[Rhodes22-list] A Global Intelligence Briefing For CEOs

[Hank]

Lee,

His credentials are pretty impressive and what he rights makes sense to me.
Maybe Brad can chime in with his opinion of the China section.

The part about the declining birthrate I found very interesting.  I believe
you can even break it down further.  Meyer breaks it down by ethnicity, but
not by socio-economic status.  From my personal observation while living in
Mexico, The upper and middle class are having fewer babies, while the lower
class have more.  For example, In my wife's family, her parents had 8
children and most families from that generation had at least 4.  Of my 8
kids, none of them have more than 2 children and so far everyone has said
that is enough for them.  While this is certainly not the rule for EVERY
family, I believe it does show a trend that should be considered.

Hank


On 3/27/07, KUHN, LELAND <LKUHN at cnmc.org> wrote:
>
>
> Hank,
>
> I can't speak to the accuracy of Mr. Meyer's assessment, but it's
> certainly well worth the read.
>
> Thanks!
>
> Lee
>
> -----Original Message-----
> From: Hank [mailto:hnw555 at gmail.com]
> Sent: Monday, March 26, 2007 12:19 PM
> To: The Rhodes 22 mail list
> Subject: [Rhodes22-list] A Global Intelligence Briefing For CEOs
>
> Very interesting reading.  Nothing against either party, just some keen
> observations on the world as it now exists.
>
> Hank
>
>
> A Global Intelligence Briefing For CEOs
>
> Herbert Meyer
>
>
>
> Currently, there are four major transformations that are shaping
> political,
> economic and world events. These transformations have profound
> implications
> for American business owners, our culture and our way of life.
>
>
>
> 1. The War in Iraq
>
>
>
> There are three major monotheistic religions in the world: Christianity,
> Judaism and Islam. In the 16th century, Judaism and Christianity
> reconciled
> with the modern world. The rabbis, priests and scholars found a way to
> settle up and pave the way forward. Religion remained at the center of
> life,
> church and state became separate. Rule of law, idea of economic liberty,
> individual rights, human rights all these are defining points of modern
> Western civilization. These concepts started with the Greeks but didn't
> take
> off until the 15th and 16th century when Judaism and Christianity found
> a
> way to reconcile with the modern world. When that happened, it unleashed
> the
> scientific revolution and the greatest outpouring of art , literature
> and
> music the world has ever known.
>
>
>
> Islam, which developed in the 7th century, counts millions of Moslems
> around
> the world who are normal people. However, there is a radical streak
> within
> Islam. When the radicals are in charge, Islam attacks Western
> civilization.
> Islam first attacked Western civilization in the 7th century, and later
> in
> the 16th and 17th centuries. By 1683, the Moslems (Turks from the
> Ottoman
> Empire) were literally at the gates of Vienna. It was in Vienna that the
> climatic battle between Islam and Western civilization took place. The
> West
> won and went forward. Islam lost and went backward Interestingly, the
> date
> of that battle was September 11. Since them, Islam has not found a way
> to
> reconcile with the modern world.
>
>
>
> Today, terrorism is the third attack on Western civilization by radical
> Islam. To deal with terrorism, the U.S. is doing two things. First,
> units of
> our armed forces are in 30 countries around the world hunting down
> terrorist
> groups and dealing with them. This gets very little publicity. Second we
> are
> taking military action in Afghanistan and Iraq. These are covered
> relentlessly by the media. People can argue about whether the war in
> Iraq is
> right or wrong. However, the underlying strategy behind the war is to
> use
> our military to remove the radicals from power and give the moderates a
> chance. Our hope is that, over time, the moderates will find a way to
> bring
> Islam forward into the 21st century. That's what our involvement in Iraq
> and
> Afghanistan is all about.
>
>
>
> The lesson of 9/11 is that we live in a world where a small number of
> people
> can kill a large number of people very quickly. They can use airplanes,
> bombs, anthrax, chemical weapons or dirty bombs. Even with a first-rate
> intelligence service (which the U.S. does not have), you can't stop
> every
> attack. That means our tolerance "for political horseplay" has dropped
> to
> zero. No longer will we play games with terrorists or weapons of mass
> destructions.
>
>
>
> Most of the instability and horseplay is coming from the Middle East.
> That's
> why we have thought that if we could knock out the radicals and give the
> moderates a chance to hold power, they might find a way to reconcile
> Islam
> with the modern world. So when looking at Afghanistan or Iraq, it's
> important to look for any signs that they are modernizing. For example,
> women being brought into the workforce and colleges in Afghanistan is
> good.
> The Iraqis stumbling toward a constitution is good. People can argue
> about
> what the U.S. is doing and how we're doing it, but anything that
> suggests
> Islam is finding its way forward is good.
>
>
>
> 2. The Emergence of China
>
>
>
> In the last 20 years, China has moved 250 million people from the farms
> and
> villages into the cities. Their plan is to move another 300 million in
> the
> next 20 years. When you put that many people into the cities, you have
> to
> find work for them. That's why China is addicted to manufacturing; they
> have
> to put all the relocated people to work. When we decide to manufacture
> something in the U.S., it's based on market needs and the opportunity to
> make a profit. In China, they make the decision because they want the
> jobs,
> which is a very different calculation.
>
>
>
> While China is addicted to manufacturing, Americans are addicted to low
> prices. As a result, a unique kind of economic codependency has
> developed
> between the two countries. If we ever stop buying from China, they will
> explode politically. If China stops selling to us, our economy will take
> a
> huge hit because prices will jump. We are subsidizing their economic
> development, they are subsidizing our economic growth.
>
>
>
> Because of their huge growth in manufacturing, China is hungry for raw
> materials, which drives prices up worldwide. China is also thirsty for
> oil,
> which is one reason oil is now at $60 a barrel. By 2020, China will
> produce
> more cars than the U...S. China is also buying its way into the oil
> infrastructure around the world. They are doing it in the open market
> and
> paying fair market prices, but millions of barrels of oil that would
> have
> gone to the U.S. are now going to China. China's quest to assure it has
> the
> oil it needs to fuel its economy is a major factor in world politics and
> economics. We have our Navy fleets protecting the sea lines,
> specifically
> the ability to get the tankers through. It won't be long before the
> Chinese
> have an aircraft carrier sitting in the Persian Gulf as well. The
> question
> is, will their aircraft carrier be pointing in the same direction as
> ours or
> against us?
>
>
>
> 3. Shifting Demographics of Western Civilization
>
>
>
> Most countries in the Western world have stopped breeding. For a
> civilization obsessed with sex, this is remarkable. Maintaining a steady
> population requires a birth rate of 2.1. In Western Europe, the birth
> rate
> currently stands at 1.5, or 30 percent below replacement. In 30 years
> there
> will be 70 to 80 million fewer Europeans than there are today. The
> current
> birth rate in Germany is 1.3. Italy and Spain are even l ower at 1.2. At
> that rate, the working age population declines by 30 percent in 20
> years,
> which has a huge impact on the economy.
>
>
>
> When you don't have young workers to replace the older ones, you have to
> import them. The European countries are currently importing Moslems.
> Today,
> the Moslems comprise 10 percent of France and Germany, and the
> percentage is
> rising rapidly because they have higher birthrates. However, the Moslem
> populations are not being integrated into the cultures of their host
> countries, which is a political catastrophe. One reason Germany and
> Francedon't support the
> Iraq war is they fear their Moslem populations will explode on them. By
> 2020, more than half of all births in the Netherlands will be
> non-European.
>
>
>
> The huge design flaw in the post-modern secular state is that you need a
> traditional religious society birth rate to sustain it. The Europeans
> simply
> don't wish to have children, so they are dying.
>
>
>
> In Japan, the birthrate is 1.3. As a result, Japan will lose up to 60
> million people over the next 30 years. Because Japan has a very
> different
> society than Europe, they refuse to import workers. Instead, they are
> just
> shutting down. Japan has already closed 2000 schools, and is closing
> them
> down at the rate of 300 per year. Japan is also aging very rapidly. By
> 2020,
> one out of every five Japanese will be at least 70 years old. Nobody has
> any
> idea about how to run an economy with those demographics.
>
>
>
> Europe and Japan, which comprise two of the world's major economic
> engines,
> aren't merely in recession, they're shutting down. This will have a huge
> impact on the world economy, and it is already beginning to happen. Why
> are
> the birthrates so low? There is a direct correlation between abandonment
> of
> traditional religious society and a drop in birth rate, and Christianity
> in
> Europe is becoming irrelevant. The second reason is economic. When the
> birth
> rate drops below replacement, the population ages. With fewer working
> people
> to support more retired people, it puts a crushing tax burden on the
> smaller
> group of working age people. As a result, young people delay marriage
> and
> having a family. Once this trend starts, the downward spiral only gets
> worse. These countries have abandoned all the traditions they formerly
> held
> in regards to having families and raising children.
>
>
>
> The U.S. birth rate is 2.0, just below replacement. We have an increase
> in
> population because of immigration. When broken down by ethnicity, the
> Anglo
> birth rate is 1.6 (same as France) while the Hispanic birth rate is 2.7.
> In
> the U.S., the baby boomers are starting to retire in massive numbers.
> This
> will push the "elder dependency" ratio from 19 to 38 over the next 10 to
> 15
> years. This is not as bad as Europe, but still represents the same kind
> of
> trend.
>
>
>
> Western civilization seems to have forgotten what every primitive
> society
> understands, you need kids to have a healthy society. Children are huge
> consumers. Then they grow up to become taxpayers. That's how a society
> works, but the post-modern secular state seems to have forgotten that.
> If
> U.S. birth rates of the past 20 to 30 years had been the same as
> post-World
> War II, there would be no Social Security or Medicare problems.
>
>
>
> The world's most effective birth control device is money. As society
> creates
> a middle class and women move into the workforce, birth rates drop.
> Having
> large families is incompatible with middle class living. The quickest
> way to
> drop the birth rate is through rapid economic development. After World
> War
> II, the U.S. instituted a $600 tax credit per child. The idea was to
> enable
> mom and dad to have four children without being troubled by taxes. This
> led
> to a baby boom of 22 million kids, which was a huge consumer market that
> turned into a huge tax base. However, to match that incentive in today's
> dollars would cost $12,000 per child.
>
>
>
> China and India do not have declining populations. However, in both
> countries, there is a preference for boys over girls, and we now have
> the
> technology to know which is which before they are born. In China and
> India,
> many families are aborting the girls. As a result, in each of these
> countries there are 70 million boys growing up who will never find
> wives.
> When left alone, nature produces 103 boys for every 100 girls. In some
> provinces, however, the ratio is 128 boys to every 100 girls.
>
>
>
> The birth rate in Russia is so low that by 2050 their population will be
> smaller than that of Yemen. Russia has one-sixth of the earth's land
> surface
> and much of its oil. You can't control that much area with such a small
> population. Immediately to the south, you have China with 70 million
> unmarried men -- a real potential nightmare scenario for Russia.
>
>
>
> 4. Restructuring of American Business
>
>
>
> The fourth major transformation involves a fundamental restructuring of
> American business. Today's business environment is very complex and
> competitive. To succeed, you have to be the best, which means having the
> highest quality and lowest cost. Whatever your price point, you must
> have
> the best quality and lowest price. To be the best, you have to
> concentrate
> on one thing. You can't be all things to all people and be the best.
>
>
>
> A generation ago, IBM used to make every part of their computer. Now
> Intel
> makes the chips, Microsoft makes the software, and someone else makes
> the
> modems, hard drives, monitors, etc. IBM even outsources their call
> center.
> Because IBM has all these companies supplying goods and services cheaper
> and
> better than they could do it themselves, they can make a better computer
> at
> a lower cost. This is called a "fracturing" of business. When one
> company
> can make a better product by relying on others to perform functions the
> business used to do itself, it creates a complex pyramid of companies
> that
> serve and support each other.
>
>
>
> This fracturing of American business is now in its second generation.
> The
> companies who supply IBM are now doing the same thing, outsourcing many
> of
> their core services and production process. As a result, they can make
> cheaper, better products. Over time, this pyramid continues to get
> bigger
> and bigger. Just when you think it can't fracture again, it does. Even
> very
> small businesses can have a large pyramid of corporate entities that
> perform
> many of its important functions. One aspect of this trend is that
> companies
> end up with fewer employees and more independent contractors.
>
>
>
> This trend has also created two new words in business, integrator and
> complementor. At the top of the pyramid, IBM is the integrator. As you
> go
> down the pyramid, Microsoft, Intel and the other companies that support
> IBM
> are the complementors. However, each of the complementors is itself an
> integrator for the complementors underneath it. This has several
> implications, the first of which is that we are now getting false
> readings
> on the economy. People who used to be employees are now independent
> contractors launching their own businesses. There are many people
> working
> whose work is not listed as a job. As a result, the economy is perking
> along
> better than the numbers are telling us.
>
>
>
> Outsourcing also confused the numbers. Suppose a company like General
> Motors
> decides to outsource all its employee cafeteria functions to Marriott
> (which
> it did). It lays off hundreds of cafeteria workers, who then get hired
> right
> back by Marriott. The only thing that has changed is that these people
> work
> for Marriott rather than GM. Yet, the headlines will scream that America
> has
> lost more manufacturing jobs. All that really happened is that these
> workers
> are now reclassified as service workers. So the old way of counting jobs
> contributes to false economic readings. As yet, we haven't figured out
> how
> to make the numbers catch up with the changing realities of the business
> world.
>
>
>
> Another implication of this massive restructuring is that because
> companies
> are getting rid of units and people that used to work for them, the
> entity
> is smaller. As the companies get smaller and more efficient, revenues
> are
> going down but profits are going up. As a result, the old notion that
> "revenues are up and we're doing great" isn't always the case anymore.
> Companies are getting smaller but are becoming more efficient and
> profitable
> in the process.
>
>
>
> Implications of the Four Transformations
>
>
>
> 1. The War in Iraq
>
>
>
> In some ways, the war is going very well. Afghanistan and Iraq have the
> beginnings of a modern government, which is a huge step forward. The
> Saudis
> are starting to talk about some good things, while Egypt and Lebanon are
> beginning to move in a good direction.
>
>
>
> A series of revolutions have taken place in countries like Ukraine and
> Georgia. There will be more of these revolutions for an interesting
> reason.
> In every revolution, there comes a point where the dictator turns to the
> general and says, "Fire into the crowd." If the general fires into the
> crowd, it stops the revolution. If the general says "No," the revolution
> is
> over. Increasingly, the generals are saying "No" because their kids are
> in
> the crowd.
>
>
>
> Thanks to TV and the Internet, the average 18-year old outside the U.S.
> is
> very savvy about what is going on in the world, especially in terms of
> popular culture. There is a huge global consciousness, and young people
> around the world want to be a part of it. It is increasingly apparent to
> them that the miserable government where they live is the only thing
> standing in their way. More and more, it is the well-educated kids, the
> children of the generals and the elite, who are leading the revolutions.
>
>
>
> At the same time, not all is well with the war. The level of violence in
> Iraq is much worse and doesn't appear to be improving. It's possible
> that
> we're asking too much of Islam all at one time. We're trying to jolt
> them
> from the 7th century to the 21st century all at once, which may be
> further
> than they can go. They might make it and they might not. Nobody knows
> for
> sure. The point is, we don't know how the war will turn out. Anyone who
> says
> they know is just guessing.
>
>
>
> The real place to watch is Iran. If they actually obtain nuclear weapons
> it
> will be a terrible situation. There are two ways to deal with it. The
> first
> is a military strike, which will be very difficult. The Iranians have
> dispersed their nuclear development facilities and put them underground.
> The
> U.S. has nuclear weapons that can go under the earth and take out those
> facilities, but we don't want to do that. The other way is to separate
> the
> radical mullahs from the government, which is the most likely course of
> action.
>
>
>
> Seventy percent of the Iranian population is under 30. They are Moslem
> but
> not Arab. They are mostly pro-Western. Many experts think the U.S.
> should
> have dealt with Iran before going to war with Iraq. The problem isn't so
> much the weapons, it's the people who control them. If Iran has a
> moderate
> government, the weapons become less of a concern.
>
>
>
> We don't know if we will win the war in Iraq. We could lose or win. What
> we're looking for is any indicator that Islam is moving into the 21st
> century and stabilizing
>
>
>
> 2. China
>
>
>
> It may be that pushing 500 million people from farms and villages into
> cities is too much too soon. Although it gets almost no publicity, China
> is
> experiencing hundreds of demonstrations around the country, which is
> unprecedented. These are not students in Tiananmen Square. These are
> average
> citizens who are angry with the government for building chemical plants
> and
> polluting the water they drink and the air they breathe.
>
>
>
> The Chinese are a smart and industrious people. They may be able to pull
> it
> off and become a very successful economic and military superpower. If
> so, we
> will have to learn to live with it. If they want to share the
> responsibility
> of keeping the world's oil lanes open, that's a good thing. They
> currently
> have eight new nuclear electric power generators under way and 45 on the
> books to build . Soon, they will leave the U.S. way behind in their
> ability
> to generate nuclear power.
>
>
>
> What can go wrong with China? For one, you can't move 550 million people
> into the cities without major problems. Two, China really wants Taiwan,
> not
> so much for economic reasons, they just want it. The Chinese know that
> their
> system of communism can't survive much longer in the 21st century. The
> last
> thing they want to do before they morph into some sort of more
> capitalistic
> government is to take over Taiwan.
>
>
>
> We may wake up one morning and find they have launched an attack on
> Taiwan.
> If so, it will be a mess, both economically and militarily. The U.S. has
> committed to the military defense of Taiwan. If China attacks Taiwan,
> will
> we really go to war against them? If the Chinese generals believe the
> answer
> is no, they may attack. If we don't defend Taiwan, every treaty the U.S.
> has
> will be worthless. Hopefully,China won't do anything stupid.
>
>
>
> 3. Demographics
>
>
>
> Europe and Japan are dying because their populations are aging and
> shrinking. These trends can be reversed if the young people start
> breeding.
> However, the birth rates in these areas are so low it will take two
> generations to turn things around. No economic model exists that permits
> 50
> years to turn things around. Some countries are beginning to offer
> incentives for people to have bigger families. For example, Italy is
> offering tax breaks for having children. However, it's a lifestyle issue
> versus a tiny amount of money. Europeans aren't willing to give up their
> comfortable lifestyles in order to have more children.
>
>
>
> In general, everyone in Europe just wants it to last a while longer.
> Europeans have a real talent for living. They don't want to work very
> hard.
> The average European worker gets 400 more hours of vacation time per
> year
> than Americans. They don't want to work and they don't want to make any
> of
> the changes needed to revive their economies.
>
>
>
> The summer after 9/11, France lost 15,000 people in a heat wave. In
> August,
> the country basically shuts down when everyone goes on vacation. That
> year,
> a severe heat wave struck and 15,000 elderly people living in nursing
> homes
> and hospitals died. Their children didn't even leave the beaches to come
> back and take care of the bodies. Institutions had to scramble to find
> enough refrigeration units to hold the bodies until people came to claim
> them.
>
>
>
> This loss of life was five times bigger than 9/11 in America, yet it
> didn't
> trigger any change in French society. When birth rates are so low, it
> creates a tremendous tax burden on the young. Under those circumstances,
> keeping mom and dad alive is not an attractive option. That's why
> euthanasia
> is becoming so popular in most European countries. The only country that
> doesn't permit (and even encourage) euthanasia is Germany, because of
> all
> the baggage from World War II.
>
>
>
> The European economy is beginning to fracture. The Euro is down.
> Countries
> like Italy are starting to talk about pulling out of the European Union
> because it is killing them. When things get bad economically in Europe,
> they
> tend to get very nasty politically. The canary in the mine is
> anti-Semitism.
> When it goes up, it means trouble is coming. Current levels of
> anti-Semitism
> are higher than ever. Germany won't launch another war, but Europe will
> likely get shabbier, more dangerous and less pleasant to live in.
>
>
>
> Japan has a birth rate of 1.3 and has no intention of bringing in
> immigrants. By 2020, one out of every five Japanese will be 70 years
> old.
> Property values in Japan have dropped every year for the past 14 years.
> The
> country is simply shutting down.
>
>
>
> In the U.S. we also have an aging population. Boomers are starting to
> retire
> at a massive rate. These retirements will have several major impacts:
>
>
>
> *         Possible massive sell-off of large four-bedroom houses and a
> movement to condos.
>
> *         An enormous drain on the treasury. Boomers vote, and they want
> their benefits, even if it means putting a crushing tax burden on their
> kids
> to get them. Social Security will be a huge problem. As this generation
> ages, it will start to drain the system. We are the only country in the
> world where there are no age limits on medical procedures.
>
> *         An enormous drain on the health care system. This will also
> increase the tax burden on the young, which will cause them to delay
> marriage and having families, which will drive down the birth rate even
> further.
>
>
>
> Although scary, these demographics also present enormous opportunities
> for
> products and services tailored to aging populations. There will be
> tremendous demand for caring for older people, especially those who
> don't
> need nursing homes but need some level of care. Some people will have a
> business where they take care of three or four people in their homes.
> The
> demand for that type of serv ice and for products to physically care for
> aging people will be huge.
>
>
>
> Make sure the demographics of your business are attuned to where the
> action
> is. For example, you don't want to be a baby food company in Europe or
> Japan.
> Demographics are much underrated as an indicator of where the
> opportunities
> are. Businesses need customers. Go where the customers are.
>
>
>
> 4. Restructuring of American Business
>
>
>
> The restructuring of American business means we are coming to the end of
> the
> age of the employer and employee. With all this fracturing of businesses
> into different and smaller units, employers can't guarantee jobs anymore
> because they don't know what their companies will look like next year.
> Everyone is on their way to becoming an independent contractor. The new
> workforce contract will be, "Show up at the my office five days a week
> and
> do what I want you to do, but you handle your own insurance, benefits,
> health care and everything else."
>
>
>
> Husbands and wives are becoming economic units. They take different jobs
> and
> work different shifts depending on where they are in their careers and
> families. They make tradeoffs to put together a compensation package to
> take
> care of the family. This used to happen only with highly educated
> professionals with high incomes. Now it is happening at the level of the
> factory floor worker. Couples at all levels are designing their
> compensation
> packages based on their individual needs. The only way this can work is
> if
> everything is portable and flexible, which requires a huge shift in the
> American economy.
>
>
>
> The U.S. is in the process of building the world's first 21st century
> model
> economy. The only other countries doing this are U.K. and Australia. The
> model is fast, flexible, highly productive and unstable in that it is
> always
> fracturing and re-fracturing. This will increase the economic gap
> between
> the U.S. and everybody else, especially Europe and Japan.
>
>
>
> At the same time, the military gap is increasing. Other than China, we
> are
> the only country that is continuing to put money into their military.
> Plus,
> we are the only military getting on-the-ground military experience
> through
> our war in Iraq. We know which high-tech weapons are working and which
> ones
> aren't. There is almost no one who can take us on economically or
> militarily. There has never been a superpower in this position before.
>
>
>
> On the one hand, this makes the U.S. a magnet for bright and ambitious
> people. It also makes us a target. We are becoming one of the last
> holdouts
> of the traditional Judeo-Christian culture. There is no better place in
> the
> world to be in business and raise children. The U. S. is by far the best
> place to have an idea, form a business and put it into the marketplace.
> We
> take it for granted, but it isn't as available in other countries of the
> world.
>
>
>
> Ultimately, it's an issue of culture. The only people who can hurt us
> are
> ourselves, by losing our culture. If we give up our Judeo-Christian
> culture,
> we become just like the Europeans. The culture war is the whole
> ballgame. If
> we lose it, there isn't another America to pull us out.
>
>
>
> Herb Meyer served during the Reagan administration as special assistant
> to
> the Director of Central Intelligence and Vice Chairman of the CIA's
> National
> Intelligence Council. In these positions,he managed production of the
> U.S.
> National Intelligence Estimates and other top-secret projections for the
> President and his national security advisers. Meyer is widely credited
> with
> being the first senior U.S. Government official to forecast the Soviet
> Union's
> collapse, for which he later was awarded the U.S. National Intelligence
> Distinguished Service Medal, the intelligence community's highest honor.
> Formerly an associate editor of FORTUNE, he is also the author of
> several
> books.
>
>
>
> *Herbert Meyer*
>
> *P.O. Box** 2089***
>
> *Friday Harbor**, **WA** **98250***
>
> *(360) * Fax*
>
> *Email: herbmeyer at storkingpress.com*
>
> Confidentiality Notice: This e-mail message, including any attachments, is
> for the sole use of the intended recipient(s) and may contain confidential
> and privileged information.  Any unauthorized review, use, disclosure or
> distribution is prohibited.  If you are not the intended recipient, please
> contact the sender by reply e-mail and destroy all copies of the original
> message.
>
> __________________________________________________
> Use Rhodes22-list at rhodes22.org, Help? www.rhodes22.org/list
>