Seeing The Elephant Part 4

Instead, we should focus on reforming the organization we already have. Even in the twenty-first century-a time in which millions of nonstate actors engage in decentralized, cross-border activity 24/7-life is still organized around sovereign nations, especially in the realm of security. Although today's threats emanate largely from nonstate actors, functional states hold a monopoly on the solutions to these problems (that is, the intelligence community, military forces, and diplomatic corps). A revitalized UN could better coordinate sovereign states' responses in order to uphold stability and the rule of law.

The political nature of the UN, however, is also a source of its headaches. Deep disagreements among its founding members and between other contending forces have handicapped the organization. The Bush administration has maintained a pa.s.sive-aggressive att.i.tude toward the UN, keeping its budget impossibly small (regularly paying its relatively trivial annual dues months, in some cases years, late), and disregarding UN policies and procedures if it disagrees. The American "my way or the highway" perspective isn't appreciated by many, including close G7 allies, particularly after the invasion of Iraq. European countries often call for a stronger UN role in security matters, possibly because they have disproportionately large roles at the UN; some claim they use it as a pulpit for a.s.serting their regional interests and overinflating the continent's influence in global affairs. China basically has what it wants out of the UN-a permanent seat and veto power in the Security Council, yet it pays little in dues and often abstains from public opinions. Small nations that would otherwise have no public voice in global affairs use the UN as a loudspeaker. Finally, the restrictive control over the Security Council exercised by the United States, Russia, and the nations of Western Europe has created considerable distrust and resentment among rising economic powers that want greater say and control in the organization.

The UN needs a fundamental structural reorganization if it is to accomplish its original mission of promoting international cooperation and maintaining peace and security, and the United States is probably the only country that can galvanize such an effort. However, it remains to be seen whether the United States will bring forward the reforms that the United Nations needs to avoid the fate that beset the League of Nations.

A reformed UN must become an integral, effective cornerstone of global civil society that combats the disruptive, lethal forces that threaten our collective capitalist peace. Pragmatically, this can happen by (1) encouraging more balanced partic.i.p.ation beyond the dominant World War II power bloc, measures that would include a larger, more equitably shared budget and expanded permanent Security Council members.h.i.+p, and (2) strengthening capabilities in the spheres of peacekeeping, intelligence coordination, and nonproliferation.

More Balanced Partic.i.p.ation: Budget Reform For an organization that has so much theoretical prestige, it is not reflected in funding. The UN, excluding peacekeeping efforts and a few humanitarian programs such as the UN Development Program, the World Food Program, and the UN Children's Fund, operates on roughly $2 billion per year.88 Three countries-the United States, Germany, and j.a.pan-routinely account for half of this budget. The first step in rejuvenating the UN is simply to put more money behind it. With a more egalitarian formula for financial contributions, the UN could broaden the number of true stakeholders. Currently, a member state's capacity to pay is determined by the country's population size and gross national income, adjusted to subsidize poorer member countries. Yet the current structure has allowed several powerful nations to free ride the system. China, a permanent Security Council member, paid only $53 million in 2007, while Russia (another permanent member of the Security Council) and India routinely pay less than $20 million each, both surpa.s.sed by the contribution of tiny Switzerland. (See Three countries-the United States, Germany, and j.a.pan-routinely account for half of this budget. The first step in rejuvenating the UN is simply to put more money behind it. With a more egalitarian formula for financial contributions, the UN could broaden the number of true stakeholders. Currently, a member state's capacity to pay is determined by the country's population size and gross national income, adjusted to subsidize poorer member countries. Yet the current structure has allowed several powerful nations to free ride the system. China, a permanent Security Council member, paid only $53 million in 2007, while Russia (another permanent member of the Security Council) and India routinely pay less than $20 million each, both surpa.s.sed by the contribution of tiny Switzerland. (See Table 4.2 Table 4.2.) One proposal is to gradually increase total funding for the UN. To weaken the grasp of a few countries over the organization, perhaps a new funding formula should be introduced based 50 percent on population and 50 percent on economic output (on a PPP basis). a.s.sume a larger UN budget set at $10 billion-a dramatic increase from its current $2 billion level, but still fairly low. Under this new arrangement the United States (with 4.3 percent of the world's population) would pay approximately $228 million in population dues plus $1.066 billion in economic dues (to account for its 21.8 percent share of world output). That makes for a total payment of less than $1.3 billion, more than double today's contributions but less than 11 percent of the total UN bill versus nearly 22 percent today. This is but a small part of the United States' aggregate defense/intelligence/diplomatic spending that is currently nearing $800 billion.

Table 4.2 UN Budget a.s.sessment and Payments (in US$ millions) UN Budget a.s.sessment and Payments (in US$ millions) SOURCE: United Nations: 2007 Status of Contributions to the Regular Budget, International Tribunals, Peacekeeping Operations and Capital Master Plan.

China, on the other hand, would see a dramatic increase. It currently pays less than 4 cents per Chinese citizen or just 2.6 percent of the UN current budget. Under the new system, China would actually become the largest UN financier, paying more than $1.5 billion each year.While this seems high, keep in mind China now holds almost $2 trillion in hard currency reserves. No longer a poor country, China needs to be more vested in the UN system. India, too, would be required to pay considerably more as would Brazil. In contrast, several European members would actually pay less than they currently do. And small countries with very small populations and economies would not be overly penalized under this new formula.

How can we get these countries to agree to a larger budget and a new financial formula? The United States must take the lead on this front, readily offering to pay its share of the extra funds and setting a new higher standard while broadening the financial base of the UN with new players. For newcomers like India and Brazil, such increases will need the incentive of increased power, influence, and prestige. The amount of money we are discussing-$10 billion in total-is but a rounding error in the budgets of the top 20 countries that will be footing 90 percent of the bill. President Obama can take a strong multilateral stand by advancing greater financial support for the UN, paying the proposed increase on time, and setting a new stage for more reinvigorated UN partic.i.p.ation. And with renewed interest in the UN, we would likely see the budget and scope of activities grow significantly in the near future. But these developing countries will need greater roles in the UN in exchange for such increases.

More Balanced Partic.i.p.ation: Security Council Reform At the heart of the UN debate over representation and financial commitments is the Security Council, a body that still reflects the global power structure of 1945. At that time, 11 countries were named to the council, with a privileged five victors of World War II-the United States, the United Kingdom, France, Russia, and China (known as the P5)-granted permanent members.h.i.+p with veto rights. Since 1966, this has grown to 10 elected members, but the council remains undemocratic, with a two-cla.s.s system (permanent and temporary).

The veto power of the P5 allows each to turn down a resolution even if the other 14 members approve it, which often leads to UN gridlock. Skeptics question whether Security Council reform is feasible so long as certain members have an individual veto. One highly charged suggestion is to end veto rights (perhaps over a specified time frame), while also expanding the P5 to nine members (the P9). These moves alone could dramatically reinvigorate the UN on many levels. A new 19-member council would remain small enough to be efficient yet broad enough to reflect a wider range of views than it currently does. As a subst.i.tute for the current veto enjoyed by the P5, a three-quarters majority rule could be implemented to guarantee that the council's decisions reflect, at all times, a worldwide consensus. This means that the council's decisions would have to be supported by at least 15 members.

While the P5 would initially object to this realignment, there are legitimate reasons to move in this direction. First, the current veto right puts too much power in the hands of one country. Second, if there is a concern that requires a veto, a sponsor would need to gain the support of an additional four members to block a council vote. With a revised permanent status, one can see how the addition of other world powers would be far less controversial than if new permanent members had veto rights. With no changes to the permanent status of council members in 60 years, it is long overdue.

While there are many worthy countries, there is a wide consensus that political and economic powerhouses such as j.a.pan, India, Brazil, and Germany have the size and stature deserving of members.h.i.+p. As the second and third largest economies in the world, j.a.pan and Germany's candidacies should not be hugely contentious, although China may have issues with j.a.pan. The historically contentious relations.h.i.+p between the two has not yet cooled: Chinese Premier Wen Jiabao told j.a.pan that it must face up to its World War II aggression before aspiring to a bigger global role, stating, "Only a country that respects history, takes responsibility for history, and wins over the trust of peoples in Asia and the world at large can take greater responsibilities in the international community."89 Indeed, when China, along with Russia and the United States rejected the last major effort for Security Council reform in May 2005, the strained Sino-j.a.panese relations.h.i.+p was cited as one of the key reasons. Indeed, when China, along with Russia and the United States rejected the last major effort for Security Council reform in May 2005, the strained Sino-j.a.panese relations.h.i.+p was cited as one of the key reasons.90 However, several U.S. diplomats, including Condoleezza Rice, have promoted their inclusion. However, several U.S. diplomats, including Condoleezza Rice, have promoted their inclusion.91 Nor should Brazil be a controversial addition. It is the largest Latin American country in population and economic power in addition to having the 11th largest defense budget and the 18th largest standing army in the world. The country is no stranger to the Security Council, having been elected to it 18 times, the most of any elected country. Brazil has contributed troops to several UN peacekeeping missions (Angola, the former Belgian Congo, Cyprus, Mozambique, and East Timor, among others), putting it among the 15 largest financial contributors to the UN budget, and it would be b.u.mped up to sixth under the proposed new formula. Most of the Security Council would probably approve Brazil's permanent members.h.i.+p, although the Chinese have shown no public support. The only vocal opponents to a Brazil members.h.i.+p are two Latin American countries-Mexico and Argentina-which argue that Brazil is not Spanish speaking and therefore is not representative of the Latin world. Yet Brazil stands strong as an important player in the twenty-first century.

India should also be added to the permanent members of the Security Council, although its candidacy poses far more complexities than Brazil's. It is simply too big to ignore on the global scene. As the world's second largest country in terms of population (on its way to being the first), the largest democracy, a huge economy (perhaps the third largest on a PPP basis), and a nuclear power with the world's third largest standing army, India's scale speaks volumes for inclusion. It is among the largest contributors of troops to UN peacekeeping commitments, and it actually was one of the founding members of the Security Council back in 1945. However, potential opposition from countries such as Pakistan and China needs to be addressed first.92 Oddly, the United States is now the only P5 member opposed to India's candidacy. While President Bush made some conciliatory overtures to India, including the civilian nuclear power sharing program signed in 2006, his administration's opposition to India's permanent UN Security Council seat is due to its Pakistan-centric South Asia policy, where Pakistan remains Was.h.i.+ngton's key ally in its war on terror. The United States does not want to upset Islamabad, which clearly opposes India's entry to the council.Yet India's large Muslim population-more than 160 million-might be appreciated by other Muslim countries worldwide and may ultimately help the United States and the G7 in the long run with the fight against global terror, easing tensions between the Western and Islamic world. Oddly, the United States is now the only P5 member opposed to India's candidacy. While President Bush made some conciliatory overtures to India, including the civilian nuclear power sharing program signed in 2006, his administration's opposition to India's permanent UN Security Council seat is due to its Pakistan-centric South Asia policy, where Pakistan remains Was.h.i.+ngton's key ally in its war on terror. The United States does not want to upset Islamabad, which clearly opposes India's entry to the council.Yet India's large Muslim population-more than 160 million-might be appreciated by other Muslim countries worldwide and may ultimately help the United States and the G7 in the long run with the fight against global terror, easing tensions between the Western and Islamic world.

Keep in mind that an additional 10 countries would make up the council, and that permanent status without a veto right would no longer be nearly as prestigious or valuable as it is today. Therefore, calls for a Muslim or African country to broaden permanent representation may be less vocal. Indeed, by adding j.a.pan, India, and Brazil and removing the veto right over time, the Security Council's complexion changes dramatically, breaking up the West's traditional stronghold.

While the combination of an expansion of the P5 to P9 with the phase-out of the veto right would make sense on many fronts, critics would argue that few of the P5 would sanction such moves. But look at the reality of the situation. For the United States, giving up the veto would be largely symbolic and should not affect it practically. To form a bloc, the United States would need only four others on the entire Security Council with four old allies-the United Kingdom, France, Germany, and j.a.pan-already permanent members. If finding four others is a major undertaking, perhaps a message is being sent that should be heeded. The Europeans should not object strongly, given that the EU will already have three permanent members of the five nations needed for a veto. Finally, Russia and China, too, should be motivated to accept this reform since the United States alone (nor any individual country) could no longer block broader consensus. This is extremely controversial, but in many ways the downside risk of such expansion and veto change seems considerably less than what the world a.s.sumes with an impotent, ignored UN.

A revised members.h.i.+p that includes four new permanent members-j.a.pan, Germany, India, and Brazil-an evolution of veto rights at the Security Council and a larger budget could potentially restore vigor, democracy, and legitimacy to the UN. The proposed new dues formula would allow for more equitable underwriting of UN activities. These reforms taken together could reduce global tensions and resentments, underscore the evolution of world power, and set the stage for a more empowered UN role in Macro Quantum management.

UN Peacekeeping The UN peacekeeping tradition is now more than 50 years old since first raised in response to the Suez Crisis of 1956, and there have been more than 60 UN peacekeeping operations. The concept has enduring, pragmatic appeal: deploy lightly armed military personnel from member countries under UN command to war-torn areas that need a neutral party to cultivate conditions for sustainable peace. UN peacekeepers-including soldiers and military officers, civilian police officers, and personnel from many countries-deliver undeniably valuable services in postconflict situations and a.s.sist excombatants in implementing official peace accords. Such a.s.sistance comes in many forms, including confidence-building measures like power-sharing arrangements, electoral support, strengthening the rule of law, and providing some stability for renewed economic and social development.

While in theory peacekeeping is an excellent strategy to maintain the capitalist peace, one common criticism is that the UN's ad hoc, bureaucratic style often results in deployment delays when global crises occur. For example, during the Rwandan genocide, the UN was unable to garner international support for aid to the country, and 800,000 people were slaughtered. One suggestion to remedy these delays would be the creation of a rapid reaction force: a standing group that receives troops and support from Security Council members and is ready for quick deployment. This should be a permanent feature of the UN, expanding the capabilities of the organization in concert with the new realities of twenty-first century civil wars.

Currently the peacekeeping process calls on existing troops from member nations' armies to join designated missions; however, multi-country peacekeepers are typically poorly coordinated. Frequently, each country's troops live on separate bases and operate independently. In recent years, the UN has tried to overcome coordination problems by hand-picking specific battalions that already have peacekeeping experience.93 By contrast, a dedicated full-time command structure, similar to NATO, with centralized training and communication in a common language, would allow a more effective response. Moreover, some have suggested interesting, flexible methods for allowing wealthier countries to contribute more in capital and weapons than in soldiers, with countries with larger militaries to be compensated for supplying more troops, something that may be useful if peacekeeping efforts become more commonplace. By contrast, a dedicated full-time command structure, similar to NATO, with centralized training and communication in a common language, would allow a more effective response. Moreover, some have suggested interesting, flexible methods for allowing wealthier countries to contribute more in capital and weapons than in soldiers, with countries with larger militaries to be compensated for supplying more troops, something that may be useful if peacekeeping efforts become more commonplace.94 Peacekeeping should also be extended to other nonmilitary conflict situations such as natural disasters and pandemics like the Asian tsunami of late 2004 or Hurricane Katrina in 2005. A standing rapid reaction force would require increased permanent funding for a command structure, training, equipment, and deployment. As discussed earlier, the general dues structure would be increased dramatically to fund this command and training structure, with individual peacekeeping missions still kept outside the general budget.

NATO Reform In the aftermath of WWII, the Soviet threat was very real: Its armed forces outmanned the rest of Europe significantly, and in 1949 the USSR tested its first nuclear weapon. Stalin armed both the North Koreans and Mao's Communists in China. In response, the NATO treaty was written to bind the United States, Canada, and Europe together in the case of a Soviet attack. NATO's charter states that if any of the member nations is attacked, all will respond to the attack together.

As the Cold War ended and the Soviet Union collapsed, some called for an end to NATO, claiming the raison d'etre raison d'etre of the alliance has evaporated. As part of post-Cold War restructuring, NATO's military structure was cut back and new forces such as the Headquarters Allied Command Europe Rapid Reaction Corps were established. Former Eastern bloc countries including the Czech Republic, Hungary, Poland, Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia have subsequently joined the organization. In the post-Cold War era, NATO has intervened in humanitarian crises in former Yugoslavia, sent troops to Afghanistan, and (since 9/11) has increased ant.i.terrorist cooperation. of the alliance has evaporated. As part of post-Cold War restructuring, NATO's military structure was cut back and new forces such as the Headquarters Allied Command Europe Rapid Reaction Corps were established. Former Eastern bloc countries including the Czech Republic, Hungary, Poland, Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia have subsequently joined the organization. In the post-Cold War era, NATO has intervened in humanitarian crises in former Yugoslavia, sent troops to Afghanistan, and (since 9/11) has increased ant.i.terrorist cooperation.

It probably isn't said enough, but NATO is a phenomenally successful organization, perhaps the greatest traditional military force the world has seen. As such, it would seem logical for NATO to embrace new missions, as demanded by new twenty-first century threats, in addition to its traditional focus on territorial defense. These new aims include crisis management (the ability to intervene effectively in smaller-scale conflicts) and countering weapons of ma.s.s destruction.

Capitalizing on its great success, NATO could be extremely useful helping the UN strengthen the peacekeeping force by building a similar command structure and model. This is preferable to NATO expansion, because the UN is a truly global force, while NATO remains a regional group that has yet to shed its anti-USSR (and by extension, anti-Russian) image. A 2004 Russian parliament resolution warned that Russia would revoke a promise to limit troop numbers in several key strategic regions if NATO continued its eastward expansion.95 Russian President Dmitry Medvedev echoed this sentiment in 2008, adding: "Atlantism has exhausted itself. Now we must talk about the integrity of the entire Euro-Atlantic s.p.a.ce-from Vancouver to Vladivostok." Russian President Dmitry Medvedev echoed this sentiment in 2008, adding: "Atlantism has exhausted itself. Now we must talk about the integrity of the entire Euro-Atlantic s.p.a.ce-from Vancouver to Vladivostok."96 It has been suggested EU expansion is a more appropriate forum to incorporate these states. Since the EU emphasizes economic interlinkages, as opposed to security, it would be less likely to evoke a hostile Russian response. It has been suggested EU expansion is a more appropriate forum to incorporate these states. Since the EU emphasizes economic interlinkages, as opposed to security, it would be less likely to evoke a hostile Russian response.

Moreover, NATO must rea.s.sess its long-term nuclear plan. Nuclear weapons have formed part of NATO's collective defense policy since its inception, but its policies have grown contentious. While NATO has only three nuclear weapon states officially recognized by the nuclear Non-Proliferation Treaty (NPT), several others-including Belgium, Germany, Italy, the Netherlands, and Turkey-all host nuclear weapons on their territory as part of a sharing arrangement.

Every NATO member is a party to the NPT, which went into force in 1970, aiming to rid the world of all nuclear weapons. Under the NPT, states that did not possess nuclear weapons as of 1967 agreed not to obtain them, and states that did hold them agreed to reduce these weapons over time. NATO's weapons-sharing arrangement seemingly violates the principles of the NPT. Indeed, the necessity of maintaining weapons in Europe is debated by the host countries themselves, such as when former German Chancellor Gerhard Schroder called for removal of U.S. nukes in Germany in 2005.97 After the Cold War, NATO reduced its nuclear forces and no longer targets any single country with its weapons.98 Still, NATO defense ministers uphold the centrality of nuclear weapons to the organization's purpose. In a communique responding to Belgium and German calls for the withdrawal of nuclear weapons from their states' territories in April 2005, NATO ministers responded, "the fundamental political purpose of NATO's nuclear forces: to preserve peace and prevent coercion." Still, NATO defense ministers uphold the centrality of nuclear weapons to the organization's purpose. In a communique responding to Belgium and German calls for the withdrawal of nuclear weapons from their states' territories in April 2005, NATO ministers responded, "the fundamental political purpose of NATO's nuclear forces: to preserve peace and prevent coercion."99 In a heralded 2007 editorial, distinguished statesmen George P. Schultz, William J. Perry, Henry Kissinger, and Sam Nunn argued for accelerated disarmament, writing: "In today's war waged on world order by terrorists, nuclear weapons are the ultimate means of ma.s.s devastation. And nonstate terrorist groups with nuclear weapons are conceptually outside the bounds of a deterrent strategy and present difficult new security challenges."100 Similar ideas have been floated by U.K. Prime Minister Gordon Brown and Defense Secretary Des Browne who offered to host a conference for technical experts from all five recognized nuclear states to develop technologies for disarmament. Similar ideas have been floated by U.K. Prime Minister Gordon Brown and Defense Secretary Des Browne who offered to host a conference for technical experts from all five recognized nuclear states to develop technologies for disarmament.101 The Schultz group proposed a renewed commitment to the principles of the NPT, that is, continuing to reduce the nuclear forces in all states that possess them. They also suggest ratifying the Comprehensive Test Ban Treaty and initiating a multilateral effort to control the uranium enrichment process, which guarantees uranium for nuclear power reactors without allowing individual countries to carry out their own enrichment. The Schultz group proposed a renewed commitment to the principles of the NPT, that is, continuing to reduce the nuclear forces in all states that possess them. They also suggest ratifying the Comprehensive Test Ban Treaty and initiating a multilateral effort to control the uranium enrichment process, which guarantees uranium for nuclear power reactors without allowing individual countries to carry out their own enrichment.

The move toward eliminating nuclear weapons should be applauded, but the feasibility of a multilateral enrichment process is limited at best. A centralized enrichment process may lessen chances than any given country will produce nuclear material to use as weaponry, but deciding who gets the enrichment contracts has provoked much political bickering. As discussed earlier, it is difficult to argue against developing nuclear power in energy-deficient countries. But there are many other clean, viable alternatives to nuclear power. We could bypa.s.s the squabbling over multilateral enrichment by simply encouraging renewable power sources instead of the development of nuclear facilities.

More important, NATO should be spearheading the global s.h.i.+ft away from nuclear-based defense. That said, it was unfortunate to see five former NATO bigwigs-including General John Shalikashvili, the former chairman of the U.S. Joint Chiefs of Staff and NATO's ex-supreme commander in Europe; General Klaus Naumann of Germany; General Henk van den Breemen, a former Dutch Chief of Staff; Admiral Jacques Lanxade; and Lord Peter Inge of the United Kingdom-float a hawkish 2008 manifesto for NATO that underscored nuclear first-strike capability, yet another plan to fight the last war.102 At least the Shalikashvili group had enough insight to call for reform of NATO's inequitable funding arrangements and troop burdens. 103 103 Given that the United States disproportionately foots the bills and contributes troops, it accordingly has a more resounding voice setting the NATO agenda. The security challenges of the future demand equitable, effective, and coordinated action by nations with common interests. NATO has made impressive strides toward adapting itself to the demands of a changed and changing world, but its members should recognize that neither the alliance nor their own military establishments are perfectly suited to these demands. Fielding the requisite military capabilities will not come cheaply, nor will further inst.i.tutional changes within NATO be without cost. But it is well worth the effort, given the myriad security challenges we now face. Given that the United States disproportionately foots the bills and contributes troops, it accordingly has a more resounding voice setting the NATO agenda. The security challenges of the future demand equitable, effective, and coordinated action by nations with common interests. NATO has made impressive strides toward adapting itself to the demands of a changed and changing world, but its members should recognize that neither the alliance nor their own military establishments are perfectly suited to these demands. Fielding the requisite military capabilities will not come cheaply, nor will further inst.i.tutional changes within NATO be without cost. But it is well worth the effort, given the myriad security challenges we now face.

Given the new emphases, a common call is for NATO's member states to be structured for more rapid deployment, similar to the recommendation for UN peacekeeping forces. Achieving a more expeditionary posture entails expanding and modernizing NATO's transportation fleets (princ.i.p.ally military airlift, but also sealift), acquiring more mobile logistics a.s.sets, upgrading infrastructure in selected countries, and modernizing the forces themselves so that lighter, more mobile units can be more effective in a wide range of missions. This will entail, among other things, exploiting recent advances in surveillance, information processing, communications, and precision weapons so that the military a.s.sets of adversaries can be rapidly located, identified, and destroyed with minimal collateral damage. NATO must also develop a greater ability to deter and defeat chemical, biological, and nuclear weapons. Many military a.n.a.lysts and specialists, like the Rand Corporation, believe these "softer" plans will be far more important than new expensive hardware and weaponry for NATO's more modern posture.104 The Way Forward Today's security risks cannot be controlled by endless military spending, overstretched engagements, and unilateral postures. U.S. politicians have seemingly forgotten the craft of balancing commitments and resources responsibly, while accurately detecting and gauging risk in the twenty-first century. The refinements of our global security architecture will require far greater multinational cooperation than we have ever seen before, but in the end, this would strengthen and reinforce the capitalist peace.

U.S.-led efforts should refocus security policy on prevention-not fire-fighting. After all, it is easier (and cheaper) to detect smoke than save a burning house. The primary tools of our Macro Quantum defense paradigm will be multilateral bodies and the diplomatic and intelligence communities, synchronizing to diffuse the tensions of interstate compet.i.tion, monitor terrorist activity and prevent the spread of arms. In situations where violent conflict breaks out, NATO forces and UN peacekeepers will be prepared to act decisively and rapidly. The United States will continue to maintain a traditional military, but this army should be small, nimble, high-tech, and staffed by highly skilled personnel, as opposed to the c.u.mbersome, hardware-intensive beast we have now.

The United States and G7 should no longer try to unilaterally control threats through the use of force; that's merely attacking the symptoms of the world's ills versus cooperatively curing the root causes. We must begin to explore new approaches to diffusing old threats.Weaning the world off fossil fuels and promoting energy efficiency may be a far simpler solution to solving problems in the Middle East and reduce the necessity for military intervention there. A concerted effort on the energy front would also help ease global warming and the concomitant security and social threats. Likewise, a multip.r.o.nged approach to poverty could help reduce civil wars, terrorism, and nuclear proliferation. Modest global reforms such as bans on small arms production and more restrictive weapons exports could help curb global militarization and stem the worrying rise in intrastate conflict.

The proposals suggested here aim to leverage our mutual interdependence and encourage an equitable distribution of defense responsibilities in order to create a true collective security community. They seek to consider security from trunk to tail, not part by part. Twenty-first century realities put the world at risk of repeating Norman Angell's era. Without such modernizations and commitments, we may suffer worse consequences than what we witnessed in the twentieth century.

Electromagnetic Warfare and the Return of Star Wars? Since its inception in 1958, the National Aeronautics and s.p.a.ce Administration (NASA) has brought the United States moments of great national pride (such as the first manned moon landing in 1969), as well as some moments of shame (such as in 2007, when diaper-clad astronaut Lisa Marie Nowak was arrested for attempted kidnapping). Yet overall, NASA's image today is largely innocuous-a bunch of physics geeks gathering moon rocks in outer s.p.a.ce. Since its inception in 1958, the National Aeronautics and s.p.a.ce Administration (NASA) has brought the United States moments of great national pride (such as the first manned moon landing in 1969), as well as some moments of shame (such as in 2007, when diaper-clad astronaut Lisa Marie Nowak was arrested for attempted kidnapping). Yet overall, NASA's image today is largely innocuous-a bunch of physics geeks gathering moon rocks in outer s.p.a.ce.How soon we forget that NASA was founded in part to conduct military research in s.p.a.ce. During the Cold War, militarization of s.p.a.ce-once the stuff of science fiction-became an imminent threat as the Americans and Soviets raced to design and launch satellites and complex antimissile defense systems. After the fall of the USSR, military s.p.a.ce research slowed dramatically, but did not disappear entirely: In 1996, Commander-in-Chief of U.S. s.p.a.ce Command (now part of the U.S. Strategic Command) Joseph W. Ashy was quoted as saying: "We're going to fight from s.p.a.ce and we're going to fight into s.p.a.ce. That's why the U.S. has development programs in directed energy and hit-to-kill mechanisms. We will engage terrestrial targets someday-s.h.i.+ps, airplanes, land targets-from s.p.a.ce."kIndeed, it appears that the s.p.a.ce arms race may back on, although it is less clear whom we are racing. In December 2002, George W. Bush signed the National Security Presidential Directive, which essentially resumed the missile s.h.i.+eld research that had been discontinued a decade earlier. China seems keen to develop its own s.p.a.ce technologies, and in 2007, it carried out its first successful antisatellite test. j.a.pan, India, and several European countries also continue s.p.a.ce research that has potential military applications.Beyond missiles and missile defense, s.p.a.ce militarization includes the continued development of reconnaissance satellites and satellite navigation systems (not just for use in Range Rovers, GPS is an extremely useful military tool). s.p.a.ce also provides the venue for nuclear tests: High alt.i.tude nuclear explosions, reaching heights over 50 km, have been used largely for research purposes.These explosions are actually how the United States got the idea for electromagnetic weapons, another military innovation that eerily resembles something from Battlestar Galactica Battlestar Galactica. In 1962, the United States first exploded a nuclear bomb 20 miles up in the atmosphere. The gamma rays resulting from the explosion triggered an electromagnetic pulse that disrupted radio stations more than 700 miles away.l The pulse lasted for only a fraction of a second, but it showed that electromagnetic pulses were not only possible but also potentially useful. The pulse lasted for only a fraction of a second, but it showed that electromagnetic pulses were not only possible but also potentially useful.Today, a device known as a virtual cathode oscillator (vircator, for short) can mimic the effects of a nuclear explosion, generating high-powered microwaves (HPMs) to similar effect. Electromagnetic weapons, sometimes called e-bombs, can be used to destroy electronic systems, as well as temporarily incapacitate people. Although the weapons are still experimental, the U.S. Navy reportedly used electromagnetic pulse warheads during the opening hours of the first Gulf War to disrupt and destroy Iraqi electronics systems.m Fears that terrorists will use a rudimentary form of the e-bomb, or that Iran or China will develop their own version of the technology, are rumored throughout the security community. Fears that terrorists will use a rudimentary form of the e-bomb, or that Iran or China will develop their own version of the technology, are rumored throughout the security community.n In some ways, this echoes the naval arms race of 1906 with the British In some ways, this echoes the naval arms race of 1906 with the British Dreadnought Dreadnought s.h.i.+p. s.h.i.+p.The forward-looking time bias of the Macro Quantum paradigm requires us to antic.i.p.ate new threats and incorporate new technologies-whether they come from the sky or pulse through the air. As it stands, the U.S. military budget is heavily skewed toward fighter jets and naval carriers-the technologies of yesterday. To avoid becoming a modern-day Maginot Line, the military hardware budget should s.h.i.+ft to favor these tech-intensive applications.

Chapter 5.

Immigration People, People Anywhere

Immigration is the sincerest form of flattery.

Since our ancestors left the African savannahs two million years ago, migration and travel have been an inherent part of our human experience. We're hardwired for movement; it's a Darwinian instinct, a curious inclination, an encoded skill to wonder and to wander in search of new opportunities and possibilities. From the hunters and gatherers' trek from Africa to Eurasia and then across the Bering Straits to the Americas, to explorers' voyages and conquests during the Age of Exploration and colonization; from the slave trade of the eighteenth and nineteenth centuries, to Europeans' pilgrimages to new worlds, migration has long generated the issues and emotions we face in the Macro Quantum twenty-first century: excitement, fear, joy, tension, and even violence between newcomers and local populations.

Throughout history, human movement has frequently been the result of population pressures: famine, climate change, political instability, and powerful economic forces. While these continue to drive migration in the new millennium (see Figure 5.1 Figure 5.1), unprecedented demographic s.h.i.+fts and the economic success of developing countries have added unique twists to the ways-and whys-people move. First, aging populations in the G7 are creating a dearth of able-bodied workers and an overabundance of elderly. Second, while successful economies have always attracted immigrants, the source countries that once provided these immigrants are now becoming destinations. Both of these trends support the case for the creation of a coherent policy that views immigration as an opportunity rather than public nuisance.

This is easier said than done. Cross-border migration is a topic rife with contradictions and misconceptions. The far-reaching socio-economic and cultural ripples it provokes in both sending and receiving countries invite pa.s.sionate opinions from all involved. Even though roughly 10 percent of G7 populations are immigrants, some still view immigration as a zero-sum game. In the United States, this group is small-only an estimated 20 to 25 percent of voters who are mostly male, white, and lacking college degrees-but they have had a disproportionate voice in the media and in Was.h.i.+ngton. Yet these immigration naysayers are wrong to think migration is bad for the economy.1 Like in trade, all countries that partic.i.p.ate stand to benefit. Unfortunately, without an accurate understanding of the demographic imperatives driving migration and its actual cross-border effects, this vocal minority has drowned out proper public discourse, perpetuated stereotypes, and created a culture of discrimination. Immigrants are depicted as stealing jobs, and scientists' and scholars' research is viewed as a threat to national security. Like in trade, all countries that partic.i.p.ate stand to benefit. Unfortunately, without an accurate understanding of the demographic imperatives driving migration and its actual cross-border effects, this vocal minority has drowned out proper public discourse, perpetuated stereotypes, and created a culture of discrimination. Immigrants are depicted as stealing jobs, and scientists' and scholars' research is viewed as a threat to national security.

Figure 5.1 International Migration by Category, 2005 International Migration by Category, 2005 SOURCE: OECD International Migration Outlook 2007.

NOTE: For Information on the compilation of the standardised statistics, see www.oecd.org/els/migration/imo2007.startLink http://dx.dci.org/10.1787/015262881585.

Despite these misgivings, migration is a central link in today's worldwide web of persons, goods, customs, practices and ideas-an essential element of the elephant we're describing. We must accept the free movement of people along with the free movement of goods and capital; it is a necessary feature of the Macro Quantum world. Immigration policy needs to be viewed as a government tool to cultivate a workforce that will complement global labor force trends. This requires a revamping of both our att.i.tudes and approaches toward this age-old (albeit increasingly complicated) phenomenon.

The Ticking Age Bomb For virtually all of recorded time, populations everywhere have increased, and age structures were bottom-heavy (that is, more young than old). By contrast, today the populations of some countries are still growing rapidly, but many are stagnant, and some are even shrinking. Many are aging, while others remain young.

This era of divergence started with the Industrial Revolution, when some nations leapfrogged ahead of others economically. In many ways, the story of modern wealth creation and rising living standards is actually a story of changing demography. As countries become wealthier, fertility rates begin to decline. As Table 5.1 Table 5.1 shows, the richest countries typically have the smallest families, and vice versa. shows, the richest countries typically have the smallest families, and vice versa.

This transition was likely caused by changes in the social and economic logic of large families brought about by industrialization as well as changes in the roles of women, who were now viewed as potential workers in addition to (or even instead of) being mothers and wives.2 Urbanization and industrialization favors smaller families; instead of being another pair of hands to work the farm, a city child is another consumer of s.p.a.ce, time, and resources. And, because an industrial economy provides more opportunities for women to join the workforce and support themselves, it leaves them less time to rear children. In turn, this declining birthrate leads to higher wealth per capita, making more resources available to cultivate individuals-human capital-through education. Better educated workers result in higher productivity per capita and fuel the process of trade and economic development that we discussed in Chapter Two (wherein farmers become factory workers, factory workers become white-collar workers, and so on). Urbanization and industrialization favors smaller families; instead of being another pair of hands to work the farm, a city child is another consumer of s.p.a.ce, time, and resources. And, because an industrial economy provides more opportunities for women to join the workforce and support themselves, it leaves them less time to rear children. In turn, this declining birthrate leads to higher wealth per capita, making more resources available to cultivate individuals-human capital-through education. Better educated workers result in higher productivity per capita and fuel the process of trade and economic development that we discussed in Chapter Two (wherein farmers become factory workers, factory workers become white-collar workers, and so on).

Table 5.1 Rising Wealth, Shrinking Families Rising Wealth, Shrinking Families SOURCE: U.S. Census Bureau, CIA World Factbook 2007.

Across generations, these demographic trends were amplified. If a couple has only one child, and that child marries another single child, and they have only one child, the population quickly shrinks. Two sets of grandparents (four people) produce two children, who go on to have only one child: The population goes from four to two to one in only two generations. On the other hand, if a couple has three children, and each of those children has three, the population grows exponentially. And as Figure 5.2 Figure 5.2 shows, populations in the developing world are predicted to follow the latter pattern. shows, populations in the developing world are predicted to follow the latter pattern.

Figure 5.2 Predicted Population Growth, Developed vs. Less Developed Countries Predicted Population Growth, Developed vs. Less Developed Countries SOURCE: IMF.

What are the global implications as populations stagnate in rich countries but continue to grow in poor ones? First, the developing world has a chance to catch up to the G7 in terms of aggregate GDP. Think of the size of an economy with the simple equation: Population Population Per Capita Output = GDP Per Capita Output = GDP. The more people, and the more each individual can produce, the larger the economy. We've already seen that wealthy countries with smaller populations can invest more in human capital to increase per capita output, which results in a modest GDP gain. But if a developing country with a ma.s.sive population, such as India, is able to capture even a very small increase in efficiency (per capita output), it is multiplied by a population of 1.1 billion, and appears as a very big gain. This is why so many of the largest emerging markets-including Brazil, China, and India, among others-are also some of the larger economies in the world.

Another aspect of this demographic transition is that the United States and the G7 are aging. The lower fertility rate and longer life expectancy in the rich world has left developing countries with younger populations than their rich world counterparts. By 2025, one in five Europeans will be more than 65 years old,3 and more than a third of j.a.pan's population will be over 65, winning it the t.i.tle of oldest in the developed world. and more than a third of j.a.pan's population will be over 65, winning it the t.i.tle of oldest in the developed world.4 In extreme cases, such as in Italy, Germany, and j.a.pan, death rates now exceed birth rates; these countries are actually In extreme cases, such as in Italy, Germany, and j.a.pan, death rates now exceed birth rates; these countries are actually depopulating depopulating, as Figure 5.3 Figure 5.3 shows for j.a.pan. shows for j.a.pan.

With fewer and older people, the G7 labor force is shrinking fast. a.n.a.lysts estimate that to offset these worker declines would require a net migration of about 500,000 people per year for j.a.pan, 150,000 for Germany, and 100,000 for Italy.5 It is clear that aging, industrialized nations need to reconsider their immigration policies. These countries, currently the biggest players in the global economy, will experience stagnant (or negative) economic growth and a sharp decline in wealth if nothing is done. McKinsey believes by 2027 household financial wealth in the world's major economies will be roughly $31 trillion less than if historical population trends had continued. It is clear that aging, industrialized nations need to reconsider their immigration policies. These countries, currently the biggest players in the global economy, will experience stagnant (or negative) economic growth and a sharp decline in wealth if nothing is done. McKinsey believes by 2027 household financial wealth in the world's major economies will be roughly $31 trillion less than if historical population trends had continued.6 And what's more, aging populations stress pension and health care systems, as income-earners must support a growing number of retirees. In the United States, the ratio of workers to retired people-the "dependency ratio"-was 4.5:1 in 1941.7 By 1970, this had dropped to 3:1, then is estimated to fall to 2.7:1 by 2009, and it is expected to hit 1.6:1 by 2050 unless policies change. In Germany the current ratio of 2.3:1 is expected to fall to 1.3:1 by 2030. By 1970, this had dropped to 3:1, then is estimated to fall to 2.7:1 by 2009, and it is expected to hit 1.6:1 by 2050 unless policies change. In Germany the current ratio of 2.3:1 is expected to fall to 1.3:1 by 2030.8 In j.a.pan, a steeper falloff occurred: In 1990, the country had 5.8 workers per retiree, but this dropped to 3.9:1 in 2000 and is heading to 2.1:1 by 2025. In j.a.pan, a steeper falloff occurred: In 1990, the country had 5.8 workers per retiree, but this dropped to 3.9:1 in 2000 and is heading to 2.1:1 by 2025.

Figure 5.3 j.a.panese Population Transition j.a.panese Population Transition SOURCE: Statistics Bureau MIC.

Since 2002, the United States has experienced reduced private savings and a growing fiscal (government) deficit along with a growing current account deficit, reflecting increased borrowing from abroad. U.S. imports of goods and services continue to outstrip U.S. exports by a wide margin, leaving U.S. households and firms to borrow the difference on international capital markets. Meanwhile the U.S. federal fiscal deficit, augmented by ambitious military adventures abroad, registered at 3 percent of 2007 GDP. Because private households aren't saving, and the government isn't saving, the question becomes, who is going to cover the costs of retirement for an increasing number of Americans? The 2007 Social Security Trustees Report already raised the concern that this U.S. benefits program will face ma.s.sive annual deficits in as little as a decade if no reforms are made.9 Fortunately the recent metamorphosis of the developing world from a net borrower to a net lender has eased the industrial aging boom. The excess savings of EMs have been held in foreign currency reserves, often invested in U.S. treasuries. But this bailout cannot last forever. In the future, cross-border savings flows may not fill such deficits for two reasons: First, the world's current supersavers represent only a small piece of the global financial pie. In China for example, financial a.s.sets have been growing extraordinarily rapidly (14.5 percent compounded annual rate over the past decade), but its share of global financial a.s.sets is still only 4 percent.10 Second, many emerging markets are aging, too. Between 2006 and 2030, the number of older people in less developed countries is projected to increase by 140 percent as compared to an increase of 51 percent in more developed countries. Second, many emerging markets are aging, too. Between 2006 and 2030, the number of older people in less developed countries is projected to increase by 140 percent as compared to an increase of 51 percent in more developed countries.11 China is expected to have 265 million 65-year-olds by 2020, partially the result of the one-child policy, implemented in 1979. China is expected to have 265 million 65-year-olds by 2020, partially the result of the one-child policy, implemented in 1979.12 Russia's working-age population is expected to shrink 34 percent by 2050, and the country's population is already decreasing by 700,000 people per year. Russia's working-age population is expected to shrink 34 percent by 2050, and the country's population is already decreasing by 700,000 people per year.13 These nations will have to use their surpluses to deal with their own pension issues; they will not be able to support U.S. overspending forever. These nations will have to use their surpluses to deal with their own pension issues; they will not be able to support U.S. overspending forever.

Immigration could partially offset the problem of decreasing populations and provide an injection of fresh economic activity. It can also help meet the demand for health care providers, a.s.sisted-living facility workers, and other professions uniquely required by G7 aging populations. With no changes in the current restrictive immigration policy, the G7 will soon face unsavory pension reform decisions, including delaying formal retirement ages or reducing transfer payments, given increased life expectancies.

New Wealth, New Destination Countries The prosperity of formerly poor countries is altering immigration patterns. Greater political stability, exploding economic opportunity, and the promise of social mobility for citizens abroad is encouraging the return of national diasporas. In fact, many people who left their countries seeking brighter economic prospects a generation ago are going home. Moreover, the children of those immigrants, who were born in the United States and elsewhere, are making the decision to immigrate to their parents' homelands. Take India as an example. Today there are at least 20 million Indians scattered throughout the world, most of whom migrated to the United States, the United Kingdom, and the United Arab Emirates.14 Within the past decade, though, a new destination has appeared atop the list: India. Nonresident Indians, known as NRIs, have turned into "returned nonresident Indians" or RNRIs. Within the past decade, though, a new destination has appeared atop the list: India. Nonresident Indians, known as NRIs, have turned into "returned nonresident Indians" or RNRIs.15 In the technological hub of Bangalore alone, it is estimated that between 30,000 and 40,000 RNRIs have come home within the past 10 years, reflecting a radical change in migration patterns. In the technological hub of Bangalore alone, it is estimated that between 30,000 and 40,000 RNRIs have come home within the past 10 years, reflecting a radical change in migration patterns.16 When droves of Indians packed their bags in the 1960s and 1970s, it was a combination of low pay, a lack of technological jobs, and a frustrating, socialist economy that convinced them to go. Highly skilled NRIs from India, usually the graduates of elite technical universities, tended to have a common destination, especially in the 1990s: Silicon Valley. Indians arguably became the most sought after group of employees in the Valley, and many became millionaires there. And while it is speculated that there are more successful entrepreneurs of Indian origin in Silicon Valley than in any city in India, this is changing.17 The expertise and work experience gained by NRIs abroad can now be used back home. Since the 1990s, foreign direct investment (FDI) has taken off in India, partially the result of a more open and deregulated economy. Technology development now happens in India while technology consumption happens in the United States. The expertise and work experience gained by NRIs abroad can now be used back home. Since the 1990s, foreign direct investment (FDI) has taken off in India, partially the result of a more open and deregulated economy. Technology development now happens in India while technology consumption happens in the United States.18 At the same time foreign companies are expanding into India, Indian companies have been going global, expanding abroad, giving a double boost to the national economy. The country's companies have moved beyond the phase of simply replicating U.S. pharmaceuticals and European automobiles. Instead, they are now becoming some of the world's leading innovators in areas such as biopharmaceuticals and automotive engineering. The result is what some have described as a "silent scientific repatriation" in India. At the same time foreign companies are expanding into India, Indian companies have been going global, expanding abroad, giving a double boost to the national economy. The country's companies have moved beyond the phase of simply replicating U.S. pharmaceuticals and European automobiles. Instead, they are now becoming some of the world's leading innovators in areas such as biopharmaceuticals and automotive engineering. The result is what some have described as a "silent scientific repatriation" in India.19 This returnee trend is popping up in other countries as well. As FDI and outsourcing drive economic growth, some expatriates are being sent back by their employers to set up outsourcing operations throughout Asia, Latin America, Africa, and the Middle East.20 Many returned expats have found that the best way to move up is to move back. Many returned expats have found that the best way to move up is to move back.21 The returnees enjoy prestige in their homelands, often gaining some of the best-paid, most desired jobs.They are sought by companies on both sides of the globe to connect U.S. and G7 customers and workforces, often bridging cultural divides to accelerate economic integration. The returnees enjoy prestige in their homelands, often gaining some of the best-paid, most desired jobs.They are sought by companies on both sides of the globe to connect U.S. and G7 customers and workforces, often bridging cultural divides to accelerate economic integration.

In addition to returnees, emerging markets now deal with an influx of other diverse immigrants. Like in trade, a steady flow of "South-to-South" migration that never touches the rich world has developed. Although the United States continues to be the number one destination country for immigrants, its lead is shrinking. In 2005, among the 20 countries with the highest numbers (and percentages) of immigrants living within their borders were Ukraine, Saudi Arabia, India, Pakistan, the United Arab Emirates, Israel, Kazakhstan, Cote d'Ivoire, and Jordan.22 (See (See Table 5.2 Table 5.2) For example, Algeria hosts immigrants representing more than 44 nationalities, and Turkey has more than 600,000 immigrants in transit.23 Countries like China and India are now among both the largest sources and destinations for immigrants. Countries like China and India are now among both the largest sources and destinations for immigrants.

Table 5.2 2000-2005 Net Migration, Largest Inflows and Outflows in Thousands 2000-2005 Net Migration, Largest Inflows and Outflows in Thousands SOURCE: UN Data.

Today, countries of destination are as diverse as countries of origin.24 As the line between source and destination countries blurs, immigration becomes admittedly more complex, but mutually beneficial cooperation at the multinational level becomes more feasible. As the line between source and destination countries blurs, immigration becomes admittedly more complex, but mutually beneficial cooperation at the multinational level becomes more feasible.

Trends and Implications for the United States and the G7 Some old patterns persist. In developed countries, permanent immigration for family or work-related reasons continues to increase. In the United States, 70 percent of immigrants moved to join family members, while in Western Europe, the bulk of the immigrant population was seeking better employment opportunities.25 Differing from the past, the number of global asylum seekers has been steadily declining. Differing from the past, the number of global asylum seekers has been steadily declining.26 This group has traditionally been one of the larger immigrant categories, reflecting people displaced by political turbulence in their home countries. Today, these refugees are disproportionately represented in the immigrant populations in Africa and Asia but shrinking elsewhere. This group has traditionally been one of the larger immigrant categories, reflecting people displaced by political turbulence in their home countries. Today, these refugees are disproportionately represented in the immigrant populations in Africa and Asia but shrinking elsewhere.

With growing economic opportunity overseas, the supply of qualified immigrants available to the United States and G7 will naturally decline. But because Americans and Europeans today are better educated, older, and less fertile than ever before, the need for both skilled and unskilled workers will only continue to grow. Facing a tighter labor market and low national savings, the United States (as well as Europe and j.a.pan) must now strategize to strike a harmonious balance between what it produces domestically, what it imports, who it engages as immigrants, and what it provides its retirees.

As free trade continues, it is almost guaranteed that certain labor-intensive industries will move abroad. Eighteenth-century economist David Ricardo would have called this process of increasing specialization and trade "capturing comparative advantage," but today we refer to it by the politically unpalatable name of "outsourcing." Unpopular as it may be, it makes sense for the G7 to let some industries go, concentrating instead on businesses that require greater technological capability and less labor.

Outsourcing does eliminate some lower paying jobs, as critics point out, but by redistributing resources to the most efficient economic sectors, it can result in the creation of even more better paying ones, expanding the economic pie for everyone. This is what the Bureau of Labor Statistics (BLS) calls "net job creation." The BLS found that starting around 1990, coinciding with the advent of outsourcing, labor productivity climbed rapidly for an unprecedented 15-plus years. At the same time, more than 23 million jobs were created in excess of those lost in the United States. In the future, even as labor intensive manufacturing continues to move away, total U.S. employment is expected to increase by 10 percent from 150.6 million in 2006 to 166.2 million in 2016. The net increase of 15.6 million jobs will come almost exclusively from services-like healthcare, education, and hospitality-which cannot be outsourced nor done by machines. This should allay some irrational fears of job loss:While a call center can be moved to Calcutta, your hairdresser, dentist, and kindergarten teacher certainly cannot .27 Even with outsourcing, wealthy nations will still have to compensate for their aging populations by bringing in new workers. A shrinking working age population will push up wages for these new high-skill service sectors; skilled domestic workers will vie for these positions, thereby leaving a gap in low-skill jobs. A greater number of elderly means physically intensive jobs will go unfilled. What's more, the United States and other countries with aging populations might need to raise retirement ages to keep worker-retiree ratios in better balance or cut back on long-term benefits. Americans are living longer than ever before, but the retirement age (currently 62) hasn't changed since 1983. The average American born in 1983 could expect to live to 74.7; today life expectancy at birth is 78.1 years. As of April 2008, the average retired worker received $1,083 in monthly benefits.28 If the United States doesn't scale back benefits or raise the retirement age, these extra 41