In my last post I ended it by saying “…you need to start taking the long view about your life and the things you depend on.” What are those things? At the most generic level, they are these five things: physical health, financial security, social & professional relationships, knowledge or skill and the environment. 

The same five priorities are constants at all social levels – global, national, regional, business and personal – in differing forms. Given that the world is increasingly globalized and interdependent, and that this has significant impact on where you study, work or retire, there are a half dozen global issues worth considering when planning at any level. Lets take water scarcity, oil consumption and population trends as examples.

This is a map of world water scarcity trends from 1980 to 2015. Notice what happens to India.Source: U.S. National Intelligence Council, Global Trends 2015 report.

Below is an updated and more detailed version of water scarcity trends, projecting to 2025, just fifteen years from today.

 
Source: Foreign Policy magazine article - ”Not A Drop To Drink?“

India’s current population is around one billion people. By 2020 they are expected to add approximately three to four hundred million more souls, or about the total population of the United States, thus exceeding the growth rate of China. In third place by the way, is Pakistan and notice in the above maps how their water situation is expected to go. By 2030 India’s oil consumption is expected to double. Meanwhile, India is rapidly running out of water. See BBC news article dated 7 July 2009: Mumbai Faces Acute Water Shortage. It is my opinion, that due to population growth and shrinking the Himilayan glaciers, ALL regions of India will suffer catastrophic water scarcity in the near future.

As an aside, Mexico has almost identical problems (see maps above) to which we can add a drug war.

These trends – water scarcity, energy consumption and demographics – must be taken into consideration with regards to your future education, career and retirement plans. They will not just effect India and Mexico. They will effect your future. They are things in your environment that you depend on and that you can no longer afford to ignore or take for granted.

Next I will review what I consider to be key economic issues that will effect us all, regardless of our geographic location, in the coming years.

Its not natural for humans to think in long terms. We aren’t programmed that way. Our operating system is still the same one that was refined by evolution about a million years ago to function optimally in the present moment. And that’s a big problem in the modern world. Let me give you an example.

Our bodies are programmed to really, really like any form of sugar or fat because of their high calorie content. The reason is because, for animals, sugars and fats are rare and valuable, so our bodies are programmed not just to like them, but to be able to eat more than we need at the moment and store it for later. That is the best biological strategy when high calorie containing foods are rare. Now that high calorie foods are everywhere, we have a problem. The only solution to overcome this problem is to have our rational brain override our evolutionary programming. In other words, to take the long view.

Now lets apply that issue to your life span and the availability and price of oil. This is important to any boomer who plans on living a few more decades but more important to Gen-X and critical to millenials.

This chart shows how many billion barrels of oil each country has remaining (blue) and about how many more years it will last (purple). On average all the worlds oil reserves together are estimated to last about 43 years longer.

Now mind you, its not as if everything will remain the same until one day the last gas tank is filled and then suddenly we have a problem. We’ll have problems long before that, the minute demand exceeds supply, likely within ten to fifteen years. Also, consider the fact that these figures are reported by the politicians of each country and it is in their interests to report a very positive outlook.

Lastly, look at the years remaining in U.S. oil reserves. Armies require gasoline to operate. Without gasoline, the U.S. has no army. Do you think that is going to happen? How old will you be in ten more years?

The chart above is base on current consumption rates. Let me quote from the U.S. military’s Joint Operating Environment document published in November 2008 with regard to future energy supplies: “By the 2030s, demand would be nearly 50% greater than today. To meet that demand, even assuming more effective conservation measures, the world would need to add roughly the equivalent of Saudi Arabia’s current energy production every seven years.”

And which western country do you think consumes the most oil per person?

Source: BP Statistical Review of World Energy 2009

Since just about everything about your life depends on oil, this information is worth considering seriously. That is the understatement of the century. However my point here is not really about oil. It’s that you need to start taking the long view about your life in general and about the assumptions you have about the things you depend on.

In July, the Canadian government bailed out the the pulp & paper industry to the tune of $1billion. The graph below is why.

Source: BC Stats Business Indicators April 2009

The western Canadian economy, in a manner similar to the U.S., has  been hit hardest after the auto industry region. In both the U.S. and Canada, the foresty industry was already struggling (notice you aren’t reading this in a newspaper) and the economic downturn then hit the industry hard. In BC a lot of jobs, and therefore local spending, depend on forestry. Since their stimulus plan depends on getting consumers spending again, the feds had to bail out the forestry sector (the west) as well as the auto sector (the east).

Even though four out of five jobs in BC are in the services industries, a lot of those jobs are government jobs. The second biggest provider of employment income in the province is forestry. You can understand the simple reality of our economy very easily in the map below. This is a map of income dependencies. These regions depend primarily on these industries for income. This is why the feds have bailed out the forestry sector.

Source: British Columbia Local Area Economic Dependencies: 2006 (Published March 2009)

Why do you need to know this? If you live in one of our large urban areas like the lower mainland, its easy not to appreciate the simple truth about jobs and tax revenues in BC. Just as we now depend on globalized trade, the price of oil and our American cousins, we also depend on the forestry industry. By the way which part of the province were you planning on working in after you graduate? Is your business or are your future plans dependent in some way on this industry? If the industry does not recover, what might the impact be? What might be some alternative sources of income in forestry dependent areas? What opportunities are to be found in this crisis?

If you are considering a university education I recommend reading this short paper (five pages) from the C. D. Howe Institute, “Extra Earning Power: The Financial Returns to University Education in Canada” which compares university degrees from a financial ”Return On Investment” (ROI) perspective. The graphs below are from that document .

Rates of Return for Males, Canada, 1990, 1995 and 2000

Rates of Return for Females, Canada, 1990, 1995 and 2000

The above linked document provides a breakdown by gender, type of degree, and field of study. I do realize that there are motives other than money for attending university however one should decide knowing as much as possible.

Since the biggest bang for your buck is a bachelor’s degree in health science or a degree in medicine, and there is going to be a shortage of health care workers starting, well, now, then from a financial security perspecive either of those choices look like a pretty good choice for a career. I will also point out that anyone in ANY of the three current generations could enroll in a bachelor’s degree health related program now and in four years come out with a very secure new career with an 11-21% ROI.

Please watch this short video (2:58) by math professor Arthur Benjamin about why statistics is the most important kind of math to learn. It’s the reason I use it in this blog to help you with your life planning.

Source: TED (Technology, Education & Design) Conference 2009