World Boom Ahead: Why Business and Consumers Will Prosper

415 Pages·1999·1.44 MB·English

by  Knight A. Kiplinger Knight Kiplinger

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WORLD
BOOM
AHEAD
Why Business and Consumers Will Prosper
Knight Kiplinger
Kiplinger Books, Washington, D.C.
Published by
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Library of Congress Cataloging-in-Publication Data
Kiplinger, Knight A.
World boom ahead : why business and consumers will prosper /
Knight Kiplinger. -- [Rev. ed.]
p. cm.
Includes index.
ISBN 0-938721-70-4 (paperback)
1. Economic forecasting. 2. Business forecasting. 3. Twenty
-first century--Forecasts. I. Title.
HB3730.K517 1999
338.5'42--dc21 99-27769
CIP
© 1999 by the Kiplinger Washington Editors, Inc. All rights reserved. No
part of this book may be reproduced or transmitted in any form or by any
means, electronic or mechanical, including photocopying, recording, or
by an information storage and retrieval system, without the written permission
of the Publisher, except where permitted by law.
This publication is intended to provide guidance in regard to the subject
matter covered. It is sold with the understanding that the author and
publisher are not herein engaged in rendering legal, accounting, tax or
other professional services. If such services are required, professional
assistance should be sought.
First edition. Printed in the United States of America.
9 8 7 6 5 4 3 2 1
Acknowledgments
A
book of this breadth could not have been researched,
reported and written by one author working alone. By
the time I finished the last chapter, events would have
overtaken the forecasts I had written a year or two earlier.
So, much of the reporting and analysis came from my colleagues at
Kiplinger,who cover these subjects for our weekly and biweekly reports
on the business outlook. Their input was the starting point for my writ-
ing, and near the end of the job, they critiqued, challenged and helped
me refine my forecasts. My use of the first-person plural—the editorial
“we”—is not an author’s false modesty. It reflects the reality of our col-
legial reporting and forecasting process.
I tip my hat with great respect to the Kiplinger colleagues who
assisted me on the first edition of World Boom Ahead: our longtime exec-
utive editor Jack Kiesner, who retired in mid ’99; editorial manager and
foreign affairs editor Gary Matthews, who has since returned to U.S.
diplomatic service in Bosnia; chief of research Annemarie Albaugh; edi-
tors Gini Barazia, Peter Blank, Melissa Bristow, Marty Chase, Martha
Craver, Ken Dalecki, Mike Doan, Bill Eby, John Fogarty, Jerry Idaszak,
Steve Ivins, Elizabeth Kelleher, Joan Pryde, and Mark Sfiligoj; and
research reporters Romaine Bostick, Greg Luberecki, Gerry Moore,
Jenny Morrison, and Amy Roberts. I am especially indebted to David
Koenig, a former Kiplinger editor, for his timely and diligent help in
organizing the staff’s work into some well-focused drafts.
Austin Kiplinger—my father, colleague and editor emeritus of
our organization—provided astute judgment, inspiration and (most
appreciated of all) editorial supervision of the weekly Kiplinger Letter
during the final months of my writing and revision.
iii
World Boom Ahead
Every author needs a tough and caring editor, and I was very
fortunate to have one in David Harrison, the director of Kiplinger
Books. With candor and good humor, he kept the project on schedule,
revived my spirits when they flagged, and made countless improve-
ments in the content and presentation of my ideas. My executive assis-
tant, Emily Melton, was the best scheduler, facilitator, gatekeeper and
friend an author could have. Several other Kiplinger staffers con-
tributed valuable assistance: Rosemary Beales Neff fine-tuned the
manuscript; Daniel Kohan provided a clean design; Dianne Olsufka
proofread the galleys; and Don Fragale smoothed the book’s course
through production and printing.
I reserve my deepest gratitude and affection for my family—my
wife, Ann, my son, Brigham, my daughters, Sutton and Daphne—who
gracefully endured Dad’s preoccupation, distraction and occasional
irascibility while he was working at home on “the book.” (Although our
beloved Kerry Blue terrier, Henry, cannot read this acknowledgment,
I hope he can sense my gratitude for his comforting presence, lying
nearby while I banged on the keyboard, paced back and forth and
struggled for the right words.)
Finally, I want to acknowledge the contributions of our many edi-
torial sources—the men and women in business, government, academe
and research who give us the benefit of their judgment every week for
ourKiplinger Letters. Some of our best sources are our subscribers, who
suggest story ideas and contribute to our knowledge of their fields. It is
they who are the real experts on what lies ahead. We journalists are sim-
ply the communicators of their knowledge, experience and foresight.
K.A.K.
iv
CONTENTS
Introduction to the 1999 Edition ix
1 The Big Picture 1
Meeting the Challenge of New Competition • Technology at the Forefront
• The Meaning of a ‘Boom’ • The 20th Century Growth Record • 21st
Century Growth Will Double or Triple • How the U.S. Will Fare • Prosperity
Amid Relative Decline • Labeling the Century Ahead • 50 Years of Amazing
Change • A Technology Sampler • Alternative Scenarios • Sneak Previews of
the 21st Century • A Millennium of Progress
2 Major Global Trends 19
Higher Growth, Greater Wealth • Declining National Sovereignty
• Government as Facilitators of Growth • Emergence of a Global Middle
Class • Emulation of the American Growth Model • More Political Freedom
and Democracy • Fewer World-Changing New Inventions • Integration of
All Peoples into One Global Market • No Global Depression, but Plenty of
Regional Slumps • Globalizing of Antitrust Policy • Economic Sanctions Will
Wane • Low World Inflation • Broader Sharing of World Leadership
• New Sources of Capital • Rising World Population, but a Lower Rate of
Growth• Adequate Supplies of Food, Fuel, Water • No Worldwide Warfare,
but Regional and Civil Strife • Worldwide Empowerment of Women
3 America’s Bright Economic Future 41
A Surge in Productivity • Adequate Capital for Growth • Foreign Role in
U.S. Growth: Customers and Investors • American Multinationals Spread
Their Reach • No End to Trade Deficits • Strong Foreign Investment in
U.S. • American Firms Keep Moving Abroad • U.S. a ‘Debtor Nation’? No
Big Deal • The Mighty Dollar • U.S. Manufacturing: Alive and Well • The
Reindustrializing of America • Low Inflation Ahead • Interest Rates
Will Stay in Present Range • Coming Squeeze on Corporate Profits •
Smoother Business Cycles • Shorter, Milder Recessions
4 Expanding World Markets 69
Canada • Europe, West and East • The New Euro • Asia • China Rising
• Japan: Finally Opening Up • India at a Crossroads • Ailing, but not
Toothless, Tigers • Crisis in Indonesia • Taiwan Emerges Stronger • South
Korea Tries Openness • Anglo-Asia: Australia and New Zealand • Latin
America • Mexico Recovers from Crisis • Another New Dawn for Brazil
• Venezuela Banks on Oil • Costa Rica: A Central American Success Story
• The European Trade Challenge in Latin America • The Middle East and
North Africa • Sub-Saharan Africa • Russia and the CIS
World Boom Ahead
5 Government’s Role in the U.S. Economy 107
A Public Sector of Stable Size • The Government Spending Outlook
• Supporting Tomorrow’s Elderly • Medicare and Social Security Will Be
Stabilized •The Structure of American Taxation • More Regulation of
Daily Business Life • The Antitrust Revival • Standardization of Laws
• A Trend Toward Freer Trade
6 Upheaval in Education and Training 127
Distance Learning • Intense Business Involvement in Education • New
Respect for Vocational Education • Improving Our Public Schools
• Alternatives to Public Education • Big Changes Ahead for Higher Education
7 America’s Standard of Living 145
Global Comparisons • Personal Income Keeps Rising • Big Gains for
Women, Racial Minorities and Seniors • The Distribution of Riches
• Reasons Behind Growing Income Inequality • Social Mobility • The
Outlook for Poverty • A Nation’s Health Is More Than Wealth • Fears
about America’s Future
8 World Population Growth 165
Young Nations, Old Nations • No Doomsday Ahead • Relentless
Urbanization • A Declining World Population after Mid Century?
9 Constantly Changing American Population 173
Growing, But More Slowly • The Graying of America • The Aging Boomers
• The Baby-Boom Echo • Super Seniors • Generation X• Intergenerational
Conflict Ahead • Surging Racial Diversity • Why Immigration Is Good for
America • The Major Racial and Ethnic Groups • Where Americans
Will Live • State-by-State Outlook • Hot Metro Areas • Political Impact of
Regional Growth • The Growth Wild Card: Anti-Growth Sentiment
• Households, Marriage and Divorce • Business Implications
10 Threats to the World Boom Ahead 203
Military and Political Concerns • American Military Alliances and
Preparedness • The Dilemma of Civil Wars • Mountains of Deadly Weapons
• The Nuclear Threat • Terrorism and ‘Weapons of Mass Destruction’
• The Specter of Cyber-Sabotage • The Explosive Middle East• China’s
Growing Military Might • Conflict on the Asian Subcontinent
• Tension in East Asia • Russia will Rise Again • Overpopulation, Famine
and Disease • Government Corruption and Organized Crime
11 World-Changing Technology 215
The Bounty of Technology • Troubling Technology Challenges
CONTENTS
12 Ubiquitous Computers 221
Flatter Growth in Computing Speed Ahead • Totally New Kinds of Chips
• Fast Growth in Non-PC Chip Markets • ‘Wintel’ PCs Versus Network
Computers • Competition from New Information Appliances • Antitrust
and the Computer Industry • Superintelligent Software • Dictation and
Translation from Print and Voice • Virtual Reality • The Ultimate Goal:
Ease and Transparency • Full Globalization of the Computer Industry
13 Telecommunications and Information Technology 229
A Force for Freedom and Open Markets • The All-Powerful Internet • New
Modes of Data Transmission • The Wired World • Phone Companies
• Cable TV • Electric Utilities • International Calls Through Oceanic Cables
• The Wireless Challenge • Cellular Phones and PCS Companies • TV and
the Internet Come Together • Broadcast TV • Direct TV Comes on Strong—
and then Radio, Too • Information by Satellite • Pricing and Regulatory
Battles Ahead • Amazing New Appliances • Ubiquitous Electronic Spies
14 Biotech Takes Off 247
Deciphering the Human Genetic Code • Medical Wonders • Attacking
Cancers • New Drugs for Every Disorder • Battling the Aging Process
• Attacks on Genetic Diseases • Human Drugs from Plants and Animals
• Animal Organs for Humans • The Future of Gene Therapy • The
Promise of Cloning • Genetic Testing • Biotech’s Boost to the Food Supply
15 Robotics, New Materials and Energy 257
Automation in Industry • Designing in Virtual Reality • New Materials for
Every Purpose • Amazing Polymers • New Materials from Agriculture
• New Uses for Ceramics • Energy Technology • Electricity from Sun and
Wind • Electricity from Hydrogen, Via Fuel Cells • Comeback for Nuclear
Power? • The Ultimate Conservation Play: Superconductivity
16 Outlook for Key Industries 267
The Money Business • Fully Global Markets • The New Look of Banking
• Rising Profitability in Financial Services • Delivering Health Care • The
Government’s Role • The Employer’s Dilemma • New Focus on Prevention
• Home Health Care Boom • Telemedicine • The Energy Industry
• Serious Conservation • Plenty of Fossil Fuels • American Energy
Production• Nuclear Energy in Eclipse—for Now • Alternative Energy
Sources • Deregulation and Globalization • The Environment Business
• Corporate Initiatives • The Water Business • Farming and Food • Less
Government in U.S. and World Agriculture • Agricultural Trade • The
Food Industry• Globalization of Food • Retailing, Marketing and Media
• Catalogs and Online Shopping • Global Retailing • Targeted Advertising
• Housing and Construction • More Suburban Sprawl, but Urban Vitality,
World Boom Ahead
Too • Strong Demandfor Housing • Moderately Rising Home Prices
• Slower Growth for Office Space • Strong Demand for Industrial Space
• Slower Growth in Retail Space • Transportation and Travel • Strains on
Energy Supplies and the Environment • The Worldwide Auto Business
• Ever-Faster Trains • More Competition in Making Airplanes • Defense and
Aerospace • Industrializing Outer Space • Commercial Satellites
17 The Future Shape of Business 321
New Business Structures • Ascendant Transnationals • Constant ‘Rolling
Up’ of Medium-Sized Firms • Growth by Acquisition • More Joint Ventures
• Questionable Profitability of Megamergers • The Demise of Big, Closely
Held Companies • The Securitizing of Everything • Improving Workplace
Standards • Converging Management Styles • The Internet as Business
Tool • Management and Marketing • Corporate Liability Will Be Limited
• Environmentalism in Every Decision • Growing Clout by Institutional
Investors • New-Style Executives • The Rise of the CIO • Itinerant CEOs,
with Shorter Tours of Duty • Ever-Rising Executive Pay—While Times Are
Good • The Geography of Business Growth • Fierce Competition in
Economic Development • Growing Power of the Nonprofits • High Taxes
Ahead for Nonprofits
18 The Changing Way We Work 347
The Lengthening Workweek • Declining Job Loyalty • Telecommuting
• Self-Employment Boom • Tight Job Markets • Individual Empowerment
and Teamwork • More Scrutiny of Employees • Less Formal Affirmative
Action • Continuing Decline in Union Power
19 Good Careers for Tomorrow 357
Science and Engineering • The Red Hot Internet • Good Fields for Social
Science and Humanities Majors • Slow Growth for Middle Management
and General Office Work • The Health Care Boom • Financial Services
• Making People Happy • Education • Good Jobs Without Much or Any
College Required • Finding Your Career on the Internet
20 Investing for the Years Ahead 367
Greater Volatility Ahead • U.S. Equities • Higher Stock Valuation
• Overheated IPO Market • The U.S. Outlook • No Big U.S. Market Slump
15 Years from Now • Global Investing • The Strong Record of Global
Markets • Contrarian Global Investing • Well-Priced Regional Markets
• Picking Top Multinationals • Success in Emerging-Markets Stocks
21 Postscript: The Kiplinger Record 381
Index 393