Phil Hauck's TEC Blog

Tuesday, June 15, 2010

Major Impacts of Declining Birth Rates Worldwide ...

Recently, my TEC Groups heard Herb Meyer, a senior CIA official back in the 1980s; he prepared the overnight national security intelligence report, and was the first to forecast the probable decline of the Soviet Union. Today, he talks to groups about trends that he sees. This one is particularly interesting:

Key Trend #2: The Coming Death of Europe, Japan, Russia, et al ...
• Why? Declining and VERY LOW Birth Rates! Replacement rate is 2.1 ... many at 1.3 (within 30 years, will lose 30% of population ... very big deal!) and declining. No region has ever recovered from a 1.1 rate.
• With fewer young/fewer workers, means fewer people to support a longer-living retired class. Coupled with trend towards welfare states where more and more expenses are supported by the state, it becomes a financial disaster! The death spiral supports itself: As prospects get dimmer and dimmer, couples become less and less likely to have children. (You see that in the U.S. today. See further below.)
• Europe’s birth rate overall is 1.5 ... a disaster. Germany’s is 1.3. In 30 years, Europe will have 30 million FEWER PEOPLE, with even fewer workers supporting more elderly. Only 40% of college-educated German women have children. Lowest is in Italy and Spain at 1.1 and 1.2. RUSSIA is in the same fix, and knows it: Medved has declared Sept. 12 each year a Day of Marital Contact! Huh!
• France is giving a woman with two kids $3,000 a month to have a third.
• How to compensate: Allow immigration of Muslims escaping from their dire economic straits ... but aren’t integrating them into the population. Big Mistake: Younger Muslims frequently want Western mores and culture (and jobs), but Europeans are keeping them poor, helping to radicalize them. Lesson to the U.S. In France, 20% of people under 20 are Muslim.
• Muslim areas are all above replacement at 2.4 to 6.8, altho declining.
• We wonder why European states don’t support us in Iraq and Afghanistan. A major reason is that those states are now up to 10% Muslim, and leaders need their votes to get re-elected.
• Other bad trends overseas: Only 1 of 7 couples is getting married. Trends toward stability of family life are negative. Putting AGE limitations on surgeries, so once you reach certain ages, you can’t get certain health care. Also, trend toward Euthenasia (bad for elderly!). Parents encouraging bright kids to emigrate to where there are greater opportunities ... can’t get into U.S. because of small quotas, so are going to Canada, Asia.
• Also, Europeans don’t like to work. One country has 400 MORE vacation hours on average than the U.S. ... TEN WEEKS! The average work week is less than 38 hours. Any effort to change is made with great resistance ... witness riots in France, and the current refusal by Greeks to acknowledge their bankruptcy.
• Japan: Birth rate is 1.3, forecasting 50 million fewer people in 30 years. Have already closed 2000 schools, at 300 per year. Closed two universities. In 20 years, 20% of population will be over 70 years old.
• Canada: No better. A 1.5 birth rate.
• You need PEOPLE ... to be customers, buyers, workers, to support an economy and provide money for a family to live on and pay taxes.

The U.S.’s Prospects ...
• The bad news is that the Anglo birth rate is 1.8 and slipping. The good news is that the Hispanic rate is 2.8, putting us at the desired 2.1. For the first time, more kids are being born to Mothers NOT born in the U.S. than U.S.-born mothers.
• Of interest, there is a political context with an underlying cultural phenomenon: Red states vs. Blue states, or areas. Most economic growth, and higher birth rates, are occurring in Red states/areas ... and the reverse is in Blue states/areas. Also, “people of faith” live more normal lives, and pro-create. (Corollary: Europe is going more and more sectarian.) The more you have an increasing tax burden, with less and less discretionary income, the less you are likely to have a child, or another child. Yet, children are essential for the future.
• Utah has highest birth rate, Vermont the lowest.
• Projections are that we will need an additional 50-60 million people to support a growing economy and our aging baby boomers ... and most of the new people will be Hispanic immigrants, critical to our future economic health just as immigrants have been in the past. Another key: Have POLICIES to INTEGRATE them, to avoid Europe’s catastrophes. Yes, they take an inordinate share of school expenses in early years, but on balance they are tax-neutral ... what they pay is what they use.
• Needs will include: New homes/clothing/home needs/education/food ... and ENERGY.
• Challenge: As we move towards a State-ist economy, we will be hard-pressed to pay for increasing entitlements for increasingly large financially-stagnant (and declining) recipient bases (social security, medicare, medicaid, etc.).

Sunday, June 6, 2010

Reflections on Job Creation

1. On "jobless recoveries": Coming out of the 2000-2002 downturn, the general consensus of my members was that FINALLY their investments in enterprise software, etc., were having a productivity impact ... they were able to add considerable volume without adding as many people percentagewise. This 2008-2010 recession, again a jobless recovery, their thinking is different. This time, as they laid off people, they formed employee committees to figure out other ways to cut costs and improve productivity ... which they've done very effectively. One member told me that he laid off 150 people, and to achieve the same volume as growth occurred again, because of the productivity improvements his people had found, they would only have to add back 87 people.
So, the first "jobless recovery" they attributed to software efficiencies, and the second to just old-fashioned value stream analysis.

2. Of interest, the American businessperson is very entrepreneurial/reactive. Give me a problem ... and I'll find a way around it. Example: The DAY after the health care insurance reform bill was passed (Mar. 23), I heard discussions of my members saying, "Okay, our personnel costs are going to rise ... but we have to keep costs down. What do we have to do?" They are figuring ways to add robotics, do without, find even more non-value-adding activities, etc. ... all with the intent of reducing the employee base per volume (reducing the need for people). (Not what the nation needs, but in the long run, preserves job retention and allows creation.)

3. At a recent TEC meeting, we did Significant Event Sharing of the nine members present. Most are now trying to add people. Of interest, FIVE of them (more than half) said that despite the high unemployment and lots of applications, they are unable to find enough "qualified" people to hire. They are struggling to find people! (One member said in one remote plant, more than 50% of applicants are being turned down because of drug use.)

Knowledge Doesn't Lead To Change. Understanding Does.

If I tell you, "There were a million heart attacks last year", unless you're one of those million, you don't care.
But if I can show you a picture of an artery, and you can see the plaque rupturing, now the heart attack isn't abstract, it's a real story. And you're much more likely to take care of your own heart because you don't want that same story to affect you.
Source: Dr. Mehmet Oz.

Another Reason Women Die Later Than Men: Arteries

Our arteries take a beating ... more than 100,000 new pulses every day. They eventually go bad.
In our 20s: Generally healthy, but tobacco smoke, cholesterol and sedentary lifestyle begins accumulating.
In our 30s and 40s: Plaque begins to accelerate in men. Delays in women occur until after menopause. Cholesterol, smoke, high blood pressure and high blood sugar are causing persistent injury to the inner linings.
In our 50s: Artery walls become stiffer, more fibrous, putting more pressure on heart pump. High blood pressure creates damage. Women are now 15 years behind in deterioration, but now accumulation of plaque begins to accelerate.
In our 60s and beyond: Left ineffectively checked (lifestyle), plaques can rupture or erode, leading to blood clots that can cause heart attacks.
Source: Wall Street Journal, June 1, 2010.

To Lose Weight: First Reduce Calorie Intake, Then Exercise To Maintain

Research indicates that vigorous exercise is NOT the way to start the process of weight loss, although it’s essential later on.
Rather, weight loss must be primarily due to better control of diet, in particular volume. Calories In (Volume) must be less than Calories Out (Daily Effort) for an extended period of time to move your body to your desired weight level.
“The body aims for homeostasis,” or current equilibrium, says expert Barry Braun. It wants to remain at the weight level it is used to, especially for women because of their child-bearing health needs. If all you do is exercise to create weight loss, the body will immediately kick in with appetite-increasing hormones so that you eat enough to get back to the current equilibrium.
This is where it gets interesting. First, eat fewer calories to drive your weight reduction. Then, exercise regularly! The exercise helps re-establish the homeostatic steady state at the new level! (Study after study shows this, although there’s not yet a clear explanation as to why.)
Here’s the bonus: You can eventually return to your previously normal caloric intake ... or at least eat more than you needed to in order to lose the weight. The exercise maintains the new homeostasis level for you, just as it maintained the old one.
And it doesn’t have to be “vigorous” exercise. Research indicates that enough low level activity (walking, etc.) can be sufficient.
So, what is “vigorous exercise” needed for: Well, for the aerobic benefits ... bringing in higher oxygen levels that create greater energy and thinking capability (oxygen blood cells to the muscles and to the brain)!
Tip: If you drink a glass of water before every meal, you're less likely to over-eat.
Source: Gretchen Reynolds, New York Times Magazine, April 11, 2010.

Among Biggest Health Mistakes
• Working out simply to burn calories. What matters more is exercise intensity. Vigorous exercise dulls your appetite, while moderate exercise stimulates it. That's the difference between a walk and a jog/walk.
• Keeping eating until you go to bed. Make a hard-and-fast rule: No eating within two hours of bedtime.
Source: Bob Greene.

Atwell's Solution to Financial Crisis Regulation

In his recent Nicolet Bank Blog, CEO Bob Atwell made some interesting points about the financial breakdown of the last several years, as well as insights into the current 3,000-page regulatory reform bill ... insights which were also reprinted in Investors Business Daily. Among them:
• The goal must be to ELIMINATE (not just reduce) the systemic risk at the core of the problem, which is NOT the direction of the bill. The bill as proposed further centralizes and politicizes finance and financial regulation. Centralization of financial power and regulatory power is the CAUSE of the problem, NOT the solution.
• The premise of the bill is that systemic risk must be managed by more and tougher regulators. Regulatory complexity favors the large players in any industry because they have the people who can manage and lobby it. Smaller organizations don't.
• What we WANT is a system which has RISK ELIMINATED, not managed. The best way to ELIMINATE system risk is to stop using policy approaches that create it. It can be ELIMINATED very simply by imposing HIGHER CAPITAL STANDARDS on banking institutions. Taxation of system's risk would also reverse the implied public subsidy that creates it.
• "We hate Congress because we don't like what we see in the mirror (our going along with what they do), but we refuse to recognize it as our image."