On a recent Walker Webcast, Walker & Dunlop's CEO, Willy Walker, was joined by Wharton Professor and author of "2030: How Today's Biggest Trends Will Collide And Reshape The Future Of Everything" Dr. Mauro Guillén to discuss the demographic shifts, automation trends, geopolitical and economic evolutions, and technological advancements that are shaping our world.
Willy Walker is chairman and chief executive officer of Walker & Dunlop. Under Mr. Walker’s leadership, Walker & Dunlop has grown from a small, family-owned business to become one of the largest commercial real estate finance companies in the United States. Walker & Dunlop is listed on the New York Stock Exchange and in its first ten years as a public company has seen its shares appreciate over 800%.
Mauro F. Guillén is one of the most original thinkers at the Wharton School, where he holds the Zandman Professorship in International Management and teaches in its flagship Advanced Management Program and many other courses for executives, MBAs, and undergraduates. An expert on global market trends, he is a sought-after speaker and consultant. He combines his training as a sociologist at Yale and as a business economist in his native Spain to methodically identify and quantify the most promising opportunities at the intersection of demographic, economic, and technological developments. His online classes on Coursera and edX have attracted over 100,000 participants from around the world. He has won multiple teaching awards at Wharton, where his presentation on global market trends has become a permanent feature of over fifty executive education programs annually.
As Director of the Lauder Institute of Management & International Studies between 2007 and 2019 he revolutionized the world’s premier graduate international program combining the Wharton MBA with a degree in International Studies by launching innovative learning experiences such as the Global Knowledge Lab, the Lauder Intercultural Ventures, and the first Africa-focused academic program at a major business school. These contributions earned him the Aspen Institute’s Faculty Pioneer Award.
His research, teaching, and speaking incorporates both numerical assessments of trends and illuminating examples from business, politics, and everyday life. He shows in accessible terms that one can accurately forecast trends by systematically following the babies and following the money into the future. His research has earned him many distinctions, including Fulgright, Rockefeller, and Guggenheim fellowships, a membership in the Institute for Advanced Study in Princeton, and prizes from the Academy of Management, the American Sociological Association, the Social Science History Association, and the Gustavus Myers Center for the Study of Bigotry and Human Rights. He is an elected member of the Sociological Research Association and the Macro Organizational Behavior Society.
His research, op-eds, and commentary have been featured in numerous outlets, from the New York Times and the Wall Street Journal to The Economist, and the Financial Times. He has appeared on radio and TV shows such as NPR’s Marketplace and Radio Times, CNBC’s Mad Money and Squawk Box, and CNN’s Fareed Zakaria GPS. He is a seasoned public speaker at conferences, conventions, forums, and corporate events organized by industry associations and Fortune 500 companies. He serves or has served on several advisory groups, boards of directors, and nonprofit boards of trustees.
If you have any comments or questions about the evolving economic landscape and how it is impacting the CRE space, our experts are available and fully operational to help. Additionally, if you have topics you would like covered during one of our future webcasts, we would be happy to take your suggestions.
Willy Walker: Thank you, Susan, and good afternoon and welcome to another Walker Webcast. I know many listeners like the market commentary I provide at the beginning of most webcasts, but with all that I want to discuss with my guest today, I'm going to jump right into it. We have over 5,000 people pre-registered for this webcast and I know there are many, many people who want to hear Dr. Guillén’s responses to my questions.
So I'd wanted to play John Lennon's iconic song, Imagine, to lead us in today as my guest, Wharton Professor Dr. Mauro Guillén references Imagine in his bestselling book, 2030: How Today’s Biggest Trends Will Collide and Reshape [the Future of] Everything. To underscore the opportunities that lie ahead in technology and the shared economy, where potentially, as Dr. Guillén points out, “The world will live as one.” I must say, however, that as I read 2030, and considered the daunting challenges our world faces over the coming decade, with overpopulation; global warming; middle-class stagnation in the developed world; and so many other concerns that Dr. Guillén lays out so clearly in his book, I considered having the lead-in music be Led Zeppelin's song, When The Levee Breaks, and some of the lyrics from that saying, “When you're trying to find your way home you don't know which way to go/If you're goin’ South, they got no work to do.”
So, I want to start, Dr. Guillén, on the Led Zeppelin-side of it. I want to start with The Levee Breaks and then we'll move in the second half, into the Imagine John Lennon world of how we're going to get ourselves out of this. But first of all, thank you for joining me. And second of all, your book does a great job of taking global demographic trends and painting a clear picture of what the world will look like in 2030. Let's start with who's growing, who's shrinking, and why should any of us care?
Mauro Guillén: Yeah, Willy, thank you so much for inviting me to your webcast here. It's really an honor to be able to share with you the next 60 minutes or so and discuss what the future, the immediate future, is going to bring us. And you put your finger on something that I think is really important: What is going on with population? So, which parts are going to be growing? Which parts are going to be shrinking? So, we can answer this question in two ways. One is in terms of geography. And in that case, the answer is very clear. So, Africa and South Asia, including India, will be expanding relative to the rest of the world. Why? Because they're having more babies. And remember those babies, as time goes by, they're also living longer, and they're catching up in terms of their life expectancy. And then there are two parts of the world that are definitely shrinking. One is Europe, and the other one is China, along with Japan, South Korea and other countries in East Asia. So, people might be wondering, how about the U.S.? How about Latin America? How about the Middle East? Well the changes there are not as pronounced, and in any event, they're not going to change the global balance. But then the second way of answering that question very quickly is, how about by age? Well, we have smaller and smaller generations as time goes by, so essentially the population group above age 60 will be getting bigger. relatively speaking. compared to other age groups, and the younger age groups will be becoming less important, as time goes by.
Willy Walker: So, you talk about the dramatic growth that's going to take place in Asia and in Africa. You also point out that 97.5 percent of the world's water is undrinkable, and that less than 1 percent sits in lakes and reservoirs and you project that 4 billion people by 2030 will live in cities where water is an issue. Clean, potable water is an issue. How do we deal with the water resource that is so fundamental to not only life, but to society as we know it today?
Mauro Guillén: Yes, well you know I teach, I’m employed at the University of Pennsylvania, which was founded by Benjamin Franklin, and if you remember Benjamin Franklin once said that, “One learns the worth of water when the well goes dry.” Right? So, it's one of these things that we take for granted, like the air, right? And I don't think we're going to be able to take it for granted any longer. Because the problem is that of the water that is drinkable, right? We use 80 - 85 percent of it in agriculture. And then the rest is industrial use and residential use, like when we drink water in our kitchen. And you know we've got to make sure that our culture becomes more efficient in the world, because that's 80 to 85 percent of all of the water drinkable, drinking water that is used in the world. And, as you know, it is certainly the case that American agriculture, European agriculture, Japanese agriculture, are very efficient in the use of all sorts of resources and very productive. But in most other countries in the world, it's very inefficient. So, there's a long way to go here, in terms of that. But as you pointed out, the problem is particularly in cities, because we tend to build cities in places where there's very little drinking water. Yeah, I don't know exactly why that has happened. And so, we need to bring the water to people. And cities are growing, as you know. Every week there's one and a half million additional urban residents in the world. Every week, 1.5 million additional people living in cities, mostly because they're migrating towards cities. And so, we're gonna have to think very carefully about this. We're going to have to invest in infrastructure, but more importantly, Willy, as consumers, I think we need to essentially think twice about how much water we use. We need to become more efficient in the use of water.
Willy Walker: You do point out in your book about the amount of water. As you have a rising middle class in Asia and in Africa that as people move into the middle class, they become larger protein eaters and you do point out in your book the difference of what it -- how much water is used to create a pound of protein of meat versus chicken versus fish; and to your point, we need to be more efficient consumers. The punchline of what you point out in your book is, we ought to be eating a heck of a lot more fish than we should be eating cows.
Mauro Guillén: Absolutely. So, this is all about protein, right? So, the more money people have, the more protein they eat. And not only that, they tend to start eating instead of chicken pork, and instead of pork beef. And it takes about you know, an average in the world, an astounding 3,500 gallons of water to produce one pound of beef. Because you know the cow is born and the cow needs to grow over many years, right? So, it's astounding. It's 3,500 gallons of water on average in the world. In some parts of the world, you know, farmers are more efficient in the use of water than others. But what this is indicating to us, once again, is that you know it would be a good idea for all of us as consumers to revisit some of the decisions that we make. Because some of the food that we eat is very good for us, like vegetables; others are not so good like beef, if you eat it in excessive amounts. It's bad for your heart and so on, so forth. So I think we need more education of consumers. I think we need more incentives for consumers to do the right thing and in so doing, I think we will be able to overcome, you know the looming crisis in terms of the availability of water in the world.
Willy Walker: You talk about the great urban migration and how fast cities are growing, Dr. Guillén, and one of the other things you point out in the book is that 90 percent of natural disasters are caused by water. And so, what we have is this massive migration to cities that predominantly are in, on the coasts. And so, we're basically moving people into urban centers that are some of the most dangerous places for them to be, given the impact of hurricanes and typhoons and flooding. Talk for a moment about the proliferation of mega cities and the challenges they face just from a security standpoint.
Mauro Guillén: That's a great question. Look, in the year 1990, and that was just one generation ago, right? Thirty years ago. There were only three cities in the world with more than 10 million people. And those were New York, and then Tokyo, and Osaka in Japan. Just three, right? But today we already have more than 20 cities. With each of them more than 10 million people, some of them with more than 20 million people, those are the mega cities. And by the year 2030 we're going to have 35 cities in the world, with more than 10 million people. And look, cities are very inefficient. We waste a lot of energy in cities. And once they reach a certain size we actually, you know, get into a lot of problems: traffic, pollution... You know, the entire area of the city is, you know, covered with asphalt or with concrete; and therefore, whatever rain falls doesn't get to the right places. So, it is a really a disaster, I think we have so many mega cities in the world. And again, mega cities: having excess of 20 million people. And unfortunately, as I mentioned earlier, they continue to grow. So, I have in mind cities like New York and Los Angeles; like São Paolo; like Lagos in Nigeria; like Beijing in China; Shanghai. I think it would be better for us, and maybe remote work will help, it would be much better to essentially distribute the growth of cities across a larger number of them. Everybody wants to live in the cities, that's understandable. But maybe we can create incentives. We can make it easier for people to gravitate towards cities that are, you know, slightly smaller than these mega cities that we have in the world.
Willy Walker: So, you projected by 2030, 60 percent of the world's population will live in cities which take up a grand total of 1.6 percent of the world's landmass. So 60 percent of the 8 to 9 billion people on the face of the planet will live in urban centers that take up 1.6 percent of the landmass in the world, and they will contribute 75 percent of the carbon emissions from that 1.6 percent of the landmass. As we think forward to 2030 and that the carbon emissions coming out of those cities, think forward for a moment, as it relates to what we need to do with society to make sure that those cities, become more efficient as it relates to carbon emissions. Does that mean more efficient cars? Does that mean more efficient buildings? And particularly because a lot of that growth is happening in the developed world where they don't have the standards that is happening in the developing world, where they don't have the standards the developed world has today.
Mauro Guillén: And oh absolutely. Look you put your finger and I think a problem for which is only two solutions, and I think we need both solutions given that it is an urgent problem to solve. The first solution is new and better technology for insulating our homes, for you know, generating power and using that power, that electricity more efficiently. Smart transportation systems. Just to give you an example here in United States all of those cars that you see are driven in the downtown areas. 30 percent of the time those drivers what they're doing is looking for a parking spot. Right, that doesn't make any sense right. I mean we should have in this, you know digital world, we should have like a panel and our car indicating to us, here's where you can find an empty parking spot. So that you're not like driving around spending 10 or 15 minutes looking for one.
But I think more broadly, what we need to do is also something that that may strike some of your listeners, your followers, as you know, like a crazy idea. Which is, we should be growing food in the city. And why do I say that? I say that because, if you do that, then first of all, you don't have the spending on energy to bring the food to the city. But also agricultural activities inside of a city will help recycle the air, will help contribute to a greener environment. And you see, this is why some of those mega cities that we see in the developing world like in Africa, they're not as bad in terms of pollution as let's say LA or New York City. Well first, of course, because they have fewer cars, but also because in Africa, they grow 30 percent of their food inside of city boundaries, right. Because the cities have grown expanding into farming areas and so on and so forth. So, I think we can take a hint from that and realize well if we grow a little bit of lettuce, if we grow some vegetables in Manhattan through perhaps techniques such as vertical agriculture, which is becoming really important trend these days. Then you know not only we would cut on the transportation costs, but also on consumption, but also we would be improving air quality inside of the city. So I think there's a lot of things that that we can do, and we just have to you know start getting things done.
Willy Walker: So, you talk about vertical agriculture in cities. There was an article that I read a couple weeks ago about using the old subway system in London to grow agriculture underground, and so there is clearly new innovations and cutting-edge technology that is driving exactly what you're talking about.
Let's focus for a second on how companies ought to target their client base. So you make it very clear that the middle class in the United States is stagnating. And that, while many, many companies in the United States look at millennials as the largest demographic and also newfound purchasing power in millennials and therefore let's focus on millennials. But you essentially say you're focused in the wrong place. Talk a little bit about where the money sits in the United States, and then I want to move to the developing world and the emerging middle class, and what companies need to be focused there. But let's stay on the developed world and in the U.S., specifically as it relates to middle class stagnation, if you will, as far as incomes, and in a misdirected focus on millennials by your analysis.
Mauro Guillén: Yes, so what's going on Willy something very simple. Every generation that is born these days is numerically smaller than the proceeding generation. That's because the birth rate, or the fertility rate is falling, right. So as years go by, you know the average number of babies per woman is falling, and this has been going on in the United States, if you remember, since the baby boom of the 1950s and early 60s. Right. So, at the same time also we're living longer and longer so life expectancy is growing. So, what this means essentially is that millennials is numerically actually the smallest generation we've ever had here in this country. And at the same time, what we're having is all of those baby boomers going into the 60s, into their 70s, into their 80s. And with very prolonged life expectancies. So that segment of the market, about the age of 60 is very quickly becoming the largest segment, not only in terms of the number of people, but also purchasing power. My forecast is that by the year 2030 the population group in United States about the age of 60 will represent the largest consumer segments, and for the longest time it has been ignored by companies. Brands never really thought about that segment. They were focusing on people in their 20s in their 30s maybe in their early 40s because remember that used to be the largest generation, with the biggest purchasing power. But not any longer.
And let me just give you another piece of information that I think is very telling. Here in the United States 80 percent of the net worth is owned by people above the age of 60; 80 percent. Now the U.S. is an outlier in most other countries in the world is between 60 and 70 percent. So, I’m not claiming here that everybody above the age of 60 is rich, of course, not because wealth, as well as income, are unevenly distributed, there's a lot of inequality. But that segment above age 60 has not only the numbers, but it also has the purchasing power now. And remember, today as we speak there's 12,000 Americans who are celebrating their 60th birthday every day. So that segment is growing. And you know what, on average, those people who are turning 60 years old today they're expected to live on average another 24 years. That's another lifetime right, as consumers, potentially as workers and also another lifetime to enjoy things, right. So, 24 years on average beyond age 60 that's a really long period of time.
Willy Walker: So, let's shift to the developing world, and you talked at the beginning about the demographic trends in Asia and Africa. And when I read your statistic of 1.6 percent of the world's landmass is going to house 60 percent of the world's population by 2030 and I, as someone who's in the apartment financing business said that's a lot of apartments. As I also read your book, I sat there and said, if I were in consumer products I’d really be focusing on how I sell consumer products to that African and Asian growing middle class and, potentially, not the U.S. middle class. Talk for a moment about the companies that you have advised as it relates to how do you have to think about those emerging populations, because, as you also point out in your book the Marlboro brand and the Coke brand, as strong as they are globally, are being displaced in many markets by local brands.
Mauro Guillén: Absolutely, so we have a situation, as you said, in which the old middle classes of Europe and the United States they're no longer growing and, in fact they've been stagnant. And this is, of course, the result of the fact that we're having more frequent recessions. And, in general, we have rising inequality so there's more income and wealth concentrated at the top. So the middle class is not expanding. At the same time, take a look at what's going on, not just in China, also, Thailand, Malaysia Vietnam, India, I mean you name the country, right. And what's going on is that every year that passes in those emerging markets, you have an additional 80 million people becoming middle class. So they are living in poverty and they're becoming middle class. And of course middle class people, as you know, they like to buy branded products. They like to go on vacation. They like to buy a house, so they need a mortgage and have a car, so they need a car loan so everything about consumer companies, consumer goods, and also financial services essentially takes off when the middle-class grows.
Now not only that the average income of that middle class is also growing. So that middle class is getting richer. We still have the riches middle class in the world don't get me wrong. But as a market combined by the year 2030 the Chinese middle class will have more spending power than the American middle class, for the first time. And that's going to be, I think a moment of reckoning, because you see brands for the longest time have always launched new products, and new ways of selling products, on the basis of the largest market in the world. So, they were essentially coming up with products for the American consumer. But now that the Chinese middle-class consumer market is going to become the biggest in the world in about nine years from now then I think more and more, brands will start playing to the tastes and the preferences of the Chinese consumer. And, as I said earlier, it's not just China, the problem is that you also have India, which also has a growing middle class. And you have Indonesia you have Thailand and Malaysia and that's just in Asia. Then we could also talk about sub Saharan Africa where the middle class is also growing so. Things are changing very fast that's the bottom line, and one of them is the growth of the middle class in emerging markets.
Willy Walker: You have in your book a fantastic -- when you're talking about the growth in the middle class and emerging brands, you also have a picture of your iPhone case. Of the box that your iPhone came in and it has the Federal Communications Commission stamp on it that its been approved by the FCC in the United States and the European Union equivalent to the FCC; and your point is that that's great that it qualifies in the U.S. and all we've looked for his approval from the U.S. regulatory body and Europe, but with what you just talked about of China, being the largest economy on the face of the planet, you're gonna have to get the Chinese regulator to give you the stamp of approval on products and you're gonna have to look at what the buying patterns of the Chinese middle class and to all the other economies that you just talked about. So it's not only designing brands, it's also the overall regulatory regime under which you have to work going forward.
Mauro Guillén: Well, absolutely so here you're referring to technical standards. And not just phones and their consumer electronics, but many other categories of products need to comply with regulations, with government regulations. And we call them technical standards. And so you know, typically what companies would do is get approved by the largest market regulators. So, for the longest time that was the United States. Then if you remember 20 years ago Europe came together instead of being a collection of national markets. They created a single market, so, then the European Union also became an important regulator, because there was a market about the same size as the U.S. when you combine all of those markets. It still is today. So, in other words, now we have as you mentioned, in the case of my iPhone, two main regulators in the world, European and United States. But within a few years, China will be as a market even bigger than either the U.S. or Europe and therefore my prediction is that companies will seek approval from the Chinese regulators for their global operations. And shortly thereafter I think also India is going to play a similar role, given that their market is also going to be really, really big. So yes, the golden rule here is that the largest markets in the world, get to the decide what are the rules of the game in international competition. That's the key principle here.
Willy Walker: So if we focus on -- you're talking about the emerging middle class in China, and you just said, as the middle class grows, people are going to start to buy more discretionary goods, they're buying purses as you point out in your book. But it's also stranding the older Chinese population in rural areas with no support. And you go from there to Japan, where clearly the aging population is requiring more and more help and in Japan they've introduced robotics in a very significant way to take care of their aging population. You state that 90 percent of senior care is provided by immigrants, both in the United States and throughout the developing world, 90 percent of care is provided by immigrants. Yet in the developing world, in Europe and in the United States, we have a big anti-immigration push. We've watched it for the last four years. How are we going to take care of our seniors?
Mauro Guillén: Yeah, that's exactly right. You know, we are so inconsistent in terms of the decisions that we make. so precisely at the time when population is aging very quickly in Europe and the United States.. we're going to have 35 percent of the population above the age of 60 and some of them will require you know 24-hour kind of assistance in their home, right. And as you said, right now in the United States in many parts of Europe as well, 80 up to 90 percent of those people who take care of the elderly in their homes are immigrants, but we have a backlash against immigration. So, look at the only solution is technology. The only solution is automation. And that's why in the book I refer to all of those new, really tantalizing experiments in Japan, in Europe, and the United States. With using robotics to assist the elderly. So I don't have in mind here robots do everything for you, like a human being would. But robots will help you with a specific task in the household, right. That maybe a 70 or 80 or 90-year-old can no longer perform. That's the way we're going. Technology, automation, because once again not only we're having fewer babies but also there is this you know trend towards increasing limits towards immigration and therefore something's gotta give and I think the only possible solution will be in the end, technology.
Willy Walker: You point out that technology is the solution to this issue, but you also make a very compelling case about immigration and the value of immigration. You give tremendous statistics that talk about what immigrants do, particularly in the U.S., to entrepreneurship, to creating companies, to being doctors and lawyers and technologists, and all sorts of other things. One of the interesting things you point out is the false narrative that immigration takes middle class jobs in America. The point that I want you to comment on is, you made a statement about how paradoxical it is that recent immigrants in Europe and the United States are supporting candidates for political positions that demonize immigration. Talk about that for a second.
Mauro Guillén: Yes, so, more so than the immigrant, it’s the people who migrated here. One specific case in this is, as you know, Latinos and Latinas, right, Hispanics in the United States. You've got to understand something, that this sub-group tends to be very strong in terms of entrepreneurship and small businesses. Of course, the small businesses and entrepreneurs here in the United States, they tend to lean more Republican than average, because they like the lower taxes, they like some of the measures that typically Republican political candidates tend to advance. Now, at the same time, yes, it's true, those same Republican politicians tend to be more against immigration, right, I think for all the wrong reasons. So, there is this paradox that some minority groups and, specifically, here in the United States it’s Hispanics who have already migrated into the country, sometimes they vote for political candidates who happen to be against immigration, but I think they do so out of other considerations. The one thing that I think is really important, Willy, to emphasize, is that you know the premise to your question, which is completely true. Most immigrants arrive here in the United States when they are in their 20s, in their 30s, in their 40s. So, they are working immigrants. They will contribute to social security, they will contribute to the economy. But not only that, they are disproportionately entrepreneurs, because immigration itself is an act of entrepreneurship. You have to take the initiative to leave your home country and travel for thousands of miles, and so we see this entrepreneurship in the form of restaurants, dry cleaners, and all the rest, but also in terms of high tech entrepreneurship. So, you name a big tech company in the United States, whichever you want, and there's a 50 percent chance it will have been founded or co-founded by an immigrant. So, for example, Google or Tesla. So, the positive impact of immigration is just enormous. As you said, immigrants, most of them either have no skills, so they work our fields, or they work in the service sector in janitorial jobs, or they have very high levels of skills. On both ends, there's not enough Americans to take the jobs that the economy is creating. It is in the middle where most middle-class jobs are in terms of skills, but most immigrants don't have those intermediate skills. They either come with very low levels of skills or with very high levels of skills. So, as you said, it's a myth that there is that is not much competition between the local American middle class and immigrants for jobs.
Willy Walker: Let me add one other data point to your point about myths, and then I want to move on to women. That is that you point out in the book that the 8 million undocumented immigrants in the United States in 2016 contributed $13 billion in payroll taxes, and almost all could not claim any social security benefits. So, I think that there is this great thought myth that illegal immigrants are net detractors from the system. That obviously doesn't take into account services such as emergency room visits and things of that nature, but, just from a tax standpoint, $13 billion to the positive net and nothing taking out of the social security trust fund.
Let's move to women, for a minute, Mauro. Your book makes a very compelling case that women not only are working harder, they're getting better jobs, and they also are controlling the majority of financial decisions. So, as I read your book and thought about the emerging middle class in developing markets, and that's where lots of global companies ought to be focused, I also thought about women and said, “forget about millennials, forget about any other demographic other than 60 plus year old women.”
Mauro Guillén: Absolutely. Look, this topic is really dear to me. I have two daughters, so I'm very happy about these trends. Look, there is still discrimination by gender, there's no question about it. Having said that, the progress economically that women, in the United States and in many other countries around the world, have made over the last 20 or 30 years is enormous. Most of it has been driven by better access to education. So better access to education opens up opportunities for women that didn't exist before. As you said, my forecast is that by the year 2030, not just in the United States, but in the world, women will come to own more than half of the net worth of the wealth. Look, in terms of income, right now, as we speak today, the U.S. Census Bureau reports that in 41 percent of American households where there's a man and a woman married to each other, the wife makes more money than the husband. The projection of the U.S. Government is that, by the year 2030, in more than half of American households, the wife will make more money than the husband.
Now, let me put this in very simple terms. Willy, when you and I were born and we were growing up, that was not the situation. In 99 percent of American households, the husband would make more money than the wife, for a very simple reason that most of the wives were not working outside of the households. So, what I’m trying to say here is that we're in a completely different world, and, as you said, women, increasingly with money in their pockets, are becoming also a very rapidly growing consumer segment. So, it's not just China or India, it's women anywhere in the world. That segment is growing because they have more opportunities available to them, so they're making more money and then accumulating wealth.
Willy Walker: One of the fantastic things, I think, you do in your book, Mauro, is to basically look at big demographic trends and then connect the dots about how it has economic impacts. So, for instance, you point out that, in China, the fact that you had the one child only policy, that then changed the demographic landscape, it made them be more savers than spenders because women were controlling money, and therefore, the savings rate in China exploded, and therefore they bought U.S. treasuries, and that drove down mortgage rates in the United States. That's a long chain of all these different things that came from a big, one child only policy that was implemented by the government, but ends up in allowing Americans to borrow for their home at exceedingly low interest rates.
One of the other ones that you point out, as it relates to women controlling finances, is that you tie the proliferation of exchange traded funds (ETFs) to the fact that women are trying to invest in less risky investments. So, rather than signing up with an individual money manager, where men will sit there and say, “I like my friend and want him or her to manage my money,” women are much more risk averse, and therefore they're going into ETFs. Is there data that supports that?
Mauro Guillén: Oh, absolutely. We have data from experiments, so you put men and women in a room and you give them some phony money, and you ask them to invest it. But, more importantly, just take a look at pension funds. 60 percent of Americans have a pension fund, both men and women. Take a look at how they allocate those pension funds to asset classes. You can just go to the website of some of the biggest pension fund managers in United States, and they disclose this. The women tend to be more conservative when it comes to investing their money.
There's another difference, by the way, between men and women, which is that the women tend to trade and exchange their funds from one investment to another much less frequently than men. As you know, that's a recipe for disaster in the case of men, because it's very difficult to beat the market. So, it's better to just make one decision and then commit, for a number of years, about that decision, rather than change your investments here and there and try to beat the market.
Now, having said that, Willy, I also want to mention something really important, very quickly, which is what we're also seeing over time is that men and women are converging in terms of their investing behavior. So, there still difference, with women being more risk averse and women trading less frequently than men with their own money, with their savings. But, having said that, as women go through the same or similar experiences as men, they are working outside of the household, they're making their money, they become more like the men. But, we are still seeing even without convergence, a substantial difference between the two.
Willy Walker: It's fascinating, and it makes me think that everyone who's been playing around in GameStop for the last week is all men, and I would make an assumption that everyone at Citadel who made a lot of money on that trade is a whole bunch of men.
Mauro Guillén: Look, I quote, Oscar Wilde in the book, if you remember the Irish playwright, which is one of my favorites. In one of his plays, one of the characters says, “Women try their luck, men risk theirs.” That's the quote, and I think it captures, really well, this attitude about, not just money, but also about the future, because at the end of the day, your decisions about how to invest your savings have a lot to do with your mentality, with the way in which you think about the future.
Willy Walker: So final stat/thought about the global challenges we face and sort of moving out of Led Zeppelin into John Lennon, if you will. My final one is, you have two charts in your book that fascinated me. One is the increased incidence of obesity, both in the United States, more broadly speaking, the developed world, but throughout the world, and the other is abject poverty and how that's going down. So, the numbers that you cite is, in 2020, we've got 600 million morbidly obese people on the face of the planet, and we have 800 million people living in abject poverty. Your projection is over the next 10 years, that 600 million obese number turns into 1.2 billion, and your 800 million in abject poverty drops to 200 million. So, we're doing a great job of making it so that people have access to healthcare and to water and to food, but not a great job of making sure that the developed world doesn't just increasingly get bigger and bigger. Those numbers floored me. One statistic you put forth is, the United States of America has 4 percent of the world's population and 18 percent of the global body mass. What can be done to, if you will, arrest that up chart on obesity, because clearly, the one taking global poverty down is headed in the right direction.
Mauro Guillén: Yes, so you're absolutely right. I mean, our success at reducing poverty around the world has been considerable over the last 20 or 30 years, thanks, of course, to the growth of emerging markets. China has lifted out of poverty like 700 million people, and India is in the process of lifting out of poverty 500 million people, but the overweight and obesity epidemic has to be precisely with the same issue. As people become middle class, we were talking earlier, that they start consuming proteins and they go from chicken to pork to beef, and they start eating more processed foods, more snacks, more of all of these kinds of foods. Also, they move from the village, to the city, they become more sedentary, they don't do as much exercise, they spend too many hours a day sitting in front of their computer. So, we need also more exercise, but I think the fundamental problem is the diet. As people have more money in their pockets, they seem to be making very bad choices about what to eat and what to drink, so we also have sugary drinks there in the mix. So, I think we need to educate people from an early age, because, as you know, one of the most devastating aspects of this global pandemic called obesity is that it's affecting children increasingly. That is a tragedy that you have a 5-year-old or a 10 year old or 12 year old who is already obese. So, I think we should try to help those people, we should try to introduce incentives, we should try to improve our diets. We need to invest in education, in terms of what things to eat, what things to avoid, and how to run a healthy life, full of exercise with a diet that helps us accomplish what we want, but without gaining too much weight.
Willy Walker: So, let's shift to the solutions. Your book spends a lot of time focusing on new technologies that might be able to help us with all the things that you and I just talked about. You use a phrase that I thought was really great, which is “lateral thinking.” Talk for a moment about lateral thinking and what it is, and give us an example of a company that has thought laterally about how to attack a market.
Mauro Guillén: Yeah so lateral thinking is all about connecting the dots. So, you and I have been talking for the last half hour about a number of population trends, economic trends, and also some technological trends. The point of lateral thinking is that these trends are feeding into one another. In other words, that you need to look for the interconnections. You provided earlier, a very good example of that, with the one child policy in China. The effect on the savings rate and how that in turn changed for the better, interest rates here in United States and government bonds, because the Chinese were not only exporting goods to the U.S. market but also they were exporting savings, right, effectively. So, there are a lot of companies that know how to think laterally, and they find those interconnections. Think about, for example, companies that have put two and two together. In the sense of, for example, economic trends and demographic trends and I always mention companies such as GE here in the United States, or Phillips in the Netherlands, or Toshiba in Japan, or Siemens in Germany they manufacture these big devices. The MRI, the scanners, that you know now are among the most expensive pieces of equipment in hospitals. Now most of these companies were making light bulbs, GE was making light bulbs until very recently right. So was Philips of the Netherlands, but they thought we cannot make any money with light bulbs, because they are all of these companies in emerging markets, who can make bulb's much more efficiently, cheaply, then we can. So, they thought, what can we do, that would be helpful in the future, and they thought well we're very good at R&D, so MRI machines are very technology intensive. But number two, population aging that's how they connected the dots, right. So, in Europe, in the United States, in Japan, increasingly in China, and in the rest of the world, you have more people above the age of 60. Therefore, you have more chronic conditions, therefore, you need more MRIs, and so they decided lets just stop manufacturing bulbs. And lets start you know the focus all of our resources on MRIs. And look, some of these companies now, especially in the case of Phillips from the Netherlands, 35 40 percent of their revenue comes from medical equipment and for GE, as you know, the medical equipment division is also really, really important.
Willy Walker: So, you talk about the older population we've talked about demographic shifts, talk for a moment about companies like Uber and Airbnb and their lateral thinking. I think one of the things you point out, in both of those examples is how, it's not just a disintermediating technology, it's not just that Uber disintermediated the taxicab industry. But that it is young and old, working together so you're giving the older people, the ability to drive a car and then also meet the needs of a younger group that previously maybe wouldn't be able to take a ride somewhere. Talk about how that lateral thinking and using both of those two demographics has revolutionized travel.
Mauro Guillén: Yeah so let's take the example of Airbnb. So what this company saw 10 years ago, the founders of this company saw was that most of the assets in the world are owned, as I said earlier by people above the age of 50 right or 60. But younger people they don't have the money to buy those assets, but they would have to they would like to have access to them, they would like to use them. For example, when they go on vacation and needless to say, as you know, millennials hate hotels, they hate banks, I hate all of these old institutions. So, because they want to experience travel in a different way. So the basic idea for Airbnb is that you have these two very different generations in the United States and in many other countries. One with assets, the other one without and the one without assets, they would like to have access to those assets, without purchasing them. Right, and so Airbnb came up with this fabulous idea, which of course has created a lot of headaches for the hotel industry and, by the way, as you know, Airbnb just went public in December of last year and their revenue is about the same as it was before pre-pandemic. Which is astounding because everybody else in the travel industry is operating at 20 percent or 30 percent capacity. You know, hotels, airlines, cruise lines, you name it. So what was Airbnb response to the pandemic, well people may not be able to travel 5000 miles away for a vacation but maybe instead of spending a few days on vacation they would like to move out of the city for two months and go within a couple of hours drive to a house and rent it. Right in the age of social distancing. So in in making that pivot Airbnb was able to recover already from this pandemic and, believe it or not, the revenue figure, they charge a Commission on the Rentals, the revenue figure is the same as before the pandemic is astounding right. But once again their fundamental insight was to recognize that there were two different generations there, one with assets, the other one without, and the one without they really wanted to gain access to those assets.
Willy Walker: So, you talk a lot about the shared economy potentially having huge environmental impact and one of the stats that you talk about is the ridiculously smaller amount of water and energy that people who stay at an Airbnb use versus someone staying in a Hilton or Marriott Hotel. And I can't remember what the exact number is but it's just it makes your head spin and basically what it says is we show up at a Hilton or Marriott we turn on the shower and we take a five hour shower and we leave the lights on in the room. But we go to someone's house and we think about it, as if it's our house. And therefore, we use less electricity and less water, which is neat and we're also recycling and allowing older people to rent their homes out which then might make them want to stay in those homes for longer. Which means that we don't need more retirement communities, because they can age in place and have an additional income, etc, etc. But on the Uber Lyft side of things, you talk about the circulation of cars and you talk about the additional emissions that are put out and you also talked about the fact that, it may sound great to increase utilization on the car. But if the life of the car goes from being 10 years to three years because it's being utilized all the time, we still got to go back and build another car. Is that a fair analysis that Airbnb is great for the environment and Uber and Lyft aren't great for the environment? And take that out another step to other companies.
Mauro Guillén: And that's a great question, so let's focus for a moment on the right holding right, because I think it's a mixed bag. So, on the one hand, if instead of driving your own car you just getting an Uber or a Lyft or a DD in China. Then it's more likely that that asset the car will be used more efficiently, because you see in the United States when people are driving their car downtown 30 percent of the time they're looking for a parking spot. Now, if you are getting an Uber or Lyft or a DD, then you know you don't have that waste. Now the problem is that the greater availability of rides through a platform, such as these that we've been discussing has reduced the appeal of public transportation, that is the problem right. And it has also increased traffic congestion. Well that and also the delivery trucks, because, as you know, online shopping has gone through the roof right. So, it's a mixed bag. I think the jury's still out when it comes to the net environmental impact of ride sharing platforms right. But I do believe that ride sharing platforms will have a net positive environmental impact once they move to electrical. So once we move to electric vehicles, and we can easily do that if you know, there are incentives for all of those drivers to essentially switch to electric right, maybe they can be buy the platform a higher share of the fare, right for the trip. Then I think it will be the case that the sharing economy when it comes to rides, especially in cities, will have a net positive effect on the environment.
Willy Walker: Alright, so we talked about a net positive when you get the EDs now talk about autonomous and what it's going to do to the trucking industry, you have a stat in your book that says that I think it's in 36 of 50 states driving, truck driving, is the number one industry as it relates to employment in the States and your projection by 2030 is all that fleet is autonomous and those 3.5 million Americans who drive trucks are out of work, what are we going to do?
Mauro Guillén: Yes, and you know.
Willy Walker: And am I right on the stats? Correct me if any of these stats I'm throwing out are wrong.
Mauro Guillén: Yeah yeah yeah.
Willy Walker: Trying to remember.
Mauro Guillén: The exact figure, is as you said that in more than 40 states truck drivers is the largest occupational group right, so even bigger than schoolteachers. I mean there's a lot of truck drivers in United States because we move a lot of merchandise using trucks and you know here's the problem. The problem is that it's so much easier to automate trucking than it is to automate you know your car right. Because trucking as a lot of it as you know, long distance happens overnight on the highways and all of that. And you can organize convoys of trucks without drivers or maybe with just one driver, but that person driving 20 tracks right. So yes, I mean, I think this is going to be really tough for truck drivers because there's not going to be as many jobs in the future and, by the way the country in the world that is most advanced in terms of the driverless trucking is China. Right, they're making a lot of progress in that direction. So yeah and look, I mean there's no question that technology will destroy jobs at the same time that it delivers, you know so many improvements to our quality of life. So, the important point here Willy, not just for truck drivers but for any other types of workers that are displaced by technologies that we shouldn't forget about them. I think we have been forgetting about them over the last 20 years. And we should come up with ways to help them find another job, right. Because technology will continue to be implemented, an automation is a very powerful force. However, I think, as a society, we should be taking care of those people who are displaced by these technological revolutions.
Willy Walker: So, you talk about these technological revolutions and you talk in the book about Uber and the fact that Uber and Travis Kalanick, it just basically ran over local regulation to get Uber out there and basically said, you know build it first and ask for permission later is essentially what you say. And you talk about Uber in London and the fact that there was this big city and by all the taxicab drivers in 2015 and then in 2017 the legislature passed where they're going to ban Uber and 850,000 people signed a petition to make it so that Uber could exist. And my mind went to well, that makes sense in the world we live in today. That all these people, to your, to kind of the populism that exists, that if the technology is there and it gives me freedom to use it and it's a low price get out of the way government and I'm going to go down that path. Yet we talk about truck drivers who are going to be displaced. We talk about the fact that while people might put a lot of faith in Travis Kalanick and the management team at Uber, we might remind ourselves that Travis Kalanick lost his job because he couldn't run his own company. And I'm not trying to throw spears at him, but my point being is that there is a regulatory framework that we've all relied upon, particularly in the United States. And the technology market, look at Facebook today. Look at Google today, as it relates to being able to not abide by the publishing rules that have been the New York Times, and everybody else has to live under. They are writing their own rules, and yet there seems to be this big tension today. Between let the free economy, and let these new Apps do whatever they want, but then, all of a sudden, at the same time, we want the protections that have existed in the past. How does this kind of clash between capitalism and populism work itself through in the next 10 years so that we don't have additional strife and additional sort of conflict in our political system that we saw so clearly in 2016.
Mauro Guillén: Yeah so Willy, I think either extreme is unacceptable, so the extreme where there's no regulation for these technological platforms or the other extreme, where you regulate them so much that you kill them. So, you need to have to find the balance and, of course, in terms of striking a balance between the two extremes no regulation and full regulation. You know I think the most important principle is, this is going to help consumers. This is going to result in you know, lower prices, but also better for example, environmental impact, right. So not so much of an impact on the environment. So, I think we probably need to come up with priorities here as to what is it that these regulations should look for? What is it that you know these companies that are becoming so successful that we call them big tech for a reason. What is it that they should do in terms of paying their dues back to society? Because they're making a killing right, I mean they're growing like crazy, many of them are making big profits. But maybe we need to rein them in, in the sense of directing them in the direction of helping society cope with all of these problems right. And, by the way, if they eliminate jobs, if they make workers redundant, in other industries, maybe we should also ask them to contribute to helping relocate those workers, retrain them, and so on.
Willy Walker: So, I got to get you to talk about blockchain and crypto for a second because I hear you talk about governments, the one thing that the dominant government in the world has always had and you walk, you walk your readers through this and it's fascinating. That every dominant empire over history has had the fiat currency and they've been able to control the world because they've controlled the currency. And now all of a sudden, we have crypto coming in, and we have blockchain. And first of all, on crypto you talk about crypto being you know seamless and people can go and invest in it, and we can use it as a currency. At the same time, I have a really hard time thinking that the United States Government just lets go of having the fiat currency. And the second thing is, you talk a little bit about the environmental impact of it. And I think the stat you used was, the amount of energy required in the world today to run all the servers on bitcoin is the amount of energy used to power, the country of Austria for a year with 8 million people inside of it. So there's nothing there's like I was thinking about all the big bitcoin owners like Paul Tudor Jones and all these other big hedge fund people, and I was thinking, they need to not only by carbon offsets for their jets they need to buy carbon offsets for their positions in in bitcoin. But then blockchain makes all the sense in the world. Like the title insurance industry should go away. Because we shouldn't have questions about title you shouldn't have to have insurance on the title, because the title of being a blockchain. Talk for a minute about crypto and blockchain and what we're going to see 10 years from now.
Mauro Guillén: So the blockchain is a very powerful technology. It has this big you know minus, which is, as you know, that is very energy intensive and you provided a vivid example of Austria, comparing it to a bitcoin trading. But the blockchain has the potential of essentially you know, eliminating a lot of bureaucracy, a lot of red tape that we have in the world. And, by the way, also eliminating quite a few jobs right. People who you know manage all of those parts of the economy and the blockchain, of course, is the technology that underlies bitcoin, but it has applications. In so many other areas, so I think blockchain is definitely going to be part of the future. And, by the way, it will also help us with the environment because tracking, for example, carbon offsets, as you said that's something that could be done on the blockchain. Tracking the provenance of goods, protecting endangered species in the world, all of that could be done on the basis of the blockchain. But the more interesting part, of course, is the crypto currencies and you refer to the dollar. Yes, the U.S. Government, the Federal Reserve, will never want a cryptocurrency to become as important as $1 for one very basic reason, they don't want to lose control over monetary policy, over the supply of money, over interest rates. And cryptocurrencies if they were to become dominant in the world that would mean that governments will lose that financial leverage that they currently have. So, that's why I mentioned in the book Willy that I don't think governments or central banks will ever tolerate in the world that something like bitcoin or some other cryptocurrency becomes widely used. They will always regulate it to death right if that were to happen. But I think that we can you know bundle cryptocurrencies with other services like discount coupons or smart contracts. Another area would be your voting rights as a shareholder. How you exercise those voting rights, or as a citizen in elections. And if you put all of these things together in something that is normally called a digital token. So, cryptocurrency would be only one component in that digital token. Then I think that would be an innovation. I think that would be more efficient. I think that would make a contribution to the economy and the well-being. And I think governments and central banks would tolerate that and, by the way we already see this in action in places like Estonia. The country in northern Europe is a tiny country, but you know they have made a lot of progress in terms of people over there, using these digital tokens. And also in Africa, where they don't have a banking system and they don't have you know our usual means of payment, places like Kenya and Ghana. So, this is already becoming a reality in some parts of the world, and I think we will come here to the United States as well.
Willy Walker: So, my final question I could keep going on with you for three more hours with all the things that I pulled out of your book but you obviously started working on this book long before the pandemic set in. And as you were doing your research about these daunting global challenges of overpopulation and of moving to cities that are susceptible to flooding into typhoons and hurricanes and all that. It's a pretty it's a pretty daunting challenge to be able to confront all this and find solutions. And at the same time, you very accurately point to a lot of technologies that could change the world over the next 10 years and might make it so that we don't sort of self-destruct. And then, all of a sudden in comes, the pandemic and in sort of record time, scientists and technologists and, interestingly technologist, not just that scientists’, technologists got a solution to this much, much quicker than we thought. Is your view, after having pulled your book together more optimistic or pessimistic after having seen how we dealt with the Covid pandemic?
Mauro Guillén: Yeah look I'm a realistic optimist. I think there our opportunities embedded in all of this. But here's the point. I have been spending some time studying previous pandemics, such as the plague of Justinian or the Black Death or the 1918-1919 influenza in Europe and the United States. And there's a big difference between those pandemics in the past and Covid-19. Covid-19 is a big accelerator of preexisting threats. The other pandemics, they brought history to stop. They rerouted history in a different direction. Covid-19 is accelerating populational aging, is accelerating the use of technology, is accelerating the rise of the emerging markets of East Asia, because they're performing better than we are. It's accelerating all of these preexisting trends. So look my only regret Willy in terms of the arguments and the evidence in the book is that instead of 2030 as a title I should have chosen 2028. Because this acceleration is bringing in the future faster to us. So, in other words, we need to prepare and now there should be in the midst of these pandemic even more urgency to prepare for that future.
Willy Walker: Well, Dr. Guillén mil gracias por hablar conmigo. It's really been a great pleasure. Thank you so much for all of your thoughts all your input.
To everybody on the on the webcast, thank you for joining us today. We're back next week with the chairman of McKinsey and the CEO of the Great Place to Work Institute talking about what makes great companies great. Thanks for joining us today and Dr. Guillén again, thank you very much, great to see you.