Predictions Are Hard, Especially About The Future

Last week Tyler Cowen, Bryan Caplan, and Karl Smith were talking about their optimistic and pessimistic forecasts for the future. I take it the goal here is in some sense to forecast relative to the conventional wisdom baseline. So here goes, I am:

— Optimistic about China: I think American commentators have gotten obsessed with “bubbles” and are missing a China that’s (a) steadily growing its capital stock, and (b) determined not to let millions of people sit around idly out of fussy dislike of waste. They could keep growing at close to this clip for 20 years and still be well behind Portugese living standards, and I see no reason why Chinese people should forever be poorer than Portugese. Don’t listen to the haters

— Pessimistic about America: Because we now have well-sorted ideologically polarized political parties, our national institutions of government have become dysfunctional. But precisely because we now have well-sorted ideologically polarized political parties, efforts to point this out end up viewed through a short-term lens and dismissed as special pleading. Meanwhile, those who do see that there’s something wrong tend to daydream about third parties rather than attacking the real issues. Nothing terrible will happen as a result of this, but I think we’ll keep on not fixing our very fixable problems.

— Optimistic about health care costs: People spend too much time looking at wild CBO projections and arguing about politics and not enough thinking about the applications of informative technology to health care that are coming down the pike. If computers can play Jeopardy at a high level, they can also take over a huge share of routine diagnostic work.


— Pessimistic about immigration: The electorate seems to be becoming less sensible about the desirability of foreigners moving here at the same time Mexicans seem increasingly disinclined to risk their lives walking across the desert to live and work here under conditions of persistent legal harassment. The trendlines in Europe look similar, and starting from a worse baseline.

— Optimistic about small developed countries: People don’t talk about it enough, but one of the main consequences of the world becoming more peaceful and the costs of transporting goods falling is that a lot of the traditional returns to scale that used to exist for large countries have gone away. At the same time, I think smaller polities have a much easier time of focusing political attention on delivering adequate and cost-effective public services. A bunch of excellent small countries (Netherlands, Ireland, Belgium, Finland, Denmark) have temporarily shot themselves in the foot by signing up for the euro but this will pass. Small is beautiful.

— Pessimistic about climate change: Coordinated global action on the scale necessary to avert climate catastrophes is just hard to do. But for a while it looked like all the different clocks were lining up right for action in 2009–2010. It didn’t happen. There’s now just no way mitigation will get done on a scale and timetable adequate to prevent major ongoing dislocations. Human civilization has survived a lot of terrible disasters in the past (look at the 1914–45 period) so I don’t think we’re “doomed” the way some environmentalists say, but people my age and younger are looking at a cascading series of avoidable climate disasters and it makes me angry.

Obviously, it’s in the nature of this exercise that I’m probably going to be all wrong.