Tech Boom, Demographic Shock Shaping the Future of Business (Part 2)
(In the final episode of this two-part series, author, commentator and Ipsos Public Affairs CEO Darrell Bricker [@darrellbricker] dishes on the demographic shock that will disrupt consumer consumption patterns and force us to rethink business models of the past. Read part 1 here.)
There are more people in the world than ever before and the doomsayers fear a population explosion that will put planetary resources at risk. But what if the overpopulation pundits are wrong? What if the world is actually facing the shock of running out of people faster than we can replace them?
And if that’s the case, can your business model survive and thrive in that environment?
In his new book “Empty Planet: The Shock of Global Population Decline” Darrell Bricker and co-author John Ibbitson argue that declining fertility rates pose serious implications for many businesses that are already struggling with the shock of a serious labor shortage.
Bricker argues that a shrinking population will leave us with an ever-smaller number of workers supporting a growing cohort of retirees which could lead to major economic disruption. Turns out that the population is also becoming increasingly urbanized to the point where research shows that by 2050, two-thirds of the world’s population will live in cities. All of which will shake up consumer consumption patterns now and in the future.
Which brings us back to Bricker. In this final episode of our two-part interview, Bricker dishes on the “low-fertility trap” and why it’s time for business leaders to rethink conventional business models and get ahead of the demographic curve. Hope you enjoy the conversation.
Appian: Let’s revisit something you mentioned earlier. You talked about the misinformation out there about population trends. What is the biggest myth about overpopulation?
I think the single biggest myth that’s driving all of this is what’s happening in the developing world. So, there’s this assumption that birth rates are rapidly increasing and that it’s way out of control in the developing world. There’s a lot of bad information about India in that regard.
There’s this perception that families in India are having lots and lots of kids. But the Bill and Melinda Gates Foundation recently underwrote a study in which hundreds of global demographers challenged the assumptions of the U.N.’s modeling.
They recalculated India’s birth rate down from 2.3 to 2.1 which is just the rate you need to replace the existing population. India is at that level right now. Whenever I say something like that to people, they’re shocked. But that’s the truth. If you go through the top 10 most populous countries in the world today, birth rates have declined by more than 50% since 1960.
Debunking the Overpopulation Myth
Appian: If that’s the case, then how could we possibly grow the population to over 11 billion people?
Bricker: That’s right. The question is who’s having the babies? The misconception that I’m always confronted by is the lack of knowledge about declining birth rates in the developing world. And that’s always the start of an interesting conversation.
Appian: That reminds me of a conversation I had with a robotics and automation expert in Singapore. He told me that businesses in China were facing a serious labor shortage which was a big reason why China prioritized its pivot to digital labor. China and labor shortage? That sounded so counterintuitive.
Bricker: China is in the low fertility trap. …Once you get the fertility rate below two, it doesn’t go back up. So, the families suffering the biggest decline in size are in China.
The UN has started revising its population projections downward. Expect that revision to continue, until eventually its current low variant becomes its new medium variant. This was the core message of Empty Planet. @darrellbricker https://t.co/e6LqGVrcDw
— John Ibbitson (@JohnIbbitson) June 18, 2019
Appian: So, given what you know and what you’ve seen, are you optimistic or pessimistic about the future of the planet.
What John (Ibbitson) and I say in the book is that the declining population trend that we talk about is not a good thing or a bad thing. But it’s probably going to be the most important trend of the 21st century.
I know others will argue that other trends are more important. But the significant decline of the human population as a result of choice is a new trend and it’s going to affect everything. So, to me, that’s the thing we need to pay attention to. And almost nobody’s paying attention to it today.
Changing Consumption Patterns
Appian: Finally, what’s the future going to look like 20 or 30 years from now.
Bricker: Whenever I think about what the future is going to look like, I think about those movies from the 1950s and all of those things that were supposed to happen in the world but didn’t. So, futurism is a fun activity but not realistic. I take that back, some things from Star Trek may have come true.
But beyond that, I think we’re going to see a much more urbanized population because the other big trend we’re seeing is that people are leaving the countryside in droves and moving to the city. So, our biggest public policy and infrastructure challenges are going to be urban challenges. And dealing with those issues is going to be a big deal for us.
The second thing we’re going to have to deal with is an economy that’s not going to driven by the consumption patterns of the past. Older populations don’t consume the same way younger populations do. So, we’re going to have to adjust our business models to that.
And along with that is the issue of dealing with the generational divide in terms of wealth (gap) between the older and younger populations and how we’re going to manage that. Because in my home country of Canada, by the mid-2030s, there are just going to be two people working for every person that’s retired. Well, that’s probably unsustainable.
Appian: We’re facing a similar demographic challenge in the U.S.
Bricker: So, the question is, how are you going to set up a social security and retirement system for older people? How are you going to manage that when you don’t have enough young people paying taxes to sustain it? That’s going to force some pretty hard existential questions on the public policy front.
Beyond that, on the consumer front, when you think about technology—which is Appian’s principle interest—the question is, why are we always thinking about building technology for young people? Why aren’t we also thinking about building technology for older people. They’re prepared to pay for it.
They want to live independently for as long as possible. So, what are we building in terms of technology to facilitate that? Because that’s a huge market. It doesn’t seem very sexy but that’s where the growth opportunity is going to be.