Patrick Schwerdtfeger is a motivational speaker who can speak about global megatrends and business trends at your next event. Contact us to check availability. The full transcript of the above video is included below.
Full Video Transcript:
Hi and welcome to another edition of Strategic Business Insights. Today we’re going to talk about global megatrends. I’m going to cover eight of them, eight different global megatrends. In no particular order we’re going to go through them. But let me just say right off the bat, all of these megatrends, these are big, long-term macro trends that are going to affect the entire world. And when you have a huge trend like that, it’s an established direction. We are going in that direction. They are going to be business opportunities associated with every single one of the ones I’m going to talk about, and there are also going to be problems with every single one of the ones we’re talking about. Let’s face it, problems are the genesis of business opportunities. So when we go through these global megatrends, think about what the opportunities might be for your skill set or your company or whatever it is you do. How can you capitalize on some of these trends?
Okay, eight global megatrends in no particular order. Number one, one of the ones that’s most fascinating to me: Productivity. People don’t understand that when they watch the evening news and it says productivity is up and so people automatically think, “Oh, that’s great news!”when productivity goes up, it means it took less human beings, it took fewer people to produce the same amount of goods and services. When productivity goes up it leads to higher unemployment. And we are seeing this in our economy, we’re seeing it all around the world, that productivity is going up, which means that some of those good jobs that we used to have are disappearing because they’re being automated through robots or algorithms or what have you. Productivity’s going up so it takes fewer people to do the same amount of work.
So at the end of the day what’s it actually leading to? It’s leading to higher inequality because the people who are on the leverage side, business owners, people who have capital where they are investors in businesses, they take advantage of that productivity and they’re making a huge amount of money, whereas everyone else is getting squeezed like crazy. People have to work harder all the time keeping a job, having a good job. People are working more hours. They’re working harder. There’s more pressure, more stress.
So which side of the leverage equation are you on? Are you someone who’s benefitting from the increased productivity or are you someone who is having to pay the price of increased productivity? In other words, you have to produce more in every given hour. You want to be on the leverage side.
Next up, business versus governments. Businesses are more powerful than governments today and it’s going more and more in that direction. You’ve got these multinational corporations that they’re able to take their—this relates to productivity, by the way, because let’s say they had a factory in the United States. Well, it’s cheaper for them to have that factory in, say, China. And so they can move it to China. Well, all of a sudden the American economy just takes a little bit of a hit because all those employed people are now over in China. So their economy benefits, and meanwhile the profit dollars might be increased so the profit coming back to America might be higher than it would have been otherwise. And now the wages in China are going up quite quickly, so the same company can shut down that factory that they have in China and move it to Bangkok or move it to Thailand or to Malaysia or Indonesia where the wages are still lower. So this mobility—and that’s all productivity.
And the most amazing thing, by the way, is that now it’s not even just the labor force, the money of what the wages are in these different countries, but they’re developing robotics and algorithms that are calculating thing and actually automating positions so that they’re even losing jobs in those countries where the wages are low. They’re losing jobs because companies are able to automate more and more. So the middle class of the economy is being stripped out. We’ve got these low-level jobs that are just really menial tasks or service sector jobs, and then you have the very high-end jobs which are management, executive, and of course, owners. They’re making a fortune and these people are working their tails off.
But as business gets more and more relative to governments, we’re going to see more and more concessions from governments to try and keep business in their country and keep their employment. One of the biggest requirements of democracy is full employment or as close to full employment as you can get. If you have low unemployment, you’ll get reelected. If you have high unemployment, there’s a good chance that you’re not going to get reelected. So the governments really want to preserve employment levels within their countries. They’re going to have to give enormous concessions to business to keep those factories and keep those jobs within their borders. Business is getting incredibly, incredibly powerful.
The global mind, the Internet – number three. The Internet is bringing everybody together for the first time in history. All the borders of different nations or different cultures or sectarian divisions in different parts of the world, all those borders are blurring over. It doesn’t matter as much as it used to. All the expertise from around the world is all finding its way, finding each other. People with different expertise are finding each other, contributing to things – the open source movement where engineers from around the world are all collaborating on different projects.
This is the “global mind.” It’s a phrase that was coined by Al Gore in his book, The Future. It’s very, very true. The Internet is bringing expertise together from all over the world. Again, that’s going to be a huge opportunity; it also comes with some challenges.
Changing demographics – number four. Changing demographics in the developed world, i.e. United States, Canada, Europe, Japan, South Korea, Australia, New Zealand, a handful of other countries—those are really developed nations, and of course Europe is an amalgamation of a whole bunch of nations—the population is aging. We are living a long time and we’re not making a lot of babies. So for example, Europe between 2010 and 2050, their population is going to be almost completely stagnant. They’re projecting 1% growth in their population during that timeframe. United States has about 26% growth during that timeframe, but that’s primarily—we do have a higher birth rate but we also have higher immigration levels in the United States. But then, like Russia, their population is dropping by 12% during that timeframe. Japan, their population is dropping by 17%. No babies are being born. Meanwhile, they’re going to have the highest number of above-65 people of any developed nation, in fact any nation on the planet. That’s going to be a huge strain on their resources because those are the people who need entitlement programs…
Here’s the thing: When people are very young, say 25 and under, they’re healthy but not economically productive for the most part; 25 to 65, they’re healthy and economically productive in the economy; when they’re 65 and above, they tend to be not that healthy and not that productive. So it kind of acts like a weight, like an anchor on the back of a boat. It’s horrible to say that but it’s true. These people, someone has to take care of them, either their family or entitlement programs. Someone has to help them sustain themselves, especially if they haven’t saved enough money during their productive period of their lives. But that’s going to be a huge strain for the developed nations.
Meanwhile, on the developing side of the world, their populations are exploding with tons of young people. The birth rate is actually dropping around the world, which is good news. Thank God because the population is unsustainable in the way it’s growing today. But in the developing world, especially South Asia, Middle East, some parts of South America, the birth rate is very high, and certainly Africa the birth rate is very high, so the population’s growing very quickly. Again, that means their economies are probably going to grow quite a bit, but there’s going to be a lot of volatility there. Young people tend to be the ones that protest and get angry about things. It happened here in America, too, when we had our baby boom and they were in their late teen/early 20 years. That was the sixties and the seventies, and we had a lot of volatility here in America.
So this just tends to happen. Almost any time when you have social unrest, there is usually a youth bulge, a baby boom. There are a lot of young people, and that’s one of the things that fuels that. So we know this is coming. This is happening in developed nations all around the world.
Currencies and credit, number five. Our credit system is going to break eventually. Right now, countries all around the world are printing money to try and keep the economy moving and keep our credit system working. There’s a whole bunch of complicated reasons why our credit system has to grow every year. And just recently, when the private sector really had a significant downturn, we basically just switched out private debt for public debt. The US government took out enormous debt to subsidize the economy and bail out companies and all the entitlement programs. The same thing happened in Europe, taking huge public debts, the ECB, to finance, to keep grease going, their bailout packages in Italy and Spain and Ireland and Portugal. All these countries required help. That’s all public debt. Japan has taken enormous public debt to keep their economy going. That is not sustainable.
And they’re printing money – US is printing money, Europe is printing money, Japan is printing money, the UK is printing money. Everyone is printing money, huge amounts of money. That system is probably going to break at some point. It’s never happened before, so we don’t know what’s going to happen when that takes off. But we’re already seeing some things that are happening as a result of it, like the recent interest in Bitcoin. Bitcoin is this brand new thing. It’s an online virtual currency. It’s an open source currency which is not affiliated with any person or any company or any country – completely borderless.
Well, if the credit system breaks, something like Bitcoin—it might be Bitcoin, it might be something else—but something like Bitcoin could get a huge amount of traction and people could actually switch to this type of virtual currency. It is possible. Over the course of 10, 20 years, it’s remarkable the changes that can take place. So Bitcoin, at the beginning of this year, 2013, Bitcoins were like 7 to 10 dollars each, and today they’re over 200 dollars each. This is one year that it had gone up that much in price. So there’s a lot of early interest in Bitcoin and there have been other [00:11:21] references to do similar things. We need to watch that to see what’s going to happen to our credit system and what’s going to take its place when it finally breaks, and I suspect that’s going to happen. Within our lifetimes we’re going to see significant changes in our credit system.
Resource depletion: We are in this already. The topsoil is shrinking around the world. Fresh water is strained more than ever before. There is enormous resource depletion. Even in 2011 when the commodity prices went up as they did also in 2007, I believe, we had food riots in 32 countries around the world, mostly in Africa. So developing nations, when commodity prices go up—which is going to happen as the population grows. So as the population grows, there’s going to be more and more demand for commodities and the prices are going to go up. And as that happens, there are going to be food shortages and food riots. People turn into animals very quickly when their lives are at stake.
This is the sixth trend, by the way. Sixth megatrend that we’re talking about here – again, no particular order. But we can expect very big strains on topsoil, on water, resource depletion in general, leading to social unrest. We’re going to see this. We’ve already seen it and it’s going to continue.
And adding onto that is the seventh, which is global warming. Global warming has already begun. Nine of the last 10 years were record years in terms of high temperatures. That’s leading to bigger storms like Katrina and super-storm Sandy, and huge storms – there’s one going through the UK right now and there was a big one that went through the Philippines. These are record-breaking storms. We’re going to see more and more of that. So we’re going to see more drought, lack of rain, and then when the rain comes it’s going to come hard all at once and with a ton of wind and damage. Super-storm Sandy is costing our government 60 billion dollars—and insurance companies, not just our government—but there’s an enormous amount of money that has to go to support these communities after storms like this.
Ninety percent of the world’s population lives on coastlines, so if the sea level rises—which is happening. It’s already happening. The Arctic ice cap is melting. That’s going to have huge implications. Because right now it’s white, so the sun rays bounce off it and go right back out into the atmosphere or into space. But when that ice melts, now it’s dark blue, so those same sun rays get absorbed into the ocean and global warming is going to accelerate at that point. The polar ice cap is expected to be completely gone in 2030. So we are seeing this already. It’s already begun. That’s the seventh one I wanted to talk about.
And the last one that I wanted to talk about—number eight—is biotech. Biotechnology – I think it’s one of the most exciting growth industries for the next 10 to 20 years, for a whole bunch of reasons. Number one, we’re actually figuring it out. Like the human genome has been sequenced, now they’re sequencing the proteins in the human genome, which is orders of magnitude more data; it’s a huge, colossal project. But they’re looking at even neurotransmitters inside of the brain and mapping those, and all these—nanotechnology—all these things are converging.
So the technology is there, and meanwhile with the baby boomers aging, not only here in our country—look at that, I just dropped my microphone—not only here in America but also in Europe and also in Japan, the demand is going to be there as well. So as those people age and have all kinds of ailments associated with aging, these huge populations are going to be driving the demand in the biotech field and biotech is ready to respond. We’re going to see stem cell technologies and so forth affecting diseases like Parkinson’s and Alzheimer’s disease. These are all areas that are going to be changing very, very quickly.
So again, number one, productivity. Number two, businesses are more powerful than governments. Number three, Internet and the global mind bringing mental resources from around the globe. Number four, emerging demographic shifts are going to dramatically change developing countries versus developed nations. Currencies and credit – the credit system is in trouble. What’s going to replace it when it finally goes? Resource depletion – mainly topsoil and water, and then related to that is global warming, is number seven, and number eight is biotech. Global megatrends – there are going to be significant changes coming. How can you position yourself to take advantage of those trends?
Thanks for watching this video. My name is Patrick, reminding you as always to think bigger about your business, think bigger about your life.
Patrick Schwerdtfeger is a keynote speaker who has spoken at business conferences in North America, South America, Europe, Africa, the Middle East and Asia.