Assessing Future Trends

Surely, Niall Ferguson counts as one of the nation’s leading economic historians. But, he is also a public intellectual. In order to be a public intellectual you need to follow trends. Better yet, you need to prognosticate.

This might make you like the person that Wordsworth once called “mighty prophet, seer blessed,” but when he wrote that line, the poet was referring to a 6 year old child.

I am not sure of the relevance, but the truth is, no one gets punished for bad prophecies. And, following trends, as Ferguson explains, contains a risk factor. Take, for example, the trend that Harvard psychologist Steven Pinker has identified: things have been getting better for the human species over the past centuries. One might make this argument, cogently, but a trend does not need to go on forever. It might be a fake-out, and for all I know, things will keep getting better until they get worse.

As Wittgenstein so pithily remarked, there is no such thing as a scientific fact about tomorrow. This fact notwithstanding, climate change hysteria assures us that the trend toward global warming will continue unabated until we are all roasted. And yet, climate change hysteria is an especially Western mania, so we might believe, following trends, that nations who seem more concerned with providing for their populations’ energy needs will prevail in the long run.

And besides, the fact that the stock market has been in an upwards trend for many years now-- it’s called a bull market-- does not mean that it will continue thusly forever. Anyone who has spent the past couple of years buying the dips has been losing money. The notion that the long term trend is going to bail them out feels like one illusion too many.

So, what trends does Ferguson identify. First, climate change. This is a given, because if you do not accept it, and fail to note that even if the climate is getting warmer, this is not necessarily a bad thing, you will be dismissed from the ranks of mighty prophets.

The planet keeps getting warmer and that trend is almost certain to continue, according to the Intergovernmental Panel on Climate Change. Try reading its Sixth Assessment Report if you want to see how hard it will be to avoid rising average temperatures in the next 30 years.

Next, Ferguson remarks that population keeps growing, even though the population of some countries is declining, as is life expectancy. Of course, this ignores the possibility that a shorter life span will reduce medical bills for the nation at large:

The world’s population keeps growing, per the United Nations World Population Prospects, thanks mainly to elevated fertility and improving mortality in Africa. The combination of rising population and climate change in Africa is a recipe for hunger, if not famine, conflict and mass migration.

Opioids are killing large numbers of people, though we are not on sufficiently good terms with the governments of Mexico and China to do anything about it. 

In the US, meanwhile, life expectancy is declining, especially because of opioid deaths, as John Burn-Murdoch recently showed in the Financial Times. Anne Case and Angus Deaton of Princeton University have been making this point about “deaths of despair” for some years.

And then, Ferguson addresses an issue that is near and dear to this blog. The declining mental health of young people. You would think that all of the available treatments would have addressed the problems, unless you understand that most of these treatments are not very effective. 

As for what has caused the problem, no one seems to understand that the attack on the integrity of the family has produced far too many broken homes. Along with it, the war against men has produced significant damage. Of course, these are feminist policies, so one is not allowed to say who caused what.

Meanwhile, the mental health of young people is a disaster. As Derek Thompson reported in a recent Atlantic essay, the share of American high-school students who say they suffer from “persistent feelings of sadness or hopelessness” rose from 26% to 44% between 2009 and 2021. More than a quarter of girls reported that they had seriously contemplated attempting suicide during the pandemic.

Aside from the adverse effects of Covid lockdowns, Thompson offered four explanations for the plight of Generation Gloom: social media addiction, declining “sociality” (which I translate as sociability), the perception that the world is a stressful place, and excessively protective modern parenting. The third of these raises the possibility that negative news contributes to a negative trend.

Now, Ferguson does not want to sound like a Cassandra-- many of the most astute Cassandras out there are decidedly pessimistic about market trends-- so he finds some good trends. Beginning with battery life-- it has become cheaper. The life span of Americans is declining. But battery life is increasing. There, this is comforting:

OK, I know, there are some good trends. For example, the unit costs of photovoltaics and batteries for electric vehicles have fallen substantially over the past two decades. In most of the world except South America there has been a significant gain in tree canopy cover since 1982. And whenever I sit down with my friend the venture capitalist Vinod Khosla, he always cheers me up. The last time I saw him, in 2019, we were all going switch from real meat to impossible burgers. This year he has high hopes of nuclear fusion. But those are moonshots, not trends.

And yet, unfortunately, in the world of finance, the trends in inflation and debt and productivity are declining:

Meanwhile, how is the trend in inflation around the world in any sense good? Thirty-seven countries now have double-digit inflation rates, according to the International Monetary Fund’s April World Economic Outlook, and the energy-price shock shows no sign of fading in either gas or coal.

How about the trend in US public finance? According to the Congressional Budget Office, the federal debt held by the public will be 98% of gross domestic product this year, just below the level it reached in World War II. By 2052 it could hit 185%, as the federal deficit is projected to rise almost every year from now until mid-century.

As for labor productivity the trend is downward. One might suggest that this is the consequence of the trendy embrace of diversity, equity and inclusion-- which means handing out credentials and jobs for reasons that have little to do with merit:

You think Americans can grow our way out from under this debt mountain? Allow me to show you the downward trends in productivity growth in all the world’s developed economies, courtesy of the Organization for Economic Cooperation and Development. Whenever I am told that the 2020s can’t possibly be as inflationary as the 1970s, I point out how much higher the growth rate of GDP per hour worked was back then.

Not only is productivity growth lower today. Judged in terms of the growth rate of the money supply, the Federal Reserve made a bigger mistake last year than at any point between 1968 and 1979. The demographic situation and outlook are worse in every major economy. The fiscal position is much worse today. Then we had worries about pollution; now we have the existential threat of climate change.

Any time anyone calls attention to the existential threat of climate change, one is tempted to remark that the more we believe in the existential threat of climate change the more we are going to be inclined to sabotage ourselves.

Fear not, Ferguson says. The world’s leading autocracies, led by people like Vladimir Putin, are about to implode. This is good because it is far better than having to compete against them.

Fair enough, by all indications, Russia is losing its war in Ukraine. On the other side, Russia and Saudi Arabia and other OPEC nations are cutting back on petroleum production. As far as they are concerned, the interests of the United States are yesterday. And who cares about oil prices when we can virtue signal about Jamal Khashoggi.

And besides, the war is not over until it is over. And the other war, the real war, the one that involves the reserve status of the United States dollar is just starting.

Here, Ferguson seems more like cheerleader than prophet:

First, as I argued here two weeks ago, Russia is losing President Vladimir Putin’s annexationist war in Ukraine. If (and it is a big “if”) the US and its allies supply more firepower and more finance at this crucial moment, there is a decent chance that Russia’s colonial army in southern Ukraine unravels and Putin finds himself back where he started in February, controlling just Crimea and part of the Donbas region.

Putin has shrunk in stature on the international stage to the extent that not only do the Chinese and Indian leaders now treat him with disdain, but even the leaders of Belarus, Kazakhstan and Serbia have ceased to bow and scrape.

The trend against Russia is clear, for now. At the least, it seems that Putin has overplayed his hand. But, what is going to happen when, despite climate change, winter descends on an energyless Europe.

Where will all of the trends go then?