Category Archives: Predicting the Future

Revisiting My 2008 Predictions

Shortly after the 2008 election, I made some predictions about how Obama’s presidency would turn out (original post here). Now that the 2012 election is upon us, let’s see how I did:

Obama will be a two-term president, though he will be significantly less popular by the time his presidency comes to a close. Stars that burn so bright tend to fade quickly. It will not help Obama that many of the problems with politics-as-usual that he speaks out against are systemic. Even the leader of the free world is powerless against the political process.

Verdict: we’ll know about the second term in about two weeks. But he is already much less popular than he was four years ago. People expect the impossible from their presidents. That means the only way to win election is to promise the impossible. When those impossible promises obviously aren’t kept once in office, people are disappointed. It’s a common pattern that will repeat itself in future administrations.

One-party rule will not be good for Democrats. As happened with Republicans during the Bush era, unified government will lead to sclerosis, hubris, and an increase in corruption. Obama will not help; he will not risk angering his party by vetoing bad legislation. Democrats will lose their Congressional majority, probably in 2012. Voters seem to prefer divided government, which is why we’ve had it about two thirds of the time over the last century.

Verdict: I got the year wrong, but the House did indeed change hands in 2010.

-We will not see a full-fledged nationalization of health care. The government currently spends about 54% of all health care dollars; I expect that figure to rise, but not above about 67%.

Verdict: There was a big health care bill, and it did not nationalize the health care system. It will be a few more years before it’s fully implemented, but my cost estimate still seems to be in the right ballpark. Too soon to tell.

Obama will withdraw most soldiers from Iraq sometime in 2011. Some small peacekeeping forces will remain there more or less permanently, as happened with Korea.

Verdict: Got it about right, though there is still sadly little peace to be had in Iraq.

-Obama will ramp up our presence in Afghanistan, and it will not go well. This will contribute to his declining popularity. The U.S. military can fight and win almost any battle, but even they cannot build a nation. That kind of change can only come from within. Like Clinton and both Bushes, Obama will not learn that lesson.

Verdict: Correct, as far as Afghanistan goes. But I did not foresee see Libya, Syria, Somalia, or the Pakistan drone strikes. I thought his foreign policy would be roughly the same as Bush’s. It turned out to be even worse.

-Taxes and spending will both go up, but not by catastrophic levels. Overall public sector growth will be slightly less than under Bush. That means Obama’s final budget will probably be the nation’s first to to exceed $5 trillion. When divided government returns, Obama will find his veto pen and strike down bad GOP legislation, no matter how similar it is to Democratic legislation. Government growth in Obama’s second term will be sharply lower than under his first term.

Verdict: The good news is that after a huge increase early in the administration due to the stimulus and the TARP bailouts, spending growth slowed. The bad news is that spending appears to be permanently stuck at the new, elevated level. This is not sustainable. Even so, Obama, Romney and Congress all appear disinterested in cutting spending to affordable levels.

Overall, I whiffed on a few predictions, but my batting average still looks pretty good. Just goes to show that, at least with politics, rampant pessimism can be a useful predictive tool.

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It Gets Better All the Time

One of the larger themes that I hope regular readers see in this blog is that people need to cooperate if they are to prosper. And when they do, wonderful things happen. Here is an example of just that, from a really good book that I’m currently enjoying:

A horse can lug two hundred pounds more than thirty miles in a day, but a C-130 carries forty-two thousand pounds over eight thousand miles during those same twenty-four hours. This makes for a 56,000-fold improvement in our ability to cooperate with one another.

Steven Kotler and Peter Diamandis, Abundance: The Future Is Better Than You Think, Kindle locations 1504-1506.

Diamandis runs the X Prize Foundation. He is midwifing the birth of commercial space travel, among other things.The book’s thesis is that exponential improvements in the quality of human life are both taken for granted, and are just the beginning.

Life is good, and it’ll only get better — especially for the bottom billion who still live in grinding poverty. What an amazing time to be alive.

The Future of Air Travel?

For thousands of years, no human traveled faster than a horse. Napoleon’s armies were no mobile than Caesar’s. That changed almost overnight with the automobile and then the airplane. Despite that rapid progress, flight times from New York to London have barely budged in 50 years.If anything, it’s slower now that the Concorde is out of service.

That could change in the next 15-20 years with the dawn of space tourism. A spacecraft has to travel about 17,000 miles per hour to stay in orbit. A partnership between KLM airlines and a wealthy Formula One mogul hopes to make first-generational suborbital crafts that can reach 2,200 miles per hour, with an eventual goal of hitting 13,750 miles per hour.

This is good for more than space tourism — a trip from London to Sydney would take an hour and forty five minutes. That’s about the same as a flight today from New York to Chicago.

Caesar and Napoleon would be astonished. Hopefully this venture doesn’t experience the crony capitalism problems that NASA has had with a similar project.

Bernanke Says Recession Likely Over

Wonderful news if he’s right. We won’t know for sure until the GDP figures come out for the third quarter. Or the fourth quarter, depending on when the growth started and how fast it is. But leading indicators have been looking good for some time, so Bernanke’s guess seems reasonable.

Just beware of any declarative statements that come out before the data do.

Waxman-Markey Passes House 219-212

I am an economist, not a political analyst. I am not a political partisan, but I do oppose cap-and-trade. Now that my biases — and limitations — are out in the open, here is my take on the down-and-dirty politics of the Waxman-Markey cap-and-trade House vote.

It was close. That usually bodes poorly for Senate passage. But something in my gut tells me it will make it through. A filibuster is possible since there are still only 59 Democrats.

But filibusters are used sparingly. That probably means this bill will not face one.

Here’s why. There will be a trillion-dollar health care bill this summer. And the vote on Sonia Sotomayor. Republicans will probably only want to use one filibuster.

Sotomayor would not shift the ideological balance of the court, which means Republicans will probably be fine with letting her through. They will put up enough of a fight to appease their base voters. But I don’t see a filibuster.

That leaves either cap-and-trade or health care. With the economy in trouble, environmental issues have taken a back seat in the public mind. Pocketbook issues always trump “luxury issues” like global warming in times like these.

Republicans therefore have more to gain from filibustering health care than Waxman-Markey. I personally think cap-and-trade will do more to hurt the economy than the forthcoming health care bill. But the median voter doesn’t.

And politicians make their calculations on their electoral prospects, not on economic growth. They will cater to the median voter.

That means the GOP will save its filibuster for health care. Waxman-Markey will pass the Senate unless there are significant Democratic defections, or something sinks the health care bill before Waxman-Markey hits the Senate.

That’s my prediction. Now let’s see what happens. Happy to hear what you think.

Fulfilling Prophecies

CBO estimated today that unemployment will top out at around 10.5% before it recovers. Congress is doing its part to make CBO’s dire prophecy a reality.

Rep. Alan Grayson is set to introduce the Paid Vacation Act, which would make it federal law for employers to offer paid vacation for employees (hat tip to Marc Scribner for finding the story). Rep. Grayson believes his bill will stimulate the economy. “Fewer sick days, better productivity and happier employees” will boost GDP and employment.

The Congressman may be unaware that when workers become more expensive to hire, employers hire fewer of them. Or else he is more concerned with making CBO’s predictions come true.

(Cross-posted at Open Market)

Geithner on the Outs?

President Obama stuck up for his embattled Treasury Secretary last night on Leno. He assured the nation that Timothy Geithner is doing an “outstanding job.”

Could this be the “Heck of a job, Brownie” moment that seals Geithner’s fate?