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Our Recent Essays Behind the Front Page
Wednesday, April 4. 2007
Best Essays of 2007: Herb Meyer's Global Intelligence Briefing for CEOs - The Four Transformations
A darn good summary. I do not have a date for this briefing, but it's fairly up-to-date, and meaty. We all tend to get caught up in seeing the trees and missing the forest.
(Herb 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
The Four Transformations: Militant Islam, China, Demographics, and Business Restructuring
Currently, there are four major transformations that are shaping political, economic and world events. These transformations have profound implications for American business owners, our culture and our way of life.
1. The War in
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 points 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
Today, terrorism is the third attack on Western civilization by radical Islam. To deal with terrorism, the
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
Most of the instability and horseplay is coming from the
2. The Emergence of
In the last 20 years,
Because of their huge growth in manufacturing,
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
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
The huge design flaw in the post-modern 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.
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 post-modern secular state seems to have forgotten that. If
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
The birth rate in
4. Restructuring of American Business
The fourth major transformation involves a fundamental restructuring of American business. Today's business environment is very complex and competitive. To succeed, you have to be the best, which means having the highest quality and lowest cost. Whatever your price point, you must have the best quality and lowest price. To be the best, you have to concentrate on one thing. You can't be all things to all people and be the best.
A generation ago, IBM used to make every part of their computer. Now Intel makes the chips, Microsoft makes the software, and someone else makes the modems, hard drives, monitors, etc. IBM even outsources their call center. Because IBM has all these companies supplying goods and services cheaper and better than they could do it themselves, they can make a better computer at a lower cost. This is called a "fracturing" of business. When one company can make a better product by relying on others to perform functions the business used to do itself, it creates a complex pyramid of companies that serve and support each other.
This fracturing of American business is now in its second generation. The companies who supply IBM are now doing the same thing, outsourcing many of their core services and production process. As a result, they can make cheaper, better products. Over time, this pyramid continues to get bigger and bigger. Just when you think it can't fracture again, it does. Even very small businesses can have a large pyramid of corporate entities that perform many of its important functions. One aspect of this trend is that companies end up with fewer employees and more independent contractors.
This trend has also created two new words in business, integrator and complementor. At the top of the pyramid, IBM is the integrator. As you go down the pyramid, Microsoft, Intel and the other companies that support IBM are the complementors. However, each of the complementors is itself an integrator for the complementors underneath it. This has several implications, the first of which is that we are now getting false readings on the economy. People who used to be employees are now independent contractors launching their own businesses. There are many people working whose work is not listed as a job. As a result, the economy is perking along better than the numbers are telling us.
Outsourcing also confused the numbers. Suppose a company like General Motors decides to outsource all its employee cafeteria functions to Marriott (which it did). It lays off hundreds of cafeteria workers, who then get hired right back by Marriott. The only thing that has changed is that these people work for Marriott rather than GM. Yet, the headlines will scream that
Another implication of this massive restructuring is that because companies are getting rid of units and people that used to work for them, the entity is smaller. As the companies get smaller and more efficient, revenues are going down but profits are going up. As a result, the old notion that "revenues are up and we're doing great" isn't always the case anymore. Companies are getting smaller but are becoming more efficient and profitable in the process.
Implications Of The Four Transformations:
1. The War in
In some ways, the war is going very well.
A series of revolutions have taken place in countries like
Thanks to TV and the Internet, the average 18-year old outside the
At the same time, not all is well with the war. The level of violence in
The real place to watch is
Seventy percent of the Iranian population is under 30. They are Moslem but not Arab. They are mostly pro-Western. Many experts think the
We don't know if we will win the war in
It may be that pushing 500 million people from farms and villages into cities is too much too soon. Although it gets almost no publicity,
The Chinese are a smart and industrious people. They may be able to pull it off and become a very successful economic and military superpower. If so, we will have to learn to live with it. If they want to share the responsibility of keeping the world's oil lanes open, that's a good thing. They currently have eight new nuclear electric power generators under way and 45 on the books to build. Soon, they will leave the
What can go wrong with
We may wake up one morning and find they have launched an attack on
In general, everyone in
The summer after 9/11,
This loss of life was five times bigger than 9/11 in
The European economy is beginning to fracture. The Euro is down. Countries like
· Possible massive sell-off of large four-bedroom houses and a movement to condos.
· An enormous drain on the treasury. Boomers vote, and they want their benefits, even if it means putting a crushing tax burden on their kids to get them. Social Security will be a huge problem. As this generation ages, it will start to drain the system. We are the only country in the world where there are no age limits on medical procedures.
· An enormous drain on the health care system. This will also increase the tax burden on the young, which will cause them to delay marriage and having families, which will drive down the birth rate even further.
Although scary, these demographics also present enormous opportunities for products and services tailored to aging populations. There will be tremendous demand for caring for older people, especially those who don't need nursing homes but need some level of care. Some people will have a business where they take care of three or four people in their homes. The demand for that type of service and for products to physically care for aging people will be huge.
Make sure the demographics of your business are attuned to where the action is. For example, you don't want to be a baby food company in Europe or
4. Restructuring of American Business
The restructuring of American business means we are coming to the end of the age of the employer and employee. With all this fracturing of businesses into different and smaller units, employers can't guarantee jobs anymore because they don't know what their companies will look like next year. Everyone is on their way to becoming an independent contractor. The new workforce contract will be, "Show up at the my office five days a week and do what I want you to do, but you handle your own insurance, benefits, health care and everything else."
Husbands and wives are becoming economic units. They take different jobs and work different shifts depending on where they are in their careers and families. They make tradeoffs to put together a compensation package to take care of the family. This used to happen only with highly educated professionals with high incomes. Now it is happening at the level of the factory floor worker. Couples at all levels are designing their compensation packages based on their individual needs. The only way this can work is if everything is portable and flexible, which requires a huge shift in the American economy.
At the same time, the military gap is increasing. Other than
On the one hand, this makes the
Ultimately, it's an issue of culture. The only people who can hurt us are ourselves, by losing our culture. If we give up our Judeo-Christian culture, we become just like the Europeans. The culture war is the whole ballgame. If we lose it, there isn't another
Posted by The News Junkie in Best Essays of the Year, Politics at 09:47 | Comments (5) | Trackback (1)
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"Ultimately, it's an issue of culture. The only people who can hurt us are ourselves, by losing our culture. If we give up our Judeo-Christian culture, we become just like the Europeans. The culture war is the whole ballgame. If we lose it, there isn't another America to pull us out."
Guard, protect and cherish your land, for there is no afterlife for a place that started out as Heaven. Charles M. Russell, Montana, 1926.
One hell of an essay. Can't argue with any of it. He has the facts.
Meyer should have a blog. But I guess he has one, in a sense. Excellent summary, excluding all of the minor BS we preoccupy ourselves with.
It's the Big Picture.
Thanks for the post.
Thanks for the post, NJ. Especially the Business Restructuring sections. We see this happening everywhere. Government could learn a lot from this, but they love having captive employees.
"We are becoming one of the last holdouts of the traditional Judeo-Christian culture".
Yes, I have felt this for a long time. It means that those of us who share that culture have a special responsibility.
Government is far too ossified. It can't make its employees multifunctional (with some rare exceptions) nor do those employees in general want to change. The lack of human capital explains the phenomenal growth of the Beltway banditti as described in a recent Wall Street Journal article. I have seen it up close now for the last five years and it has gone well past the point of no return. Future Administrations may be Republican or Democratic, but the contractors are there to stay.
I have just been pointed in the direction of this essay (unbelievably lauded as one of the best essays of 2007).
In the fourth paragraph of section 1 Meyer refers to the fact that the US does not have a 'first rate intellience service'. Surely this is directly attributable to the fact that people like Meyer have actively been involved in US intelligence activities over the past years. The grasp of worldwide economic and political issues described in this essay are almost infantile.
I'm sorry but do other people not feel the slighest bit worried that someone capable of expounding some of the idea's outlined in this essay is currently, or has previously been, responsible for intelligence operations on behalf of the US?
If you missed Herb Meyer's Global Summary for CEOs last week, it's worth reading: it's the Big Picture.
Tracked: Apr 08, 18:40