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June 05, 2006

Addendum to Ten Questions with Dr. Joseph Chamie

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I asked Dr. Chamie three additional questions based on the comments to his first interview. Here are his follow-on answers.

  1. Question: What will the demographics of the US look like in 2050?

    Answer: Later this year, sometime in mid-October, the US population is expected to hit the 300 million mark. The growth of the America’s population is expected to continue throughout the 21st century. By 2050 it is projected to grow to about 420 million; and by the century’s end, the projected US population is approaching close to 600 million.

    The age structure of the population is also expected to become older. For example, the proportion of the US population sixty-five years or older is expected to rise from 12 percent today to 21 percent by mid-century. Furthermore, Americans are expected to be living longer in the future, with many reaching 100 years or more. Also, today there are about five people in the working ages for every person sixty-five years or older; by mid-century this number will likely be cut in half.

    The population will also be more urbanized, with large movements to outlying suburbs and smaller cities, and significant regional shifts to states in the South and West. Over the next twenty five years, for example, the five fastest growing states are expected to be Nevada, Arizona, Florida, Texas, and Utah. In contrast, states in the Northeast and Midwest regions, such as North Dakota, West Virginia, Iowa, Ohio, New York, and Pennsylvania, are projected to experience negative or close to zero population growth over the next quarter century.

    America’s population will also likely continue to experience major shifts in its ethnic composition. According to the 2000 census, for example, the top five countries are no longer of European origin as was the case in the past; they are now Mexico, China, Philippines, India, and Vietnam. In addition, greater proportions of Americans will have their ethnic origins from countries south of the US border, especially from Mexico, which now represents close to one-third of the foreign born residing in the US.

    During the coming decades, America’s population is expected to remain around four to five percent of the world total. However, its demographic standing among developed countries as a whole will increase from one-quarter today to close to one-third by 2050.

    All in all, America’s population is expected to undergo major demographic changes during the 21st century. Given America’s dominant social, economic and political role in the world, these demographic changes will no doubt have significant and far-reaching consequences and repercussions for the country itself as well as for other nations.

  2. Question: If you were an entrepreneur, what kind of business would you start to take advantage of demographic trends?

    Answer: Clearly, anticipating America’s demographic future is a much easier task, especially for a demographer, than deciding on what businesses would benefit from these changes. With this caveat, I could offer some very general thoughts on this question.

    Over the next four decades, the US population is expected to add another 100 million people. Obviously then, substantially more housing will be needed as well as all the related consumer goods and services.

    Also, the expected changes in the age structure of the US population described earlier will offer economic opportunities, especially in areas such as health, nursing and elder services and care; estate, pension and retirement planning; recreation and entertainment; new living arrangements; and of course, new patterns of consumption and investments specific to the tastes and requirements of older persons. With older and smaller families, housing requirements and service needs will also change considerably, again offering economic opportunities.

    The changing ethnic composition, especially from Mexico and Latin American countries, will bring about increasing demands for relevant and appropriate goods and services. Accordingly, opportunities will likely arise for those businesses that can cater to the needs of these new Americans in such areas as food, clothing, housing, entertainment, social services, etc.

  3. Question: Then what kind of business would you absolutely avoid?

    Answer: As my demographic training provides me with little expertise to answer this question properly, my remarks will be general and, at best, personal thoughts.

    With the US population expected to grow by 40% by 2050, the economic environment certainly appears to be a promising one for the business community. This will especially be the case in the “sun-belt” regions of the South and West, and the outlying, distant suburbs of large metropolitan areas as well as smaller cities. In contrast, other regions, in particular some states in the Midwest, may be comparatively less promising for business ventures directly relating to consumer goods and services.

    Also, given the ageing of the population as well as large immigrant population, I would avoid businesses and products that are complicated to understand, hard or uncomfortable to use, expensive to buy, difficult to store, and marginal or non-essential. Also, I think that it would be advisable be cautious about involvement with government funded social and health services, which will continue to be growing and as we have seen are likely not to be competitive in reimbursements.

    Finally, it is also important to consider the international scene. Europe’s population as well as Japan’s have recently peaked and are now declining. The US remains an exception among the developed world due to relatively high fertility (at replacement levels) and high levels of immigration (1.1 million were naturalized in 2005). Accordingly, as I noted earlier, my preference would be to start a business in the US.

    Nearly all of the world’s population growth in the next fifty years will be in the developing world. Today six countries account for half of the the world’s growth: India, China, Pakistan, Nigeria, Bangladesh, and Indonesia. India, which accounts for one-fifth of this growth, is growing so rapidly that one week of its growth is the equivalent to the natural rate of population growth for the EU-25. India is expected to be the world’s largest country in about thirty years. Also it should be noted, that by 2050, the combined populations of India and China will be what the world population was in 1950. As the populations of these two “billionaire” countries continue to develop, enormous business opportunities will also continue to arise.

Comments

Very cool post, Guy.

****************

Why thanks!

Guy

It is rather logically, as the huge immigration from Mexico, as it is, will continue for sure. The same as the wind exist between hot and cold area. And what for to run into deeper then stay in South states… The number of people in India, Indonesia, as it is growing, then it probably will continue to do the same, there is no reason for stop this process. Who want to sell the cell phone to numbers of people in India? Do you think that it is easy to explain illiterate people what for he/she needs it and teach how to manipulate it? There is still people who spend all life and can not read and write, 50 years is not enough for change it.
The life is becoming longer with increase the level of live, so the same logically the limit age will be higher. The history, practical life shows that with lower level of life the number of children grows, the same as with higher life level we have the lower children borns level, and I think that will not changed at least to the time when the countries with high level of live will find solution of this problem.
50 years is the time of one generation, not much can change in this period. At least something that can be easy to calculate.
‘Expensive to buy‘ – is something from VIP area, are you really think that this kind of business can fall down? Do you remember about Ferrari, 5 stars hotels and etc. The human community and the human mind is building so that we always do the VIP area, the human community does the leaders. So even in case of there is thousands of people in the whole Earth we have the leaders, the rich people. That is the point in what the gmail is playing, you can become the member only to be invited, it makes this service popular. Some kind of VIP club, like in England.
The current situation in the world, makes to think about the alternative power, the vehicles with easy re-moduling power supply, the same easy as to change video card in computer. To grow the services, and devices that make people more lazy and useless that it is now.

The problem is the macro economic outlook for USA is terrible. There is some serious problems coming down the path both in demographics and governance problems. These cant be papered over.

>I would avoid businesses and products that are complicated to
>understand, hard or uncomfortable to use, expensive to buy,
>difficult to store, and marginal or non-essential.

Hooah, good-bye to Windows!

I found Dr. Chamies perspective interesting and it revealed his talent and experience for diplomacy. I really hope we will see what the population will be like in fifty years. I would like to be as positive as Dr. Chamie.

One thing we do know, is that all cicilizations before this one have caved, in, collapsed or been abandoned. Many studies, anthropologists, on google, search engines and a popular NYTs best seller at the moment would say, we need to make quick changes if we wish to see 2050 with a healthy surviving population where it is right now, never mind larger.

I think it is really excellent of you to incorporate a different view and perspective at your blog Mr. Kawasaki. If you want to crack the top ten, I think you are wise to heighten the humanistic approach to your blog...especially to compete with me!

In considering Dr. Chamies perspective it is important to realize that we are not talking about several cultures or economies in the world. Although there are many countires involved in his studying demographics don't let that cloud your vision...there is really only one economy at function internationally it is totalitarian agriculture...and if we don't start to recognize that the only difference between the Middle east, China, India, Europe, North America is mileage and actually we are all the same economy....we take free food from nature and lock it up and sell it back to ourselves, and we all have the same exact economy with this practice...we need to make sure all of the population is living well and not breeding nihilists. For those who wish to know the mind of a terrorist realize they have more in common with Lex Luther than Martin Luther. they are disenfrachised...turned nihilist, they don't believe in anything. Don't be confused, read The Secret Agent by Conrad, and The Confidence Man by Melville...and read Collapse by Jared Diamond...and you will see how falling through the cracks of community is dangerous...and how having "one economy" style is also dangerous. We need to learn from other economies within the few hunter and gatherer societies still left out there. Those populations will teach us how to care for the main dominant populations of Europe, India, China Middle East and North America.

good work Mr. Kawasaki, expanding your blogs horizons...now you really are going to be a challenge for me to beat at technorati! Good luck and I hope you keep exploring these kinds of ideas here at your blog. You are so lucky to have so many readers...use your superpowers wisely!

Your humble ring mate,
Candy

The aging US population will love and embrace REIT's as an appropriate cash-flow generating investment vehicle. Travel and logistics in the future are still cloudy to me. I think it's time to build a rail system across the US. North America used to be "baseball, hotdogs, apple pie and chevrolet." Any guess on what it will be next?

Dr. Joseph Chamie:

What's your opinion on the issue of whether declining population is a problem to overcome or an opportunity to seize?

This information certainly suggests that you ought to play, if you have the money, in construction or related industry, because the anticipated growth would certainly place strain and additional requirements for buildings - be it for residential, community and health-care. Although I would think that focussing on narrow niches in the existing population would also be significant.

Could you please post some articles on innovation in business model, process and so on(similar to "How to Prevent a Bozo Explosion")?

I don't mean to be a bad apple in the bunch but although this is an interesting post, if you look at only the past 100 years of our civilization with 2 world wars, plagues and new diseases like HIV, Spanish & Avian Flu (possibly) etc... trying to predict anything over 5-10 years is simply a guess no matter how you do it ;-)

Iraq, Somalia, China, India, Taiwan, Russia, United States etc. all have HUGE problems to say the least just demographically speaking, even more politically. I take Dr. Chamie guesses with a grain of salt... who could have predicted how much of an impact the internet would have only 20 years ago! There will be something out every 10-20 years that puts the world into a tailspin (upwards or downwards), that is the only guarantee that demographics can predict in my opinion. One thing is for sure, the world is always an interesting place and no matter how things go, entrepreneurs will always be available to fill in any gaps that occur. Who is to say that even the internet will still be around 20 years from now much less our current global economic systems?

We are always 1 human being away from the next big “thing”... Einstein, Newton, Bell... everything we currently take for granted can be changed within a few years when the next invention comes into being.

Jon
Founder of http://myfoodcount.com
Free & Anonymous Health Monitoring
life: http://jon.legendarylife.com

Great post. Only problem is that I don't know whether to be excited about all of the economic opportunities or to be scared to death about the increased population.

What products to market? Maybe we should look to 'Blade Runner' for inspiration...

I have a disturbing vision of the planet collapsing around us while we are planning our next cell-phone market-penetration strategy...

These last two posts require about two days just to think about before reacting. Very interesting stuff.

This was a very useful and interesting post.

I frequently travel between the USA and India, and I can already see the differences in the demographic cohorts between the two countries. According to researchers about 50% of India's population is under 21. Companies are scrambling to address the needs of this cohort group. And one hot area is cell phones and related services. China and India is where companies are scrambling to serve the next one billion cell phone users.

Kamla

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