I mean for the West, not for emerging economies. Obviously we need to know future trajectories, and that is hard to do. But try this simple question: since 2000 or so, have the predictions of the optimists or the pessimists come closer to being correct and insightful?
At a dinner party two nights ago, the unanimous opinion, even from the optimists, was that the pessimists had been doing better in the predicting game. Of course, that does not mean the pessimists will be correct going forward. The optimists might try these counters:
1. There isn’t much of a true structure period, so a bunch of correct pessimist predictions doesn’t mean much.
2. The optimists had the better predictions for the 1980s and 1990s. Perhaps the sides simply alternate being correct every now and then.
3. The recent correct predictions of the pessimists are mostly noise. Soon, optimistic predictions are likely to start being correct again.
4. Since 2000, the pessimists didn’t actually predict as well as you might think. They failed to see how quickly the internet would spread, the power and reach of smart phones, and furthermore peace has continued, at least among the advanced economies. GDP still grew.
I don’t see #1 as giving a huge boost to a structurally-rooted optimism. Note that for #2, it is usually cheaper to destroy than to build. They are not the bleakest scenarios either, but still a big comedown for the optimists, I would think.
#3 cannot be ruled out, but it’s not a huge amount of evidence for optimism either. It does allow the optimists, however, to keep their structural models intact.
#4 runs the risk of “if this is what optimism looks like…”
I believe many optimists wish to invoke an inconsistent mix of #1 and #3.
I thank Veronique de Rugy for pushing me on this point in the conversation.
How much should the predictive ability of a group matter anyway? People who are good at predicting may or may not be good at understanding.