Graphing Optimism

Call me an incurable optimist, but I tend to see human and economic coniditions as being on a continually upward trend. It can be somewhat difficult to hold this seemingly untenable position especially on days when the stock market tanks or oil shoots above 100 dollars per barrel, but all the same hard data show that in most every arena--the economy, demographics, the aviation sector--things are actually improving all the time. Meet a professor who puts my thoughts not only into words, but molds them into dazzling exhibitions: Dr. Hans Rosling of the Karolinska Institute in Sweden. Rosling’s stunning displays provide clear focus to one indisputable fact: demographically speaking, the world is getting much better. On a graph moving through time Rosling places 200 countries on a grid with one axis labeled median income and the other life expectancy and shows how these countries have developed over the course of the past 200 years...all in 4 minutes (see here). I know what you’re thinking, this kind of information overload seems about as intellectually satisfying as putting the history channel on fast forward and watching with glassy eyes, yet Rosling’s exuberance and narration bring to the forefront the important message behind this display: people the world over are living longer and getting richer and the developing world is making progress at a tremendous rate. Placed in a longer-term, macrospective environment an interesting phenomenon is illustrated here. By removing ourselves from our own day to day observations of history we are better able to see the ‘grand’ movements. Now, stop for a moment and put yourself in the place of a person living during the Spanish Influenza epidemic of 1918 or the stock market crash of 1929. From his or her perspective the world had taken a turn for the worse--perhaps a herald of a not-so-great future. Yet, in Rosling’s graph shows that these events are mere blips in the general upward progression.
Where am I going with this? In my previous post on jet fuel prices I pointed out that the trend in passenger and cargo numbers is one of substantial long-term increase, even in the face of rising cost of oil. Much as is the case with the events Rosling discusses, we lose sight of the grand scheme when looking at data for the aviation sector. One or two years in a down cycle and analysts begin predicting the end of aviation and factoring out any innovations or coping mechanisms the industry might present. The aviation industry, however, will surprise us from time to time. Take for instance $4.5 billion in profits that is expected to be posted for 2010 (source). Difficult years will happen in the future, yet aviation always innovates, and more people and products will take to the sky. Things always get better. Do not commit the fallacy of the last data point, but look to the long-term trends for strategic guidance.

Tracking the Trends

Back in 1964 Bob Dylan famously sang that “times, they are a-changin’.” The 1960s were a time of momentous change in the United States, but he could have just as easily been talking about the first decade of the 21st century. The demographic makeup of the United States is always shifting, but once every ten years researchers are gifted with snapshot of the country’s makeup. I’m talking, of course, about the U.S.Census and more specifically its 2010 iteration. Much has already been made of the political ramifications of the population count with Florida and Texas siphoning six seats from New York, Michigan, Pennsylvania, and others (for instance this Washington Post article). While these political changes will undoubtedly have an effect on the future of the country, there are trends that will have larger, more far reaching effects.
   Today, my Kenan Institute colleague Dr. James Johnson Jr. and I released our report “Six Disruptive Trends: What Census 2010 Will Reveal.” In this report we preview some major themes that we believe the full data from the 2010 Census will corroborate--we’ve drawn our data from a variety of sources, including intercensal statistics from the Census Bureau, the Bureau of Labor Statistics, and other government agencies. What do we mean by disruptive trends? If left unacknowledged, these trends have the ability to weaken the competitive advantage the United States still holds in the global marketplace. On the other hand, if dealt with in a deliberate and thoughtful manner, these trends offer an opportunity to reinvigorate the U.S. workforce and create new marketplaces for consumer goods and services. By putting the spotlight on these changes we hope that business and government in America will adjust accordingly to capitalize on these trends.
    So, what have we found? While our paper tackles these trends to a much greater depth, I intend to explore each of these movements in later posts.

1) The South Continues to Rise: Over half the population growth in the United States during the past ten years has occurred in the South. This has been primarily due to the migration of people from all demographic groups and higher fertility rates among some groups, particularly Hispanics.

2) America Is Browning: nonwhites made up an estimated 85 percent of U.S. population growth.

3) Marrying Out Is So In: Marriages between people of different ethnicities has doubled since 1980 with those between Hispanics and whites accounting for 41 percent of all racially mixed marriages.

4) The Silver Tsunami Is Arriving: Nearly 80 million baby boomers will be retiring over the next 20 years. The largest generation in America will put immense pressure on social security and the healthcare system as they will also have longer lives.

5) Closing the Wage Gap?: Almost half of all jobs in the United States, 49.8 percent, are held by women. Similarly, women are more likely to attend college and hold jobs that are less likely to disappear in economic downturns. Most surprising? In some metropolitan areas, women are earning up to 20 percent more than men due to higher educational attainment!

6) Grandparents as Parents: Between 2001 and 2010 over the number of children living in grandparent-headed households increased by 26.1 percent. As this phenomenon continues to grow it will put increased financial strain on older generations

These six trends point to an increasing diversification of the American populace in several different areas--especially age and racial/ethnic makeup. A new array of products and services, tailored for age, lifestyle, and culture, will be demanded. How will businesses and communities respond? Share your opinions and comments and read the full article, available on the Kenan Institute’s website.

Detroit One Step Closer to Moving from Autocity to Aerocity

To American ears the city of Detroit is synonymous with one thing: automobiles. Many, however, would like to see an addition to that list of synonyms--aerotropolis. With the signing into law of the Next Michigan Development Act (NMDA) by departing Governor Jennifer Granholm this hope is one step closer to reality. The NMDA provides for the creation of up to five agencies, each of which is constituted by a group of linked communities with an interest in providing amiable conditions for the growth of businesses centered around transport hubs. One such agency, the Aerotropolis Development Corporation, will now be imbued with the power to dispense tax incentives to new businesses within the 60,000-acre economic zone located along the I-94 corridor between Detroit Metro Airport (DTW) and Willow Run Airport (YIP). The NMDA aims to foster an area dominated by high-tech, professional, and shipping businesses similar to those seen around Dallas-Fort Worth Airport (DFW) or Memphis International Airport (MEM). The cooperation of the Michigan government and the communities surrounding DTW and YIP point to the success of this endeavor.

Most impressive about the efforts surrounding the Detroit aerotropolis project is the level of cohesion with which the communities, state, and developers are acting in an effort to grow the proper conditions for a major economic hub. It is certain that with a major passenger airport like DTW, a Delta/Northwest hub, and YIP, a major center of air cargo, an aerotropolis of some sort will develop--the major unknown is what shape that entity will take. Without significant, cross-jurisdictional planning an aerotropolis will not live up to its economic potential. Yet, the agreements in place among the communities surrounding these two airports show a willingness to plan in ways to better leverage overall aerotropolis productivity, aesthetics, and sustainability. I look forward to watching the growth of the Detroit Aerotropolis and think it a propitious opportunity to provide a solid economic foundation for a region hard-hit by the recent economic cycle. Congratulations to all those involved in the project.
For more about the Detroit Aerotropolis Corporation click here.
For more about the signing of the Next Michigan Development Act click here and here.