The shape of things to come.
I’ve come to the conclusion that the only force in the universe you can absolutely depend upon is in direct conflict with basic human nature. The force is cyclicality and the human behavior is best summed up by my friend Bob Willemin’s line: “People have a tendency to take current circumstances and extrapolate them indefinitely into the future.”
This anomaly is best observed in the financial world. When things are booming, it seems impossible for people to imagine a collapse, and vice versa. Even as our economy is showing clear signs of recovery, most people just don’t believe it. Not just ordinary people, but lots of economists and business leaders share a persistent pessimism.
I guess I’m what you’d call an optimistic realist. I strongly believe things will continue to improve. But no one knows, including me, the exact shape our next wave of prosperity will take. But I’ll take a stab at it.
- It’s roundly believed that the American consumer has fundamentally switched from profligacy to penny-pinching. I don’t quite believe this. I think consumption will return to fairly robust levels, though never reaching the peaks we once experienced. Americans love to buy stuff, and you can’t change that basic cultural drive overnight. One big difference is the bursting of the housing bubble, which has deprived the acquisitive urge from a critical source of fuel – accessible home equity. It’ll take years for this ready leverage to come back, if ever. I also agree that people will spend on different things, and it’ll take a long time for conspicuous consumption to once again rear its decadent head.
- Companies always figure out how to operate more efficiently during a recession. So productivity will continue to increase ahead of job growth. But not forever. After each recession, jobs in the US catch up as opportunity outstrips mere survival.
- New regulations will make sure we don’t repeat past mistakes. They won’t stop new ones from happening.
- Digital technology will continue to transform our economy and society at an accelerating rate. Institutions unwilling or unable to cope with this will continue to fail. Though many considered DOA will survive and have the last laugh.
Last, but not least, all those young, bright-eyed, and occasionally irritating people running around the halls of commerce, government and academia are plotting brilliant things we can’t even imagine. So be nice to them. They’re all of our futures.