21st CENTURY FUTURECAST:

THE GOSPEL OF CHANGE

FUTURECASTS online magazine
www.futurecasts.com
Vol. 3, No. 1, 1/1/01.
(from Vol. 1, No. 1, 8/1/98)

       Homepage   Economic futurecast  Government futurecast  International futurecast

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Futurecasts confirmed:

 

 

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  Almost 2 1/2 years ago, FUTURECASTS online magazine published its initial Futurecast issue setting forth and explaining substantially probable outcomes for the 21st century in economics, governance, and international affairs. It is, of course, still too early to expect confirmation of accuracy from actual results. However, at least, no expectations have as yet been undermined by events, and some events have already proceeded strongly along lines confirming those futurecasts - in some instances much to the surprise of acknowledged authorities.
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There have already been many examples of developments proceeding along lines predicted by FUTURECASTS - often to the surprise of many of the "authoritative voices" that dominate intellectual discourse.

  Some particularly noteworthy examples:

  • The political impact of severe economic disruptions have been widely feared - and with good reason. Nevertheless, the forces highlighted by FUTURECASTS that spur the continued spread of democratic systems have broadly succeeded. Isn't it interesting that the most characteristic political impact of the Asian Contagion and similar economic crises has been the peaceful exchange of political power in accordance with reasonably fair elections in such unlikely places as Indonesia, Russia, Taiwan, South Korea, and Mexico. The states spun off from Yugoslavia have also now experienced such peaceful exchanges of power after long periods of economic hardship and military conflict. Once again, the skeptics have underestimated democratic electorates.
  • Various forms of limitations on governmental powers continue to spread. Democracies increasingly depend on independent judicial tribunals for administrative and constitutional review - and commercial law is increasingly being left in the hands of independent tribunals even in authoritarian states. The European Union has two independent supranational tribunals - the European Court of Justice with jurisdiction over treaty disputes, and the European Court of Human Rights with jurisdiction over human rights questions - and the World Trade Organization has had substantial - albeit not total - success in resolving trade disputes.
  • Capitalism has continued its worldwide conquest of economic policy. Although much remains to be done, a wide variety of nations have continued to enact significant economic reforms, opening up their economic systems, and creating political, legal and economic environments conducive to capitalist commerce. Many third world nations have even opened their banking systems to foreign ownership. All around the world, efforts are being made to provide stock markets that enable successful startups to "go public" and raise the funds they need for expansion.
  • The Euro, the internet, and the need to be competitive in global markets, have loosed competitive pressures in Europe that are forcing rationalization of economic policies. Tax levels are coming down, and restraints on part-time and temporary employment are being reduced to increase needed labor market flexibility. Financial markets are being integrated.
  • The Asian Contagion was proclaimed by some economists, like MIT Prof. Paul Krugman, as the worst financial crisis since the Great Depression. FUTURECASTS was definitely under whelmed. In fact, the most notable feature of the crisis was the speed of recovery - occurring so fast that pressures for needed reforms were seriously undermined - leaving the area still dangerously exposed to future financial reverses.
  • Japan has continued to resist politically unpleasant reforms - although some progress has slowly - reluctantly - been made. Instead, it has continued to primarily rely - unsuccessfully - on Keynesian efforts at massive deficit  spending and radically low interest rates in its decade long struggle with economic malaise. Here, too - as FUTURECASTS has frequently pointed out - reality has perversely refused to conform to Keynesian expectations.
  • The cornucopia of expanding wealth continues to flow over the American people, and spin off vast sums for government purposes.
  • The politics of budget surplus have replaced the politics of budget deficits. Government programs and government budgets are exploding at the state level - under both Democratic and Republican administrations - and the same is happening at the federal level - sharply confirming FUTURECASTS expectations that "the era of big government" will exuberantly continue.
  • Problems with reduced lending standards are now surfacing in higher loan default rates for many banks.
  • Problems with deteriorating military readiness were confirmed by intelligence failures in the War on Terror and lack of sufficient "boots on the ground" during the occupation of Iraq.
  • The political response to judicial activism is also reflected in recent presidential election campaigns as control over the Supreme Court becomes a serious issue - and in the 2000 election, even the Democrats found reason to complain.

Alarmists and Utopians:
(from Vol. 2, No. 2, 9/1/99)

  FUTURECASTS continues to reject both the alarmist and the utopian views of future prospects. Indeed, both extremes are simply stupid.
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    Alarmist forecasts are often exaggerated or overemphasized because of the awareness that the easiest way to get public notice is to scare the s__t out of people. Utopian forecasts are often the result of advocacy scholarship on the part of those who seek to further utopian schemes by predictions that the schemes will occur and succeed.
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  This does not mean that there are not things to be alarmed about. Bad things happen in this world. The publisher of FUTURECASTS had a successful futurist career for almost two decades - from the mid 1960s when he published his book presciently entitled “Dollar Devaluation,” until the mid 1980s, when he finished 12 years as a financial columnist for a string of business newspapers - informing businessmen and investors that government economists and policymakers were following invalid concepts, and correctly explaining why and when periods of inflation and recession would result during that turbulent period.
  •   Utopian expectations that the business cycle will be rendered obsolete, and that technology will free the world from the need to work will - of course - not be realized. Capitalism is not an utopian concept. It cannot - and doesn't presume to - provide utopian results. It is merely - by a considerable margin - the best way to organize economic activity, and the only system that provides the flexibility and dynamism essential to keep pace with the accelerating rate of technological change.
  • Government and private propensities to mismanage affairs will continue unabated.
  • Terrorism - remains an obvious problem. The reduction in terrorist activity after the end of Cold War Soviet support has now been replaced by a sharp increase with the advent of militant Muslim support.

  This does not mean that there are not reasons for considerable optimism. Some very good things are presently happening in the world.

  FUTURECASTS remains very optimistic about the economic and political prospects for the next century.
  • The population explosion - the key to so many prospects for the second half of the 21st century - will be brought under control by such factors as the electric light bulb, television - and the increasing availability of education for girls.
  • Depletion of non-renewable energy sources - will be taken care of by capitalist markets - easily - unless governments get in the way.
  • Widespread military conflicts - have in fact been greatly reduced and confined to minor nations and a few remaining hot spots.
  • Food shortages - are widespread in only those states that are involved in conflicts or suffer under governments that do not facilitate capitalist market mechanisms.
  • The arms race - has in fact been reversed in all of the major world powers.
  • Proliferation of weapons of mass destruction - is an obvious problem - but possession of such weapons has so far had the primary effect of concentrating minds on the horrors of modern warfare. But terrorist cannot be similarly restrained and will prove a difficult problem.
  • Nationalism, protectionism and isolationism - remain serious problems - but are actually in substantial retreat before the forces of capitalism and globalization.
  • Deficit spending by governments -  is increasingly  viewed once again as harmful - although many third world nations still desperately need relief from past excesses and the recent recession drove most major nations again heavily into debt.
  • Moral decay - has been asserted and deplored since at least the end of the last Ice Age.
  • The big rock will not soon fall from the sky - and if it does come after the middle of the century, we will be technologically capable of destroying or diverting it.

  Both the good and the bad probabilities must be given equal recognition.

Exotic Technologies
(from Vol. 2, No. 3, 10/1/99)

  Nanotechnology, artificial intelligence, bioengineering and other exotic technologies will undoubtedly revolutionize life during the 21st century. However, it can confidently be predicted that basic principles of economics will remain intact throughout the 21st century.

 Luddites and utopians:

   Advances in productive technology during the last two centuries have repeatedly induced pessimists to worry that new machines would destroy more jobs than they create, and induced optimists to muse about the creation of an economic utopia, usually managed by government or other "wise men."
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 The automation scare:

 

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   Even supposedly learned people have worried that automation will destroy jobs. Paul Samuelson's widely used economics textbook, at least as late as 1961, expressed the fear that computers would lead to automation and destroy jobs. Of course, computers have proved to be one of the greatest job creating inventions of all time - for the entire world. If the Nobel laureate really understood capitalist markets, he would have understood why this is the inevitable result of all technological advances.
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 Advances in technological efficiency ALWAYS enable a market economy to do more than it could before.

   Advances in technological efficiency ALWAYS enable a market economy to do more than it could before. No one person or group of people, no matter how intelligent, can have a clue as to what the extra goods and services will be. But individuals all around the world - applying the new capabilities within their own realms - take individual steps forward that, in sum, achieve amazing results.
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  That's why centrally planned economies and concepts of "industrial policy" are stupid. Only those working in systems of economic freedom (capitalism) are able to take full advantage of the technological advance, and avoid the problems of rapid economic obsolescence that accompany it.
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  There will be plenty of work to be done throughout the 21st century.

 The utopian myth:

  

 

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   Only capitalism will flourish in the 21st century. Indeed, it will probably be a golden age of capitalism.  Only government mismanagement  (inflation, wars, protectionism affecting domestic and international markets, etc.) can defer the expected capitalist gains. After all, as the technological advance accelerates (as it will), it will require increasingly massive investments to finance the accelerating technological changes - to build, maintain, and constantly improve the new technological facilities - and great entrepreneurial talent to develop the new industries.
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 All government managed or large scale collective systems will, even more than in the 20th century, prove hopelessly and inherently inept, and will fall further behind the United States and other market economies.

   There will be many Bill Gates.
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  It is obvious that - in a world of rapid change - skilled management becomes increasingly important.  Entrepreneurial talents are scarce - even among good managers - and will be increasingly valuable as the 21st century progresses. Technological skills that are up to date will also increase in value. Those whose productivity is increased by technology will see their rewards increase faster than those who gain little or no increase in productivity. (That's why top entertainers and sports stars see greater earnings growth than top dentists or brain surgeons.)
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  Thus, capitalism (economic freedom) will become increasingly indispensable in the 21st century, and all who work should see substantial increases in living standards throughout the century. However, disparities of wealth will continue to increase. All government managed or large scale collective systems will - even more than in the 20th century - prove hopelessly and inherently inept - and will fall further behind the United States and other market economies.
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  Accelerating Rates of Change:
(from Vol. 1, No. 1, 8/1/98))

 

 

 

 

 

 

 

 

 

 

 

It will be the new technological developments rather than the technological disappointments that will provide the real surprises.


  The key to understanding the 21st century is a rate of technological change that will be twice as fast as that of the 20th century. By the end of the 21st century, the force of change will reach tidal wave proportions.

  Technology forecasts beyond 25 years are notoriously unreliable, and FUTURECASTS will not offer any specific forecasts for the century. The paperless office remains a myth, a Moon base is still not even in contemplation, and HAL may not be here in 2101.
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  Sophisticated, integrated computer programs that rival human intelligence will be extensively delayed due to the Reverse Moore's Law of software development. As program complexity increases into the tens of millions of lines of code, programming difficulties and costs increase exponentially. Even the Windows operating system requires tens of millions of lines of code and thousands of programmers. Thus, most computer advances will remain limited to discreet applications and "expert systems." Fortunately, wonders can be achieved in this manner.
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   Nanotechnology, too, will make great strides, and provide us with amazing capabilities. However, nanotechnology facilities and components will be immensely expensive to create, maintain, and constantly improve. They will supplement rather than replace traditional manufacturing. They will most certainly not eliminate labor or provide the basis for an egalitarian utopia.
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  However, it will be the new technological developments rather than the technological disappointments that will provide the real surprises. Twenty five years ago, neither the world wide web nor the unraveling of the genetic code were expected to be achievable by the end of the 20th century.

 Flexibility:



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  This means that static, inflexible entities will have trouble just holding their own. Most will be swept away by the end of the century, leaving an economic, political and ideological landscape that will be unrecognizable to those of us living at the beginning of the century.

  Despite fierce resistance, reform efforts continue worldwide in both the economic and  political spheres.

  Opportunity:


  The world will be dominated by the flexible, the opportunistic, the entrepreneurial. Accelerating rates of change means a rising flood of new opportunities. It doesn't matter if opportunities are missed -- ten more just as good are already rolling in with the tide.

  CEOs who fail the test continue to be replaced at an accelerating rate.

  The Wave of the Future:

 

 

 

 

 

 

 

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  During the 20th century, many political and intellectual leaders disparaged capitalism and were pessimistic of the future of the United States and of the world. Many feared that fascism was "the wave of the future." When fascism was defeated, there were those who thought that communism and socialism were "the wave of the future." The surprise for many was that it was capitalism that turned out to be the wave of the future flowing out of the 20th century. Confirming our faith in economic freedom, the 20th century turned out to be the American Century.

  It has always been fashionable in certain intellectual circles to malign capitalism for deceit, unfairness, dishonesty, and discourtesy - all driven by greed. However, such conduct is economically foolish - and such intellectuals could never survive as businessmen if they conducted themselves in such a manner. In fact, capitalism tends to reward business behavior that is honest, fair, civil, and compassionate - and it inspires risk-taking that can often be credibly seen as heroic.

  Government Economic Controls:

 

  

 


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  We start the 21st century with mixtures of entrepreneurial capitalism, welfare capitalism, and autocratic capitalism vying for supremacy. Leadership groups in the political and intellectual spheres prefer state-dominated and controlled economic systems that leave major levers of economic power in political hands where they can be used for political and/or ideological purposes. These leadership groups are powerful and articulate. However, their policies are wrong, and their victories will lead to many miseries for the people they ostensibly act for.
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  The Government futurecast for the 21st Century is that government will certainly have much more to do, but it will remain as inherently inefficient as ever. The battle over how much government is necessary or desirable will rage on unabated, but the expansion of Big Government will nevertheless remain inexorable.
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   Entrepreneurial Capitalism:

 

  Entrepreneurial capitalism is the wave of the future for the 21st century. To prosper, entrepreneurial capitalism must have an environment that includes a substantial degree of individual liberty, which can only be safeguarded by multiparty democracy and limited government.
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  The Four Pillars:

 

 
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  The International futurecast is that the 21st century will see the worldwide triumph of all four economic and political pillars of the American Way of Life: economic freedom (capitalism), political freedom (multiparty democracy), limited government (checks and balances on governmental powers, especially property rights and an independent judiciary), and individual liberty (legally enforceable individual rights).
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Another
American Century:

 



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  In this sense - in the best sense - the 21st century will be more the American Century than was the 20th century. Protectionist policies, "industrial policy" and welfare approaches will hold back European progress, and limits on labor mobility will diminish the benefits obtainable from commercial and monetary union. Autocratic capitalism will smother the progress of Asia's vast multitudes. Only by becoming more like the United States with respect to these four governance virtues will the nations of Europe and Asia be able to keep up with the United States.

  In fact, in both Europe and Asia, progress encouragingly  continues - but much more remains to be done.

   The Gospel:

 

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  The Economic futurecast for the 21st century is for a cornucopia of material prosperity for those nations that adopt and properly adapt to their own characteristics the fundamental virtues of the American political and economic system. The Gospel of the 21st century is Change, Opportunity, and - with respect to these governance virtues - the Triumph of the American Way of Life!
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  Setbacks:

 

  As in the 20th century, progress will not always be easy, peaceful, or without major setbacks along the way. Such setbacks, however, should be nowhere near as devastating as those that had to be overcome in the 20th century.
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  Minority  Majority:
  The United States will no longer be a majority white nation. However, this will not matter, since it will remain a clearly majority American nation. The "melting pot" will triumph once again - easily.

  The 2000 census confirms accelerating rates of intermarriage - for all ethnic and racial groups.

  A Miracle in Boston:
   The Gods of Baseball will at last remove their pitiless curse from the Boston Red Sox. They will cease devising malign punishments for its fans, grant forgiveness for its original sin (trading the Babe), and permit Boston to win a World Series.

  Keep the faith!

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  Copyright © 2001 Daniel Blatt