The future | Futurecast: How Superpowers, Populations, and Globalization Will Change the Way You Live and...

Complex software allowed companies to breakup complex service and distribute parts to companies anywhere | Futurecast: How Superpowers, Populations, and Globalization Will Change the Way You Live and Work | Robert J. Shapiro

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	• Futurecast: How Superpowers, Populations, and Globalization Will Change the Way You Live and Work Robert J. Shapiro St. Martin's Press, 2008 - 368 pages average customer review:based on 6 reviews view larger image
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highly recommended

Must-read book of the year, bar none.

Robert Shapiro was Under-Secretary of Commerce in the Clinton administration from 1998 to 2001, and now leads a consulting firm for US and foreign companies on business issues in general. Now he brings us this book.

"Futurecast: How Superpowers, Populations, and Globalization Will Change The Way You Live and Work" (358 pages) brings the "big picture' of what we can realistically expect in the next 15 years so so. Shapiro focuses on several general themes (geopolitics, globalization of the economy, and the global demographic shift) and the incredible shifts that they will INEVITABLY will bring about. Praise yourself lucky that you are is the US, as Shapiro's outlook for Europe and Japan is bleak at best. Observes Shapiro: "The geopolitical marginalization of Europe seems all but certain. It may be hard to imagine today when much of Europe disdains America's power and its president, but these developments could strengthen the Atlantic alliance." (He goes on to explain in great detail how that would happen.) Shapiro points out there are two wild cards in all scenarios: terrorism and Islamic fundamentalism (which are not the same thing, of course). The effects of the global demographic shifts are devastating, yet certain to happen (Russia is losing about 1 million, yes you read that correctly) people every year) and certain to cause huge political consequences, particularly in Europe and Japan. And on and on...

Be forewarned: this is not a book you'll read in a couple of hours (or even days). This is dense and serious writing. It took me a good two weeks to read the book from start to finish, but it was so worth it. This book for me is as essential as Thomas Friedman's revolutionary "The World Is Flat" book 3 years ago. This book should be required reading for all college students, and frankly our politicians. Are you reading this, Wahsington? Absolutely essential reading.

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The future

I have been attempting to predict the future since about 1965 when I first started reading science fiction. I have almost always been wrong. I have been reading expert's attempts to predict the future since about the same time. They have almost always been wrong. In spite of that it is great fun to predict the future, and even though there are so many variables that the predictions are almost always wrong, the attempt leads to greater understanding of the present.

This book is well written and a pleasure to read. It discusses the main trends that will shape the future, and then goes on to discuss the unknowns, such as major technological changes or catastrophic terrorist events that could make major changes the current trends.

I don't doubt that if you read this book in 10 years it would seem dated and you would smile at many of the incorrect predictions, but reading it today has given me a fine experience of thinking about what is happening in the world.

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Complex software allowed companies to breakup complex service and distribute parts to companies anywhere

1. China is the world's source of personal savings used in the global capital markets and will be the second largest market for everything produced.

2. China's rise will not preclude America's decline. China's expanding production will come from mainly from developing countries. In 2003, America's global production was 23 percent and stable.

3. China's leaders will have little choice over the next decade but to unwind state owned banks and let western financial institutions take hold.

4. American system of job-based medical insurance will continue to unravel, until the number of uninsured working people reaches a political tipping point and a battle for universal healthcare.

5. America's lower energy taxes make energy less expensive than Japan and Europe. Growth in China, India, and Central Europe, and other developing nations will put upward pressure on oil prices. The lack of America savings will produce a dollar crisis and stall the American economy for a time.

6. China saves so much of its income and private businesses retain so much of its earnings - it comes to 40 of China's annual GDP.

7. China attracted $850 billion in foreign investment, mostly in modern manufacturing operations. Between 2002 to 2005, China attracted almost $333 billion in new direct foreign investments.

8. From its start, China's tentative embrace of capitalism was fundamentally a political choice, as its leaders sought to distance themselves from the palpable failures of both Maoism and Soviet-led communist movement and focus on driving economic growth and national power it conferred. Chinese leaders opened industries to foreign trade and investment and for the first time allowed the workforce to move from village to bigger cities where the jobs existed. Western joint ventures brought western technology and expertise to China and provided training grounds for the next generation of Chinese managers and entrepreneurs.

9. With so much of China's growth and progress based on transplants from more advanced economies, most of what makes China modern exists in a kind of economic vacuum without the strong, natural ties to everything else that help maintain intricate forms of economic balance. Jobs could move to India and Bangladesh and this vast disparity makes it much harder for China to develop the kind of integrated national economy that large countries need to maintain their growth and development.

10. China's state owned banks keep monopoly companies afloat, forcing banks to write off bad loans that drain the working capital from the deposits of ordinary Chinese.

11. Building a world-class manufacturing platform that produces things that most China's businesses and people can neither use nor afford is creating another pitfall for stable economic progress, since China has to use its high savings to finance a good part of the foreign demand for its own exports, especially to the indispensable American market.

12. The US economy is dependent on the central banks of Japan, China, and other nations to invest in US treasuries to keep American interest rates down.

13. China is a country that provides little medical or old age coverage. The Chinese people save a good part of what they earn for retirement. The personal savings are held in state owned banks and lend to hundreds of inefficient and often insolvent state-owned businesses. Extending basic social benefits will involve shifting billions of dollars from public works, slowing modernization, increasing consumption, belly-up many state owned enterprises, and depleting savings.

14. China has plenty of ambitious people eager to start their own businesses, but no modern banks to provide them financing. A perpetual credit crunch exists for small and medium size businesses.

15. Intellectual rights are constantly being violated or ignored in China.

16. China's interior highway and rail system are out of date. Materials and finished goods move slowly from place to place and often damaged along the way.

17. Most of China's pollution is linked to the state's energy -inefficient industrial plants.

18. The usage of soft coal provides cheap energy and the intense use of fertilizers made China food self-sufficient.

19. China has no equivalent of western consumer product-safety agency. Nor does Beijing have the administrative resources to create a central food and drug regulatory system.

20. The Russian leaders want to avoid the "Russian Trap" of quickly privatizing the state-owned enterprises.

21. In America high corporate earnings help nearly half of all Americans because 40 percent of US stocks are held by pension plans and personal retirement accounts. American workers are racking up impressive productivity gains - more so than the Japanese or Europeans.

22. One-third of all US doctoral degrees in the sciences and three-fifths of those in engineering are awarded to foreign or foreign born students. 40 percent of Silicon Valley startups in 1990s were found by Indian investment entrepreneurs.

23. If the United States is such a powerhouse in advanced technologies, why does it run large trade deficits in these areas? The data shows that technology companies are fully globalizing. Half of the imports driving high-tech trade deficit come from the foreign subsidiaries of US technology companies.

24. Japanese companies still base their employees pay and promotions on tenure and union rules. Labor laws and social conventions that sharply limit firms freedom to fire or reassign most workers ofte prevent them from reorganizing their domestic operations to make their IT investments work for them.

25. If Moscow is commited to serious structural reforms, because of Russian low wages, exports could be competitive worldwide. Every since 2000, the flow of direct investment out of Russia has exceeded the investment in. The Russian politician and oligarchs will not agree to terms of the large western oil companies and so new capital and technologies, and expertise voided from helping develop oil in Russia.

26. Russia has the lowest fertility rates and life expectancy and the highest rates of infant and youth mortality of any advanced or major developing society.

27. Between 2001 through 2008, 2.8 million jobs were sent overseas. These were manufacturing jobs, electronics, auto, and industrial computer. 600 plants were closed down.

28. Complex software allowed companies to breakup complex service and distribute parts to companies anywhere.

29. In the future distributed software communication types will cover wide areas of inventory control, medical diagnostics, engineering, and legal analysis.

30. What happens as competition heats up? Lower wages, less labor benefits, harder times raising price, and slower job creation.

31. China will use investment & technology transfers to become one of two indispensable economies by 2020. Million of farmers will leave the farms to work in the cities.

32. China and India will junk state monopolies, open to western investment, own domestic competition, attract capital to build modern factories, and abandon government crony selection of suppliers.

33. Heavy manufacturing will disappear in advance economies, such as, autos, steel, appliances, and electronics.

34. America and Japan are investing in China: knowledge, relationships, supplier networks, manufacturing in foreign transplants.

35. Europe is fighting shrinking domestic economies and experiencing slow growth and high taxes.

36. Americans accept harsh competition and spend ½ in ideas as production. These ideas provide new innovations and job creation and receive foreign investment.

37. Great conflicts between the US and Iran or North Korea are unlikely. China is two decades away from becoming an imperial power. Globalization cannot guarantee peace. Deep economic relationships have not precluded war.

38. India's GDP is small than Russia's or Brazils.

39. India success has been in software programming and generic pharmaceuticals and competitive with global leaders from Europe and America.

40. From 2000 to 2003, India accounted for barely seven-tenths of 1 percent of the world exports. 60 percent of India's population still works in agriculture, compared to 14 percent in Russia and less than 50 percent in China. The productivity of India's vast agricultural workforce is 1 percent that of American farmers.

41. The 20 percent held Indian Jobs in reasonably large businesses in manufacturing and services is about 15 percent as productive as that of Americans in similar jobs.

42. India is less open to foreign technologies and expertise and growth depends on domestic consumption rather than investments and exports.

43. In 2004, India received $5.3 billion in foreign investment and China received $60.6 billion out of $233 billion. India attracted less FDI than Poland.

44. India's dismal infrastructure and suffocating government regulation make it hard to generate profits in the subcontinent.

45. The national and state governments still own most of India's electrical power generation and distribution operations.

46. China has open its energy sector to American and European imports of thermal and clean power generating equipment, gas, hydropower, and wind turbines, large-capacity pump storage units, advanced nuclear power station equipment, gas desulphurization equipment, and middle and high voltage capacitors. China produces four times the amount of electricity as India. 40 percent of India power is given away or stolen. India's business sector is one of the least energy intensive.

47. India's banking system is more developed than China's. The Reserve Bank of India has direct 45 percent of all business loans be given to small and medium size-businesses. Businesses that help create a self-sustaining village.

48. India's national literacy rate is 146th out of 177 countries.

49. There are six thousand Indian institutions of higher education graduating 2.5 million people per year.

50. A recent survey of human resources managers at U.S. and European multinationals reported that just 25 percent of Indian engineering meet their standards and 10 percent of those with degrees in arts and science. India universities produce fifty to hundred graduates who compare favorably with their counterparts.

51. Japan's workers produce goods and services worth on an average of $34.40 per hour is 40 percent less than the average value produced by American workers, a good justification for higher US salaries, where incomes per person in Europe and Japan ranging from $29,200 to $32,700 compared to $42,000 in the United States.

52. Japan and Europe zoning make it harder to build factories or shopping mall suburbs, large-scale stores, and labor regulations preventing retailers from staying open in the evening and manufacturers from adjusting shift scheduling.

53. Japan send 49 percent in exports and receives 63 percent in imports.

54. Japan historically has legal prevented foreign investment. In 2000s, foreign investment as a share of GDP was one-seventh that of the US. Japanese laws still bar foreign companies from using their stock to buy a Japanese company, hostile takeovers are virtually impossible, and friendly bids are routinely rejected.

55. Japan walls off its domestic companies from contact with global leaders in their industries or sectors. The combination of extensive regulatory protections for tens of thousands of inefficient small companies and the absence of competition from companies from other advanced countries destroys the need to develop their own technologies and best practices, and adopt others. The US produces innovation.

56. Japan is the least productive advanced country.

57. Since 1990, Japan has spent more of its GDP on research and development than the United States, much of the difference is America's R&D in defense areas.

58. In America, every dollar sent abroad in foreign direct investment produces $1.14 gains at home.

59. Korea is the greatest small economy success story of the last half-century. When Korea War cease-fired, the South was one of the poorest places on earth. Korean's railroad, ports, hydroelectric dams, factories, and mines were all developed in the North, around the Yalu River; and by 1945, the factors and plats of the northern Korea accounted for one-quarter of Japan's industrial base, during Japanese occupation. In 1960, seven years after the armistice, South Korea's GDP was $2.3 billion and a per capita income of $79 were among the lowest in the world. By 2005, South Korean income had reached $16,800, a thirtyfold increase since 1960 and the country's GDP topped $800 billion, a fifty fold increase since 1960. The North's GDP was $30 billion, less than 4 percent of the South's.

60. The basic strategy of Korea's long line of dictatorial economic reformers - jump-starting selected industries by giving favored companies such as Samsung and Hyundai huge loans from state-run banks, special tax breaks, government contracts, and other bureaucratic favors - came from Japan.

61. From the 1960s, Korea opened its economy to imports of raw materials, parts and machinery, so its budding companies could use them to produce exports. The new Korean producers of steel, heavy machinery, autos, industrial electronics, shipbuilding, metals, and petrochemicals received 60 percent of all Korean bank loans. Since 2000, Korean exports have jumped to 40 percent of GDP, driven by global demand for many Korean products.

62. Korea didn't import modern industrial base from advanced global companies.

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Megatrends

Overall, the author does a good job of describing the
megatrends he sees in our future. For instance,
globalization will shift labor intensive jobs to
areas of the world where labor costs are cheaper.
The USA and China will emerge as superpowers and
dominate globalization. As the number of working people
go down- the quality of life goes down and the various
social programs will be under funding strains as in
Europe.

The author sees overall challenges in health care,
globalization and climate change. The traditional
economies will experience slower growth with higher
taxes, more elderly and a shrinking labor force.
Globalization also encourages costly new medical
procedures due to technological improvements.
The government must find ways to control costs in
this area by merging partnerships with industry.

The USA will build and maintain global information
networks. This is our area of strength. The USA
labor force will grow decently over the next few
decades due to the current stock of immigration.
The new immigrants are needed to replace the labor
pool of retiring baby boomers. There will be no
baby boom in Sub Sahara Africa and Russia. These
countries may suffer for the lack of a labor pool.
In summary, Americans have produced more children
than Europeans or the Japanese. The price of the
baby bust is the end of strong growth in Europe
and Japan according to the author.

China must build its infrastructure and manage the
coastal information technologies with the needs of
inland China. Outsourcing does cause the loss of
some jobs; however, there is a counterbalance to
increments in productivity. I happen to believe that
outsourcing is not a panacea or cure-all for a
number of reasons. i.e. enforcement of corporate
standards is more difficult; Random Acts of G-d
can obliterate operations overnight etc.

The author poses the question concerning oil demand
and prices. Ultimately, oil prices will rise and
stabilize at various equilibrium levels. The new
technological advances may serve to keep oil prices
in check , if there is a serious effort to seek
new oil sources and build cars that are energy efficient.

The book provides a serious perspective on the
challenge we face in the future. Policymakers in
Washington, DC and elsewhere should take note !

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What will life be like in America, Europe, Japan or China in the year 2020?

As everyone?s lives across the world are become increasingly interconnected by globalization and new technologies quicken the pace of everything, the answer to that question depends on the fate and paths of the world?s major nations. In Futurecast, Robert Shapiro, former U.S. Under Secretary of Commerce and Chairman/Co-founder of Sonecon, looks into the future to tell us what our world will over the next dozen years. Though that time span seems brief, Shapiro foresees monumental changes caused by three historic new forces?globalization, the aging of societies, and the rise of America as a sole superpower with no near peer? will determine the paths of nations and the lives of countless millions. What jobs will there be for you and your children? What will happen to your health care? How safe will you be at home or abroad? Answers to these questions will depend, even more than today, on where you live in the world:

? Even as China expands its military and its economy, America will be the world?s sole superpower for at least the next generation, and continue to lead efforts to preserve global security and stability.

? The U.S. and China will be the world?s two indispensable economies, dominating the course of globalization.

? Globalization will continue to shift most heavy manufacturing and millions of high-end service jobs from advanced countries like the US, to China, India, Indonesia, Mexico, Romania, Turkey and other developing nations.

? Europe?s major nations and Japan will face the prospect of genuine economic decline and critical problems in their retirement pension systems, moving further towards the periphery of global economic and geopolitical power.

? Every major country?the U.S., Europe, Japan, China?will face critical problems with their health care systems, and the entire world will face a crisis over energy and climate change.

If one adds the wildcard of possible, catastrophic terrorist attacks to this mix, the period between now and 2020 will be as challenging as any in modern times. Taking these deep global developments into account when planning for the future isa necessity. Robert Shapiro?s clear-eyed Futurecast is the knowledge portfolio you need to prepare for the years to come.

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