Wednesday, April 29, 2015

Transformation of the Aging Industry

Unprecedented population aging is coinciding with exponential technological changes. The effects on the older population and the economics of the aging industry will be worth watching.


There’s something happening here.
What it is ain’t exactly clear.

Through their cautionary protest song, "For What It’s Worth," Buffalo Springfield and rock legend Stephen Stills reflected and amplified the zeitgeist of 1967: the social and cultural turmoil surrounding the Vietnam War era. This stanza addresses confusion and trepidation over escalating divisiveness within the nation’s borders.

In some odd ways, this protest ballad can be renewed and reinterpreted today as the nation confronts population aging. Heated conversations, recurring almost daily through national media, focus on inexorable increases in the costs of Social Security and Medicare; the questionable benefits and clearcut liabilities of growing old; and, dictated by tradition, the acquiescent social roles that older adults should accept.

Something unprecedented is happening here. Western countries and many eastern countries are growing old fast. Of all the people who have ever reached the age of sixty-five, half of them are alive right now.1 Keep in mind that preceding the seven billion people who are alive today, one-hundred billion have lived and died during the last fifty-five thousand years. 

Population aging is not new or novel. Those cards were played in the 1940s, 1950s, and 1960s during the post-World War II birth boom. Demographics are destiny, and so here we are now in the middle of an aging boom. What a surprise!

But there is another force intersecting population aging that is challenging and changing every industry. We are living in an era of transformational technologies accelerating at an exponential pace—from genetics to robotics and from information to nanotechnology—the so-called GRIN technologies. Relative to human history and the snail’s pace of change in the distant past, the twenty-first century will not involve one hundred years of progress; it will become twenty thousand years of progress.

So, we have extraordinary population aging arriving at exactly the same moment as exponential technological changes. Something’s happening here.

It follows that we cannot be fully capable in the field of aging, serving older adults, without also becoming futurists. And what is a futurist? Someone who believes in the need to look forward with optimism.

Generational Tempest Narrative

Two narratives are competing for public consciousness about aging. The Generational Tempest Narrative portends doom-and-gloom scenarios when the costs of social insurance overwhelm government tax revenues, with older generations committing the sin of fiscal child abuse on the youngest and unborn generations.

According to Laurence Kotlikoff and Scott Burns in their disturbing book, The Clash of Generations: Saving Ourselves, Our Kids, and Our Economy, the nation’s “unfunded liabilities”—money needed by the federal government to pay for all its current promises to retirees, federal employees, military families, and disadvantaged groups—have reached a mind-boggling $211 trillion.

Keep in mind that the nation’s gross domestic product (GDP) in 2013 was $16.8 trillion. Thus, assuming no growth or contraction in future GDP, it will take 12.5 years of income, derived from all goods and services produced and sold by all the companies and individuals in the U.S., simply to pay for promises made to retirees and other “dependents” through the end of this century.

Is this haunting view of the future what’s going down?

On the contrary, Stephen Mihm, an assistant professor of economic history at the University of Georgia, pushes back with an interesting observation about predictions made by economists:

“Recessions are signal events in any modern economy. And yet remarkably, the profession of economics is quite bad at predicting them. A recent study looked at ‘consensus forecasts’ (the predictions of large groups of economists) that were made in advance of sixty different national recessions that hit around the world in the 1990s: in 97 percent of the cases, the study found, the economists failed to predict the coming contraction a year in advance.”

Look at this another way. Find a generational accountant or economist who, in writing, predicted two of the most significant business and technological changes in the twentieth century just ten years before these transformations. Try to identify someone now predicting economic disaster in the mid-twenty-first century who, in 1975, also predicted how desktop microcomputers would transform everything in business by 1985. Try to discover a generational accounting expert who, in 1985, predicted the advent and adoption of the internet in 1995.

Members of today’s oldest generations were at the center of these major transformations, not merely bystanders. In the mid-1970s, Bill Gates founded Microsoft, and Steve Jobs founded Apple, begetting the personal computer industries. Tim Berners-Lee, a British baby boomer, created the World Wide Web, authoring the hypertext markup computer language we use every day when we type http:// into an internet browser. Interestingly, these three digital revolution pioneers were born in 1955.

Looking back over our shoulders today, we can see historical precursors hearkening forthcoming societal transformations around desktop computers and distributed digital networks, including their concomitant economic transformations. If anti-entitlement soothsayers could not predict these major changes ten, or even two years before they happened, how reliable can they be at predicting the future thirty, forty, or fifty years from now?

Warren Buffet, the fourth richest man in the world with a personal wealth of $67.5 billion, has faith in the growth potential of the U.S. economy. He forcefully contradicts those who think pessimistically about the impact of social insurance on the overall economy.

“We’ve made certain promises that promise away a portion of the pie,” Buffet said during a television interview in 2008. “But the wonderful thing is that the pie gets larger. Even with one percent per year real productivity growth per capita, we double the GDP in per capita in real terms in seventy-five years when the Social Security projections go up. So even though seniors may get more of the pie, the pie will grow enough so that everybody will get more of the pie.”

In The Clash of Generations, for example, Kotlikoff and Burns predict that the U.S. GDP in 2030 will be $23.08 trillion. They further predict that the combined cost of Social Security, Medicare, and Medicaid will be $3 trillion, or a hefty 13 percent of GDP. However, the respected Centre for Economics and Business Research, World Economic League, proposes that the U.S. economy will produce a more robust $33.15 trillion GDP in 2030. The social insurance programs would then be 9.05 percent of GDP, a more manageable scenario in line with Buffet’s optimism.

Transformation Narrative

What might propel the making of a much heftier economic pie, one large enough to
feed generations of all ages, including Millennials (b. 1980-1995) and Generation Z (b.
1996-present)? 

The transformation narrative points to economic expansion because of the creative and
unexpected ways that today’s oldest generations have historically changed business and
society. Science, technology, and social action can advance economies that embrace the opportunities rather than the problems of aging. 

Transformation is in the DNA of generations that reached adulthood during the early
to mid-twentieth century. Those generations have challenged business norms and contemporary thinking at each life stage. They have fueled company and product creation with their fads, fashions, foibles, and refusals to accept past as prologue. 

Their numbers and shared values have grown multinational firms such as Microsoft,
Apple, McDonald’s, Honda, Harley-Davidson, Nike, and Starbucks. They have transformed
outlying bohemian villages into tony places such as Asheville, Telluride, and Santa Fe. They have ignited investment markets with mutual funds, 401(k)s, and online portfolios. They have created enormous wealth, driving the American economy forward. 

So what gifts will exponentially accelerating technologies bestow on today’s oldest
generations, extending their lives with vitality while stimulating new economic growth? Most significantly, we’ll see dramatic evolution in capabilities to protect and restore the human body from the negative effects of aging. 

For example, recall the fantastical technologies showcased in Star Trek, the popular sci-fi television series and blockbuster movie franchise. Dr. Leonard McCoy, or Bones as he was affectionately called, could wave his Tricorder over an injured crew member and instantly diagnose any medical problem.

Science fiction is about to become science fact around 2016. The Qualcomm Tricorder XPRIZE is a $10 million international competition to develop a device that can diagnose patients as well as or better than a panel of board certified physicians, with magical capabilities similar to Dr. McCoy’s.

Imagine a portable, wireless gadget about the size of an iPhone that monitors and diagnoses your health status, providing real-time access to critical health biometrics. This device will help older adults become more aware of developing health problems faster and more accurately. The Tricorder will extend the reach of preventative medicine, further shifting focus from illness and morbidity to disease prevention and wellness. 

End of Slash and Burn Medicine 

Near the end of his storied career spanning four decades, ABC network news anchor Peter Jennings informed viewers through a taped message on World News Tonight, that he had been diagnosed with lung cancer and was beginning chemotherapy treatment. The sad day of this final broadcast was on April 5, 2005. Four months later, on August 7th, substitute anchor Charles Gibson broke into ABC’s regular programming to announce Jennings’s death.

Jennings died just a few months after the FDA approved a new drug developed by Genentech, the biotechnology firm that has pioneered creation of genetically targeted cancer medications. Tarceva, the drug’s brand name, attacks non-small cell epidermal growth factor receptor (EGFR) lung cancer mutations, a variant that strikes about 15 percent of victims. 

By attacking only mutating cancer cells quite effectively, Tarceva has extended the lives of many stage 4 lung cancer patients from several months to several years. Had Jennings cancer appeared just a year later, we can only wonder if he might have benefited from this miracle medication, perhaps enabling him to stay in the news anchor’s chair for awhile longer.

Printing Viruses

Even more amazing, scientists are entering the era of 3D cancer medications—medicine for one person capable of killing the complex, idiosyncratic cell mutations that are unique to each individual’s cancer. Autodesk, a world leader in 3D design software such as AutoCAD, has discovered how to change the process of drug development through “synthetic biology,” also known as digital genetic engineering. 

This highly advanced technology involves employing a 3D laser printer to produce unique DNA codes. “Additive printing” technology will someday be able to construct synthetic, cancer-destroying viruses that can infect only mutating cells and kill them, leaving multiplying healthy cells alone. The cost to do this could actually shrink from $1 billion to develop a single traditional pharmaceutical medication, down to almost nothing to produce an individual’s one-of-a-kind synthetic virus cancer killer. 

Hundreds of other examples demonstrate how population aging converging with exponentially accelerating technologies is constructively changing aging right now. These advances crosscut every major field, from housing to consumer electronics and from nutrition to financial services.

Optimistic, open-minded futurists are alert to these transformations and are able to recognize the opportunities before others less inclined to believe in the abundance that longer, more robust lives bring to society. 

Dr. Theodore Roszak, late author of The Making of a Counterculture and Longevity Revolution, wisely observed: “Modern society has aged beyond the values that created it.”11 The time has clearly come for a new conception of aging, a framework of plenty rather than the paranoia swirling around with not enough thinking.

Policy makers and political leaders must understand that aging means unparalleled opportunities for the U.S. economy. People can and will contribute far longer into late life, focusing their accumulated experiences and wisdom on today’s greatest concerns for the future. Technologies now being developed to cure or ameliorate typical diseases of aging, can also become economic exports that grow the nation’s GDP even beyond Warren Buffet’s optimistic expectations. 

Horrific outcomes predicted by generational accountants and economic doomsayers will not come true as foreseen, partly because the generations over age fifty shift paradigms, create new industries, abolish others, and ultimately reshape the social and economic landscape. The most significant economic transformations in human history are underway today, presaging a future of abundance beget by population aging. •CSA

Brent Green is president and founder of Brent Green & Assoc. in Denver, Colorado. Green speaks, writes, and consults about the intersection of aging and transformational technologies. He has been an outspoken and influential advocate for new social and cultural
frameworks concerning the economic value of population aging. He is author of five books, Including Marketing to Leading-Edge Baby Boomers and Generation Reinvention. Contact him at 303-743-0140, brent@bgassociates.com, or visit www.bgassociates.com.

Transformation of the Aging Industry was recently published in the Winter 2015 edition of the CSA Journal.

Blog posting provided by Society of Certified Senior Advisors 
www.csa.us