Almost three years ago when Peter Drucker wrote in his book "The New Realities" that East and West Germany would be united in the '90s, his publisher at Harper and Row said the view was extreme.
The paragraph was deleted after the publisher checked with two former secretaries of state. Drucker said the most prominent former secretary of state said, "Have Drucker take it out. He's too old to make an ass of himself."At 81 Peter Drucker continues to lecture and write on the changing world economy. Thursday, Utah Valley Community College's School of Business was one of 130 hosts for Drucker's live interactive video conference.
"We are in for a period of very rough weather," Drucker said in his lecture "The World Economy after 1992." You can't do long-range planning in the middle of a hurricane, he said.
"We've just completed 40 years of amazing predictability," Drucker said. Since World War II, the political climate has been dominated by the West with the primary objective of subduing communism. The other side was a mirror image.
The next 10 years will be dominated by politics, Drucker said, and not by economics. The world economy will be pulled in three directions.
It is bad for anyone who has to make business decisions, he said. When there are three forces, or three vectors, there is no answer, he said.
The three forces he outlined are transnational globalization, regionalization and changes in the way we work.
The crisis with Iraq is historically significant because it is transnational - the first time that almost the whole world has been united.
Terrorism is a transnational problem. World security is threatened by independent armies for the first time in 400 years, Drucker said.
The environment is another transnational issue. The forests of Scandinavia are threatened by acid rain from industries in northern England and Europe. The Mediterranean beaches of Spain are polluted by dumping in Greece and Turkey.
The greatest impact on the economy will be brought by the trend toward regionalization, Drucker said. The European Economic Community is the first example of regionalization. Drucker thinks its impact will be greatest in the first five years when he expects the EEC to be very protectionist.
The North American Economic Community is the most important economic event for the next 10 years, Drucker said. The United States and Canada are already integrated. The "great news" is Mexico, he said.
For 150 years Mexico has said, "If only the Rio Grande were as wide as the Atlantic," and their policies were directed with that attitude and "miserably failed," Drucker said. But now Mexico is moving toward a customs union with the rest of North America, he said.
Mexico is home to the most productive car plant in the world, Drucker said of the new Ford plant there. He said regionalization will move high-labor products to Mexico for the benefit of the region.
The Far East Economic Community will be built around Japan. Drucker said there is an 80 percent to 90 percent chance that the government of China will collapse.
Drucker said Latin American nations can turn around - and turn around very fast. The capital needed is available from their own citizens who invest out of the region.
The last force in the world economy, the way we work, is changing very fast. Technological change is minor. The big change is the social approach of total quality management, he said.
Drucker said the Japanese understood the change immediately.
The lesson for business, said Drucker, is that the businessman has to get outside and say to an employee, "Educate me about your job."
Even if the business is local, be aware of the world, Drucker said. "Don't try to predict the future, try to stay even with it.
Major economic world forces after 1992
Drucker says the world economy after 1992 will be shaped by three forces:
1. Transnational globalism.
Terrorism and environmental issues will cross national lines.
The European Economic Community.
The North American Economic Community, including Mexico.
The Far East Economic Community.
3. Changes in the way we work.