Meyer: Outlook for global economy looks positive
Date posted: May 6, 2014
SHERIDAN — Retired Vice Chair of the National Intelligence Council and CIA Chair for the Ronald Regan Administration Herb Meyer visited Sheridan College on Monday as part of the Wyoming Business Alliance’s annual Economic Outlook Tour. Meyer gave an optimistic overview of world events that are shaping the global economy.
To set the context for likely factors that will drive the economy in upcoming generations, Meyer pointed out that the world is now at a turning point in which it is becoming modern and industrialized.
Meyer attributes the recent wars in the Middle East to the growing pains of a culture emerging from centuries without democracy, individual rights and social practices that encourage individual thought and entrepreneurship.
“Our own transition into the modern world was not smooth and seamless,” he said, referring to the European emergence from the Dark Ages.
“Today, the Islamic world is making the journey we began hundreds of years ago,” Meyer said, pointing to new, fragile democracies around the world like those in Iraq and Afghanistan. “The war is about the world becoming modern.”
Along with the rapid industrialization of the world within the last 30 years, Meyer said another interesting development of the current times is the emergence of a global middle class. For purposes of the conversation, Meyer defined middle class as an existence where everyone has enough to eat, a home with utilities, children are vaccinated and at least one parent has a job that pays enough that it provides any amount of disposable income.
“Within your lifetimes, half of the world will cross a line that has ever been crossed before, and that is that an overwhelming majority of people in the world will not be poor,” Meyer said. “Why? Because we have figured it out.”
Meyer went as far as to proclaim that even today, no one is starving.
Meyer said with the establishment of free markets and property rights, populations around the world have been able to emerge from poverty and establish an existence of relative health and stability. In addition, individuals’ relationships with their governments are changing so they see the role of their governing bodies as one of protection, rather than corruption. That, he said is good for national security.
“People like us don’t go to war with people like us,” he said, indicating the positive developments of the world are not reported or understated in the main stream media and that meaningful public dialogue about the true direction of humanity does not exist on many public platforms.
Instead, Meyer said, people are inundated by nay-sayers.
“If a scientist were to announce they’ve found a cure for cancer, there would be a talking head on TV who would say it’s a terrible thing because all the nursing homes will fill up,” he laughed, adding that while the world isn’t immune to unfortunate circumstances, as a whole, society is making collective leaps and bounds.
“There’s always some creep out there that’s going to cause trouble like Osama Bin Laden,” he said. “But, the kind of wars that we’ve seen in the past — massive infantries, tanks…are much less likely in the future than in the past as the world becomes modern.”
Meyer provided the example that the recent revolution in Egypt was incited when the price of bread rose so high that people could no longer afford their food for the day. Therefore, when food and basic living necessities are available, people are less likely to be willing to fight.
The modernization of the world means more people are literate and exercise self-determination regarding the direction of their lives. One of the byproducts of this phenomenon is that birth rates in many parts of the industrialized world have dropped well below the population maintenance value established by the World Health Organization of 2.1. For example, the birth rate in the U.S. is now at 2, but falling. In Japan and Germany, it’s 1.3, and in much of the rest of western Europe, the number is around 1.5.
This means the world is quickly trending toward a population of mostly older people alive, and the top-heavy structure creates a larger tax burden on younger generations who must perpetuate social programs for the elderly.
Meyer said by the year 2045, the number of people in the world over the age of 55 will be more than any other age group for the first time in history. From an economic perspective, compensating for an aging human race requires a paradigm shift.
“Old people don’t spend money the way young people do,” Meyer said.
Meyer said WHO data suggests the world population will peak at around 9 or 10 billion people and then begin to decline with lower birth rates.
The redeemer of the economy, if there is one, will then be the newly created global middle class.
“The trick is to develop products that are clever, inexpensive and green,” Meyer said, explaining that experts who study markets are targeting the worldwide middle class that has between $9 and $20 of disposable income per day.
In addition to markets that target disposable income, Meyer emphasized the wave of modernization around the world will require unprecedented food and energy resources.
“We are going to need an unbelievable amount of energy,” Meyer said, adding that the availability of food is the next biggest priority of the future world economy.
“For all the people who are against (Genetically Modified Foods), that’s fine, but what they’re doing is condemning people to poverty,” Meyer asserted, indicating an ample food supply can be produced only when existing farmland is at optimal yield per acre.
Meyer briefly touched on the issue that coal companies in the Powder River Basin are attempting to establish a coal export terminal in the Pacific Northwest to reach Asian markets. While the proposition is in serious jeopardy because of environmental concerns for the people living near where the port would be located in Oregon, Meyer said the same opponents have failed to consider that the Asian demand for coal is rooted in the reality that societies there are evolving.
While jobs in energy, food production and infrastructure will remain among the most important in the long-term future of the global economy, Meyer indicated the upcoming workforce will likely have to find its niche within society’s functioning.
For thousands of years, humans worked on farms. When field workers were replaced by tractors, those same workers conveniently went to work in manufacturing plants. Now that manufacturing has been overtaken by technology, today’s workers are struggling to find their role. Meyer suggested careers in healthcare may be the next wave of economic viability because of the aging world population.
Meyer’s address ended on a positive note.
“It’s an interesting, optimistic, hopeful, exciting time to be alive, to be in the United States,” Meyer said.