Investment: A History

ONE OF THE MOST PROFOUND MANIFESTATIONS of the democratization of investment is the emergence of the concept of retirement and its funding. Wider acceptance of “retirement” began to appear only 150 years ago and has expanded steadily since. Today, financing retirement has produced the largest aggregation of investment capital in the world. In the United States alone, retirement assets total an astounding $24 trillion.¹ The focus on funding retirement has vastly changed our institutions and the investment vehicles they employ, begetting the need for a new set of skills from people involved in managing retirement resources. The idea that funding retirement is a major goal of investment has had profound consequences for our society, including the development of pension funds, the burgeoning of retirement savings plans, and an unresolved national dialogue about the future of Social Security.

In the latter case, less altruistic progeny were not always thrilled to bear the burden of an elderly parent. Unlike today, however, many past societies actually required children to take care of their parents. This was certainly true of the United States (or more aptly, the then-British Colonies of America), where the values set in place by the English Poor Law of 1601 prescribed the family as the initial provider of support for parents and grandparents. This bred all manner of conflicts, and court dockets were often rife with claims arising out of some youth’s failure to pay his due to his parents.2

For those without children, the English Poor Law had protocols for providing for them when they could no longer work. These protocols tended to involve ad hoc programs by public officials supported by “poor” taxes funding programs that coordinated transfers of wood or food. First, it was necessary for one to demonstrate legitimate need and to show that one had contributed in earlier years and was not deliberately seeking idleness. It was also essential to show that residency began long before the time of need. This requirement was generally strictly enforced. In 1707 the city of Boston, for instance, forced out a man of over eighty years named Nicholas Warner, telling him that he could not receive assistance in the city because he was not a long-time resident.³ Communities were closer knit then and even the city of Boston had a population of a mere 7,000 in 1690, so it is unsurprising that while there were efforts to take care of one’s own impecunious elderly, outsiders were viewed rather differently.⁴

Within one hundred years, however, the advancement of urbanization dissolved this kind of small-scale coordination and led to more institutionalized forms of public assistance for the involuntarily retired. Though the first almshouse in the British colonies was founded in 1664, such institutions were not commonly used at the time. By the mid- to late 1700s, however, rather than remaining in their own residences and receiving the requisite supplies for living, the poorly resourced elderly were very often forced into almshouses. When the almshouses were still novel and underused, they were not uncomfortable places to spend one’s final years. However, that situation changed fairly quickly. As immigration increased and as rapid urbanization led to more squalid conditions for many, municipal administrators worked to control the rising costs of welfare by making it an unattractive option. By requiring residence in an uncomfortable almshouse as a prerequisite for any assistance, they hoped to curtail funds spent on welfare. The worst turn of events for the elderly in the almshouses was the relegation of orphans and released prisoners to their grounds, resulting in the old sharing residence with young children and ex-convicts, groups the community judged harshly as undeserving members of society. This unfortunate situation led the retired elderly to be seen as idle, despite their history of hard work. This view persisted until shortly after the Civil War when separate public programs were created for these demographics. The bottom line was that from the early seventeenth to the mid-nineteenth century there was a steady degradation in services provided to the elderly as many other marginalized demographics were consolidated into the almshouse. This “preretirement” era was simply not a pleasant time to be elderly and impoverished.5

The Presbyterian Church was at the center of much of the development of early versions of pension plans in the United States. There were two principal advances the Presbyterians made: one was a pension system supported by parishioners for the benefit of ministers, and the other was an insurance scheme paid for via premiums from the ministers themselves.

The first approach began in 1718 with the Synod of Philadelphia’s introduction of the “Fund for Pious Uses,” which had as its goal the extension of funds and relief of financial distress to Presbyterian ministers and their families. In 1759, this system was properly chartered, and though the name changed to the rather long-winded “Corporation for Relief of the Poor, and Distressed Ministers, and of the Poor and Distressed Widows, and Children of Presbyterian Ministers,” its central goal did not. From time to time, money was spent on other causes as well. There were documented occasions of expenditures for an organ and even the payment of ransom monies for children captured in raids by Native American tribes. The funds were managed less conservatively than one might expect. For instance, there was a substantial $5,000 loan to the Continental Congress so that it could properly compensate soldiers during the American Revolution, a fairly high-risk investment, given the uncertainty of the very existence of a counterparty had the war gone differently.6

The second advancement—a more traditional insurance-style pension fund with revenues derived from premiums paid by ministers—began at the Presbyterian Ministers’ Fund over eighty years before Mutual Life of New York, and it grew to be a tremendously well-run fund. It was, in many ways, the first real pension fund. With respect to the management of the fund’s assets, both bonds and stocks were purchased. In terms of the cost of management, the fund outperformed its counterparts by a wide margin. While New York Life, for instance, had expenses per policy of about $20 in the early twentieth century, the cost per policy for the Presbyterian Ministers’ Fund was a quarter of that.⁷

To be clear, it did have several structural advantages over later pension funds, including the fact that the majority of the fund’s controlling directors were not compensated for their work. Furthermore, at that time the Presbyterian fund had never challenged a claim. In addition, and perhaps most salient of all, the Presbyterian fund faced a much more favorable actuarial schedule than did its fellow insurers, because it limited itself to a segment of the population that was better educated, more honest in making claims, and had much more predictable life spans, given a line of work with very low physical risk.⁸

A close look at the early history of this fund reveals fascinating retirement planning among certain depositors—namely, female servants. Researchers who scoured data from the fund after 1850 found that female servants had a savings pattern resembling a deliberate attempt to store funds for retirement. Upon inspection, it is fairly straightforward to see why they were in a unique position to do so. Many were not married, were not anticipating the receipt of a sizable inheritance (hence their participation in the workforce), and all the while did well enough to meet their own expenses. Unlike males, for whom researchers found at best a tenuous relationship between the size of the balance and the age of the depositor, the trend of saving was clear among female servants. On average these women also withdrew from their accounts less often than males. This does not mean that males were not saving in some other capacity, but it does look as though male depositors used their savings as a highly liquid account, withdrawing money from it more regularly to pay off loans or provide for other, often familial, expenses.¹⁰

To summarize, the character of retirement before its modern incarnation broadly had three forms. The first was effectively involuntary retirement for those who were simply unable to contribute to the economic apparatus. This required the difficult and often ungenerous support of third parties. Retirement for this segment of the populace was not remotely liberating and rarely enjoyable. Retirement was not a much-anticipated stage of life as much as it was a mark of feebleness. Fortunately today’s counterpart is far different. The second and third forms of retirement look much more modern in their character but were limited to a small segment of the population, notably either those who had the good fortune of significant wealth (or at least some disposable income to be able to put some aside regularly) or those who had developed a sophisticated mechanism of support from a much more generous community (such as the Presbyterian Church).

One trend that is partly responsible is the decline in the agricultural sector over this period. The argument in support of the importance of this explanation is that retirement is, on average, more of an urban industrial phenomenon than a rural farming phenomenon. Farmers generally participated in some capacity in the management or operations of farms until a rather advanced age. This suggests urban physical labor is somehow distinct from that faced in a rural setting; perhaps it is the reliance an older farmer could have on other hands or a transition toward overseeing his property rather than having direct involvement. Perhaps it is that urban labor caused more distinct physical strain than that faced in agriculture, or perhaps it is a greater breadth of opportunities available to an older individual in urban environments. Whatever the reason, it is true that the labor force participation rates for those on farms were higher than for those not on farms. As the number of individuals involved in the agricultural sector declined over this period, there was a resultant aggregate level increase in retirement. Estimating the degree to which declines in the agricultural sector were responsible essentially involves comparing the actual aggregate labor force participation rate to the theoretical value if the proportions of men in agriculture and nonagriculture had not changed from 1880 to 1940. This exercise suggests that about 22 percent of the decrease in labor force participation rate among elderly males is attributable to agriculture, an important but not exclusive driver of this trend.12

A second explanation, and even more pronounced in effect, is that higher incomes over this period drove the ability of individuals to retire. There is strong evidence that the decision to retire, particularly in the mid- to late nineteenth century, was related to the ability to retire, whether through recurring income or accumulated wealth. Empirical work studying Union Army pensions as a natural experiment during this time suggests that economic shocks had a strong effect on retirement rates, indicating that the decision to retire is often distinctly financially motivated. Thus, during periods of rising incomes, retirement rates should naturally increase. It has been suggested that over the interval from 1900 to 1980, increasing wages could explain as much as 60 percent of the increase in retirement rates. It is interesting, though, that the effect of income on the retirement decision appears to have fallen after 1950 as individuals have come to see retirement as an “expectation” rather than a mere “option” and as an industry has developed to provide leisure for those in retirement.¹³

The decision to retire is not the sole change that has transpired over the last century and a half, however. There has also been growth in the length of retirement. This, too, is a worthwhile trend to study, as it is the length of retirement that determines what one needs to have saved. What has driven the elongation of retirement? Is it a drop in labor force participation rate at ever-earlier ages, or is it the decreases in mortality?

To begin to answer this question, there are two noteworthy points to consider: average total life expectancy for those who had reached twenty years of age grew from less than sixty-two years in 1900 to more than seventy-three years in 1990. Over this same interval, there was a drastic drop in the labor force participation rate of older Americans, from 65 percent to just 15 percent of men over the age of sixty-five by 1993. Both aspects—increased life expectancy and an earlier exit from work—have contributed to longer retirement. The increase in life expectancy was the more crucial factor from 1940 to 1990, with up to 79 percent of the increase in retirement length attributable to the drop in mortality over this period.¹⁴

It is likely that the growing length of retirement motivated significant savings at an earlier age. The economic explanation for this is life-cycle saving—or the idea of spreading one’s means over the course of one’s life by saving during employment and drawing down the accumulated sum during retirement. A simple computation suggests that a twenty-year-old in 1900 would anticipate a retirement equal to approximately 7 to 12 percent of the rest of his years, so he would need to save about 7 to 12 percent with zero return (and less if higher return assumptions are used).15 Of course, the growth in retirement length would, by the same logic, necessitate ever-higher savings rates.

Before the Great Depression, one contingent offering retirement plans was insurance companies, which supplied a small but robust customer base of clients. While the Depression wreaked havoc on trust companies, common stocks, and bond markets, insurance company–run pension plans actually fared extremely well. The total number of plans blossomed in the aftermath of the crash, as they were broadly perceived as among the few places to put money securely. In 1930, there were some 100,000 individuals covered by pension arrangements managed by insurance companies. Over the course of the following decade, insurers brought on 600,000 new covered employees.¹⁶

Insurance companies operated in a rather overtly oligopolistic fashion within the pension arena. Metropolitan Life was the most prominent player, underwriting about a third of the plans, followed by Prudential, Equitable, and Aetna, who together controlled about another half. The grip of these major players on the market was tightened by the creation of the Group Association, which largely standardized the rates paid.¹⁷

The major difficulty faced by these companies at the time was the Depression’s effect on interest rates. The returns on investment were sharply curtailed by these low interest rates, and consequently, the cost to employers to provide for a given stream of payouts in retirement increased fairly drastically. A few insurers responded to the low interest rates by discouraging the sale of more plans, despite the new demand for them, because many managed their risk in terms of one company-wide interest rate being applied to all the contracts they insured. Bringing on new clients for companies with an overabundance of older plans would translate either into a dilution of their own earnings or into expected losses.18 Ultimately, the fact that these structures did fare well through the Great Depression, inspiring confidence in both the purchasers and the broader public, laid the groundwork for many of the private forms of retirement savings.

Franklin Delano Roosevelt, a staunch champion of public retirement support, was not the first Roosevelt to promote the potential benefits of implementing such a national system; Teddy had done so over twenty years before.19 Of course, both Roosevelts were joining a long list of social advocates for these systems. Perhaps the most visible of all was Francis Townsend, who concocted a retirement plan during the Great Depression meant to entice less productive workers to retire and provide openings for younger, unemployed workers. Townsend was a physician who became thoroughly dedicated to the cause and continued to call for more benefits because the Social Security program that was eventually enacted fell short of his expectations. He sought a retirement system with a retirement age of sixty in lieu of sixty-five and one that would pay up to $200 per month (the average income of middle-aged workers), far greater than what would ultimately be enacted.²⁰ The Townsend proposal envisioned a 2 percent national tax on the sale of goods and services between businesses. He also suggested a requirement that pensioners spend the $200 within 30 days of having received it, thus combining a very progressive retirement system with a plan that Townsend hoped would aid in bringing the American economy out of the Depression. Townsend was certainly successful in marketing his message, joining forces with a real estate broker by the name of Robert Earl Clements, with whom he opened a headquarters for supporters of the plan on January 1, 1934. Within just one year, over 1,000 Townsend clubs were in operation across the country, and Townsend found himself with millions of supporters.²¹

Indeed, the time was ripe for Social Security, and over the decades of the early twentieth century, there grew broader political will to put it into place—attributable in part to the Great Depression, during which time the desperate need for solutions rendered flexible otherwise rigid institutions and made it possible for them to be molded into Roosevelt’s progressive vision.

In 1937, there was essentially one hurdle left before the New Deal Democrats could enact the plan: the Supreme Court. It is interesting to note that the Supreme Court then had one of the most elderly compositions in history, with an average age of over seventy-one. The Court was divided, with three liberal justices and four conservative justices (no surprise why this, along with some federal courts, was subject to FDR’s failed court-packing scheme) and two potential swing votes—Charles Evans Hughes and Owen Roberts. At first, the committee that had dreamt up the proposal, the Committee on Economic Security, was divided over whether it should invoke the commerce clause or the ability to levy taxes for “general welfare” programs. The program seemed to be in great peril when the Agricultural Adjustment Act, which claimed to have similar constitutional foundations as Social Security, was struck down by the Court in 1936. It was only an unforeseen change of heart by Justice Roberts that took the wind out of the sails of the conservative plurality and gave 5-to-4 support to the program.²² History often has a tendency to naturalize pivotal events and to treat them as a chain of a multitude of causes, destined to happen. However, the truth is that this program that supports (or, for many, simply is) the retirement of countless Americans very nearly never existed.

Although Social Security may have seemed radical to politicians in the United States, the ideology behind it was far behind its more progressive counterparts of similar socioeconomics in Europe. Public insurance plans were seen as early as the late nineteenth century in Europe, developed first in Germany per an order from Otto von Bismarck. By the time the United States instituted its own scheme, it was behind over thirty other nations in doing so.

Remarkably, despite Bismarck’s rather conservative political philosophy, he was quite forceful in his promotion of a retirement system in Germany. In the face of calls that his proposal was socialist, he stated, “Call it socialism or whatever you like. It is the same to me.” He was, though, a subscriber to realpolitik, the doctrine promoting a pragmatically oriented decision-making process. And his dedication to the establishment of a retirement system was pragmatic indeed. There were calls in Germany by Marxist elements to implement a far more progressive system, and to some extent, this was Bismarck’s attempt to quell those forces.23

There is a legend that America’s retirement age of sixty-five is a vestige of Bismarck’s retirement program. The lore has it that Bismarck chose this age and thereafter many other countries selected it as well, using Bismarck’s model. However, Bismarck’s program actually had a retirement age of seventy, an age likely chosen because few German citizens reached that advanced age. Although it is true that the German system did reduce the retirement age to sixty-five, it did not do so until 1916, many years after Bismarck’s death.²⁴

Whence, then, does the American selection of age sixty-five come? The Committee on Economic Security, charged with determining the proper retirement age for Social Security, drew on two antecedents. The first was a mosaic of state pension plans, which typically used either sixty-five or seventy as the retirement age, with approximately the same number of states using sixty-five as using seventy. Helping drive the committee toward sixty-five in lieu of seventy was the Railroad Retirement System, which made its way through Congress in 1934. The Railroad Retirement System used sixty-five as the age of retirement, creating a federal precedent for age sixty-five.²⁵ It was thus the retirement systems already in place within the United States that likely motivated the selection of age sixty-five, rather than the thinking of Bismarck.

Later, there was a push to return the protections and advantages offered by the pension fund to the public at large. For instance, the Revenue Acts of 1938 and 1942 included provisions that made pensions “tax qualified” and disallowed favoritism of highly compensated employees over labor, lest they jeopardize their protected tax status. Also, some firms cunningly sought to use the pension system to circumvent the price and wage fixing of World War II by increasing promised benefits rather than providing the often-prohibited raises. There were judicial changes as well that helped labor, such as the finding of the federal courts that pension plans could be part of the union negotiation process over employee salary and benefits.²⁷

One of the first failures of unfunded pension liabilities was when the Studebaker Corporation closed its automobile-manufacturing plant in South Bend, Indiana, in 1963. While the retirees and those who had met the criteria for retirement but had been working until the time of the shutdown did receive their full pension benefits, the younger workers were almost entirely wiped out, with some receiving a cash payment worth a paltry percentage of the present value of the promised pension and another class of beneficiaries receiving nothing at all.28

This event, in concert with another instance in 1958 when the Studebaker-Packard Corporation reneged on a pension plan provided to employees of the Packard Motor Car Company,²⁹ put the issue of unfunded pension obligations on the radar of many Americans. The media picked up the issue as well; an NBC Reports special that aired in 1972 called “Pensions: The Broken Promise” received abundant press and was viewed widely across the country, spotlighting the issue during a divisive congressional battle over pensions.³⁰ Together, these events and the ensuing media coverage helped garner political support for pension reform.

Given their involvement in the early pension problems, the United Auto Workers (UAW) had an interesting position on the subject of pension reform. On the one hand, the UAW did not, of course, want to see labor suffer when firms were facing dire financial straits. On the other, because it had often pushed for retroactive increases in pension benefits, it did not necessarily want to require full funding of plans at all times because that would increase the push back against the UAW’s negotiation of more pension benefits, since the firm would be required to make an immediate cash outlay to meet the liability after new benefits were set.³¹ The thrust of the UAW’s push for reforms was to establish pension reinsurance more than it was to create requirements for fully funded pension plans.

Congress responded with efforts from a variety of committees. The traditional view was that pensions were legislatively under the purview of the labor committees, but the Senate Finance and House Ways and Means Committees also played a role, citing the tax shelters that these instruments offered as the basis of their involvement. This multipronged legislative effort created ERISA in 1974, which materially improved pension fund solvency obligations, reviewed the limits on the tax deductibility of pension contributions, and implemented standards to assess whether plans were being too favorable to highly compensated employees at the expense of labor. The UAW’s push for pension reinsurance materialized in the form of Title IV of ERISA, which created the Pension Benefit Guaranty Corporation, which pays out benefits up to a statutory maximum should a covered pension plan fail.32

General Mills was one of the first firms to move its pension away from the conservative management of insurance companies. The insurance companies generally saw invested funds through the lens of a conservator—to reduce risk but not necessarily to maximize return or generate excess returns. At a board meeting in 1965, the idea of ameliorating pension liabilities and improving the bottom line by taking advantage of a more aggressive investment approach was introduced with great success at the cereal and foodstuffs supplier. Of course, General Mills needed to conduct a selection process for a new manager, and the company ultimately settled on a group within Capital Research and Management Company, then run by Robert Kirby.³³

Some within Capital immediately understood the potential of an entirely new type of client if other private firms were to follow suit in their decision to move money away from the insurers and toward investment management professionals. This type of client was more sophisticated than the average investor and, even more attractively, the client account could grow continuously rather than be spent down during retirement and liquidated at death by being paid out to heirs.³⁴

The excitement some felt within Capital about securing this type of account was far from universal, however. Some of the most obvious candidates for running pension money—particularly those who would come from mutual funds—did not want to leave their positions because they were already earning healthy salaries and bonuses and saw the endeavor as risky. Others stayed away from the logistical challenges posed by pension fund management as compared to mutual funds, particularly travel to solicit new clients and maintain present ones.35

Although the independent pension fund management business may have had some trouble attracting personnel, soon the trend became undeniable. Municipalities, too, wished to put money with these managers. Once a California law changed to allow pensions to place up to one-fourth of their assets in equities extending their ability to be slightly more aggressive, many states, cities, and counties began to take the plunge.³⁶

While ERISA was a much-needed legislative achievement, in the period since, the private sector has largely begun a trend away from the defined benefit plan in the form of a pension to the defined contribution in the form of the 401(k) or 403(b). In the year following the passage of ERISA, there was approximately $186 billion in defined benefit plans and a significantly smaller $74 billion in defined contribution plans. However, in the late 1990s, defined contribution plans overtook defined benefit plans in terms of assets. That trend has continued since, and by 2006, private sector defined benefit plans had some $2.5 trillion in assets under management, compared to $3.2 trillion for defined contribution plans. The number of pension plans fell by over half from 1975 to 2004, while the number of plan participants increased by 26 percent. Defined contribution plans, by contrast, have seen participation increase about sevenfold over this same interval, with an approximate threefold increase in the number of plans.³⁷ Those numbers, along with funds in Individual Retirement Accounts (IRAs) and annuities, have continued to grow further at the start of the twenty-first century. As of the middle of 2014, employer-oriented defined contribution plans totaled $6.6 trillion, private sector defined benefit plans grew to $3.2 trillion, government defined benefit plans blossomed to $5.1 trillion, IRAs reached $7.2 trillion, and annuity reserves climbed to $2.0 trillion.³⁸

Defined contribution plans have been a major vehicle for retirement investment and have further democratized investment. The penalizing of premature withdrawal by levying a 10 percent fee and making all taxes come due if the funds are removed early on retirement accounts holding tax-deferred savings has certainly provided a strong incentive to keep people invested in their retirement. The plans have also been effective in pulling a completely new type of participant into the investing world: the saver. According to a survey by the Investment Company Institute, over one-half of individuals who had IRAs and 401(k)s when polled about their reason for investment listed “general savings.” These individuals see the market not so much as an opportunity for vast appreciation over the long term, but more as an alternative to depositing money at a bank. The tremendous simplicity in setting up 401(k)s and IRAs has certainly contributed to this trend.39

There is a broader history of people beginning to turn to the markets as another mechanism simply to save beginning with the inflation of the 1970s, when they were inspired by easy money and shocks to oil prices. Normally, the interest offered to depositors through savings accounts at banking institutions rises in line with the prevailing interest rates, so if the nominal interest rate rises along with inflation, so too will that paid by the bank. However, this state of affairs was prevented by an interest rate cap mandated by Regulation Q. Regulation Q was implemented in the depths of the Depression to prevent savings and loan institutions—many of which were then on the brink of collapse due to liquidity constraints—from competing against each other for deposits on the basis of interest rates and harming themselves in the long run by making payments to depositors unmanageable. Of course, this cap in Regulation Q was fairly innocuous in the decades after the Depression because it remained more or less dormant until inflation reared its ugly head. Once inflation exceeded the interest rate cap, savers watched the real value of their deposits being whittled away. Meanwhile, the stock market was ostensibly offering good bargains as equities declined, heightening the interest in alternatives to bank deposits.⁴⁰ This general trend fueled interest and participation in the equities markets, including through the use of vehicles like 401(k)s and IRAs in the late twentieth century.

Housing wealth cannot be ignored in the present analysis, even if these assets are unmanaged, as it accounts for about one-half of total household net worth nationally. Furthermore, housing wealth represents about two-thirds of the wealth of the median household, given that other forms of financial wealth are not distributed evenly.41

Beyond highlighting some problems associated with delaying crucial decisions faced by a segment of the population in addressing their expected financial needs in retirement, this observation has critical ramifications for a policy that many touted in recent years—namely, private investment accounts in lieu of Social Security. First, it runs contrary to the most common benefit claimed by advocates for the reform, that of empowering individuals to take charge of their own retirement, as many do not spend adequate time mulling over the figures to optimize for their own needs. Second, it makes it abundantly clear that carefully setting default positions is vital, because many participants will simply stay with the default guideline, so either rates and allocations that best serve the greatest number of people or rates and allocations that change according to other participant dimensions (age, other savings, and income) seem appropriate.

It is impossible to overstate just how significant this recent growth in retirement assets has been. In 1974, the amount of assets dedicated to retirement in America was approximately $368 billion.44 As of 2013, that number had grown to $20.8 trillion.⁴⁵ There was substantial growth across a wide variety of investment vehicle types—IRAs, for instance, had no assets in 1974 but grew to contain some $4.9 trillion in assets by 2011. State and local pension plans likewise grew, from about $88 billion in 1974 to $3.1 trillion by 2011, as did annuities, blossoming from $47 billion in 1974 to $1.6 trillion.⁴⁶

How do these numbers look on an inflation- and wage-adjusted basis? Retirement asset growth between 1975 and 1999 translated into a fivefold increase in assets relative to income.⁴⁷ This, of course, meant that the stock of assets average retirees possessed could last them many times longer. This aggregation of investable assets constitutes an enormous pool of financial resources in the country. Similar proportions have been achieved in many other economically developed areas around the world, notably Europe, Japan, and other developed Western and Asian nations. Further, as more developing countries such as China and those in the Southern Hemisphere attain more mature economic status, the phenomenon is likely to extend toward additional segments of the world’s population.