Ellison Chair in International Floriculture
Ellison Chair in International FloricultureTeaching, Research, Extension and Service

Last chance to complete water-related survey for nursery and greenhouse growers

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The University of Maryland is involved (along with several land-grant university partners) in a USDA-funded project to determine how new sensor-based irrigation networks can benefit the ornamental plant production industry.  We would like your help to better understand current practices in the industry, and have developed a survey that asks questions about water, nutrient, and runoff practices in the industry, and about how the industry can take advantage of recent and anticipated advances in sensor-based irrigation networks.

The goal of this research is to use your answers, along with those provided by other growers across the country, to create baseline information, and to determine the potential of these systems to improve specific greenhouse, container nursery, and field nursery practices.  This information will help us to document current irrigation and nutrient use practices, and help measure the impacts of changing practices in the future.  It will also help us as researchers and as an industry to define our research goals at the local, regional, and national levels, to help growers address current and future needs.

We know your time is valuable and worked hard to minimize the amount of your time it will take to complete the survey.  However, the survey still requests a lot of information.  We estimate that the survey should take approximately 20-40 minutes to complete depending on how your operation is set up. Your participation is the key to the success of this project.

All information you provide will be kept STRICTLY CONFIDENTIAL, and only summary information about the industry and aggregated estimates of economic and environmental impacts will be presented. Your individual responses will not be shared with any state or federal regulatory agency, and will be protected as required by Federal law, as part of the University of Maryland human subjects agreement that you will be asked to agree to before you begin the survey.

Access the survey by clicking the link below (or typing the address into your internet browser): https://www.research.net/s/ornamental

Any questions or comments can be directed to John Majsztrik: jcmajsz@umd.edu (preferred) or by phone (301) 405-2778

3 misconceptions that need to die

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HT to Sid Raisch for this link — http://www.fool.com/investing/general/2011/10/25/3-misconceptions-that-need-to-die.aspx, Morgan Housel, October 25, 2011

At a conference in Philadelphia earlier this month, a Wharton professor noted that one of the country’s biggest economic problems is a tsunami of misinformation. You can’t have a rational debate when facts are so easily supplanted by overreaching statements, broad generalizations, and misconceptions. And if you can’t have a rational debate, how does anything important get done? As author William Feather once advised, “Beware of the person who can’t be bothered by details.” There seems to be no shortage of those people lately.

Here are three misconceptions that need to be put to rest.

Misconception: Most of what Americans spend their money on is made in China.

Fact: Just 2.7% of personal consumption expenditures go to Chinese-made goods and services. 88.5% of U.S. consumer spending is on American-made goods and services.

I used that statistic in an article last week, and the response from readers was overwhelming:Hogwash. People just didn’t believe it.

The figure comes from a Federal Reserve report. You can read it here.

A common rebuttal I got was, “How can it only be 2.7% when almost everything in Wal-Mart(NYSE: WMT  ) is made in China?” Because Wal-Mart’s $260 billion in U.S. revenue isn’t exactly reflective of America’s $14.5 trillion economy. Wal-Mart might sell a broad range of knickknacks, many of which are made in China, but the vast majority of what Americans spend their money on is not knickknacks.

The Bureau of Labor Statistics closely tracks how an average American spends their money in an annual report called the Consumer Expenditure Survey. In 2010, the average American spent 34% of their income on housing, 13% on food, 11% on insurance and pensions, 7% on health care, and 2% on education. Those categories alone make up nearly 70% of total spending, and are comprised almost entirely of American-made goods and services (only 7% of food is imported, according to the USDA).

Even when looking at physical goods alone, Chinese imports still account for just a small fraction of U.S. spending. Just 6.4% of nondurable goods — things like food, clothing and toys — purchased in the U.S. are made in China; 76.2% are made in America. For durable goods — things like cars and furniture — 12% are made in China; 66.6% are made in America.

Another way to grasp the value of Chinese-made goods is to look at imports. The U.S. is on track toimport $340 billion worth of goods from China this year, which is 2.3% of our $14.5 trillion economy. Is that a lot? Yes. Is it most of what we spend our money on? Not by a long shot.

Part of the misconception is likely driven by the notion that America’s manufacturing base has been in steep decline. The truth, surprising to many, is that real manufacturing output today is near an all-time high. What’s dropped precipitously in recent decades is manufacturing employment. Technology and automation has allowed American manufacturers to build more stuff with far fewer workers than in the past. One good example: In 1950, a U.S. Steel (NYSE: X  ) plant in Gary, Ind., produced 6 million tons of steel with 30,000 workers. Today, it produces 7.5 million tons with 5,000 workers. Output has gone up; employment has dropped like a rock.

Misconception: We owe most of our debt to China.

Fact: China owns 7.8% of U.S. government debt outstanding.

As of August, China owned $1.14 trillion of Treasuries. Government debt stood at $14.6 trillion that month. That’s 7.8%.

Who owns the rest? The largest holder of U.S. debt is the federal government itself. Various government trust funds like the Social Security trust fund own about $4.4 trillion worth of Treasury securities. The Federal Reserve owns another $1.6 trillion. Both are unique owners: Interest paid on debt held by federal trust funds is used to cover a portion of federal spending, and the vast majority of interest earned by the Federal Reserve is remitted back to the U.S. Treasury.

The rest of our debt is owned by state and local governments ($700 billion), private domestic investors ($3.1 trillion), and other non-Chinese foreign investors ($3.5 trillion).

Does China own a lot of our debt? Yes, but it’s a qualified yes. Of all Treasury debt held by foreigners, China is indeed the largest owner ($1.14 trillion), followed by Japan ($937 billion) and the U.K. ($397 billion).

Right there, you can see that Japan and the U.K. combined own more U.S. debt than China. Now, how many times have you heard someone say that we borrow an inordinate amount of money from Japan and the U.K.? I never have. But how often do you hear some version of the “China is our banker” line? Too often, I’d say.

Misconception: We get most of our oil from the Middle East.

Fact: Just 9.2% of oil consumed in the U.S. comes from the Middle East.

According the U.S. Energy Information Administration, the U.S. consumes 19.2 million barrels of petroleum products per day. Of that amount, a net 49% is produced domestically. The rest is imported.

Where is it imported from? Only a small fraction comes from the Middle East, and that fraction has been declining in recent years. So far this year, imports from the Persian Gulf region — which includes Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates — have made up 9.2% of total petroleum supplied to the U.S. In 2001, that number was 14.1%.

The U.S. imports more than twice as much petroleum from Canada and Mexico than it does from the Middle East. Add in the share produced domestically, and the majority of petroleum consumed in the U.S. comes from North America.

This isn’t to belittle our energy situation. The nation still relies on imports for about half of its oil. That’s bad. But should the Middle East get the attention it does when we talk about oil reliance? In terms of security and geopolitical stability, perhaps. In terms of volume, probably not.

A roomful of skeptics
“People will generally accept facts as truth only if the facts agree with what they already believe,” said Andy Rooney. Do these numbers fit with what you already believed? No hard feelings if they don’t. Just let me know why in the comment section below.

Fool contributor Morgan Housel owns shares of Wal-Mart. Follow him on Twitter @TMFHousel. The Motley Fool owns shares of Wal-Mart Stores. Motley Fool newsletter services have recommended buying shares of and creating a diagonal call position in Wal-Mart Stores. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

The Earth at Population 7 Billion

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The United Nations Population Fund estimates that the world’s 7 billionth person was born Oct. 31. Understanding demography is a core part of STRATFOR’s work, as it colors a great many factors, from whether a state can balance its budget to whether a state will be capable of defending itself.

Conventional wisdom tells us that the increase in population is putting pressure on the global ecosystem and threatening the balance of power in the world. As the story goes, the poorer states are breeding so rapidly that within a few generations they will overwhelm the West and Japan — assuming the environment survives the rising tide of people.

That thinking obscures a far more complex reality. Four factors help properly analyze the impact of population growth. First, populations are indeed cresting in the developed world — and appear already to have done so in Germany and Japan. Because of large gains in life expectancy, these cresting populations are first aging. Third, while a senior citizen and an infant both count as a single person from a census point of view, only one of them can one day have children — in other words, aging is the last step before a population begins declining. The developed world is moving into an era of shrinking populations. And before anyone thinks that the masses of the developing world are about to take over, the demographic profiles of the major developing states are only three decades behind the developed world.

So while the absolute population of the developed world will crest within the next generation, that of the world as a whole will level out and begin to decline sometime in the next two to three generations.

This trend of aging, followed by shrinking populations, is already rewriting the geopolitical environment. A normal population structure is tilted toward the young: there are many babies, fewer children, still fewer young adults, and so on. Young adults support children, but they are at the low ebb of their earning potential. Young adults’ large numbers plus low earning power combine with their high living costs to make them debtors. Older adults have finished raising children, and their earning power is at its zenith: They are a society’s creditors. A typical population structure features fewer mature adults than young adults, which leads to weak capital supply but strong capital demand. Loans are expensive, borrowing is difficult and cost efficiency is of crucial importance. This was the normal state of affairs globally in the 1960s, 1970s and 1980s.

The modern era’s trend of aging-but-not-yet-declining populations has changed all of these calculations. There are many more mature adults in all developing countries than there are young adults. Capital supply is robust as those mature workers save for their retirement and pay more taxes than when they were younger (or both). But there are fewer young families to absorb the available capital. In such a capital-rich environment, borrowing costs plummet, leaving substantial room to lower taxes. Economic growth greatly increases when money management becomes a booming industry as every saver looks for ways to earn returns on investments. Sectors become overinvested and bubbles form; volatility and financial crashes become more common.

Demography drove economies to this condition in the 1990s, when credit (and thus growth) increased. In the 2000s, mature workers produced a good deal of excess capital. The 2010s find the global economy correcting itself after 20 years of excess-capital-driven growth — at the same time as mature workers are retiring and leaving their capital-supplying role.

A darker period is likely to dawn by the 2020s. Most of those high-wage earners will have retired — they will no longer supply capital and instead will depend on the state to issue their pensions. The cost of capital will invert strongly. The generation born between 1964 and 1979 — characterized by its low numbers — will be responsible for supplying capital. Not only will they have to fund the younger generations, they also will have to support the pensions and geriatric-support programs created by their predecessors. Since the developing world’s aging process lags about 30 years behind that of the developed world, this same generation will act as the primary capital suppliers to the entire world.

The developing world started to age too late. Its countries will lack enough mature workers to generate the capital needed to replace that which can no longer be imported from the developed world. The developing world will experience the financial challenges of the developed world, without having built up the infrastructure and industrial base the developed world has had for three generations. Such capital scarcity threatens to halt growth across the poorer parts of the planet. It will also make for strange bedfellows: The only hope the developed world’s ’64-’79 generation will have to meet their bills is to import more taxpayers. Perhaps the most unexpected outcome of population patterns is that the developed world will have a massive interest in attracting immigrants.

The aforementioned analysis is what the picture will look like on a global scale — but with demography, every country and region in many ways constitutes a unique reality. The trends that shape demography are affected by geography and culture. The overarching trend is of a shrinking global population, but there are dozens of standalone stories where that trend is either bucked, magnified or otherwise interpreted through the lens of the locality. Here are five examples:

Russia’s population started shrinking some 20 years ago due to the influence of alcoholism, drug abuse and communicable diseases rather than due to having achieved affluence. That difference in causality whittled away the morale of Russia’s potential young parents so deeply that Russia now has more citizens in their 20s, 30s, even their 60s, than it has teenagers. Russian power may well be in sharp ascendance currently, but it is entirely likely that in about 10 years time, the Russians will lack the people they need to man a sizable army, or perhaps even to maintain a modern society.

India is the only major developing state that is still experiencing a normal population profile (in which there are more babies than children and more children than young adults, etc.). This could make India the world’s workforce, but the country probably will soon be the target of huge citizen-recruitment programs from the rest of the world. Unless India can make a significant leap in the quality of its mass education, the coming brain drain will deplete the country’s skilled labor.

China’s population stands at more than a billion, but after thirty years of the one-child policy and of population movements from rural to urban areas, the Chinese birthrate has fallen dramatically. Only Japan is aging faster than China. Even if STRATFOR is wrong and the Chinese economy does not collapse over the next few years, it will struggle mightily to survive the 2020s, when China faces sharp qualitative labor shortages. China’s economy depends on attractive labor costs — the looming bottoming out of the cheap, low-skilled labor pool could be a deathblow.

Brazil may not turn out as capital-starved as much of the developing world. The country’s demographic has not inverted, but merely slowed: its number of 20- and 30-year-olds is similar to its number of teenagers and children. In two decades, Brazil may have a population structure that makes it relatively capital rich (by the standards of the world in 2040). It could well become the only major developing state that can generate its own capital and not depend on the developed world’s shrinking capital supplies. And thanks to the local opportunities that local capital can create, it might avoid losing too much of its skilled labor to foreign recruitment.

The United States is the only developed state that still can claim a positive demographic profile, and this is before factoring in immigration. In the developed world, only New Zealand is younger than the United States, and the United States is the only developed state that has a young generation strong in numbers — those born between 1980 and 1999 are second in number only to the baby boomers, who are currently in the process of retiring. As such, the United States not only faces the least severe shift from capital excess to capital scarcity, it is also the only developed state that can hope to grow out of the current demographic period in anything less than sixty years. In the 2020s, the United States will have a good number of citizens in their 30s, who are capable of having children. Across Europe, the dominant generation at that time will consist of people in their 50s and 60s. America’s adjustment will still be difficult, but it alone among the major powers will still have excess capital and a younger generation capable of supporting its economic systems.

STRATFOR would like to extend its thanks to the fine people at the U.S. Census Bureau who collect, organize and share their statistics on global population. You can access their data here.

The State of Horticulture Programs

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This recent post from Lawn & Landscape News provides an excellent overview of the state of university horticulture programs across the country. Well worth the read.

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Earlier this year, Newsweek listed the Top 20 most useless degrees. And sitting close to the top at No. 2 was horticulture. (Don’t feel bad, journalism was No. 1.)The ranking was based on data that included the industry’s median starting salary ($35,000), median mid-career salary ($50,800) and percentage change in the number of jobs from 2008-2018 (-1.74). And the ranking reiterated many of the reasons university and college horticulture programs say they’re having trouble attracting students – the public’s perception is salaries are too low and a degree is, well, useless for a career that could involve planting and mowing.”Parents are sending their children to business school – the business schools are swelling,” says Roger Harris, professor and head of the horticulture department at Virginia Tech University. “There’s a perception that people don’t know what horticulture is … and there’s a perception that they can’t make a good living, which is totally false. Our students are making near the top of the college, as far as starting salaries. They’re working for competitive companies.”

Enrollment NumbersHere is a breakdown of undergraduate student numbers for the schools we spoke with. Note: the list is an apples to oranges comparison. For example, Brigham Young is strictly landscape management, while Colorado State is horticulture and landscape architecture.Brigham Young Universityexpects fewer than 200 students in its landscape management program for the upcoming schools year. In 2003, it had about 75 students.

Colorado State University has seen a stable number of about 400 students over the years.

Michigan State University’s enrollment has declined from 146 in 2005 to 110 in 2010. It’s two-year program had 112 students in 2005 and 70 in 2010.

Texas A&M University has about 200 students in its horticulture major and eight years ago it had about 140.

Penn State University’s horticulture program has been declining for nine years and has about 45 students. It’s landscape contracting program has stayed steady with about 120 students.

Virginia Tech University has about 85 students compared to about 150 15 years ago.

Advancing programs. As federal and state budgets were cut, it’s no surprise the trickle-down effect of that tightening hit hard many universities and colleges. Hort programs have seen budget cuts as high as 19 percent. Those who haven’t seen decreases have worked with flat budgets, which essentially equates to a reduction.

The cuts have meant the loss of faculty, extension and research programs. It’s meant horticulture departments merged with other departments. And it’s meant an increasing number of programs have looked externally for non-state sources of funding.

For example, at Penn State, tree care companies and the fruit and vegetable industries have helped pay either for teachers’ salaries or operating expenses. A trend Rich Marini, professor and head of the horticulture department, hopes the rest of the industry catches on to.

“The nursery and landscaping industries have been almost totally non-supportive in the past,” he says. “I think the future for the landscape and nursery programs at most universities (is) as tenured track people retire, they will probably be replaced with – as long as we have enough students – instructors, nine-month appointments, instructors with one to three year contracts.”

The changes in recent years haven’t all been gloom. Departments retooled to meet the needs of incoming students and the industry.

A glimpse of how things have changed in the last decade: Michigan State University added a Sustainable and Organic Horticulture concentration. Virginia Tech’s landscape contracting students receive a minor in entrepreneurship.

Colorado State University changed the name of its landscape horticulture major to environmental horticulture and added a landscape business concentration. Why the change?

“There were two main reasons: One was that name better reflects the nature of the program in a broader sense,” says Steve Wallner, professor and head of the department. “When you’re talking about the curriculum and what those students are interested in and hope to wind up doing, it really is all about outdoor spaces and outdoor environments, so environmental horticulture made sense from that point of view. Secondly, we thought it would be more appealing to students from a recruiting sense.”

Texas A&M University designed a degree with less science and more business and design skill emphasis in hopes to draw more students to the program. “The biggest change in the last five years has been our new BA degree program which has brought in some talented students that we would not have attracted previously,” says Tim Davis, former head of the horticulture department.

Of the schools Lawn & Landscape spoke with, the answers about whether the student population was decreasing or increasing were mixed. Many department heads said their horticulture majors have declined in enrollment, but landscaping majors or concentrations in landscaping, viticulture, enology and organic ag have held steady or increased. (See sidebar above.)

Since receiving PLANET accreditation in 2003, Brigham Young’s landscape management program has seen enrollment increase from about 75 students to about 200. During that time, production horticulture was also eliminated, said Phil Allen, professor of landscape management.

Virginia Tech had about 150 undergrads in its hort program 15 years ago; the numbers dropped steadily for years and recently stabilized around 85.

Harris says he pinpoints a few reasons for the decline – similar reasons multiple department heads gave.

No. 1, horticulture isn’t seen as a “professional” industry to many.

No. 2, land-grant universities with large engineering and business schools have raised the entrance bar and put caps on the number of students, making it difficult for students interested in any field to get accepted.

No. 3, the number of students transferring from community college systems or two-year programs has declined. “I think the community college system is suffering a little bit,” he says. “I think people are deciding to keep working instead of going to school because it’s an economic thing – they don’t know if it’s worth it or not. The hort programs that were feeding us a little bit, some of them have been discontinued – community college programs.”

A bright spot is that even with a national unemployment rate hovering around 9 percent, horticulture students are finding jobs. The number of job offers might not be as high as they once were, but there are still positions in most areas.

“I encourage students to consider areas where supply and demand ratios are very favorable, and areas where the demand is greatest include irrigation, and the account manager trainee type position and also plant healthcare or tree healthcare and arboriculture,” Allen says. “Those areas we could triple the number of students we have and every one of them could have multiple job offers when they graduate.”
Recruiting students. From an industry perspective, Kory Beidler, technical training manager at The Brickman Group, says he hasn’t noticed a difference in the number of students graduating nationwide, but the competition among companies trying to recruit the students has become fiercer.

“There is more big players nationally or even regionally that now have resources to do recruiting, where maybe 10-15 years ago there were only a few of us that really could spend the money or have the resources to go after colleges,” Beidler says. “Now they have a representation (at colleges and job fairs), so that’s why the competition has increased.”

Another trend companies have seen is a change in graduates’ expectations.

Beidler says he has seen an increase in the number of students interested in design, estimating or management jobs right after graduation, but there are only so many of those positions available, and especially within a commercial landscape maintenance company like Brickman.

“There is less eagerness among current college graduates to go into more physically demanding jobs,” says Gordon Ober, vice president of recruiting and development for the The Davey Tree Expert Co. “Many of today’s college students are also not as eager to work longer hours or pick up and move far away from home. Also, upper ranking students are not as willing to start at the bottom to learn the business and work their way to the top. They want a defined, short-term roadmap for advancement up and out of production positions. They expect to start as management trainees, account representatives/managers or supervisors.”

Still, those in the industry say the quality of student being produced is still high.

Brett Lemcke, vice president of R.M. Landscape and chairman of PLANET’s Student Career Days says the students he runs into at the annual event and at job fairs are the ones companies want to recruit because they show a real effort and enthusiasm for the industry.

“The quality (of students) is very strong,” he says. “They’re new to the industry, so they have a lot to learn but, at the same time, they’re willing to learn. They understand why we’re all here and what the business is about.”

Experience in the form of internships is one thing Beidler and Ober say they wish more graduates had on their resumes. The solution to that is two parts: Colleges requiring students perform internships in the field before graduating and more companies offering the opportunity.

William Vance Baird, professor and chair of Michigan State University’s Department of Horticulture, says internships should extend to high school students, which would give them an early experience and connection to the industry.

“Most of our students get interested in majoring by having some positive contact with horticulture,” he says. “The best recruiter is someone who gives them a chance to do something more with plants than dig holes and/or pull weeds all day; then they see that this can be a career. If companies can provide summer employment for high school students that is varied in scope and includes a few days shadowing the bosses, for example, or a trip to an industry event like an expo or a field day, it can really open their minds to what is possible.”
Attracting students. Many of the barriers the industry faces when it comes to attracting young people aren’t new. And some department heads and industry folks say even if an influx of students were interested in the industry, depending on their concentration, there may not be jobs. Still, moves need to be made to change the perception and draw more students to the industry.

From the university and college perspective, they’re trying to brand the industry as technical and professional and with resurgence in all things organic and eco-friendly, departments are pushing the message that the horticulture industry is a steward of the environment. They’re not only going after high school students but those already on campus that are undeclared.

“Students are interested in making the world a better place, making a difference,” Baird says. “Stress the positive contribution to the environment and quality of life made by our industries.”

But they can only do so much without the industry’s help. Many department heads say higher starting salaries would help. As well as the industry playing a larger role in helping high school students – or even younger – understand what it is the industry does.

Marini says when he arrived at Penn State he thought he had an easy recruitment solution, just visit high school science classes and college fairs.

“I quickly found out that we weren’t allowed to do that,” he says. “There are so many college recruiters attending high schools trying to recruit students that the high schools limit the number of times any university can visit them. So if Penn State can only go into a high school once, they don’t want the head of the horticulture department going.”

There are initiatives taking place with high school and middle school students – PLANET is involved with Future Farmers of America and has put together recruiting pieces and worked with state associations to promote the green industry – but every company can be part of the process, Lemcke says.

“Contact local horticulture programs or get into high schools and just talk about, as business owners or managers, the success you have, how fun and creative your jobs are and start pushing (the industry) that way,” Lemcke says. “As industry people, if we can go after (schools) and say, ‘Hey, I’m available, sign me up for whatever,’ that would help with momentum, getting people on board and filling up these classrooms.”
The author is an associate editor at Lawn & Landscape. She can be reached atclawell@gie.net.

If You Keep Digging You’ll Come Up in China

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During the first week of August, a group of green industry folks (including myself) attended and presented at the Dalian International Horticulture Forum. Two of my colleagues have provided excellent commentary regarding our excursion so I am including links to their comments below:

Chris Beytes – GrowerTalks e- newsletter
Dr. Marvin Miller – America in Bloom newsletter column

Enjoy!

Demography is Destiny

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BNH spoke to Ken Gronbach, author of The Age Curve: How To Profit from the Coming Demographic Storm (AMACOM, 2008) and Common Census: The Counter-Intuitive Guide to Generational Marketing (Ford Odell Group, 2005). Gronbach, who ran an ad shop, KGA Advertising, in Middletown for years, sees in demographic trends reasons to espouse what most would describe as a contrarian view on America’s and China’s economic futures. Gronbach says demographics are destiny and marketers and public decision makers disregard them at their peril. BNH Publisher Mitchell Young interviewed Gronbach.

You had an agency for a long time in Connecticut. How did you transition into demographics guru?

My wife and I opened our own agency in 1979, and one of our signature clients was American Honda Motorcycle. We had all the dealers from the tip of Maine out to Pittsburgh down to Washington, D.C. — about 140 dealers. We were selling motorcycles like crazy, but [suddenly] in 1986, the bikes were shipped to the dealers. They put them on the floor, and no one came in.

Between 1986 and 1992, we tried everything, Honda put their full force behind it to solve the problem, but by 1992, business fell 80 percent and they closed all the dealers.

Was it the economy?

it wasn’t the economy; it was a demographic phenomenon. [Born] between 1965 and 1984, Generation X had nine million fewer people than the baby boomers. From a marketing standpoint, if you dropped the size of your market by over ten percent, you’ve essentially atomized it. We knew we sold motorcycles to men 16 to 24 years old and when the baby boomers exited that age, motorcycle business dropped like a stone. That’s what tipped me off to so many other issues in our marketplace. Generation X closed 30 percent of the public schools; Generation X shut down the motorcycle industry. It didn’t threaten the colleges, ironically, because they [Gen X] went to college at a much higher rate than the baby boomers.

Now Generation X age is into the car-buying age. The best customer for a Detroit automobile is a 43-year-old. That’s when the most miles are put on the car — ferrying the kids around, trips and all that jazz. The baby boomers move on, Generation X moves into the age when they’re expected to buy cars from Detroit at the level of the baby boomers, and Detroit starts firing their ad agencies and firing their presidents because sales are going down. They said, ‘We’re not getting our message out — our SUV sales are way down.’ Well, SUV sales wiped out because the buyers are wiped out. Nobody counted them.

The bottom line was that there were just fewer people to take the boomers’ place?

The most important thing was that we sent our production overseas, primarily to China. The reason for that was during the last 20 years it was an employees market: for every ten jobs being exited by the baby boomers, there were only eight [Generation X] applicants. McDonalds couldn’t even find people.

What is the birth-year range of the baby boom?

The baby boomers were born from 1945 to 1964. The next would be Generation X, and they were born between 1965 and 1984. The peak years for the boomers were between 1957 and 1961; it is a huge bell-shaped curve. Then you have Generation X, but it’s an inverted bell curve. Their lowest birth-rate years were between ’71 and ’74.

So Generation X made an employment shift from the baby boomers?

Generation X did not opt for the technical careers that the Boomers did, like factory work, electricians, plumbers. [Those occupations are] saturated with baby boomers, and boomers went into business for themselves because they couldn’t find work. That’s exactly what we’re facing right now: The kids currently between seven to 26 years old, Generation Y, are facing 50-percent unemployment. My kids can’t find summer jobs, you have to do something else — go into business for yourself. The jobs Generation Y are beginning to fill are jobs exited by Generation X. And X is a small footprint. Companies have achieved efficiencies, they’ve automated, entry-level doesn’t need as many people, a lot of things are bought online, there just aren’t as many opportunities for kids getting out of high school and college.

These demographic numbers are not secrets. So what are major companies or government agencies doing about it?

In 1998, Aetna wanted to buy US Healthcare and a friend on the board wanted me to share my opinion. I said it would be a demographic disaster. The generation that was paying into health-care insurance and using more than they were paying was the generation called the Silent Generation, born 1925 to 1944. They were tiny — their numbers are down around 50 million. The baby boomers’ numbers are up around 80 million. I told them, the Silents are going away, they’re going on Medicare. What’s next is baby boomers are moving into the age where they’re going to be paying into the system and using more [health care] than they’re paying for. You’re expecting the next generation [Gen X] that’s 11 percent smaller to pick up the slack. I couldn’t convince Aetna that this was an obvious demographic disaster. They did it anyway, and then lost $10 billion.

You said that to fix the jobs problem you have to fix the housing market. Why?

What we learned from 2008 was that the housing market is the economy. Seventy-five percent of the housing market in Arizona is foreclosures, which means there is no market. I would tell our legislators, senators and congressmen to enforce President Obama’s Home Affordable Mediation Program [HAMP]. They were supposed to sit down with the homeowners and figure out how to keep people in their homes. Take the foreclosures off the market, and you have shrunk your market in some cases by 60 percent. If you shrink the housing market in Connecticut by 60 percent, the market would come back, home values would go through the roof, it would be a signal to buy, and everybody would be back to work.

There are major assumptions about the growth of China, but you have different viewpoints of China’s future demographics.

Demographers worldwide know what’s going to happen in China. The number of people they prevented from being born through their one-child-only policy was 400 million people. To take 400 million people out of the last 32 years of the population is to literally reduce fertility by 75 percent. They went from 40 million babies per year to approaching ten million per year.

But they have a lot of people, so why would that be a bad thing?

Because you can’t cut a hole in your population. The part of the population that does the heavy lifting are the ones between 40 and 60 years old. So when it becomes the turn of this tiny group of under-30-year-olds to do the heavy lifting, they simply don’t have enough people. Economists have begun writing about their mysterious labor shortage. If you literally cut your fertility rate by 75 percent, you should expect a labor shortage.

They’ve set the stage for their country to go into economic chaos and there’s no reversing it. They simply will not have enough people to produce enough to care for their elderly. Imagine that you’re 70 years old and lost your usefulness as a laborer. You’ve worked 40 years for zip, so you don’t have much saved up, and now the country doesn’t have enough taxpayers to support you. But China never had that system anyway. Their Social Security was called ‘family’ — and they obliterated it.

Aren’t the elderly in China a more or less protected class?

They’re protected culturally by the family, but it has nothing to do with the government. They went from two grandparents with eight children and 32 grandchildren. That was the system that supported the elderly. Now it’s four grandparents, two parents and one child. They don’t even know what the word ‘cousin’ means.

To throw another wrench in the works, [demographer] Nicolas Eberstadt believes the single biggest problem China is going to have is their management model to run the companies. Their model to date has been family, because they don’t trust anyone. There’s no president, two vice presidents and a chain of command; it’s family. And without family running the businesses, the businesses won’t run.

Is there a similar problem in India? They have 1.1 billion people.

Nobody knows how many people are in India; it could well be in excess of China right now. No one knows. The CIA Factbook can guess, but there’s no way to count those people. It could be as much as 750 million in northern India alone. It’s abject poverty and no education whatsoever up there, and probably 20 to 30 years behind China. The southern part of India is where the wealthy people are and they’re doing exactly what the Chinese are doing. So their problems are very similar. Is India in better shape than China? Yeah, in the long term. One, they’re our friend, and China is not. The real problem is their proximity to China.

But aren’t more prosperous Indian families having more children?

We see that wherever the Western culture goes, when people become prosperous they have fewer kids because they enjoy their wealth. They’re more selfish. Here is the big picture: If you live in Spain, France, Portugal or Germany right now, you have come to the conclusion that you’ve made a mistake by not having kids. Because the Muslims are overwhelming you. They’re having ten kids and you’re having none. Only one in seven German couples get married, and they don’t have kids. The E.U. [European Union] is done. If you want to go experience Italy, you’ve got to go now, because in ten years you won’t be able to experience Italy. France is feeling it big time. The problem is that they forgot to have kids. Remember that people precipitate economics, not the other way around. Without people, you don’t have anything.

Ten years is a pretty short time period.

It’s going to happen in our lifetime. When things go south, they go very fast. Look at 2008 — we almost lost the world economy. Once the façade of China is realized you’re going to see [that] as fast as China advanced, it’s going to decelerate.

So the high unemployment rate among Generation Y in the U.S. is because of their large numbers.

Yes. We’re the only industrialized nation in Western culture that had kids. And Generation Y is bigger than the boomer generation. The magic number is about 2.2 — you have to have more than two

    .

    If China is going to have a labor shortage, won’t that be good for the American Generation Y?

    It’s perfect. Manufacturing will start coming back to the States, and it’s going to come back with a vengeance. Colleges are reporting that their populations are 60-40 women. So where are the men?  They don’t need to go to college. The boomers dominated the technical trades. And as they retire, the Generation Y men have picked up on it. Here’s an example: you have twins — a boy and a girl. The boy wants to be an auto mechanic, and the girl wants to be an attorney. She goes through four years of high school, then to a good four-year college. At 22 she goes through another three years of school to become an attorney. Now she’s 25, and has $300,000 in student loans. She gets her first job and makes $60,000, not a bad start.

    Her brother goes through four years at a technical school. He gets out at 18 and goes to a Mercedes dealership and is an apprentice for two years. He buys his own tools over that time, and then at 20 years old they offer him a full-time job and pay him $100,000. At this point his sister is still in her third year of college, and at 25 he’s already made half a million dollars, while she’s in debt $300,000.

    You asked about my advice for our governor: Spend some money on our technical schools, because that’s where the big dividends will be.

    In Connecticut we believe that college is where the dividends are.

    So what you’ll have is a bunch of highly educated people that have no jobs.

    Many complain about the inability of the young kids to get down and work. Why?

    You haven’t felt the effect of Generation Y yet. Their peak birth rate was around 1990, so they’re only 21 years old. You’re not going to feel them for another three to five years.

    What will they be like in the workplace?

    You’re going to hire the best people you ever hired, the smartest people you ever hired, and you’re going to have the best choice of people you ever had. You’ll run an ad and people are going to wrap around your building. They’re going to come in, and they’re going to understand that hard work is a condition of employment. They’re not going to call in ‘tired.’ Believe me, Generation Y is going to be the most productive generation in our history. A tremendous influx of people will pour into our labor system. And that’s good for insurance, because they’ll be paying in and not using it.

    But because they’re young and healthy, won’t they not buy insurance?

    They’ll buy insurance because they’re going to get married younger. And that’s because you’ll have a whole crop of young men that are going to be making a livable wage at 21 instead of 27.

    What do people need to know that they don’t know now — what do we need to fix?

    There’s a shortage of dads. Half the babies born in the U.S. today don’t have dads. According to Eberstadt, who has roots in secular demography, the strength of the U.S. is faith and family, and he’s not saying that as an evangelist. We need to make sure our kids understand that it’s important to get married and it’s important to keep your word and it’s important to be responsible, and it’s important to have children. There was a 20-year interval where we didn’t have [enough] babies. Not having them between 1965 and 1984 is what created the problem for consumption and labor.

    Well, today Americans are reacting to immigration in part because of the job market.

    Immigration is our strength. The immigrants who came in filled in the hole in Generation X. Latinos poured into the country because that’s where the opportunity was. Let’s say Latinos assimilate in 20 years; their kids won’t even speak Spanish. The stats of the number of Latinos in the military is overwhelming. If they’ll fight for the country, they want to be Americans. In 2025, we will begin a new generation called the ‘Baby Blenders.’ Our kids will intermarry because they don’t see color or race any more. We’ll look like Derek Jeter.

    The future of learning

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    Every so often I come across something that stops me dead in my tracks; something so fascinating that I simply have to stop what I am working on [regardless of how important it is] and take an excursion that, in the end, proves to be paradigm-changing. This happened today.

    A friend of mine referred me to a site that has a good video explanation of enterprise value and EBITDA. It wasn’t necessarily the content (though it was exceptional). It was the manner in which the information was being presented. I witnessed firsthand the future of learning.

    Ever wished you could take a self-paced course or simply learn more about topics such as banking and money, the credit crisis, currency, current economics, finance, the Paulson bailout, valuation and investing, venture capital and capital markets? Now you can. Or, if you just wanted to brush up on your statistics, chemistry, algebra, biology, etc.? Now you can.

    As an educator, my paradigm has been rocked. I now declare myself officially challenged to think even further outside the box. Stand back, this could be dangerous!

    Want to see what I’m talking about…go to http://www.khanacademy.org and explore. Watch the TED Conference video (BTW, you should subscribe to the weekly TED conference presentations). Choose one of the 2,100 educational videos in the library and see for yourself. See the future of learning for yourself.

    Hat tip to Rick Brown for the link (thanks buddy).

    National Floriculture Forum a big success!

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    This year’s National Floriculture Forum was held in Dallas, TX on March 10-11 and drew 46 participants from across academia and industry. Texas A&M University served as the host university this year. In addition to the tours, networking, and strategic planning that occurred, there were research presentations on the afternoon of the first day that highlighted various partnerships, alliances, brands, and initiatives that are being utilized by universities and industry firms across the country in order to compete successfully in the current hypercompetitive and budget-cutting environment.

    A debriefing website has been developed (click here) which contains a history of the NFF, the proceedings from the papers presented, a roster of participants in this year’s meeting, as well as a listing of all sponsors this year. BTW, a special thanks to all of our sponsors — without your assistance this year, the National Floriculture Forum would have not been possible!