The future that has already happened

The dominant factor for business in the next two decades - absent war, pestilence, or collision with a comet - is not going to be economics or technology. It will be demographics. The key factor for business will not be the overpopulation of the world, of which we have been warned these last 40 years. It will be the increasing underpopulation of the developed countries -- Japan and those in Europe and in North America.

The developed world is in the process of committing collective national suicide. Its citizens are not producing enough babies to reproduce themselves, and the cause is quite clear. Its young people are no longer able to bear the increasing burden of supporting a growing population of older, nonworking people. They can only offset that rising burden by cutting back at the other end of the dependence spectrum, which means having fewer or no children.

Of course, birthrates may go up again, though so far there is not the slightest sign of a new baby boom in any developed country. But even if birthrates increased overnight to the three-plus figure of the U.S. baby boom of 50 years ago, it would take 25 years before those new babies would become fully educated and productive adults. For the next 25 years, in other words, the underpopulation of the developed countries is accomplished fact and thus has the following implications for their societies and economies:

• Actual retirement age - the age at which people stop working - will go up in all developed countries to 75 for healthy people, who are the great majority. That rise in retirement age will occur well before the year 2010.
• Economic growth can no longer come from either putting more people to work - that is, from more resource input, as much of it has come in the past - nor from greater consumer demand. It can come only from a very sharp and continuing increase in the productivity of the one resource in which the developed countries still have an edge (and which they are likely to maintain for a few more decades): the productivity of knowledge work and of knowledge workers.
• There will be no single dominant world economic power, because no developed country has the population base to support such a role. There can be no long-term competitive advantage for any country, industry, or company, because neither money nor technology can, for any length of time, offset the growing imbalances in labor resources. The training methodologies developed during the two world wars - mostly in the U.S. - now make it possible to raise the productivity of a preindustrial and unskilled manual labor force to world-class levels in virtually no time, as Korea demonstrated 30 years ago and Thailand is demonstrating now. Technology - brand new technology - is available, as a rule, quite cheaply on the open market. The only comparative advantage of the developed countries is in the supply of knowledge workers. It is not a qualitative advantage; the educated people in emerging countries are very whit as knowledgeable as their counterparts in the developed world. But quantitatively, the developed countries have an enormous lead. To convert this quantitative into a qualitative lead is one - and perhaps the only - way for the developed countries to maintain their competitive position in the world economy. This means continual, systematic work on the productivity of knowledge and knowledge workers, which is still neglected and abysmally low.