“Let’s All Learn How to Fish… To Sustain LT Economic Growth ” June 2018 Michael Falk, CFA, CRC
CFA Institute Research Foundation • FOUNDED IN 1965 • MISSION – TO PRODUCE RELEVANT HIGH- QUALITY PRACTITIONER-BASED RESEARCH CONTENT FOR THE GLOBAL INVESTMENT PROFESSIONAL • TYPES OF CONTENT - Monographs (… books) - Literature Reviews - Briefs (short content) - Workshop for the Practitioner - E-Courses
Let’s All Learn How… Today’s economic growth challenges will become greater in the future if only due to the world’s agedness, fertility levels and entitlement policies. However, those same challenges could be overcome with more thoughtful policies along with a culture of responsibility and appreciation. The book reconsiders what makes us “healthy, wealthy and wise,” and focuses on how we might re-imagine health care, retirement and education policies to usher in a new ERA of sustainable, long-term economic growth.
Good policies have… both
A little perspective…
And, a little clarity… Growth = % Δ Workers + % Δ Productivity On the number of Workers On the amount of Productivity Fertility Health Employment / Participation Education / Skill relevancy Net migration Capital Retirement - … will the robots be our salvation?
Workers will work longer … To solve their / our shortfalls So sayeth so many…
Yes…
BUT… BLS Civilian Labor Force Participation Rate, > 16yrs, 1/85 – 6/18
… NOT all workers are able 27% of workers who are ≥ age 58 perform physically demanding jobs that cause them to age faster than those with less physically demanding ones. Another 18% perform jobs in difficult working conditions that also place strains on their health. … these “less capables” do NOT include “job-unables”
Workers MAY work longer … To solve their / our shortfalls IFF they have: 1. Healthy aging & 2. The requisite skills
Let’s retire retirement (as we know it) Work saves us from three great evils: boredom, vice, and need. Voltaire (1694–1778) Candide 1759
What could work? 72+ Got jobs Got Enough $$$ How about compassion… 2 retirement ages
Proper netting MATTERS Social Security provides… 2014 data / September 2016 SS release
Bigger / deeper pools are NECESSARY
“Super” solutions do exist The e fu future of e of retir etiremen ent Three big ideas that could reshape the U.S. retirement system Russell Investments July 2015
A cure for health care The only way to keep your health is to eat what you don’t want, drink what you don’t like, and do what you’d rather not. Mark Twain, Following the Equator, 1897
Curing today’s sick care Incent health Personal, catastrophic policies with HSAs Free, required routine care; improved “marker” discounts 1 system, multi-faceted local access, distant services … Technology
Palliative & hospice care Atul Gawande “ . . . our decision making in medicine has failed so spectacularly that we have reached the point of actively inflicting harm on patients rather than confronting the subject of mortality” EOL docs Coverage limits beyond “xx” age
Learn to learn (and never stop) Education is the most powerful weapon which you can use to change the world. Nelson Mandela, speech given 16 July 2003
GOODBYE… To the bottom 5%... & HELLO $250,000 To the bottom 6-10%... & HELLO 0.87 GDP
“Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will live its whole life believing that it is stupid.” – Albert Einstein
Why Fish?
Demographics do NOT have to be destiny Children will be financially than their parents better off worse off Europe Asia / Pacific Latin America 14 France North America 18 85 41 Japan Mexico 72 15 43 Italy 66 26 27 65 Australia Canada Peru 64 25 U.K. 64 21 68 51 Pakistan 32 55 Argentina U.S. 22 34 Poland 60 34 53 43 S. Korea 36 30 31 52 Venezuela Average Spain 48 62 61 51 Africa Indonesia 67 34 Middle East 18 Germany Chile 58 16 51 Philippines 48 61 26 Russia 56 Brazil Ghana 31 19 35 Palest. Ter. 30 35 Malaysia 44 29 54 Average 49 43 Average 59 Kenya 24 33 Lebanon 74 47 India 47 18 64 Senegal 32 88 Jordan 26 China 37 5 52 Uganda 40 48 Turkey 41 Average 52 36 47 S. Africa 51 Israel 33 27 84 Nigeria 36 Average 11 41 58 Average 32
GIVE A PERSON A FISH AND YOU FEED HIM OR HER FOR A DAY; TEACH A PERSON TO FISH AND YOU FEED HIM OR HER FOR A LIFETIME. My paraphrase of the proverb attributed to MAIMONIDES (1135–1204)
For a bit more on my Monograph… www.letsalllearnhowtofish.com Michael Falk, CFA, CRC ▪ mfalk@focusCgroup.com My “day job” is helping investment teams improve their investment philosophy, process and execution – their decision-making – and investment firms with their strategic planning. Twitter – @Msfalk
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