Gillette-A Glorious New Century? Yes

A Glorious New Century

8/9/2001

The long days of summer have prompted me to think big thoughts. Where are the US and the world headed?

There is a tendency for people to believe that our country, not to mention the entire planet, is going to hell in a hand basket. The media exacerbates this tendency to think the worst, as they report on the most extreme events, and then draw conclusions about our entire society based on those isolated events.

Many believe that the social and cultural decline in the US is irreversible. I can understand why some take this position, although I do not subscribe to it. Statistics on crime rates, out of wedlock births and other social indicators show a more positive though mixed picture. But from an economic perspective, the future looks incredibly bright. Moreover, future growth comes with the opportunity for deep poverty around the world and social pathologies at home to be addressed and markedly diminished.

The current deflationary slowdown is troubling, and our economy may not return to the soaring heights of the late ‘90s for at least a year. Still, the productivity gains during the latter 1990s were real, and the Internet revolution is only half-done at the most, in its infancy at best. Most major companies have not fully integrated readily available technology into their operations yet, and the enormous capital investment means more impressive innovations are bound to occur.

George Gilder, founder of the Gilder Technology Report and the current owner of The American Spectator, recently made a similar diagnosis about long-term prospects. "The collapse of 2000 and 2001 will seem a mere blip in a long-run bonanza….Combining all the (financial and technological) indices of the vitality of the innovative process, a reasonable guess is that the opportunities of the next decade are roughly ten times more promising than the opportunities opening in the mid 1980s multi-trillion-dollar wealth explosion."

Future opportunities for enormous growth are not limited to the Internet alone, although computing power surely will aid in numerous scientific breakthroughs. Developments in biotechnology and medical devices in the next forty years should be astounding. Manufacturing industries will benefit from new technologies and the growth fueled by other sectors. But the most impressive developments may be in the energy sector.

Honda already has produced and put on the market a hybrid car: half-gas, half-electric. Sooner rather than later, this technology will become standard in all cars, and will cut consumption for oil in half while increasing the quality of cars and trucks and reducing pollution costs. This trend alone will spark its own boom. Moreover, developments in "micro-grids", solar, wind, nuclear fusion, and geothermal energy are all occurring rapidly and at the same time. While it is hard to say which technology will become predominant first, all of them have a strong possibility of becoming far cheaper sources of energy in the next 30-40 years, in some cases later, but in other cases much sooner.

Globalization is the overarching trend in the world today, and while its ramifications may cause disruptions in certain societies, its benefits will be on balance very positive. Communication and transportation links between countries will deepen while trade barriers will continue to shrink. Even more promising is the rejection of statist ideas in favor of free minds and free markets.

The nations of Europe will wean themselves away from top-down control from Brussels as it proves to be ineffective. Meanwhile, a common currency could prove to be extremely beneficial to the continent, provided that the US dollar, the current monetary standard of the planet, finds a degree of stability. Japan’s long decade of economic stagnation will come to an end when Japanese politicians abandon the current modus operendi in favor of pro-growth policies.

China’s leadership has embraced a growth model since 1978, which accounts for its rapid progress. While change in China has been a story of one step forward, two steps back, the ruling class opened up in greater degrees over time. China will not turn back to old ways, but evolve into a more free society open to investment coupled with religious and political pluralism. Thirty years from now, China will not be a democracy in the Western sense, and they will remain a strategic competitor to the US. But more importantly, their common interests with the US will ensure that they will not be a threat, provided the US does not make them one.

Vladimir Putin is the best thing to happen to Russia for at least a century, if not longer. He has drawn the line with the oligarchs who ran the country under Yeltsin, and has informed them that a common set of standards will be applied to everyone. He has also enacted a 13% flat tax, which will not only discourage the black market, but also make Russia, with its educated population and limitless natural resources, the next Ireland on a far larger scale.

India has begun to experience strong growth after fifty years of failed socialist experimentation , and the rest of the developing world may and should follow their example. The good news is that the 20^th century has proven what works and what does not, and every country has the opportunity to create a policy framework that maximizes both growth and common provision.

All of the examples and possibilities presented here are not flights of fancy, but a sincere effort to appraise just why our future as Americans and human beings is far brighter than normally assumed. Optimism is one of the greatest gifts anyone can possess, because it turns dreams into reality. Sometimes it is even warranted, and it is now. Nothing is guaranteed, but there are many reasons for hope.

My deepest thanks to The Long Boom web site for their inspiration and insights, which informed parts of this column. They can be found at http://www.thelongboom.org and the book by Peter Leyden, Peter Schwartz and Joel Hyatt can be purchased here.