Entries in global trends (65)
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 . . .
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Fascinating to me, and to have a defense contractor to boot!
HT to Jim Henkenius.
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.
A 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.
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:
It won't be the "clash of civilizations" in the 21st century, but the clash of generations.
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."
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.
Despite last year's drought, net farm income in US (128B projected) will be highest since 1973 (adjusted basis).
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.
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!).
- 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.
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.
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 .....
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:
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.
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.
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.
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.
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.
Find it here.
Posted by old friend (or is it demon?) Tyler Durden at Zero Hedge.
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.
Obtained from Craig Nordin. He got it from Sudha Ramachandran at The Diplomat.
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.
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."