Creative Class

I’ve been reading Thomas Friedman’s “Flat, Hot and Crowded” about the challenges facing the world and the necessity of American leadership. Then in Sunday’s Oregonian, a summary of a new study for the Center for Strategic and International Studies gives yet another reason for this. The U.S., alone among major developed nations, is not aging into irrelevance. A lot more is riding on the next administration than just getting us through the current economic hardships. America will need to stand up and reassume the world leadership we’ve been abandoning since the ‘80s.

Here are some selected excerpts:

The rich countries have been aging for decades, due to falling birthrates and rising life spans. But in the 2020s, this aging will get an extra kick as large postwar baby boom generations move into retirement. According to the United Nations Population Division, the median ages of Western Europe and Japan, which were 34 and 33 respectively as recently as 1980, will soar to 47 and 52, assuming no miraculous change in fertility. In Italy, Spain and Japan, more than half of all adults will be older than the official retirement age – and there will be more people in their 70s than in their 20s.

…Meanwhile, with the demand for low-wage labor rising, immigration (assuming no rise over today’s rate) will double the percentage of Muslims in France and triple it in Germany. By 2030, Amsterdam, Marseille, Birmingham and Cologne are likely to be majority Muslim.

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An important but limited exception to hyperaging is the United States. Yes, America is also graying, but to a lesser extent. We are the only developed nation with replacement-rate fertility (2.1 children per couple). By 2030, our median age, now 36, will rise to only 39. Our working-age population, according to both U.N. and census projections, will continue to grow throughout the 21st century because of our higher fertility rate and substantial immigration – which we assimilate better than most other developed countries.

…The declinists have it wrong. The challenge facing America by the 2020s is not the inability of a weakening United States to lead the developed world. It is the inability of the other developed nations to be of much assistance – or the likelihood that many will be in dire need of assistance themselves.

All told, population trends point inexorably toward a more dominant U.S. role in a world that will need us more, not less. For the past several years, the U.N. has published a table ranking the world’s 12 most populous countries over time. In 1950, six of the top 12 were developed countries. In 2000, only three were. By 2050, only one developed country will remain – the United States, still in third place.

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Consider China, which may be the first country to grow old before it grows rich… by 2030 it will be an older country than the United States… Russia, along with the rest of Eastern Europe, is likely to experience the fastest extended population decline since the plague-ridden Middle Ages…

The study is called “The Graying of the Great Powers: Demography and Geopolitics in the 21st Century” by Richard Jackson and Neil Howe. The major findings of the actual report are here (PDF).

In the context of this blog, what are the implications for all of the world creative centers, especially in Europe and Japan, that will face aging populations?

In yesterday’s New York Times, I noticed a few separate articles about Latin America and was struck by the impact the U.S. financial crisis/downturn is having in the rest of the hemisphere. In several ways, legal and illegal, we have been supporting economies which will now grow more slowly and needed investment will slow down. What effect it may have on reforms is unclear – Thomas Friedman has argued that huge oil revenues actually slows reform in many countries.

Just looking at Mexico, they’ll be losing money three ways:

• Reduced remittances
• Declining oil sales and prices
• More controversially, possibly declining drug smuggling and sales

I’ve provided the headline, URL link and brief quotes from each article. Do these connections make sense to you? What other impacts going both ways across the border might we see?

“Fewer People Entering U.S. Illegally, Report Says”

“..for the first time in nearly a decade, the number of people entering the country illegally was lower than the number arriving through legal channels.”

“Central banks from Mexico to Brazil have projected the biggest declines in remittances from the United States in more than 10 years.”

“In Mexico, where remittances are the second-largest source of foreign income after oil, officials projected a 12 percent drop this year, the biggest on record.”

“After Financial Crisis, Uncertainty and Lectures From Abroad”

“In only a few days, Latin American leaders have gone from schadenfreude to fear. Despite strong economic growth this decade and some aggressive efforts to break free of the American orbit, there is a growing nervousness that once again Latin America cannot escape the globalized connections in the financial sector that run through the United States.”

“…the financial crisis has exploded far beyond Wall Street. Whipsawing global markets are already having a ripple effect across Latin America. As nervous investors pulled money out of emerging markets, Brazil’s currency, the real, plunged 16 percent against the dollar last month, resulting in hundreds of millions of dollars in losses at large food and eucalyptus-pulp exporters that placed bad bets on the direction of the real.”

“Mexican President Proposes Decriminalizing Some Drugs”

“President Filipe Calderon who has made fighting drug traffickers the centerpiece of his administration, proposed legislation on Thursday that would decriminalize the possession of small quantities of cocaine and other drugs for addicts who agreed to undergo treatment.”

“A recent government survey found that the number of drug addicts in Mexico had almost doubled in the past six years to 307,000, while the number of those who had tried drugs rose to 4.5 million from 3.5 million.”

“Drugs used to flow through Mexico to the United States, and they still do, but an increasing amount of those narcotics now stays in Mexico to feed the habits of domestic consumers.”

I’m just extrapolating, but as smuggling gets harder will less illegal immigration, and U.S. recreational drug users cut back their budgets, the cartels will look at selling more in Latin American countries.

“Falling Oil Price Is a Positive Note Amid Turmoil”

“While consumers welcome the decline, which will reduce the nation’s $1.3 billion daily oil import bill, oil producers are wary. Mexico said it might have to cut its budget next year as petroleum revenue dropped. Countries like Russia and Venezuela, which have been riding a wave of energy-fueled nationalism, could be forced to scale back their ambitions and energy projects that require enormous financing could be delayed.”