of the Crimea and the easter portion of Ukraine (the former formally, the latter informally).  That led to the West placing a lot of economic sanctions on a Russian economy already faltering and now nosediving in terms of its number-one export – energy, thanks to historically low global prices.

So, what does Russia seek with its military intervention in Syria? To prove it's a "dominant" Middle Eastern power, as the story's author opines? Well, a relevant power is a less screechy expression.

But try this alternative explanation on for size: Russia is hurting from the sanctions and needs to come in from the economic "cold" imposed on it by the West over Ukraine. But how to do it? Why not intervene in a place of high global interest, one which the U.S. is lowballing in terms of effort? All of a sudden, look how important Moscow is to the "peace process"! And if Moscow is seen as holding enough of the cards on the Assad regime, maybe asking for its help there will be matched by the West forgetting its transgressions in Ukraine.

Sound like a "mini world war" to you?  Or just the cantina scene from the original Star Wars movie?

Syria is a civil war. Civil wars today tend to get internationalized (all those characters in various uniforms in the cantina ...). We lament that development, but, let me remind you what we used to call states where conflicts raged and nobody from the outside showed up. Those we called "failed states" back in the 1990s. We still have a few now (same 1-2 dozen out of roughly 200 states in the world). But, if, by and large, few outsiders show up, those conflicts that have "failed" to attract any serious global attention are simply forgotten. So maybe we should call them "forgotten states."

Syria is not a forgotten state. A lot of regional and a few extra-regional powers are interested. Are they interested enough to stop the conflict? Not really. Are they interested enough to stop the conflict from going against their side? Just barely.

But should we look at that and invoke the imagery of a world war?

That is just shameful fear-mongering on the part of WAPO trying to sell your eyeballs to their advertisers.  The paper is simply repurposing Medvedev's propaganda as deep insight: he peddles "new Cold War" to amp up the West's sense of danger, hopefully (from Moscow's perspective) rendering the Obama Administration more amenable to compromise on Ukraine. WAPO knee-jerkedly transmutes that bit of diplomatic salesmanship into a "mini world war" on Aleppo. (You say Sarajevo, I say Aleppo, oh let's call this world war off!)

Scared? You're supposed to be. The Syrian Civil War is a genuine human tragedy, but re-packaging it as a "mini world war" is just inaccurate-bordering-on-journalistically-negligent.

Is this picking on WAPO? Absolutely, but only because I respect the paper so much and constantly cite it here in this blog. Frankly, its editorial staff should know better.

Again, the larger point here is maintaining perspective, because, when we lose it, we become brittle as individuals, decision-makers, leaders, and nations. Brittle, scared actors make bad choices; they do stupid things. They lash out because they imagine it to be the only option left, after issuing over-the-top threats . . . typically in response to hyperbolic media coverage (see debates in US presidential race for way too many examples).

So no, it's not all the fault of the media, although they start the process. They just give us what we want, which is fear. Nowadays we seem to collectively crave fear of complexity and chaos and uncertainty – the holy trinity of fear-mongers everywhere.

But do yourself a favor and don't buy any of it, because fear is the mind-killer - the little death, and the ultimate enemy of resilience.

 

3:01PM

Climate Change Tests Metropolitan Resilience With Wider Array Of Weather Dynamics

I RECENTLY MET A SAN DIEGAN - A TRANSPLANT FROM WISCONSIN (WHERE I LIVE) - AND SHE WAS FLABBERGASTED TO NOTE A RECENT TORNADO WARNING THERE, COURTESY OF EL NINO.  Having grown up with tornados in southwestern Wisconsin, I was curious to discover how often this happens in sunny southern California, and, according to the Tornado History Project, it's not all that often - roughly once every 6-7 years for the immediate San Diego metro area. Having endured 6-7 such warnings every summer as a kid, that strikes me as pretty rare, so, sure, when they happen in San Diego, it must seem awfully exotic - like an earthquake in Wisconsin.

Well, with humanity having so reshaped the planet's surface and atmosphere these past decades and centuries, what were once outliers in probability are becoming more routine.  Yes, fewer people die in disasters today than in decades past - something like 98% fewer people compared to 1900! But the costs and the dislocations are clearly rising with serious speed.  Per the US Global Change Research Program's recent National Climate Assessment Assessment, we can cite the following extreme-weather trends:

As the world has warmed, that warming has triggered many other changes to the Earth’s climate. Changes in extreme weather and climate events, such as heat waves and droughts, are the primary way that most people experience climate change. Human-induced climate change has already increased the number and strength of some of these extreme events. Over the last 50 years, much of the U.S. has seen increases in prolonged periods of excessively high temperatures, heavy downpours, and in some regions, severe floods and droughts ...

Heat waves are periods of abnormally hot weather lasting days to weeks. The number of heat waves has been increasing in recent years. This trend has continued in 2011 and 2012, with the number of intense heat waves being almost triple the long-term average. The recent heat waves and droughts in Texas (2011) and the Midwest (2012) set records for highest monthly average temperatures. Analyses show that human-induced climate change has generally increased the probability of heat waves., And prolonged (multi-month) extreme heat has been unprecedented since the start of reliable instrumental records in 1895 ...

Heavy downpours are increasing nationally, especially over the last three to five decades. The heaviest rainfall events have become heavier and more frequent, and the amount of rain falling on the heaviest rain days has also increased. Since 1991, the amount of rain falling in very heavy precipitation events has been significantly above average. This increase has been greatest in the Northeast, Midwest, and upper Great Plains – more than 30% above the 1901-1960 average. There has also been an increase in flooding events in the Midwest and Northeast, where the largest increases in heavy rain amounts have occurred.CS_extreme-precip-index_13263_V9

One measure of heavy precipitation events is a two-day precipitation total that is exceeded on average only once in a 5-year period, also known as the once-in-five-year event. As this extreme precipitation index for 1901-2012 shows, the occurrence of such events has become much more common in recent decades ...

The mechanism driving these changes is well understood. Warmer air can contain more water vapor than cooler air. Global analyses show that the amount of water vapor in the atmosphere has in fact increased due to human-caused warming.,,,This extra moisture is available to storm systems, resulting in heavier rainfalls. Climate change also alters characteristics of the atmosphere that affect weather patterns and storms ...

Flooding may intensify in many U.S. regions, even in areas where total precipitation is projected to decline. A flood is defined as any high flow, overflow, or inundation by water that causes or threatens damage. Floods are caused or amplified by both weather- and human-related factors. Major weather factors include heavy or prolonged precipitation, snowmelt, thunderstorms, storm surges from hurricanes, and ice or debris jams. Human factors include structural failures of dams and levees, altered drainage, and land-cover alterations (such as pavement) ...

There has been a substantial increase in most measures of Atlantic hurricane activity since the early 1980s, the period during which high quality satellite data are available.,,These include measures of intensity, frequency, and duration as well as the number of strongest (Category 4 and 5) storms. The recent increases in activity are linked, in part, to higher sea surface temperatures in the region that Atlantic hurricanes form in and move through. Numerous factors have been shown to influence these local sea surface temperatures, including natural variability, human-induced emissions of heat-trapping gases, and particulate pollution. Quantifying the relative contributions of natural and human-caused factors is an active focus of research ...

Winter storms have increased in frequency and intensity since the 1950s, and their tracks have shifted northward over the United States., Other trends in severe storms, including the intensity and frequency of tornadoes, hail, and damaging thunderstorm winds, are uncertain and are being studied intensively. There has been a sizable upward trend in the number of storms causing large financial and other losses. However, there are societal contributions to this trend, such as increases in population and wealth.

All this is to say that US metropolitan areas should expect to suffer weather "freak-outs" on a far more consistent basis in coming years and decades - over a far wider array of dynamics. Right now we're witnessing such a freak-out in the Washington DC area, and, I can tell you, having lived there for years myself, it is indeed a freak-out primarily because local, state and federal agencies there simply don't put in the time and effort to work these extreme winter storms (either in advance or during) and because so much of the population living there is un-experienced in navigating their way amidst such conditions.  And yet, it grows ever more obvious that major US metro areas will be forced to deal with such extreme-weather events on a far more regular basis, meaning those skills will need to be developed and honed - by everyone throughout the government, society, and economy.

Per the NOAA chart above, we will measure these events primarily in damages incurred (private insurance, publicly-funded reconstruction) and lost economic activity (business continuity), and yes, that is a huge improvement over the age-old statistic of lives lost. But we are talking about metropolitan governments needing to be "masters" of so many more "domains" over time that it's clear there will need to be a lot more transparency, planning, and preparation efforts jointly pursued by private and public-sector entities.

You know the old joke about a conservative being a former liberal who once got robbed? Well, a resilience-aware executive/political leader is oftentimes simply someone who's had to answer for a weak response to an extreme-weather event.

 

12:26PM

LockMart scores desalination breakthrough?

 

Fascinating to me, and to have a defense contractor to boot!

HT to Jim Henkenius.

Reuters story here.

Gist of short notice:

A defense contractor better known for building jet fighters and lethal missiles says it has found a way to slash the amount of energy needed to remove salt from seawater, potentially making it vastly cheaper to produce clean water at a time when scarcity has become a global security issue.

Why this matters so much:  check out the NYT story on India's growing water woes.

That people in one of the rainiest places on the planet struggle to get potable water is emblematic of the profound water challenges that India faces. Every year, about 600,000 Indian children die because of diarrhea orpneumonia, often caused by toxic water and poor hygiene, according to Unicef.

Half of the water supply in rural areas, where 70 percent of India’s population lives, is routinely contaminated with toxic bacteria. Employment in manufacturing in India has declined in recent years, and a prime reason may be the difficulty companies face getting water.

And India’s water problems are likely to worsen. A report that McKinsey & Company helped to write predicted that India would need to double its water-generation capacity by the year 2030 to meet the demands of its surging population.

separate analysis concluded that groundwater supplies in many of India’s cities — including Delhi, Mumbai, Hyderabad and Chennai — are declining at such a rapid rate that they may run dry within a few years.

The water situation in Gurgaon, the new mega-city south of Delhi, became so acute last year that a judge ordered a halt to new construction until projects could prove they were using recycled water instead of groundwater.

It's an old story:  nobody really prioritizes the innovation until the national security tag gets slapped on - amidst a general defense budget slowdown.  Then voila!  Big player comes through.

10:08AM

The elder entitlement conundrum: raising retirement age doesn't get you what you want

To me, this is the ideological conflict of the 21st century:  money = access to bio revolution = longer lives, so access to tech is self-licking ice-cream cone (I live longer and therefore vote more and - BTW - have more money to spend on politics, which increases my access to tech, which makes me live longer, which ...).

Check it out from WAPO:

ST. JOHNS COUNTY, Fla. — This prosperous community is the picture of the good and ever longer life — just what policymakers have in mind when they say that raising the eligibility age for Social Security and Medicare is a fair way to rein in the nation’s troublesome debt.

The county’s plentiful and well-tended golf courses teem with youthful-looking retirees. The same is true on the county’s 41 miles of Atlantic Ocean beaches, abundant tennis courts and extensive network of biking and hiking trails.

The healthy lifestyles pay off. Women here can expect to live to be nearly 83, four years longer than they did just two decades earlier, according to research at the University of Washington. Male life expectancy is more than 78 years, six years longer than two decades ago.

But in neighboring Putnam County, life is neither as idyllic nor as long.

Incomes and housing values are about half what they are in St. Johns. And life expectancy in Putnam has barely budged since 1989, rising less than a year for women to just over 78. Meanwhile, it has crept up by a year and a half for men, who can expect to live to be just over 71, seven years less than the men living a few miles away in St. Johns.

The widening gap in life expectancy between these two adjacent Florida counties reflects perhaps the starkest outcome of the nation’s growing economic inequality: Even as the nation’s life expectancy has marched steadily upward, reaching 78.5 years in 2009, a growing body of research shows that those gains are going mostly to those at the upper end of the income ladder.

The tightening economic connection to longevity has profound implications for the simmering debate about trimming the nation’s entitlement programs. Citing rising life expectancy, influential voices including the Simpson-Bowles deficit reduction commission, the Business Roundtable and lawmakers on both sides of the aisle have argued that it makes sense to raise the eligibility age for Social Security and Medicare.

But raising the eligibility ages — currently 65 for Medicare and moving toward 67 for full Social Security benefits — would mean fewer benefits for lower-income workers, who typically die younger than those who make more.

“People who are shorter-lived tend to make less, which means that if you raise the retirement age, low-income populations would be subsidizing the lives of higher-income people,” said Maya Rockeymoore, president and chief executive of Global Policy Solutions, a public policy consultancy. “Whenever I hear a policymaker say people are living longer as a justification for raising the retirement age, I immediately think they don’t understand the research or, worse, they are willfully ignoring what the data say.”

So counter-intuitive:  raising the age = even more disproportional burden on less weathy.

The segregation is already well underway between the long- and short-lived.

The two counties in FLA:

Now globally:

It won't be the "clash of civilizations" in the 21st century, but the clash of generations.

9:41AM

Why the next pope should be a Latino

First, there is just the global distribution argument.

Then there's the dynamism/adaptation argument: a recent NYT story talk about how parts of the Brazilian church are "countering evangelicalism and secularism with livelier worship."

Why?

Market shift:

So both the center of global gravity in the church and its most likely form of marketing salvation.

Brazil is experiencing a huge expansion of its middle class.  People undergoing such tremendous socio-economic churn want moral handholds.  But they also want it in a form that they find conducive to their daily lives, and the traditional Catholic church has simply changed too slowly in response to the competition.

I saw a version of this in Ethiopia two years ago.  Place is booming and all sorts of change happening.  The classic Ethiopian Christian faith - very Catholic in form - just wasn't getting it done.  But you'd see these evangelical churches (mostly Pentacostal) everywhere and they'd be packed (I mean, with crowds extending out into the street!) - and jumping.

My fear with Benedict is that he retires so he can - in his typical control-freak fashion - determine his successor.  Let's hope it's something more than personal ego at work here.

9:28AM

Chart of the day: US farm income to be highest in 4 decades

WSJ story.

Despite last year's drought, net farm income in US (128B projected) will be highest since 1973 (adjusted basis).

Why?

Higher prices for livestock and poulty and "a continued boom in the farm belt initially fueled by rising global demand for grains" + that idiotic conversion into corn ethanol.

The big danger?  Great Plains enters the season way too dry - still.

So we see here the interplay between two dominant global dynamics in this century: rising global middle class and rising global temperature.

10:24AM

The robot-v-worker debate on job losses/gains

Subject is, do robots kill more jobs than they create?

We've approached this question many times in various Wikistrat sims, and they are many thoughts on the subject.

In a macro sense, the nightmare scenario is silly:  no society is going to job-destroy its way to rule by robots.  The amateur economist in me believes life just migrates into new areas, so there are plenty of jobs creating robots and economic activity moves on to new challenges/spheres/what have you.

But in the near-term sense, people's perceptions of the disruptive churn (sure to happen) matter a whole lot.

So this NYT report by the always smart John Markoff on a recent robotic industry conference that sought to allay some of these fears (robots everywhere!).

Some counter-arguments:

 

  • US automating and using more robots but it's still the biggest manufacturing country in terms of dollar value (I thought Germany was, but we're up there, so point taken), so we have to remember that that "manufacturing produces more jobs in associated areas than anything else."
  • Neither Europe nor Japan seems to share our fears on this subject.
  • Without automation, you can't compete globally. So if you want to steel back those jobs from China, this is how you do it.
  • "Countries that have high productivity can afford to have a good social system and a good health system."  Germany and Sweden are considered great examples of this.

 

Hmm.  Not exactly decisive, but you get the idea.  Nobody wants to own the world's most manpower-intensive manufacturing sector - except maybe Bangladesh.  So there's no way to go except onward and upward, as my Dad used to say.  Manufacturing, if highly productive, still wins and creates wider wins in your economy.  

But yeah, you still have to beat the next guy - and his robot.

9:18AM

China: The race up the production/development/political ladder is on!

Wow, that took a long time!  

Recall my recent post on China's college graduates (8m strong per year) and their expectations.

Right on cue, the NYT runs another front-pager that follows the logic up nicely:  "With diplomas, Chinese reject jobs in factory."

This is the development conundrum in a nutshell for the single-party state:  you give the people what they want (factory jobs that generate income so people moving off the land can make it in the city and send their kids to college) and then they just want more - in the form of those college kids.  And the more they want and you provide and they accomplish and achieve, the more they're running their own complex lives and get tired of hearing how only the one party and the one way are acceptable.

Best example of this was South Korea in the 1990s - four decades of essentially single-party rule and then things got a bit tumultuous.  But now look at South Korea - a second-tier great power on the move and becoming a soft-power exporter (Psy's hilarious and catchy "Gangnam Style" is just the hardest door-knocker of the burgeoning flow; personally I love the horror movies best) in addition to being a powerhouse product exporter. In many ways, China wants to replicate South Korea's path.  It's just the Party that assumes it can (or should) be done in a single-party format.

But yes, all the same tipping points eventually get reached. The size differential isn't key; it's a matter of generational turnover, and this article is a big pointer in this regard:  college grads who turn down their noses on factory jobs.

There's no turning back at this point:  China's future evolutions are already a fait accompli.  The only thing left for the West is to NOT screw it up, which typically occurs whenever we freak out over perceived "gaps" or "being passed by" or other such declinist nonsense.

The "victory," if you need such things, has already been won.  And we have Deng Xiaoping to thank for that.

China must live in the real world of its own making.  It cannot exist in the imaginary balance-of-power environments posited by the realists - on either side of the Pacific.    That real world of its own making forces very hard compromises.

And they are just beginning across China.

10:06AM

The adaptability of people is consistently under-estimated by experts

Pair of NYT stories from earlier in the month.  Both speak to the realities and myths of people's adaptability.

First one is about how Latvia (a place I very briefly visited back in the 1980s when it was still back in the USSR) and it talks about how, during the Great Recession, Latvians were able to handle the harsh austerity (sort of crew cut instead of the usual haircut).  

Second one is about how Russians are already mall fanatics. I remember Zbig Brzezinski saying, when the Wall fell, that it would be decades and generations before Russians figured out markets, etc.  It was all so godawfully patronizing (as only a Pole or Ukrainian might be WRT Russians).

My point in citing them together:  people are amazingly adaptable.  Latvians remember worse days (like your Great Depression parents or grandparents) and so they are unfazed, but Russians have no trouble slipping right into being material boys and girls (as did the Latvians for a while there and as they will again soon).

Americans have this tendency to believe we're the only adaptable people in the world, and it's true on some points:  on religion and "sacred soil," we are freakishly flexible.  If they declared that the US was being moved to Canada next week, most of us would pack up and go, because it's the freedom rule-set that we're most addicted to, with darn near everything else being negotiable.

Yes, the world is still full of traditional cultures wedded to sacred soil and religious identities (like . . . fuh-ever!), but given even the slightest chance, man, will they ever break out of their shells - and I mean everybody.  Sure, it's the kids who always lead the way, but guess what?  Traditional societies are youth-skewed (all that baby cranking) and they often feel the huge need to BE traditional precisely because there are all those young minds that need bending.  And yes, when the change comes, it does seem like the "end of X civilization," just like when Elvis and The Beatles and Stones showed up. And yes, many prices will be paid and much of the culture transformed and made that much harsher by all that individualism (to include the freedom to be miserable), but people really are the same all over - when given the chance.  No, that expression doesn't come in some archetypal "American" way.  At the end of the day, Russians are still Russians and Chinese are still Chinese (go figure!), so the applications are always different. 

It's just that the freedom impulse (far more economic in nature than political) is the basically the same:  I get to do what I want, when I want, how I want, buying what I want, etc.

So no, no 50-year transformations required on the economics.  It's the politics (single-party states in particular) that go slow.

That's what the military and intell people NEVER understand.  They think the politics (aka, intentions) can go like "SNAP!" while the economics will never change (or capabilities change slowly).  

Truth is, it's entirely the other way around. And all that economic freedom is what drives the super-fast technology adaptations (meaning HOW people use tech is nearly always more revolutionary than the tech itself).

Just my 2 cents .....

11:17AM

Interview with Radio Free Russia on Wikistrat's projections for 2013 (surprises)

Did the interview Thursday morning and it ran Friday morning.  I didn't write this one up, so it was good to see a sim run within the community and resulting in a solid product by a senior analyst (Wikistrat is maturing as a start-up in good order).

From the page:

WASHINGTON -- Wikistrat runs simulations on future events by crowdsourcing hundreds of online analysts, and hopes to be the next big thing in prediction.

Kim Brown interviews Managing Editor Chrisella Sagers Herzog, ofDiplomatic Courier Magazine, and Dr. Thomas P.M. Barnett, chief analyst of Wikistrat: 

Download

Wikistrat bills itself as "the world’s first Massively Multiplayer Online Consultancy (MMOC)". It is made up of hundreds of analysts, connected globally through the internet, who run simulations on possible future events.

Large companies and even the federal government have expressed interest in using Wikistrat, who runs simulations for a consulting fee. Right now, they're working on predicting the future of Syria and Assad's regime.

Find the page here.

11:18AM

Indian women and the push against gender violence

NYT story on widespread protests in New Dehli over the apparent gang rape and (eventual) murder of a young female student (23) on a bus.  The woman died from her wounds, which included penetration by a metal rod.

Gruesome stuff, to say the least.

The nature of the violence isn't what catches my sense of historical timing.  Men in packs will do the most atricious things.  

What's interesting here (and it corresponds to a scenario proposed by a Wikistrat analyst at a recent sim we ran) are sociologists linking this growing pack violence against Indian women to a growing disparity in gender numbers - i.e., excess males after years and years of discarding female fetuses.  The result is an age cohort where there are too many guys, too few females to court, and a budding social anger among the males that translates into violence against women and implicit attacks on their rights and standing.  In short, too few women relative to men = social devaluation of females, making them "fair game" in the minds of angry young men.

I will tell you, I buy excess males turning against governments when jobs are not there, and I buy this too.  I've never bought, in the modern context, the bit about having to place excess males in the military and then going to war.  That's applying old logic to modern situations.

But the "war" does come, is the point.  It's just a war against women.

The upside?  It forces women to fight harder and more pervasively for their rights in society, and here the historical timing reminds me of the US in the 1960s and 1970s - a time of seismic and permanent change for women in American society.  I was born (1962) into one world regarding the role of women, but by the time I was a young male courting (1982, when I met my wife and started dating her), it was a very different universe. My wife was the only daughter of a woman who divorced her husband and left to pursue her PhD - I mean, really radical stuff in the early 1970s.  That experience made my spouse a very different person, and thus forced a different relationship (trivial but telling example:  my second middle initial comes from my taking my wife's maiden name of Meussling, thus rendering, in the eyes of the USG, my original name (Thomas Patrick Barnett) as my "maiden name" for all time).

It's a tiny example of how much change happened in the US on womens' issues across the short timespan of my first 25 years of life.  I can't possibly guess at the rate of change that older civilizations like India and China will enjoy/suffer.  I can just speculate that this awakening is coming, and that it's going to be huge.

10:58AM

WAPO WonkBlog: "What will we smuggle in the future? Drones, coal, and honeybees."

Psst, got any HCFC-22?Everybody’s making predictions for 2013 right now, but why not aim farther? Recently, the consultancy group Wikistrat ran a large crowd-sourced simulation to try to figure out what sorts of items would be smuggled in 2050.

That’s right, smuggled. The idea is that you can tell a lot about a society by what’s available on its black markets. And over the next four decades the combination of new technologies, environmental pressures and shifting consumer preferences is likely to lead to a whole slew of products and behaviors being banned or restricted.

So here’s what Wikistrat expects will thrive on the black market by 2050. Note that the group mainly focused on identifying new types of contraband — no doubt old crowd favorites like drugs and guns will still be trafficked for decades to come:

Read the entire post at WAPO's WonkBlog.

The pic and caption are apt.  I got the idea for designing the sim from reading a newspaper account of how freon is now a smuggle-able item. Of course, we used it for decades in air conditioning units, but then, about 20 years ago, it was ordered phased out by an international treaty.  So voila!  Two decades later it's perfectly illegal - in some parts of the world, thus the smugglers' market.

Well, that got me thinking:  If we project ahead to 2050, which of today's legal items would become illegal? (And no, I disagree with the blog author noting that we "omitted" foreign arable land sales and leasing as "unconventional" smuggling, because that's an abuse of the term when the item in question cannot be moved across sovereign borders.  Although the concept makes me laugh to remember Woody Allen's "Love and Death" where his Russian father carries around a chunk of sod, pulling it out for friends and declaring, "Someday, I hope to build on it!")

Several dozen analysts cranked a few dozen ideas.  I then grouped them and wrote up the report.  It was a pretty good sim, and it generated (as I suspected it might) the right kind of material that a MSM outlet might like to publicize.

Access the full Wikistrat report (PDF) here and the executive summary too.

12:01AM

WSJ front-pager on "global gas push" mirrors Wikistrat sim scenario

Per the recent Wikistrat simulation, "North America's Energy Export Boom," we had a scenario called "Fit of Peaks" in which the US "got it right" (fracking revolution) but much of the rest of the world had a hard time cashing in similarly.

The WSJ front-pager, entitled "Global Gas Push Stalls: Firms Hit Hurdles Trying to Replicate U.S. Success Abroad" fits that model nicely.

Key finding:

Among the reasons for the glacial pace are government ownership of mineral rights, environmental concerns and a lack of infrastructure to drill and transport gas and oil. In addition, much less is known about the geology in most foreign countries than in the U.S., where drilling activity has been going on for more than a century.

The upshot:  the U.S. and Canada could remain the main countries to reap the economic advantages of shale development for some time.

The serious advantage: the gas and ethane glut lures petrochem and fertilizer companies to NorthAm to take advantage of the cost differential - "a huge change after years of shifting production abroad."

Bottom line:  about a decade head-start for NorthAm.

I speak this morning in Houston at a board meeting of a national offshore industries association member company.  This emerging strategic reality is coming to dominate my career right now.

12:27PM

Nice post (full of data) about India in Africa

Find it here.

Posted by old friend (or is it demon?) Tyler Durden at Zero Hedge.

Best bit:

Parallels are often drawn between India and China’s African “safaris.” Indeed, their trade with Africa has grown at similar rates; India’s at a compounded annual growth rate of 24.8% and China’s at 26.3%. More importantly, access to natural resources and especially oil is the main driver of both Asian giants’ engagement of the continent.

There are important differences though.  For one, India’s footprint in Africa is small compared with that of China. Take their role in Africa’s trade for instance. In 2011, India accounted for 5.2% of Africa’s global trade compared with China’s 16.9%. Besides, unlike China’s investment in Africa, which is led by state-owned companies, Indian investment is mainly driven by the private sector. In another contrast with Chinese companies, India hires local laborers while many Chinese companies bring Chinese laborers to their projects in Africa.

Indian officials admit that China’s aid-for-oil strategy, which involves extension of soft loans for massive infrastructure projects in return for African oil, used to impress them as it helped Beijing secure deals in its favor, according to the MEA official. This prompted India to follow the Chinese strategy in some countries where it was seeking oil deals.  However, India was unable to match the aid the Chinese offered. It underscored the need for an approach that built on India’s strengths, which ultimately resulted in India focusing on capacity building in Africa.

Worth reading.  

Obtained from Craig Nordin.  He got it from Sudha Ramachandran at The Diplomat.

12:01AM

Getting Arctic hydrocarbons will be a lot harder than anticipated

FT special report on Canadian energy that highlights the difficulties of accessing Arctic oil and gas and bringing it economically to market.

First is the sheer remoteness.  Then there's the extremely hostile environment.  Even with the ice-clearing in the summer, the genuine window for exploitation is still measured in weeks.  Everything you use must be special built, platforms with extreme reliability.

And the fields in question need to be big - really big - to cover the high costs.  

In short, only the majors and supermajors should apply, because only they will have the "financial firepower."

This is all before governments issue ever stringent safety requirements to protect the environment, a bar that rises with each Deepwater Horizon.

Finally, there's how you get it to market, with the big choice being between fixed pipelines and ice-class shuttle tankers.  Neither is cheap.

Just a bit of cold water thrown on the anticipated "bonanza."

I note it with interest as I write the final report (while traveling most of the week) for Wikistrat's recent "How the Arctic Was Won" simulation.

11:07AM

Great summarizing FT article on "global food security" risk

Notice the equatorially-centric band? Remind you of another map?

Starts by calling farmers "the canaries in the mine when it comes to climate change."  Brilliant.

What affects farmers affects the global food supply and causes the price rises that hit middle class wallets and increases the risk of hunger for the world's poor.

CC isn't the "only culprit" when it comes to good security.

The primary drivers, the article notes, are population growth and the stunning growth of the global middle class, which, as we know, likes to eat and eat well.

Next is the loss of land to food crops due to urbanization and the diversion of crops to fuels (dumbest idea in human history).

But here's the quote that caught my eye:

If these were the only pressures on the global food supply, feeding the world sustainably could still be achievable, says Jerry Nelson, a senior research fellow at the International Food Policy Research Institute (IFPRI).  "If you didn't have climate change, you could tell a story about how it will be challenging and how we need to invest more in productivity, reduce waste and manage international trade," he says.  "But this would be something we could accomplish.

"When you throw climate change into the mix, that makes everything a lot more difficult."

Or better said - with regard to risk - more uncertain.

Great little piece in "FT Special Report: Managing Climate Change."

12:01AM

Brilliant movie-chart on Kiva loans from Core to Gap

HT to Thomas Frazel at Tulane.

I wrote about Kiva in Great Powers, naturally, because there my focus was on subnational and transnational actors (the trilogy, in Waltzian terms, went PNM = system, BFA = states, and GP = trans/subnational & individuals).

No surprise on the flows here: it's virtually all Core to Gap (wait for the "actor" credits at the end).

What I saw were four big flows:

1) US to Africa

2) US to Greater Middle East

3) US to Asia

4)Europe to Asia.

 

Fascinating stuff.

 

Meanwhile, I'm on the road giving a speech to a financial conference in Atlanta.

11:34AM

Time's Battleland: NATIONAL SECURITY Death to “Resource Wars”!

Nice Washington Post piece on Saturday about how the “center of gravity” in global oil exploration and production is shifting to the Western hemisphere.  No, the bulk of global conventional oil reserves still sits in the Persian Gulf, but the larger point is worth exploring: we no longer project global futures where East and West logically fight over Middle East energy reserves.  Those expected long-term dynamics are collapsing right now before our eyes.

Read the entire post at Time's Battleland blog.