NOTE: I received this as an enclosure from a good friend, and thought that it deserved to be widely circulated. I have included part of the covering email, explaining that this is a little old, but, still excellent. Many thanks to the aurhor, Herbert Meyer for sharing his vision.
This  is long, but worth reading if you are concerned about what is going on in the world today and wonder where it all might lead. It is interesting to see what a noted analyst thinks. As you read it, can you think of measures a government might make to mitigate some of the issues.
I don't know when it was written. I checked the web for the Davos meeting in 2007 and 2008 and didn't see this report on the agenda, but then I might have missed it. Some of the words about Iraq lead me to believe that it was not a very recent report. However, this does not invalidate the major issues which are long range.
The report that I received was "in line text" and badly fractured, having been forwarded many times. I have reconstructed it as an attachment without change except for making a remark about "What Date?" and placing the final sentence in red. I trust that this makes it easier to read.
I hope that you will find the time to read it.


A Global Intelligence Briefing.

Herbert Meyer is widely credited with being the first senior U.S. Government official to forecast the Soviet Union's collapse, for which he later was awarded the U.S. National Intelligence Distinguished Service Medal, the Intelligence community's highest honor. Formerly an associate editor of FORTUNE, he is also the author of several books.

This is a paper presented several weeks (What Date?) ago by Herb Meyer at the World Economic Forum in Davos, Switzerland that was attended by most of the CEOs from all the major international corporations -- a very good summary of today's key trends and a perspective one seldom sees.






Currently, there are four major transformations that are shaping political, economic and world events.

These transformations have profound implications for American business leaders and owners, our

culture and on our way of life.

1. The War in Iraq

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 point 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 Vienna. It was in Vienna that the climatic battle between Islam and Western civilization

took place. The West won and went forward. Islam lost and went backward. Interestingly, the date of

that battle was September 11. Since the West beat them, Islam has not found a way to reconcile with

the modern world.

Today, terrorism is the third attack on Western civilization by radical Islam. To deal with terrorism,

the U.S. is doing two things. First, units of our armed forces are in 30 countries around the world

hunting down terrorist groups and dealing with them. This gets very little publicity. Second we are

taking military action in Afghanistan and Iraq.

These actions are covered relentlessly by the media. People can argue about whether the war in Iraq is

right or wrong. However, the underlying strategy behind the war is to use our military to remove the

radicals from power and give the moderates a chance. Our hope is that, over time, the moderates

will find a way to bring Islam forward into the 21st century. That's what our involvement in Iraq and

Afghanistan is all about.

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 U.S. does not have), you can't stop every attack.

That means our tolerance for political horseplay has dropped to zero. No longer will we play games

with terrorists or weapons of mass destructions.

Most of the instability and horseplay is coming from the Middle East. That's why we have thought

that if we could knock out the radicals and give the moderates a chance to hold power, they might find

a way to reconcile Islam with the modern world. So when looking at Afghanistan or Iraq, it's

important to look for any signs that they are modernizing.

For example, women being brought into the work force and colleges in Afghanistan is good. The

Iraqis stumbling toward a constitution is good. People can argue about what the U.S. is doing and how

we're doing it, but anything that suggests Islam is finding its way forward is good.

2. The Emergence of China

In the last 20 years, China has moved 250 million people from the farms and villages into the cities.

Their plan is to move another 300 million in the next 20 years. When you put that many people into

the cities, you have to find work for them. That's why China is addicted to manufacturing; they have

to put all the relocated people to work. When we decide to manufacture something in the U.S., it's

based on market needs and the opportunity to make a profit. In China, they make the decision because

they want the jobs, which is a very different calculation.

While China is addicted to manufacturing, Americans are addicted to low prices. As a result, a unique

kind of economic codependency has developed between the two countries. If we ever stop buying from

China, they will explode politically. If China stops selling to us, our economy will take a huge hit

because prices will jump. We are subsidizing their economic development; they are subsidizing our

economic growth.

Because of their huge growth in manufacturing, China is hungry for raw materials, which drives prices

up worldwide. China is also thirsty for oil, which is one reason oil is now over $100 a barrel. By 2020,

China will produce more cars than the U.S. China is also buying its way into the oil infrastructure

around the world. They are doing it in the open market and paying fair market prices, but millions of

barrels of oil that would have gone to the U.S. are now going to China. China's quest to assure it has

the oil it needs to fuel its economy is a major factor in world politics and economics.

We have our Navy fleets protecting the sea lines, specifically the ability to get the tankers through. It

won't be long before the Chinese have an aircraft carrier sitting in the Persian Gulf as well. The

question is, will their aircraft carrier be pointing in the same direction as ours or against us?

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 Western Europe, the birth

rate currently stands at 1.5, or 30 percent below replacement. In 30 years there will be 70 to 80 million

fewer Europeans than there are today. The current birth rate in Germany is 1.3. Italy and Spain are

even lower at 1.2. At that rate, the working age population declines by 30 percent in 20 years, which

has a huge impact on the economy. 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 France and Germany, and the percentage is rising rapidly because they have higher birthrates.

However, the Moslem populations are not being integrated into the cultures of their host countries,

which is a political catastrophe. One reason Germany and France don't support the Iraq war is they

fear their Moslem populations will explode on them. By 2020, more than half of all births in the

Netherlands will be non-European.

The huge design flaw in the postmodern 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. In Japan,

the birthrate is 1.3. As a result, Japan will lose up to 60 million people over the next 30 years.

Because Japan has a very different society than Europe, they refuse to import workers. Instead, they

are just shutting down. Japan has already closed 2,000 schools, and is closing them down at the rate of

300 per year. Japan is also aging very rapidly. By 2020, one out of every five Japanese will be at least

70 years old. Nobody has any idea about how to run an economy with those demographics.

Europe and Japan, which comprise two of the world's major economic engines aren't merely in

recession, they're shutting down. This will have a huge impact on the world economy, and it is already

beginning to happen. Why are the birthrates so low? There is a direct correlation between

abandonment of traditional religious society and a drop in birth rate, and Christianity in Europe is

becoming irrelevant.

The second reason is economic. When the birth rate drops below replacement, the population ages.

With fewer working people to support more retired people, it puts a crushing tax burden on the smaller

group of working age people. As a result, young people delay marriage and having a family. Once

this trend starts, the downward spiral only gets worse. These countries have abandoned all the

traditions they formerly held in regard to having families and raising children.

The U.S. birth rate is 2.0, just below replacement. We have an increase in population because of

immigration. When broken down by ethnicity, the Anglo birth rate is 1.6 (same as France) while the

Hispanic birth rate is 2.7. In the U.S., the baby boomers are starting to retire in massive numbers.

This will push the elder dependency ratio from 19 to 38 over the next 10 to 15 years. This is not as bad

as Europe, but still represents the same kind of trend.

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 postmodern secular state seems to have forgotten that. If U.S. birth

rates of the past 20 to 30 years had been the same as post-World War II, there would be no Social

Security or Medicare problems. 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 U.S. instituted a $600 tax credit per child. The idea was to enable mom and dad to have four

children without being troubled by taxes. This led to a baby boom of 22 million kids, which was a

huge consumer market. That turned into a huge tax base. However, to match that incentive in today's

dollars would cost $12,000 per child.

China and India do not have declining populations. However, in both countries, there is a preference

for boys over girls, and we now have the technology to know which is which before they are born. In

China and India, families are aborting the girls. As a result, in each of these countries there are 70

million boys growing up who will never find wives. When left alone, nature produces 103 boys for

every 100 girls. In some provinces, however, the ratio is 128 boys to every 100 girls.

The birth rate in Russia is so low that by 2050 their population will be smaller than that of Yemen.

Russia has one-sixth of the earth's land surface and much of its oil. You can't control that much area

with such a small population. Immediately to the south, you have China with 70 million unmarried

men who are a real potential nightmare scenario for Russia.

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


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 media headlines will scream that

America has lost more manufacturing jobs.

All that really happened is that these workers are now reclassified as service workers. So the old way

of counting jobs contributes to false economic readings. As yet, we haven't figured out how to make

the numbers catch up with the changing realities of the business world.

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.


1. The War in Iraq

In some ways, the war is going very well. Afghanistan and Iraq have the beginnings of a modern

government, which is a huge step forward. The Saudis are starting to talk about some good things,

while Egypt and Lebanon are beginning to move in a good direction. A series of revolutions have

taken place in countries like Ukraine and Georgia.

There will be more of these revolutions for an interesting reason. In every revolution, there comes a

point where the dictator turns to the general and says, "Fire into the crowd." If the general fires into

the crowd, it stops the revolution. If the general says "No", the revolution continues. Increasingly, the

generals are saying No because their kids are in the crowd.

Thanks to TV and the Internet, the average 18-year old outside the U.S. is very savvy about what is

going on in the world, especially in terms of popular culture. There is a huge global consciousness, and

young people around the world want to be a part of it. It is increasingly apparent to them that the

miserable government where they live is the only thing standing in their way. More and more, it is the

well-educated kids, the children of the generals and the elite, who are leading the revolutions.

At the same time, not all is well with the war. The level of violence in Iraq is much worse and doesn't

appear to be improving. It's possible that we're asking too much of Islam all at one time. We're trying

to jolt them from the 7th century to the 21st century all at once, which may be further than they can

go. They might make it and they might not.

Nobody knows for sure. The point is, we don't know how the war will turn out. Anyone who says they

know is just guessing.

The real place to watch is Iran. If they actually obtain nuclear weapons it will be a terrible situation.

There are two ways to deal with it. The first is a military strike, which will be very difficult. The

Iranians have dispersed their nuclear development facilities and put them underground. The U.S. has

nuclear weapons that can go under the earth and take out those facilities, but we don't want to do that.

The other way is to separate the radical mullahs from the government, which is the most likely course

of action. Seventy percent of the Iranian population is under 30. They are Moslem but not Arab. They

are mostly pro-Western. Many experts think the U.S. should have dealt with Iran before going to war

with Iraq. The problem isn't so much the weapons; it's the people who control them. If Iran has a

moderate government, the weapons become less of a concern.

We don't know if we will win the war in Iraq. We could lose or win. What we're looking for is any

indicator that Islam is moving into the 21st century and stabilizing.

2. China

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, China is experiencing hundreds of demonstrations around the

country, which is unprecedented. These are not students in Tiananmen Square. These are average

citizens who are angry with the government for building chemical plants and polluting the water they

drink and the air they breathe.

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 U.S. way behind in their ability to generate nuclear power.

What can go wrong with China? For one, you can't move 550 million people into the cities without

major problems. Two, China really wants Taiwan; not so much for economic reasons, they just want

it. The Chinese know that their system of communism can't survive much longer in the 21st century.

The last thing they want to do before they morph into some sort of more capitalistic government is to

take over Taiwan.

We may wake up one morning and find they have launched an attack on Taiwan. If so, it will be a

mess, both economically and militarily. The U.S. has committed to the military defense of Taiwan. If

China attacks Taiwan, will we really go to war against them? If the Chinese generals believe the

answer is no, t hey may attack. If we don't defend Taiwan, every treaty the U.S. has will be worthless.

Hopefully, China won't do anything stupid.

3. Demographics

Europe and Japan are dying because their populations are aging and shrinking. These trends can be

reversed if the young people start breeding; however, the birth rates in these areas are so low it will

take two generations to turn things around. No economic model exists that permits 50 years to turn

things around. Some countries are beginning to offer incentives for people to have bigger families. For

example, Italy is offering tax breaks for having children. However, it's a lifestyle issue versus a tiny

amount of money. Europeans aren't willing to give up their comfortable lifestyles in order to have

more children. In general, everyone in Europe just wants it to last a while longer.

Europeans have a real talent for living. They don't want to work very hard. The average European

worker gets 400 more hours of vacation time per year than Americans. They don't want to work and

they don't want to make any of the changes needed to revive their economies.

The summer after 9/11, France lost 15,000 people in a heat wave. In August, the country basically

shuts down when everyone goes on vacation. That year, a severe heat wave struck and 15,000 elderly

people living in nursing homes and hospitals died. Their children didn't even leave the beaches to

come back and take care of the bodies. Institutions had to scramble to find enough refrigeration units to

hold the bodies until people came to claim them. This loss of life was five times bigger than 9/11 in

America, yet it didn't trigger any change in French society.

When birth rates are so low, it creates a tremendous tax burden on the young. Under those

circumstances, keeping mom and dad alive is not an attractive option. That's why euthanasia is

becoming so popular in most European countries. The only country that doesn't permit (and even

encourage) euthanasia is Germany, because of all the baggage from World War II.

The European economy is beginning to fracture. Countries like Italy are starting to talk about pulling

out of the European Union because it is killing them. When things get bad economically in Europe,

they tend to get very nasty politically. The canary in the mine is anti- Semitism. When it goes up, it

means trouble is coming. Current levels of anti-Semitism are higher than ever.

Germany won't launch another war, but Europe will likely get shabbier, more dangerous and less

pleasant to live in. Japan has a birth rate of 1.3 and has no intention of bringing in immigrants. By

2020, one out of every five Japanese will be 70 years old. Property values in Japan have dropped

every year for the past 14 years. The country is simply shutting down. In the U.S. we also have an

aging population. Boomers are starting to retire at a massive rate. These retirements will have several

major impacts:

Possible massive selloff 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


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 Japan. Demographics are much underrated as an

indicator of where the opportunities are. Businesses need customers. Go where the customers are.

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 t heir 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.

The U.S is in the process of building the world's first 21st century model economy. The only other

countries doing this are U.K. and Australia. The model is fast, flexible, highly productive and unstable

in that it is always fracturing and re-fracturing. This will increase the economic gap between the U.S.

and everybody else, especially Europe and Japan.

At the same time, the military gap is increasing. Other than China, we are the only country that is

continuing to put money into their military. Plus, we are the only military getting on-the-ground

military experience through our war in Iraq. We know which high-tech weapons are working and

which ones aren't. There is almost no one who can take us on economically or militarily.

There has never been a superpower in this position before. On the one hand, this makes the U.S. a

magnet for bright and ambitious people. It also makes us a target. We are becoming one of the last

holdouts of the traditional Judeo-Christian culture. There is no better place in the world to be in

business and raise children. The U.S. is by far the best place to have an idea, form a business and put it

into the marketplace.

We take it for granted, but it isn't as available in other countries of the world. 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!