The World in 2030 and the Consequences of Good and Bad Health Habits on Lifespan!

From Aditya RanaDate: Sat, Jan 12, 2013 at 3:00 PM
Subject: The World in 2030 and the Consequences of Good and Bad Health Habits on Lifespan!

Hi!,

Making projections into the distant future is fraught with difficulties – nevertheless, it is important to develop a framework to analyse possible future scenarios and their implications. In this regard, the National Intelligence Council of the U.S. government does a comprehensive survey every four years, which looks at global megatrends over the next 15 years. They recently published a report titled “Global Trends 2030: Alternative Worlds” (http://www.dni.gov/index.php/about/organization/national-intelligence-council-global-trends) which provides fascinating insights into what the world might look like in 2030. The report is based on in-depth research and a variety of analytical tools drawn from public, private and academic sources and experts in nearly 20 countries – from think tanks, banks, government offices and business groups. To provide excerpts of some of the key points (it’s a 160 page report!):

-The world in 2030 will be radically different from the world today with no country , whether the U.S. or China, being a hegemonic power.

-The key two megatrends of increasing empowerment of individuals and diffusion of power amongst many states (and from states to informal networks) will largely reverse the dominance of the West which began in 1750, and restore Asia’s weight in the global economy. In addition, this process will usher in a new era of democratisation at the international and domestic level.

-The other two megatrends which will have a dramatic impact on the world are demographic patterns (particularly rapid aging ) and growing resource demands leading to scarcities, particularly in food and water.

-In addition, there are six key game-changers which will largely determine how radically the world will be transformed by 2030 – a crisis-prone global economy, governance, conflict, regional instability, technology and the role of the U.S.

The four big megatrends:

-1) Individual empowerment will accelerate rapidly over the next 15 years resulting from poverty reduction, growth of a huge middle-class, better education and health care.

-Today about 1 billion people globally are living in extreme poverty, earning less than $1.25 a day, and 1 billion are undernourished. The number could drop by about 50 percent between 2010 and 2030.

-Up to now less than one billion people have accounted for three-quarters of global consumption; during the next two decades, new and expanded middle classes in the developing world could create as many as two billion additional consumers. The most rapid growth of the middle class will occur in Asia, with India somewhat ahead of China (see chart below):

-2) The diffusion of power among countries will have a dramatic impact by 2030. Asia will have surpassed North America and Europe combined in terms of global power, based upon GDP, population size, military spending, and technological investment. China alone will probably have the largest economy, surpassing that of the United States a few years before 2030.

-As the world’s largest economic power, China is expected to remain ahead of India, but the gap could begin to close by 2030. India’s rate of economic growth is likely to rise while China’s slows. In 2030 India could be the rising economic powerhouse that China is seen to be today.

-Just as important, the economies of other non-Western states such as Colombia, Egypt, Indonesia, Iran, South Africa, Mexico, Turkey, and others that are middle tier today could rise by 2030. When this second tier is combined with the non-Western giants of China and India, the shift of power from the West to the emerging or non-Western world is even more pronounced.

-Based on a newly developed global power index, which incorporates traditional metrics like GDP , population size, military spending,

and technology plus a broader array of elements including health, education, and governance, the forecast for global power is depicted in the chart below:

-The shift in national power is only half the story and may be overshadowed by an even more fundamental shift in the nature

of power, enabled by communications technologies, power almost certainly will shift more toward multifaceted and amorphous networks composed of state and non-state actors . As the power of non-state actors increases, achieving legitimacy will become a more important and crucial

3) Four demographic trends will fundamentally shape most countries’ economic and political conditions and relations among states. These trends are: aging both for the West and increasingly most developing states; a still significant but shrinking number of youthful societies and countries; migration, which will increasingly be a cross-border issue; and growing urbanization, which will spur economic growth but place new strains on food and water resources.

-Countries that are amassing a large proportion of seniors face the possibility of a decline in economic productivity and slower aggregate GDP growth or stagnation.

-According to UN demographers, a country’s demographic window of opportunity can be estimated by identifying those years in which the proportion of children (0 to 14 years of age) in the total population is less than 30 percent, and the proportion of seniors (65 years and older) is less than 15 percent. To illustrate this via a chart:

-International migration is set to grow even faster than it did in the past quarter-century. The factors promoting cross-border migration are likely to remain strong or intensify. These factors are globalization, disparate age structures across richer and poorer countries, income inequalities across regions and countries, and the presence of migrant networks linking sending and receiving countries.

-Internal migration—which will be at even higher levels than international migration—will be driven by rapid urbanization in the developing world. the spectre of greater economic opportunities outside of local communities will be the biggest driver of internal migration.

-In a tectonic shift, today’s roughly 50-percent urban population will almost certainly climb to near 60 percent. Between now and 2030, demographers expect urban population to grow most rapidly where rates of population growth are highest and where the urban proportion of the population remains relatively low.

-According to the UN, between 2011 and 2030, there will be an additional urban population of 276 million in China and 218 million in India, which will together account for 37 percent of the total increase for urban population in 2030.

-While today’s giant 27 megacities (cities with a population greater than 10 million) will continue to grow, these giants will become further limited by physical land and infrastructure constraints, leading to the rise of peri-urban or “rurban” areas which will grow faster than city centres. Metropolitan regions will spill over multiple jurisdictions creating mega-regions and by 2030, there will be at least 40 large bi-national and tri-national metro regions.

-Owing to rapid urbanization in the developing world, the volume of urban construction for housing, office space, and transport services over the next 40 years could roughly equal the entire volume of such construction to date in world history, creating enormous opportunities for both skilled and unskilled workers.

-4) Demand for key resources food, water, and energy will grow by approximately 35, 40, and 50 percent respectively owing to an increase in the global population and the consumption patterns of an expanding middle class. Climate change will worsen the outlook for the availability of these critical resources as the severity of existing weather patterns will intensify, with wet areas getting wetter and dry and arid areas becoming more so. Fragile states in Africa and the Middle East are most at risk of experiencing food and water shortages, but China and India are also vulnerable.

-In a likely shift, the United States could become energy-independent. The US has regained its position as the world’s largest natural gas producer due to hydraulic fracturing technology. Additional crude oil production through the use of “fracking” drilling technologies on difficult-to-reach oil deposits could result in a big reduction in the US net trade balance and improved overall economic growth. Global spare capacity may exceed over 8 million barrels, at which point OPEC would lose price control and crude oil prices would collapse, causing a major negative impact on oil-export economies.

Potential Game Changers:

1) The Crisis-Prone Global Economy

– The international economy almost certainly will continue to be characterized by various regional and national economies moving at significantly different speeds—a pattern reinforced by the 2008 global financial crisis. The contrasting speeds across different regional economies are exacerbating global imbalances and straining governments and the international system. The key question is whether the divergences and increased volatility will result in a global breakdown and collapse or whether the development of multiple growth centres will lead to resiliency

-The world’s economic prospects will increasingly depend on the fortunes of the East and South. The developing world already provides more than 50 percent of global economic growth and 40 percent of global investment. Its contribution to global investment growth is more than 70 percent. China—despite a likely slowing of its economic growth—will contribute about one-third of global growth by 2025, far more than any other economy. Emerging market demand for infrastructure, housing, consumer goods, and new plants and equipment will raise global investment to levels not seen in four decades. Global savings may not match this rise, resulting in upward pressure on long-term interest rates.

2) The Governance Gap

-During the next 15-20 years, as power becomes even more diffuse than today, a growing number of diverse state and non-state actors will play important governance roles. The increasing number of players needed to solve major transnational challenges—and their discordant values—will complicate decision making. The chronic deficit probably will reinforce the trend toward fragmentation.

-The governance gap will continue to be most pronounced at the domestic level and driven by rapid political and social changes. The advances during the past couple decades in health, education, and income—which we expect to continue, if not accelerate in some cases—will drive new governance structures.

-Both social science theory and recent history—the Color Revolutions and the Arab Spring—support the idea that with maturing age structures and rising incomes, political liberalization and democracy will advance. China, for example, is slated to pass the threshold of US $15,000 per

capita purchasing power parity (PPP) in the next five years, which is often a trigger for democratization.

3)Potential for Increased Conflict:

-Historical trends during the past two decades show fewer major armed conflicts and, where conflicts remain, fewer civilian and military casualties than in previous decades. Maturing age structures in many developing countries point to continuing declines in intrastate conflict. The disincentives will remain strong against great power conflict: too much would be at stake. Nevertheless, we need to be cautious about the prospects for further declines in the number and intensity of intrastate conflicts, and interstate conflict remains a possibility.

4) Wider Scope of Regional Instability:

-Regional dynamics in several different theatres during the next couple decades will have the potential to spill over and create global insecurity. The Middle East and South Asia(Pakistan, Afghanistan) are the two regions most likely to trigger broader instability.

– An increasingly multi-polar Asia lacking a well-anchored regional security framework able to arbitrate and mitigate rising tensions would constitute one of the largest global threats. Fear of Chinese power, the likelihood of growing Chinese nationalism, and possible questions about the US remaining involved in the region will increase insecurities. An unstable Asia would cause large-scale damage to the global economy.

4)The Impact of New Technologies:

-Four technology arenas will shape global economic, social, and military developments as well as the world community’s actions pertaining to the environment by 2030.

-Information technologyis entering the big data era. Process power and data storage are becoming almost free; networks and the cloud will provide global access and pervasive services; social media and cyber security will be large new markets

-New manufacturing and automation technologiessuch as additive manufacturing (3D printing) androbotics have the potential to change work patternsin both the developing and developed worlds. In developed countries these technologies will improve productivity, address labor constraints, and diminish the need for outsourcing but could make more low and semi-skilled manufacturing workers redundant, exacerbating domestic inequalities. For developing economies, particularly Asian ones, the new technologies will stimulate new manufacturing capabilities and further increase the competitiveness of Asian manufacturers and suppliers.

-Breakthroughs, especially for technologies pertaining to the security of vital resources—will be necessary to meet the food, water, and energy needs of the world’s population. Key technologies likely to be at the forefront of maintaining such resources in the next 15-20 years will include genetically modified crops, precision agriculture, water irrigation techniques, solar energy, advanced bio-based fuels, and enhanced oil and natural gas extraction via fracturing.

-Last but not least, new health technologies will continue to extend the average age of populations around the world. The greatest gains in healthy longevity are likely to occur in those countries with developing economies as the size of their middle class populations swells. The health-care systems in these countries may be poor today, but by 2030 they will make substantial progress in the longevity potential of their populations; by 2030 many leading centres of innovation in disease management will be in the developing world.

6) The Role of the United States:

-How the United States’ international role evolves during the next 15-20 years and whether the US will be able to work with new partners to reinvent the international system will be among the most important variables in the future shape of the global order. Although the United States’ relative decline vis-a-vis the rising states is inevitable, its future role in the international system is much harder to project.

-The US most likely will remain “first among equals” among the other great powers in 2030 because of its pre-eminence across a range of power dimensions and legacies of its leadership role. More important than just its economic weight, it’s dominant role in international politics has derived from its dominance across the board in both hard and soft power. Nevertheless, with the rapid rise of other countries, the “unipolar moment” is over and Pax Americana—the era of American ascendancy in international politics that began in 1945—is fast winding down.

-The replacement of the United States by another global power and erection of a new international order seems the least likely outcome in this time period. No other power would be likely to achieve the same breath of power in this time frame under any plausible scenario. Although ambivalent and even resentful of the US-led international order, they have benefited from it and are more interested in continuing their economic development and political consolidation than contesting US leadership. In addition, the emerging powers are not a bloc; thus they do not have any unitary alternative vision. Their perspectives—even China’s—are more keyed to shaping regional structures. A collapse or sudden retreat of US power would most likely result in an extended period of global anarchy.

Fascinating and thought-provoking insights which reinforce the requirement to have a core asset portfolio firmly anchored in China, India and the U.S. (with the latter being focussed on energy and technology). The tactical asset allocations may vary over time based on valuations and other considerations, but the underlying structural asset allocations as described above should be invariant. Thinking about, and adapting to change, is key to successful investing (and living!) – as Keynes noted in 1937 “ the idea of the future being different from the present is so repugnant to our conventional modes of thought and behaviour that we, most of us, offer a great resistance to acting on it in practice.”

A quick look at performances over 2012: the standouts were Germany (up 29%) and India (up 26%, 24% in dollars). Greece was up 41% in dollars! While 2012 was a volatile year, it did finish with very respectable returns across a variety of risk assets and bodes well for continuance of this theme in 2013.

Consequences of good and bad health habits on life-span:

Came across an interesting article which illustrates the consequences of specific good or bad habits in terms of 30-minute units of life gianed or lost!

Mark Fischetti, Scientific American 12/2012:inShare45

We all know that smoking is bad for our health and that eating vegetables is good for it. Yet how bad and how good are they? Without a clear notion of threat and reward, it is that much harder to avoid a cigarette or to choke down a serving of broccoli. “I hate when someone tells me that something is risky,” says David Spiegelhalter, a professor of risk assessment at the University of Cambridge. “Well, compared to what?

To answer his own question, Spiegelhalter converted reams of statistical risk tables into a simple metric: a microlife—30 minutes. If you smoke two cigarettes, you lose 30 minutes of your life (top graphic). Exercise for 20 minutes, and you gain two units of microlife. Over time bad habits accelerate your aging, and good habits slow it down (bottom graphic). “That seems to resonate with people,” Spiegelhalter says. “No one likes to get older faster.”

I would like to wish my readers a healthy, prosperous and happy 2013! Keep adding the microlifes!

Regards

Aditya

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