three decades between 1955 and 1985. If these economic model projections hold—and in accordance with our “The Models Are Good Enough” ground rule let’s assume here that they will—the world will move from having not one huge economy but three. Of the original top three, only the United States will remain, in distant second place behind China. The relative clout of deposed Japan, Germany, and others of the original G6 (France, Italy, and the United Kingdom) on the world stage will be diminished.
So if China and India are poised to dethrone the original G6 economies, what does that mean for you? Will Chinese and Indians soon enjoy more lavish lifestyles than Germans and Italians? Will Parisians emigrate to Sao Paulo, seeking better pay and a happier future for their children?
Almost certainly not. Recall that one of the big drivers of all this economic growth is rising urban population and modernization. The economies of China and India
No. Asia’s rising cities demand that the economies of China and India grow many times over, and this will also multiply per capita incomes in these countries. However, that progress in personal wealth will still be relative to the extremely low per capita incomes of today (averaging less than $3,000 per year for both countries in 2010). With the sole exception of Russia,72 personal incomes in BRIC countries are not expected to surpass those of France, Germany, Italy, Japan, the United Kingdom, or the United States by 2050. An average Indian today makes less than one-thirtieth the income of an average Brit. In 2050 she or he will make less than one-third .73 That’s a tenfold improvement, to be sure, but still a yawning divide. The Goldman Sachs model, for example, projects that the average Chinese worker will earn around USD $31,000 per year in 2050. That is much better than in 2010 ($2,200 per year) but still substantially below the projected 2050 per capita incomes for Italy ($41,000), Germany ($49,000), France ($52,000), the United Kingdom ($59,000), Japan ($67,000), and the United States ($83,000).
At the national geopolitical level, however, new superpowers mean complicated, shifting alliances. Having more superpowers portends intense strategic rivalries for trade, foreign investment, and natural resources. It means having more powerful political leaders in the world, and history tells us that their ideas matter. The choices made by Vladimir Lenin, Joseph Stalin, Adolf Hitler, Mao Zedong, Winston Churchill, Franklin D. Roosevelt, Harry Truman, and George W. Bush will reverberate for years. Running through everything are the fault zones of historical, cultural, and religious divisions. “Bad outcomes are not inevitable,” the National Intelligence Council assessment concludes, but “today’s trends appear to be heading toward a potentially more fragmented and conflicted world.”74
The choices of future political leaders cannot possibly be divined here. But what we can foresee is an assortment of growing demographic, economic, and resource pressures that will shape the context and options available to them. We are barreling toward a world with nearly 40% more people and a doubled food requirement by 2050. We are transforming from a poor rural to wealthier urban species. We are in the midst of a historic transfer of money and power from West to East. The bad news, as we saw in Lagos, is that some parts of our world are poorly equipped to deal with these changes. The good news is that in our rush to urbanize, we may have found the golden pliers for defusing Ehrlich’s population bomb.
I See Old People
These megatrends have personal consequences. Honestly, for the long haul, I’ve begun socking away shares of pharmaceutical company stock. Because beginning right about now, the world is starting to fill up with old people.
Demography just might be the most fascinating academic subject you’ve never studied. Underneath its dull name and dry statistics lie gripping stories of sex and death, of the rise and fall of communities, of why migrants choose to pick up and move, of the futures for our retirements and for our children. It uncovers big surprises like the myth of the American melting pot.75 Although combing through census and national registry databanks on numbers of births, deaths, and marriages may not sound very fun, a new world is revealed. These data comprise a road map of our future still wired into today.
Consider the “baby boomer” phenomenon—that is, the post-World War II baby boom. Like a snake swallowing a big meal, this age bulge has worked its way through the decades, triggering all manner of economic and cultural transformations along the way. Many of them—like demand for doctors, vacation getaways, and Viagra as the boomers now enter their sixties—have been anticipated for years. Like all baby booms, it had a softer “baby echo” that cropped up a generation later—again, predictable.
“Population momentum” is another example of how demographic futures can be foreseen. Even if a society’s average fertility rate76 suddenly falls, its population will continue to grow twenty years later owing to the abundance of new parents carried forward from when fertility rates were high.77 This works in the other direction, too, meaning that elderly countries will keep shrinking even if fertility rises, owing to a small cohort of parents born when fertility rates were still low.
The unprecedented explosion of people on Earth happened because births began outnumbering deaths, but there’s more to it than that. The “Demographic Transition” concept described in Chapter 1 emerged from what transpired in Europe and the United States. And it appears to now be unfolding in the rest of the world as well. Recall that the Demographic Transition has four stages:
1. High and similar rates of birth and death (e.g., the preindustrial era, with a small and relatively stable total human population); followed by
2. Falling deaths but not births (initiating a population explosion); followed by
3. Falling births (still exploding, but decelerating); and finally
4. Low and similar rates of birth and death (population stabilization at a new, higher total number).
Most OECD countries have now passed through these stages and—except for those allowing high levels of immigration like the United States—have stabilizing or even falling populations. Most developing nations, however, are still in Stage 2 or early Stage 3. Thus, our run-up in global population is still under way.
Once a population enters Stage 3 its net rate of growth starts to slow, and this has generally been happening, beginning at different times and to varying degrees, for most of the world. On average, growth rates in developing countries have decreased from around +2.3% per year in 1950 to +1.8% in 2007. Expressed as “doubling times” (the number of years needed for a population to double), that means we have slowed from doubling our developing world population about every thirty years in 1950 to every forty years in 2007.
As we saw in Chapter 1, urbanization, modernization, and the empowerment of women push fertility rates downward, thus ushering in the final stage of the Demographic Transition. Put another way, the urbanization of society—if also associated with modernization and women’s rights—helps slow the rate of growth. There are, of course, exceptions to this tendency, but as these phenomena continue to expand throughout the developing world, the global population explosion so feared by Thomas Malthus and Paul Ehrlich is expected to decelerate. Already, in late-stage, low-immigration developed countries like Japan and Italy, and in regions like Eastern Europe, populations have not only stabilized but are falling. Assuming that fertility rates continue to drop as they are now, we are heading toward a total world population of around 9.2 billion in 2050, at which point we will still be growing but about half as fast as we are today.78
One of the most profound long-term effects of women having fewer babies is to skew societal age structures toward the elderly (the pulse of babies from population momentum is only temporary). That is precisely what has now begun, in varying stages, all around the world (improving health care, of course, also extends our life spans, thus increasing the proportion of elderly even more). Demographers agree that we are racing forward to not only a more urban world, but a grayer one. This, too, is unprecedented in the history of humankind. For 99.9% of the time we humans have existed on Earth, our average life expectancy was 30 years or less. Archaeologists have never dug up the prehistoric remains of anyone over 50.79
This aging will hit some places faster and harder than others. With a median age of 44.6 years80 Japan is the world’s most elderly country today. In contrast, the median age in Pakistan is just 22.1 years, almost half that of Japan. Pakistan is youthful; Japan is full of geezers. But both places will become
