America's Mega Forces - Making the most in a time of change

Updated: Jul 5

By Jeff Hulett, February 9, 2021


This article was originally written to help sort out why Donald Trump was elected president in 2016. It took me over 4 years to translate my curiosity to writing! I was surprised by the 2016 election outcome. My surprise was because I underestimated the power of a couple of mega forces uniquely playing out in the United States. While there are many forces (or trends) driving change in America, this article describes the two fundamental and high-impact forces at play in our everyday lives. Finally, I present solution ideas for how we may adapt to these mega forces.


This article is presented with the following sections:

Mega force definition

The two mega forces

Mega force combination, a toxic mix

Mega force solutions

Conclusion and afterword

Notes and Author Profile


First, what is meant by a mega force?

These are big, significant trends impacting our everyday life. They are characterized by:

  1. Mega forces are many decades or sometimes centuries in the making;

  2. Mega forces are likely to have long and persistent future tails, usually at least as long as the making;

  3. Mega forces are generally obvious in retrospect but harder to see when in it;

  4. Mega forces are often subject to our cognitive biases that obscure a) the effect of, or b) reacting to, the mega force. (1)


Next, what are the two mega forces and why do they matter?

This section describes the two mega forces. We provide mega force background and how they are at play in today’s world. The two mega forces are:


  • Mega force 1 (MF1) - Transition of the White Christian (WC) as a population majority to a population minority.

  • Mega force 2 (MF2) - Transition from the Industrial economy to the Information economy


Mega force 1 (MF1) - Transition of the White Christian (WC) as a population majority to a population minority.


MF1 has been anticipated for decades. Demographic changes are like a relentless train coming down the tracks. With today’s available data and analysis capabilities, demographic changes are reliably predictable decades in advance. However, today, the population segment anticipating change impact is significantly feeling change impact. That is - the soon not to be majority - White Christian. This feeling may create fear.


Change is hard when a group (or tribe) has been accustomed to writing the rules for centuries. Especially when those rules have been subtly tilted to their own advantage. (or not so subtly tilted in the case of the Jim Crow south or the Levittown New York housing project (2) ) Interestingly, for the WC, the tilted rules “feel” normal. They have become an expected entitlement. Very soon, WC will need to work together with all minorities as equals to create rules that work for all. This is a tough change, from “dominant, rule maker” majority to “equal, get in line with all” minority. Do not expect all WCs to make a graceful transition.


Naturally, MF1 has tribalism overtones, such as racism, ethnism, and the like. (3) In many ways the “Make America Great Again” political slogan is code for “Make America White and Christian Again.” The reality being, America’s inevitable demographic direction makes this impossible.

Interestingly, the long-time Republican political pollster and strategist Whit Ayers wrote the 2015 book 2016 and Beyond: How Republicans Can Elect a President in the New America. In it, he advocates Republican political strategies to adapt to demographic reality by reaching beyond its WC base. The Republican Party 2016 presidential nominee opposed Ayers’ recommended strategic direction. The Trump administration doubled down by inflaming WC-related fear and by intentionally not adapting to MF1 reality. While I consider the “not dealing with MF1 reality” as a “Hail Mary pass” political strategy, it seemed to have worked as a short-term election tactic. With that, it also kicked the can down the road for failing to deal with the demographic train coming down the tracks. (4)


Mega force 2 (MF2) - Transition from the Industrial economy to the Information economy


MF2 has been in motion for decades. Its hallmarks are globalization, outsourcing, and the use of intangible assets and digital technology to drive business value (as opposed to tangible assets like steel, concrete, wood, etc.). For a very good explanation of intangible assets and how they are so different from their tangible asset cousins, please see Haskel and Westlake’s book Capitalism Without Capital. (5)


The difference today, there is a core and increasingly disaffected group of people that have been left out. Whether their lack of economic participation is their choice or not is complicated and not particularly relevant for this mega force. The reality is, today, there is a sizable group of people that have been left behind by the MF2 economy. As a significance measure, Gene Ludwig and the Ludwig Institute for Shared Economic Prosperity (LISEP) estimate the “true” unemployment rate as being much higher than traditionally reported by the U.S. government. As of December 2020, the LISEP true unemployment rate is estimated at over 25% of all U.S citizens. (full disclosure, both Gene and I are affiliated with IBM) This means, over 25% of Americans are unemployed or unable to earn a “living” wage. Nobel laureate Daniel Kahneman’s research conclusion summary seems appropriate:

“Money does not buy you happiness, but lack of money certainly buys you misery.”

As such, economically, this group is faltering. Many live in communities, like in the U.S. Rust Belt, that is failing. Sometimes, they are impacted by drug dependencies and related setbacks that further deepen their difficult situation. J.D. Vance wrote in his 2016 book Hillbilly Elegy: A Memoir of a Family and Culture in Crisis about the very real challenges of those that fail to adapt to MF2 reality. He also wrote of the very difficult road for those that wish to adapt. As an example, Vance had to make very difficult transition choices in order to successfully adapt, including leaving his family behind. Vance discusses the need for “Social Capital” as a currency to help those that wish to transition to the MF2 economy.


When the mega forces combine - a toxic mix


Today, there is a confluence of these two mega forces, as they are both having a higher impact on American life. Even before the pandemic, the use of intangibles to drive the U.S. economy was increasing rapidly. Just think of the large platform companies such as Amazon, Facebook, and Netflix. Since the pandemic, the consumer adoption of these platforms across America has accelerated. Please consider the stock prices of comparable large intangible v. tangible asset based companies. For the 1 year since February 9, 2020, a representative intangible driven company, Amazon, stock price has increased 59%. Whereas, a representative tangible driven company, ExxonMobil, has decreased 15%.

It would seem investors are voting for MF2 with their pocketbooks and the trend is accelerating.


In terms of MF1, The Brookings Institute predicts white people will be a minority at the national level by 2045. This could certainly accelerate as the latest census numbers are received. Also, this is very much a national average. There are already some communities that are minority white, or at least closer than average to minority white. These cities are in the front line of managing MF2 reality. Cities such as Miami, Houston, New York, and Sacramento.


These mega forces are combining. Plus, political parties have been known to fan the flames, by exploiting our natural tribalistic tendencies to elicit fear. That is, fear of either being left behind in the information economy or fear of becoming a minority.


What are the solutions?

Mega Force solutions background


The following metaphor helps frame the solutions’ economic concept -

A rising tide raises all boats, both legacy and new boats. A falling tide drops the legacy boats, and the new boats will not come.

The mega force solutions are meant as adaptation solution ideas. The solutions include both a proactive, community-based immigration program and an active continuing education program. You may ask, why? - If we have any unemployment, why would the U.S. want to build immigration capacity? The reality is, even during a pandemic, the U.S. economy is dependent on transitioning existing skills and providing needed new skills. Also, unemployment is just an average. It is decidedly not evenly distributed across all communities or industries. As we discussed above, the intangibles-based economy is growing quickly and in great need of diverse skills.


If you are still uncertain about immigration, think of it this way: Would you a) rather have an overall larger, but thinner slice of a growing pie OR b) would you rather have an overall smaller, but thicker slice of a shrinking pie. Economists and community planners will generally choose growth. The expectation is that growth is more healthy for an economy and its citizens, especially compared to the shrinking alternative. As a practical matter and to be managed in the solution rollout, it is our nature to confuse a “thicker” but shrinking pie slice as desirable. Our source of comparison is often intensely local, laced with fear and uncertainty. Please see the Bob and Henry example. While there may be some short-term uncertainty, Henry and his family will ultimately benefit from growth. Bob may feel more certain in the short run, but his community income decline will negatively impact Bob and his family.


The following mega force solutions are meant to be high level thought starters. While solution particulars need to be debated, hopefully, we can agree mega force-related changes are needed.


Mega Force 1 idea - Population Acceleration


Title - The Community Invitation program


The big idea - actively increase the U.S. population via a proactive immigration program. Give local communities immigration planning control. This has the effect of encouraging a healthy transition in terms of proactively managing the MF1 reality. As suggested in the graphic, the increasing population also has great economic merit to increase U.S. productivity, output, and efficiency for all AND with negligible security impact to legacy citizens. The bottom line, the biggest threat to the future economic might of the United States is a declining population base. The good news is, people from outside the U.S. want to live and work in U.S. communities with unfilled job needs. The new population leverages the money multiplier to increase the tax base, business revenues, and community services. It is a win/win!


The big assumptions - a) The trend of increasing U.S. racial plurality will only increase, as already discussed. It is a demographic given. b) The economics of immigration and general macroeconomic theory suggests more immigration is good for our economy and immigration-related security and crime concerns are almost entirely a myth. (6) Finally, c) immigration can be targeted to the communities in need of workers. Managing local community challenges, such as affordable housing, is part of the planning process. (7)


How do we do this? - The federal government will provide community invitation tax credits for local communities. (Along the lines of the existing Low Income Housing Tax Credit mechanism) The credit payment eligibility is for up to 2 years and paid annually in arrears. The time period coincides with a reasonable time for the immigrant employee to get settled and get productive. The intent is to provide tax incentives for local communities to attract and retain immigrant human resource talent. Every community's planning needs are different. Some need teachers, some need domestic workers, some need construction workers, some need information-based workers, etc. Also, sometimes needs are unexpected and immediate. (like remediation after a natural disaster) The following graphic is an immigration forecast from the Brookings Institute. It is mentioned:

"The projections show that the current level of immigration is essential for our nation’s future growth, especially in sustaining the younger population." - William Frey

The community will target immigrant population growth based on their specific planning needs. The community will partner with local business needs to inform their planning. The federal government will manage the overall immigration process for entry in the U.S., with the most important element being a valid “Community Invitation.” This will be initiated by participating U.S. communities. The community may issue the invitation after the candidate is interviewed and validated. (skills, criminal background check, etc.) It is expected the scope of an issued Community Invitation includes dependent family members (e.g., spouse and dependent children) It is expected the interview and validation process will be a substantially virtual process.


This has the added benefit of community and individual choice. That is, some communities may wish to opt-out of the Community Invitation program. Others may have changing, higher, or lower needs. The Community Invitation is meant to be flexible based on community human resource needs. For communities lagging in terms of MF1 transition, the federal government may increase tax credit value as a community incentive. Also, as per the “Bob and Henry” example, Bob may not want to move and maybe content to stay in his “shrinking pie” community. No problem, as the community invitation program is an enabler for those motivated to move to an “expanding pie” community.


Mega Force 2 idea: Information Age Education


Title - The National Continuing Education (NCE) program


The big idea - Create an adaptive continuing education system that provides most citizens ongoing, relevant education. This will be accomplished via employer and training institution incentives.


The big assumptions - Automation and information technology is a significant source of disruption and societal change. This requires ongoing education to maintain skill relevance. (8) Re-training is an ongoing need in the United States. High-demand skills are necessary to help build a vibrant economy. Digital technology is a significant education enabler. Continuing education will support an "upward wicking" to update and improve skills for all citizens. (As described in the prior graphic.)


How do we do this? - Continuing Education (CE) is traditionally the domain of employers and professional certification programs. For example, accounting firms and the AICPA have a structured CE program (9) to ensure accountants are fully versed in their discipline. The idea is to create a national support infrastructure to provide education grants and CE infrastructure so most U.S. citizens may participate.


Infrastructure includes the recordation of certified CE hours and related certifications. CE grants will reimburse eligible citizens for CE training. CE curriculum is based on employer demand and grant eligibility is based on need. CE hours may be aggregated for curriculum-based certifications. All CEs and certifications are transferable across employers as related to demanded skills. This will be separate from the college and student lending systems.


Employer-provided tax credits will be available for those on the payroll that have completed CE certifications. NCE educational content is to be determined by employer demand and is expected to provide training for the latest technology-related skill needs. NCE training provided tax credits will be available for organizations building online training infrastructure. Individual citizens, based on need, will be provided reimbursements for certain technology and network bandwidth required for training participation.


As a potential funding source, employers benefitting from skilled labor could join an NCE curriculum development membership organization. Both membership proceeds and the talent of employer volunteers could be a helpful resource.


Conclusion

There are a couple of mega forces uniquely playing out in the United States. This article identifies two high impact and fundamental forces at play in our everyday lives. Finally, two high-level solutions are provided to accelerate adaptation to the mega force reality. From our sanitation worker example, both mega force solutions will help Bob, Henry, and their communities as they adapt to a changing world. Keep in mind, mega forces have been in play for decades or centuries. It is not too late to make meaningful changes to embrace mega force reality.


Afterword: This article may leave you with the thought: “Hey Hulett, this is interesting, but our political system is a mess. Don’t we need to fix our political system to make any mega force solution effective?” Good question. I have 2 thoughts: 1) I am an optimist and I feel like we need to start somewhere. I’m a big fan of acting and making mid-course corrections as we go. 2) I do not disagree that our political system has challenges. Please see my article Strengthening our vote - how we got here and what we can do about it for thoughts on the core political system's challenges and improvement solutions.


Notes

(1) Of our many cognitive biases, those most at play with mega forces are Hyperbolic discounting, Our lack of concern for future generations, The bystander effect, and The sunk-cost fallacy.

Here are definitions:

  • Hyperbolic discounting. This is our perception that the present is more important than the future. Throughout most of our evolution, it was more advantageous to focus on what might kill us or eat us now, not later. This bias now impedes our ability to take action to address more distant-feeling, slower and complex challenges.

  • Our lack of concern for future generations. Evolutionary theory suggests that we care most about just a few generations of family members: our great-grandparents to great-grandchildren. While we may understand what needs to be done to address mega force-related change, it’s hard for us to see how the sacrifices required for generations existing beyond this short time span are worth it.

  • The bystander effect. We tend to believe that someone else will deal with a crisis. This developed for good reason: if a threatening wild animal is lurking at the edge of our hunter-gatherer group, it’s a waste of effort for every single member to spring into action — not to mention could needlessly put more people into danger. In smaller groups, it was usually pretty clearly delineated who would step up for which threats, so this worked. Today, however, this leads us to assume (often wrongly) that our leaders must be doing something about the mega forces. And the larger the group, the stronger this bias becomes.

  • The sunk-cost fallacy. We are biased towards staying the course even in the face of negative outcomes. The more we've invested time, energy, or resources into that course, the more likely we are to stick with it – even if it no longer seems optimal. This helps explain, for example, our long-term identification with political parties, even as the political parties change their priorities.

(See the related March, 2019 BBC article about cognitive biases and climate change)


(2) My understanding of the “not so subtle rule tilting” has been informed by many authors, including Isabel Wilkerson and Richard Rothstein.


(3) For more information on the causes of tribalism, especially as related to our political system, please see the first section of our article Strengthening our vote - how we got here and what we can do about it . Please note, I view tribalism as a given and not necessarily a societal negative. (For example, racism is certainly bad. Organizing quickly and at scale to create a COVID-19 vaccine is certainly good. Both relate to tribalism.) Tribalism is naturally occurring in humans and something that needs to be actively managed. Individually, we can help manage our own tribalistic tendencies via education and awareness. Also, see The Economist article Evangelicals are divided over the movement’s support for Donald Trump. Provides an analysis of the changing relationship between some WCs and political parties.


(4) The long term challenge of MF1 is significant. In fact, in the book How Democracies Die, by Levitsky and Ziblatt, the authors consider this trend as an existential threat to our democracy:

“We have experienced political catastrophe before when regional and partisan enmities so divided the nation that it collapsed into civil war. Our constitutional system recovered, and Republican and Democratic leaders developed new norms and practices that would undergird more than a century of political stability. But that stability came at the price of racial exclusion and authoritarian single-party rule in the South. It was only after 1965 that the United States fully democratized. And, paradoxically, that very process began a fundamental realignment of the American electorate that has once again left our parties deeply polarized. This polarization, deeper than at any time since the end of Reconstruction, has triggered the epidemic of norm breaking that now challenges our democracy.”

Also, the authors make the following historical observation: “It is difficult to find examples of societies in which shrinking ethnic majorities gave up their dominant status without a fight.”


(5) From Capitalism Without Capital: Intangibles have four unusual economic properties. These properties can exist with tangible investments, but on the whole intangible assets exhibit them to a greater degree. These characteristics are:

• Scalability

• Sunkenness

• Spillovers

• Synergies

Three further characteristics emerge from these four, namely, uncertainty, option value, and contestedness.


(6) See Immigration Economist Bryan Caplan’s book Open Borders. By the way, I love Dr. Caplan’s comic strip book presentation! David Ricardo's timeless "Comparative Advantage" economic concept is highly relevant. This solution should help the U.S. leverage its own comparative advantages as an important contributor to economic prosperity.


(7) Immigration targeting has some nuances. First of all, by their nature, intangible assets are, well, intangible. As described by Haskel and Westlake, the scalable and synergistic nature of intangibles “should” make them producible in any geography. However, human nature is such that we like to herd. Why do high-tech people find it desirable to live in San Francisco? While plenty of objective reasons may be offered, I assume part of the reason is human nature based on our evolutionary biology. That is, our herding instinct is not going to change any time soon and will likely resume in some fashion after the pandemic. This herding instinct has a downside, especially concerning issues of affordable housing. Because housing demand changes are much faster than supply capacity absorption rates, home pricing can quickly escalate. It is expected, the Community Invitation program will encourage industry and local government to work together to proactively manage challenging housing supply issues. There are examples of high-tech industry and local community affordable housing partnerships. For example, in 2019, Google announced a $1 Billion commitment to help solve Bay Area housing issues. Also, herding can have upside, once an immigrant community gets established, they often create a welcoming atmosphere for future immigrants. Also, a lack of a proactive immigration policy is often problematic. As The Economist said in their 3/20/21 article Biden’s Muddle on Immigration, “The asylum system has become a back door substitute for a proper immigration scheme.”


(8) See David Autor’s article Why Are There Still So Many Jobs? The History and Future of Workplace Automation


(9) The AICPAs program provides Continuing Professional Education for accountants as related to the Certified Public Accountant license.

Related content

The Economist, 5/22/21, “The curious case of the disappearing worker” - suggests a “3 P” solution. Payments (back to work incentives), Passports (worker immigration), and Patience (as COVID-19 fear is resolved)


Business and Political profile

For full transparency, please see the author's political disclosure and business profile.


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