June 3rd, 2008WHAT IN THE WORLD IS GOING ON?
A GLOBAL INTELLIGENCE BRIEFING FOR CEOs
INTELLIGENCE BRIEFING FOR CEOs
By HERBERT MEYER
This is a paper presented several weeks ago by Herb Meyer at a Davos,
Switzerland meeting which was attended by most of the CEOs from all
the major international corporations — a very good summary of
today’s key trends and a perspective one seldom sees. Herbert E.
Meyer served during the Reagan Administration as Special Assistant to
the Director of Central Intelligence and Vice Chairman of the CIA’s
National Intelligence Council. In these positions, he managed
production of the U.S. National Intelligence Estimates and other top-
secret projections for the President and his national security advisers.
Meyer is widely credited with being the first senior U.S. Government
official to forecast the Soviet Union’s collapse, for which he later
was awarded the U.S. National Intelligence Distinguished Service
Medal, the intelligence community’s highest honor.
Formerly an associate editor of FORTUNE, he is also the author of
several books.
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WHAT IN THE WORLD IS GOING ON?
A GLOBAL INTELLIGENCE BRIEFING FOR CEOs
By HERBERT MEYER
FOUR MAJOR TRANSFORMATIONS
Currently, there are four major transformations that are shaping
political, economic and world events. These transformations have
profound implications for American business leaders and owners, our
culture and on our way of life.
1. The War in Iraq
There are three major monotheistic religions in the world:
Christianity, Judaism and Islam. In the 16th century, Judaism and
Christianity reconciled with the modern world. The rabbis, priests
and scholars found a way to settle up and pave the way forward.
Religion remained at the center of life, church and state became
separate. Rule of law, idea of economic liberty, individual rights,
human rights–all these are defining point of modern Western
civilization. These concepts started with the Greeks but didn’t take
off until the 15th and 16th century when Judaism and Christianity
found a way to reconcile with the modern world. When that happened,
it unleashed the scientific revolution and the greatest outpouring of
art, literature and music the world has ever known. Islam, which
developed in the 7th century, counts millions of Moslems around the
world who are normal people. However, there is a radical streak
within Islam. When the radicals are in charge, Islam attacks Western
civilization. Islam first attacked Western civilization in the 7th
century, and later in the 16th and 17th centuries. By 1683, the
Moslems (Turks from the Ottoman Empire) were literally at the gates
of Vienna. It was in Vienna that the climatic battle between Islam
and Western civilization took place. The West won and went forward.
Islam lost and went backward. Interestingly, the date of that battle
was September 11. Since them, Islam has not found a way to reconcile
with the modern world.
Today, terrorism is the third attack on Western civilization by
radical Islam. To deal with terrorism, the U.S. is doing two things.
First, units of our armed forces are in 30 countries around the world
hunting down terrorist groups and dealing with them. This gets very
little publicity. Second we are taking military action in Afghanistan
and Iraq.
These actions are covered relentlessly by the media. People can argue
about whether the war in Iraq is right or wrong. However, the
underlying strategy behind the war is to use our military to remove
the radicals from power and give the moderates a chance. Our hope is
that, over time, the moderates will find a way to bring Islam forward
into the 21st century. That’s what our involvement in Iraq and
Afghanistan is all about.
The lesson of 9/11 is that we live in a world where a small number of
people can kill a large number of people very quickly. They can use
airplanes, bombs, anthrax, chemical weapons or dirty bombs. Even with
a first-rate intelligence service (which the U.S. does not have), you
can’t stop every attack. That means our tolerance for political
horseplay has dropped to zero. No longer will we play games with
terrorists or weapons of mass destructions.
Most of the instability and horseplay is coming from the Middle East.
That’s why we have thought that if we could knock out the radicals
and give the moderates a chance to hold power, they might find a way
to reconcile Islam with the modern world. So when looking at
Afghanistan or Iraq, it’s important to look for any signs that they
are modernizing.
For example, women being brought into the work force and colleges in
Afghanistan is good. The Iraqis stumbling toward a constitution is good.
People can argue about what the U.S. is doing and how we’re doing it,
but anything that suggests Islam is finding its way forward is good.
2. The Emergence of China
In the last 20 years, China has moved 250 million people from the
farms and villages into the cities. Their plan is to move another 300
million in the next 20 years. When you put that many people into the
cities, you have to find work for them. That’s why China is addicted
to manufacturing; they have to put all the relocated people to work.
When we decide to manufacture something in the U.S., it’s based on
market needs and the opportunity to make a profit. In China, they
make the decision because they want the jobs, which is a very
different calculation.
While China is addicted to manufacturing, Americans are addicted to
low prices. As a result, a unique kind of economic codependency has
developed between the two countries. If we ever stop buying from
China, they will explode politically. If China stops selling to us,
our economy will take a huge hit because prices will jump. We are
subsidizing their economic development; they are subsidizing our
economic growth.
Because of their huge growth in manufacturing, China is hungry for
raw materials, which drives prices up worldwide. China is also
thirsty for oil, which is one reason oil is now at $100 a barrel. By
2020, China will produce more cars than the U.S. China is also buying
its way into the oil infrastructure around the world. They are doing
it in the open market and paying fair market prices, but millions of
barrels of oil that would have gone to the U.S. are now going to
China. China’s quest to assure it has the oil it needs to fuel its
economy is a major factor in world politics and economics.
We have our Navy fleets protecting the sea lines, specifically the
ability to get the tankers through. It won’t be long before the
Chinese have an aircraft carrier sitting in the Persian Gulf as well.
The question is, will their aircraft carrier be pointing in the same
direction as ours or against us?
3. Shifting Demographics of Western Civilization
Most countries in the Western world have stopped breeding. For a
civilization obsessed with sex, this is remarkable. Maintaining a
steady population requires a birth rate of 2.1 In Western Europe, the
birth rate currently stands at 1.5, or 30 percent below replacement.
In 30 years there will be 70 to 80 million fewer Europeans than there
are today. The current birth rate in Germany is 1.3. Italy and Spain
are even lower at 1.2. At that rate, the working age population
declines by 30 percent in 20 years, which has a huge impact on the
economy. When you don’t have young workers to replace the older ones,
you have to import them.
The European countries are currently importing Moslems. Today, the
Moslems comprise 10 percent of France and Germany, and the percentage
is rising rapidly because they have higher birthrates. However, the
Moslem populations are not being integrated into the cultures of
their host countries, which is a political catastrophe. One reason
Germany and France don’t support the Iraq war is they fear their
Moslem populations will explode on them. By 2020, more than half of
all births in the Netherlands will be non-European.
The huge design flaw in the postmodern secular state is that you need
a traditional religious society birth rate to sustain it. The
Europeans simply don’t wish to have children, so they are dying. In
Japan, the birthrate is 1.3. As a result, Japan will lose up to 60
million people over the next 30 years. Because Japan has a very
different society than Europe, they refuse to import workers.
Instead, they are just shutting down. Japan has already closed 2,000
schools, and is closing them down at the rate of 300 per year. Japan
is also aging very rapidly. By 2020, one out of every five Japanese
will be at least 70 years old. Nobody has any idea about how to run
an economy with those demographics.
Europe and Japan, which comprise two of the world’s major economic
engines, aren’t merely in recession, they’re shutting down. This will
have a huge impact on the world economy, and it is already beginning
to happen. Why are the birthrates so low? There is a direct
correlation between abandonment of traditional religious society and
a drop in birth rate, and Christianity in Europe is becoming irrelevant.
The second reason is economic. When the birth rate drops below
replacement, the population ages. With fewer working people to
support more retired people, it puts a crushing tax burden on the
smaller group of working age people. As a result, young people delay
marriage and having a family. Once this trend starts, the downward
spiral only gets worse. These countries have abandoned all the
traditions they formerly held in regard to having families and
raising children.
The U.S. birth rate is 2.0, just below replacement. We have an
increase in population because of immigration. When broken down by
ethnicity, the Anglo birth rate is 1.6 (same as France) while the
Hispanic birth rate is 2.7. In the U.S., the baby boomers are
starting to retire in massive numbers. This will push the elder
dependency ratio from 19 to 38 over the next 10 to 15 years. This is
not as bad as Europe, but still represents the same kind of trend.
Western civilization seems to have forgotten what every primitive
society understands-you need kids to have a healthy society. Children
are huge consumers. Then they grow up to become taxpayers. That’s how
a society works, but the postmodern secular state seems to have
forgotten that. If U.S. birth rates of the past 20 to 30 years had
been the same as post-World War II, there would be no Social Security
or Medicare problems.
The world’s most effective birth control device is money. As society
creates a middle class and women move into the workforce, birth rates
drop. Having large families is incompatible with middle class living.
The quickest way to drop the birth rate is through rapid economic
development. After World War II, the U.S. instituted a $600 tax
credit per child. The idea was to enable mom and dad to have four
children without being troubled by taxes. This led to a baby boom of
22 million kids, which was a huge consumer market. That turned into a
huge tax base. However, to match that incentive in today’s dollars
would cost $12,000 per child.
China and India do not have declining populations. However, in both
countries, there is a preference for boys over girls, and we now have
the technology to know which is which before they are born. In China
and India, families are aborting the girls. As a result, in each of
these countries there are 70 million boys growing up who will never
find wives. When left alone, nature produces 103 boys for every 100
girls. In some provinces, however, the ratio is 128 boys to every 100
girls.
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. Immediately to the south, you have
China with 70 million unmarried men who are a real potential
nightmare scenario for Russia.
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