Wednesday Briefs – 16 June 2021

THIS WEEK: Manhattan Hotels; NATO Expansion; G7 Demographics.


A friend of ours, a developer and part-owner of mid to upscale Manhattan hotels, shared with us that his properties have survived the pandemic, but only just, and that they managed to do so thanks to his team’s more conservative approach to borrowing. His direct lenders have been able and willing to extend revised terms and to allow enough time for a recovery of the properties.

Although our friend’s hotels have reopened, he is still grappling with a number of problems. One, room rates have not sufficiently recovered. Two, lower room rates attract a different clientele who are, according to him, more prone to carrying away some room items when they leave, pressuring margins. Three, although the occupancy rate is rising, it remains below breakeven, in large part because business travel has not recovered. Four, it is more difficult to find staff than before the pandemic.

Beyond these near-term issues, he is guardedly optimistic about the profitability of his hotels. He notes that during the pandemic, New York City has lost over 40,000 rooms from permanent hotel closures. He adds that there have been few permits for new hotel construction. He hopes that this new competitive landscape will make RevPARs (revenues per available room) rise rapidly when demand recovers to more normal levels.


History does not repeat itself but it rhymes. In The Guns of August published in 1962, historian Barbara Tuchman writes that, after the June 1914 Sarajevo assassination of Archduke Franz Ferdinand, Austria-Hungary “determined to use the occasion to absorb Serbia as she had absorbed Bosnia and Herzegovina in 1909.”

Tuchman then continues with this:

“Russia on that occasion, weakened by the war with Japan, had been forced to acquiesce by a German ultimatum followed by the Kaiser’s appearance in “shining armor”, as he put it, at the side of his ally, Austria. To avenge that humiliation and for the sake of her prestige as the major Slav power, Russia was now prepared to put on the shining armor herself. On July 5 Germany assured Austria that she could count on Germany’s “faithful support” if whatever punitive action she took against Serbia brought her into conflict with Russia. This was the signal that let loose the irresistible onrush of events.”

The irresistible onrush of events is the chain reaction that started World War One. Similarly, it could be said that in the 1990s, Russia’s weakness after the collapse of the Soviet Union created an opportunity for NATO expansion to the Baltic States, Poland, the Czech Republic and other former Warsaw Pact nations. Following its partial recovery in the 2000s, Russia has opposed more effectively a further expansion of NATO to Ukraine and Georgia. This will likely be a hot issue as the President of Ukraine has renewed a bid to join the North Atlantic alliance.


In 1900, the populations of the major world powers matched their economic dominance. The world population was 1.6 billion and France with its colonies had a population of 80 million, or 5% of the world. Britain with its colonies easily exceeded 320 million (mainly thanks to India), or 20% of the world. The US had 76 million or approximately 5%.

Things look different today with a total world population of 7.7 billion. France and the UK, now without their colonies, each have 67 million, or less than 1%. The US has maintained itself near 5%. The other members of the G7, Canada, Japan, Germany and Italy have 38 million, 126m, 83m and 60m respectively. The G7 altogether add up therefore to about 770 million, or 10% of the world population. Birth rates in these countries are all below replacement, which means that their demographic weight will decline further in the years ahead, while numbers rise rapidly in Africa and South Asia.

Demographic heft is not the same as economic. According to the Council on Foreign Relations, G7 economies add up to 45% of global GDP, a solid figure though significantly reduced from 1999 when it stood at 66%.

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Update: Working Age Population Around the World 1960-2050

This is an update of a similar post from 2015. The UN projections have changed but only by small numbers. The main observations are the same as six years ago (click table to enlarge in a new tab).

The working age population (WAP, those aged 15 to 64) of sub-Saharan Africa continues to grow rapidly. It has more than doubled since 1990 from 252 million to 609 million, and is expected to more than double again by 2050 to 1.3 billion. If the reality turns out to be anywhere near these projections, it will be a significant challenge for African economies to absorb and to employ productively this enormous amount of new human energy.

India faces a similar challenge with its WAP growing from 928 million now to 1.1 billion in 2050. Though daunting, this represents a slowdown in the rate of growth from the previous thirty-year span 1990-2020.

The WAP of Europe, China and Japan have already peaked and will be declining for the rest of the century, per UN projections. Europe’s decline from near 500 million in 2005 to a projected 407 million by 2050 is mainly due to eastern and southern Europe. The WAP of France and the United Kingdom will flatline to 2050 while those of Germany and Russia decline.

In the United States, the steady growth in the WAP between 1960 and 2005 combined with a falling dependency ratio to fuel strong economic conditions. Growth in the WAP is expected to be more muted in the decades ahead.

Compared to the late 20th century and the first decades of this century, the future growth in the WAP will taper off or even turn negative in several regions and countries. Sub-Saharan Africa stands out as the exception that will maintain strong WAP momentum through at least 2050.

You Are What You Risk, With Michele Wucker, 19 April 2021

“For some people, risk is scary and dangerous, and means peril and loss. For others, it means risk assets and they have to pile on because they just see the upside. But risk is actually value-neutral. It is important to be aware of the bias that you bring to things. Do you see both sides and do you weigh them? Or are you likely to overweigh the downside or overweigh the upside?” ________ Michele Wucker

We all have an ambivalent attitude towards risk. In 1850, a young Emily Dickinson wrote to her friend Abiah Root “the shore is safer, Abiah, but I love to buffet the sea. I can count the bitter wrecks here in these pleasant waters, and hear the murmuring winds, but oh, I love the danger!”

In her new book You Are What You Risk, author and strategist Michele Wucker codifies this ambivalence to risk. In this podcast with Sami, Michele explains the concepts of “risk fingerprint” and “personal risk portfolio”, among others.

Topics include:

  • 0:00 Introduction of Michele Wucker
  • 2:13 Thesis of ‘You Are What You Risk’
  • 5:20 Attitude towards risk: innate vs. acquired through experience
  • 10:40 Taking a risk vs. following a path; Risk and entrepreneurship
  • 14:10 About each person’s risk fingerprint
  • 19:45 Taking risk as the only woman in the room
  • 24:40 “Risk is value-neutral”
  • 33:00 Matching risk fingerprints in interactions; Measuring risk
  • 38:20 The personal risk portfolio
  • 42:25 Remembering the onset of the pandemic as a gray rhino


(photo of Michele Wucker by Hal Shipman)