JimPinto.com - Connections for Growth & Success™
No. 249 : 6 June 2008

Keeping an eye on technology futures.
Business commentary - no hidden agendas.
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Four major transformations of the New Century

Herb Meyer served during the Reagan administration as assistant to the Director of Central Intelligence and Vice Chairman of the CIA's National Intelligence Council.

At the recent World Economic Forum in Davos, Switzerland Meyer presented key trends with a clear perspective. Several eNews friends forwarded the text to me - thank you! Here's a summary, combined with my own editorial comments.

Today, four major transformations are shaping political, economic and world events. There are profound implications for American business, our culture and our way of life.

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The War in Iraq

Christianity and Islam are the world's major monotheistic religions. In the 16th century, Christianity reconciled with the modern world and unleashed the scientific revolution and an outpouring of art, literature and music.

Islam started in the 7th century, and developed a radical streak that attacked Western civilization several times in past centuries. The West went forward after the Renaissance; Islam went backward and has not yet found a way to reconcile with the modern world. Today's terrorism is yet another attack on Western civilization by radical Islam.

To deal with terrorism, the underlying US strategy is using its military to remove radicals from power and give moderate Muslims a chance to bring Islam forward into the 21st century. Winning the war in Iraq is irrelevant. We're looking for Islam to move into the 21st century. Indeed, there are signs that this is happening as young, educated Muslims develop freedom.

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The Emergence of China

In the last 20 years, China has moved 250 million people from farms and villages into the cities, with plans to move another 300 million in the next 20 years. They must find work, which is why China is addicted to manufacturing.

US manufacturing is based on market needs and profit. In China, Manufacturing generates jobs - very different motivations.

China is addicted to manufacturing and Americans are addicted to low prices. So the 2 countries have developed unique economic codependency. We are subsidizing China's economic development; they are subsidizing US economic growth.

Because of the huge manufacturing growth, China is hungry for raw materials and oil, which drives worldwide prices up. This is a major factor in world politics and economics.

China will take over Taiwan within the next few years, more for emotional than economic reasons. They know that their Communism can't survive much longer in the 21st century, and the last thing they want to do before they morph into some form of capitalistic system is to take over Taiwan. The US can't and won't go to war to stop the Taiwan takeover.

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Shifting Western Demographics

Most Western countries have stopped breeding. Maintaining population requires a birth rate of 2.1; in Western Europe, the birth rate is 1.5, 30% below replacement. In 30 years there will be 70-80 million fewer Europeans than there are today. Birthrates are low because of the abandonment of traditional religious-based cultures; Christianity is becoming irrelevant in Europe.

The decline of the working-age population will have a huge impact. Workers will have to be imported and most European countries are importing Muslims. Today, Muslims are 10% of France and Germany, and their numbers are rising rapidly because of higher birthrates. By 2020, more than half of all births in the Netherlands will be non-European. However, they are not being integrated into the local cultures, which is a political catastrophe.

The huge flaw in the postmodern secular state is that it needs a traditional birth rate to sustain it. Europe and Japan aren't merely in recession, they're shutting down. The Europeans simply don't wish to have children, so they are dying. The birthrate in Japan is 1.3 and they will lose up to 60 million people over the next 30 years. But Japan has a very different society than Europe; they refuse to import workers. Instead, they are just shutting down. By 2020, 1 in 5 Japanese will be more than 70 years old. Nobody knows how to run an economy with those demographics.

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. And China's huge population is directly to the South.

The Economics: When the birth rate drops below replacement, fewer working people must support more retired people, which puts a big tax burden on the workers. So, young people delay marriage and limit families. The downward spiral gets worse.

The US birth rate is 2.0, just below replacement, with population increasing because of immigration. The Anglo birth rate is 1.6 (same as France) and the Hispanic birth rate is 2.7. Baby boomers are starting to retire in huge numbers, quickly increasing elder dependency. This is not as bad as Europe, but its the same trend.

The world's most effective birth control device is money. As the middle class grows, women move into the workforce and birth rates drop; large families are incompatible with middle class living.

Although scary, these demographics also present enormous business opportunities for products and services tailored to aging populations. There will be tremendous demand for baby boomer entertainment and elder-care.

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Restructuring of American Business

Business is undergoing fundamental restructuring. To succeed, businesses are becoming "fractured" - using a complex pyramid of outsourced products and services.

The era of lifetime employment in large companies is over; they don't wish to give annual pay increases and fund pensions, so they end up with fewer employees and more independent contractors. With massive restructuring, companies get smaller and more efficient. Revenues go down but profits go up, and it's a political football.

In the midst of these shifts, America is in the process of building the world's first 21st century model economy - fast, flexible, highly productive and unstable in that it is always fracturing and re-fracturing. This will increase the economic gap between the US and everybody else.

America remains a magnet for bright and ambitious people. There is no better place in the world to be in business and raise children. It's still by far the best place to have an idea, start and grow a business. We take it for granted, but what the US has isn't available in any other country. America's multi-cultural eclecticism is its big advantage.

Click Herbert Meyer - Four Major Transformations

Click China targets the Achilles' heel of Capitalism

Click European Demographic Shift

Click Jack Welch - Who Will Rule the 21st Century?

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Having fun & making money in business

Winning is the lifeblood of any society. People in successful businesses are happier, more motivated and achieve more success. Most businesses want to win the right way. They want a better life for their families, colleagues, communities and society.

Profits are just part of the goal. Winning is a personal journey. It's about reaching a chosen destination. At its most fundamental, winning is about balanced achievement, not just for an individual, but for an integrated company within the global marketplace.

At Action Instruments, the company I founded, we had a basic theme: "Let's have some fun and make some money." It's important for businesses to have fun. Some think that this means that making money is not important. All things being equal, it's much more fun to work in a business that makes money consistently - it provides the ability do a lot of fun thins things. It's a circular argument - the business that win have fun, and businesses that have fun tend to be winners. Winning is enjoyable - and it is more enjoyable when you're having fun doing it.

The key is to make goals achievable and tied to effort, not just results. A focus on creating a positive and productive business environment will help players to flourish. The wins will come.

Click Automation.com - Winning in Business

Click Book: Pinto's Points - How to win in the automation business

Click Book : Chuck Knight: Performance without compromise
How Emerson Consistently Achieves Winning Results

Click Book: Winning - by Jack & Suzy Welch

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Merle Borg [merleborg@cox.net] has a different view regarding the threat of militant Muslims:
    "Caston Dalon's feedback reflects an alarming, dangerous, though currently popular view. His belief that fundamentalist Muslims want to overthrow our government is the very thinking that has led us into Iraq, keeps us in Afghanistan, and is unraveling our country.

    "Caston Dalon assumes that the Muslims in Europe and America are not being Westernized. For the most part, they are. It's a race to be sure, but secular ways are undermining fundamentalism in the West, and even in places like Turkey and Iran. In the meantime, what turns these people against us is not our beliefs or our freedoms, but our actions. Because of oil, the West has been meddling in the affairs of Islamic nations.

    "There exists in some people a fundamental need for 'enemies'. For a long time, that need was met by 'godless communists', the 'red peril' that threatened our way of life. When Soviet communism fell of its own dead weight, this paranoia went into severe withdrawals. The arms merchants flailed about until they found another enemy.

    "After 9/11, fringe paranoia has gone mainstream. Bush/Cheney types have found new ears to frighten, and new sources of funds. Freedoms are being curtailed. We now take off our shoes when boarding planes and accept a myriad of inane things in the dangerous belief that suicidal terrorism can be defensed. Lurking behind every corner is some bearded terrorist, it would seem, wanting to cloak our women and overthrow our very way of life. Bull shit.

    "We are in danger. The danger however, comes from thinking that extremist religious beliefs can be defeated by force. Bombing only spreads the hatred and strengthens the resolve. Led by oil men, our military is now efficiently creating terrorists by the hundreds of thousands. We are in danger indeed.

    "There is only one answer to religious extremism and that is: 'Rock and Roll'. The one thing that all fundamentalists fear is losing their sons and daughters to dancing, blue jeans, movies, books, women's rights, gay rights, democracy, the Internet, alcohol, sex, and that soul deadening, devil inspired 'Rock and Roll' music. Tin-pot dictators fear it. Fundamentalists of all types fear it. The Taliban and radicals join together in their fear of it. All tyrannical religions and tyrannical governments fear losing their children to these decadent 'Western sins'. And with good reason. It means the end of their dogma and their control.

    "The secular West needs to quit meddling in Mid East affairs and wait for wealth, media, and the Internet to spread our joyous, freeing, and life-affirming values.

    "We are in a race to be sure, but it is a mistake to think that our opponents hate us because of our beliefs. It is colonial occupation and imperial thievery that are raising their hackles and making this such a bloody contest."

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Bob Fritz, President and CEO of Avtron Industrial Automation, [rfritz@avtron.com] responds to Lee Iacocca's book-rant:

    "I think the problem is that nobody in the federal government thinks in terms of defining the objective, figuring out the value of achieving it, and then establishing metrics to see how we're doing in getting there. For instance, what is the objective of the Iraq War? Someone should write one down. If it is to "make Iraq a democracy" is that a reasonable goal? What's in it for us (the return on investment)? Finally, how do we measure progress against that goal?

    "Take energy. We should have some goal like, "produce __% of our energy domestically by the year __." Then do that which furthers that goal and stop doing that which detracts. For instance, if we had such a goal, we would not have laws making 85% of the Outer Continental Shelf illegal for oil drilling. We would not convert a 900MW nuclear plant in California to a piddling 4MW solar plant. And gasoline would not cost $4.50/gallon.

    "Instead we reel around like drunken sailors, passing laws to pay off lobbyists and then, when we see that it has harmed some other lobbyists, passing some law to help them.

    "Speaking of which, I remember when we said the goal was to land a man on the moon in 9 years. We said it. We meant it. We did it. The current crowd of dummies in this administration and Congress would have said, "let's munge around and see if we can shoot off some rockets." The moon would still be waiting.

    "It's simple. It's basic business strategy 101."

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My brother Jude Pinto [jpinto@vsnl.com] who has his own telecomm consulting business in India, still respects and admires America:

    "Jim, you keep suggesting that America may be falling behind while India is advancing rapidly. But India too has its problems.

    "We just found out that the Indian Medical Association 'officially' endorsed a (Pepsi) branded product as 'good and healthy for everybody', while ignoring other (better) competing products. Can the American Medical Association match that level of corruption?

    "Another sample: India has a "hot" stock market, which has attracted billions of dollars of global money. But we still don't have an enforceable law to check insider trading, which (I need not mention) is rampant.

    "Generally, I feel the US is streets ahead of India in regulatory framework. When regulations are weak, the rich get richer, and build bigger malls and higher towers. But the poor get poorer.

    "Dubai may be the brightest jewel in terms of buildings and investment funds. But the buildings are built with slave labor. And the funds are havens for smugglers and tax evaders. That accounts for much of their sparkle.

    "You should thank God for America, even if it is falling behind in the trivialities (highest tower, largest mall etc). Looking in from the outside, America is still a great place to be."

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