In conjunction with our latest Freakonomics Radio podcast, “The Folly of Prediction,” I decided to reach out to a former professor of mine, Raymond Horton, whose modern political economy class is a student favorite at Columbia Business School. I wanted to know what Horton thought the worst prediction ever was, particularly regarding the intersection of politics and economics. He immediately pointed to a Foreign Affairs essay written by Mortimer Zuckerman in 1998, in which Zuckerman boldly lays out the case that, like the 20th century, the 21st will also be marked by American dominance.
We’re barely a decade into the new century, so you may think it’s too early to pass judgment on Zuckerman’s prediction. But given the way things have played out over the last several years, it does look to be on shaky ground. At least that’s the opinion of Ray Horton.
Once you’ve finished reading Horton’s essay, we’d love to hear what you think count as some of the worst predictions ever.
The 21st Century the American Century? Don’t Bet on It
By Raymond Horton
On the eve of the 21st century Mortimer Zuckerman used the pages of Foreign Affairs to predict it would be “America’s century,” like the one just ending. At the time it didn’t seem as wayward as it does now. Back then the American political economy was firing on all cylinders, according to the usual metrics of good and bad. The economy was producing more and employing more, per capita incomes were rising, and even unemployment was headed in the right direction. To top it off, the federal government was beginning to run surpluses that could be used to make America even stronger.
Thirteen years later the U.S. is not firing on many of the recognized cylinders. Things have changed for the worse in a short period of time. Relatively few experts, and more importantly, relatively few common people are confident about the future of America. And while the U.S. has stagnated, some countries have prospered—again by the usual metrics. This combination of decline at home and rise abroad has reduced America’s international power markedly. Not many are predicting that this will be changing anytime soon. The safer bet, informed by events in the period since Zuckerman’s prediction, is that the 21st century will not be America’s.
Since then, two signal events stand out as path changers: 9/11 and, seven years later, the financial crisis. The former started the U.S. on an unsustainable fiscal path, the product of two wars and three years of tax cutting that would not have happened without the protective cover of 9/11. The latter led to a particularly severe kind of recession from which the economy still hasn’t recovered, thereby exacerbating the country’s structural deficit. To make things worse the decision makers are stymied, frozen by disagreement over what is causing the stagnation and how to cure it.
In many other countries (China is the outstanding example) decision makers are not stymied. China’s economy continues to grow at breakneck speed, promising to surpass America’s in purchasing power by the end of the decade. And China’s military capacity is also growing fast. India too appears to be on its way to Great Power status due to its economic and demographic advances. Of course, the development of other countries can be changed by unforeseen events, their 9/11’s if you will, or altered by the failure of their decision makers to adapt to foreseeable events. Time will tell, but at this point I wouldn’t bet that this century will belong to America.