Predicting the New Year

I seldom make predictions because I am so often wrong.  Nonetheless, when the New Year rolls around the temptation to peer into the future is irresistible.  As a consequence, I am about to put on my clairvoyant hat and do my best.

But first, a few caveats.  The longer the period to be foreseen, the less likely the accuracy.  Similarly, the more precise the formulation, the more it is apt to be off the mark.  General trends are much easier to predict than exact details.  Yet even these are subject to grave error.

We love the idea of a Nostradamus; nevertheless we must remind ourselves that his prophecies are only verified in hindsight.  Only after World War II occurred could we decide that this was a conflict to which we alluded.

In the real world, the complexities are too great to be assessed in every respect.  Unexpected events continually arise to throw our calculations out of whack.  Furthermore, we are not always sure of the rules governing change.  They too are in dispute.

Take the economy.  Liberals and conservatives both want it to grow.  But what will achieve this?  Liberals believe in Keynesian economics.  They assume that if they pump money into the system, it will take off.  As a result, they do not fear the effects of deficit spending.

Conservatives, in contrast, favor tax cuts.  They argue that if businesses and ordinary citizens have more money at their disposal, the consequent investments and personal spending will stimulate growth.  From their point of view, it is not the government but the private sector the produces wealth.

This divergence of opinions has generated diametrically opposed predictions about what this next year holds.  Thus, for Republicans the Trump tax cut will usher in a time of plenty.  They expect the economy to go into overdrive such that ordinary Americans get more jobs at higher wages.

Meanwhile, Democrats expect the opposite.  They argue that putting more money in the hands of investors merely encourages them to squander it on themselves.  If so, less will be spent on the needs of the poor and—as Nancy Pelosi predicts—people will die.

So who is right?  Although both factions claim to have science on their side, is this true?  In our scientific age we have learned the empirical investigations often generate insights that explain how events unfold.  For instance, once we understood how atoms split, we could build an atomic bomb.

The problem with respect to economics is that there is not yet a consensus on what works and what doesn’t.  Because both political power and intellectual dominance are at stake, ideology tends to overpower empiricism.  People see what they want to see and therefore come to conclusions favorable to themselves.

I, no less than other observers, am infected with this shortcoming.  I too have a history that slants the manner in which I interpret events.  This said, the way I read the tealeaves is this.  Tax cuts have had a successful track record.  They kindled growth under presidents Kennedy, Reagan, and even George W. Bush.

Keynesian stimulation grounded in government spending, conversely, has a less glowing record.  It did not get us out of the Great Depression, nor, in the hands of Barack Obama, did it generate a roaring economy.  In each of these cases, the effects were modest.

Economists, to be sure, continue to debate the whys and wherefores of these diverging stories.  Although they all believe in making deductions from the facts, they elucidate these differently.

As for me, I expect to see a booming economy.  Four per cent growth this next year does not seem out of the question.  Nor do I expect people to die as a result of this expansion.  In fact, I anticipate better health when people—including the poor—have more assets available to them.

For me, the big question is this.  Will a substantial portion of the electorate change its estimation of what has occurred?  Will Democrats and Independents credit Trump policies with generating the revival?

Or will propaganda win out?  Will the steady drumbeat of partisan criticism drown out the clinking of coins in people’s pockets?  In other words, will facts matter or will political allegiances take precedence?

Melvyn L. Fein, Ph.D.

Professor of Sociology

Kennesaw State University