Right, I’ll get my coat, then. The World in 2010.

“•US GDP will be around 3% through 2010. The truly important figure will continue to be unemployment. There won’t be much inflation next year (no shit!) and productivity growth will fall to a more normal rate like 2-3% which will help on unemployment. (Austan Goolsbee)”

I assume that you mean GDP growth. Note that productivity growth in the 2-3% range with growth in 3% means that (assuming a 1% yearly increase in the labor force), unemployment will *not* be helped.

“The US deficit will be worse than expected because of a soft recovery and low revenues, and will prompt the return of the infamous bond market vigilantes who will push up interest rates. (Leo Abruzzese, Economist Intelligence Unit)”

First, it’s The Economist, so their predictions are alway neoliberal, unless they’re neocon. Second, right now there’s not a lot of other places to put one’s money. Especially with the various financial shockwaves still rebounding, which leads to uncertainty about the soundness of investments (e.g., will the commercial real estate market follow the residential, when and by how much? Who’s holding how much soon-t0-be-junk CRE debt?).

“The troop surge in Afghanistan won’t be quick enough to have much effect on the 2010 fighting season, but it will show benefits in 2011. (Senor)”

Does he have anything to back this up? What was the guy’s position on Iraq? Right now, the only place for neocons, IMHO, is with US Army and Marine infantry units, where they could prove invaluable as IED detectors.

“There will be military action against Iran in 2010, probably from Israel. (Dan Senor, co-author of Start-up Nation: The Story of Israel’s Economic Miracle)”

Sorry – I just checked; according to his CFR bio, Senor is “Former foreign policy advisor in the administration of George W. Bush and senior advisor to the Coalition Provisional Authority in Iraq;…”

At that point anything he says should be assumed to be a lie until proven to be a lie.

If Cantor and Ryan truly excite Lexington, then Lexington should probably try and get out a little more.

(That’s what Louisville is for.)

Barry: “Does he have anything to back this up? What was the guy’s position on Iraq?”

Dan Senor was the former spokesman for the CPA in Iraq, which should be a useful guideline to his credibility. What’s more surprising is that anyone gives a shit what he thinks about Afghanistan. Or Iran for that matter (though Israel’s itching desire to pick a fight with Iran has been obvious for some time now, so that one’s more plausible).

I never know what to make of predictions about China, either. It seems like since the early 90s, the collapse of Chinese growth (or China itself) was always supposed to be just around the corner — not this next corner, mind you, but the one after that — mostly on account of what always seemed to be a vague, uneasy sense that it just couldn’t or shouldn’t be happening in the first place. Who knows, maybe Abruzzese is different.

7: Predicting the historically unprecedented exponential growth not continue is hardly remarkable. China continues to astound for good reason. But economists are unduly focused on rates instead of absolute levels for reasons that are quite unclear to me. (personally, I think it’s because they have no real theories explaining how productivity improvement happens) There are clear and obvious paths to improved worker productivity via physical infrastructure development, which China is currently investing in. It is not hard to imagine that there is some economic development level towards which a managed society like China might be able to progress towards quite quickly absent making a mistake somewhere. And note that they are still quite far from the per capita production/income of any developed nation. I think the eventual limit for Chinese growth is obviously somewhere around the current per capita production of the western world, and they may run into limitations before that just because of the underdeveloped worker capital in the countryside which may require a generation or two to catch up, but it is far from obvious to me that they need to run into a wall any time in the next decade at least.

Maria, thanks for replying.

You said “This would put productivity at parity with or lower than output, which would ultimately have a somewhat positive effect on employment figures.”

Wrong. As I said above, productivity of 2-3%, when combined with a 1% growth rate in the labor force, and GDP growth of 3%, means that unemployment will at best remain high, and possibly creep up. I’m using a casual definition here; the official ‘unemployement rate’ can do some strange things, because at some point long-term unemployed people are quite deliberately not counted. Note that I’m simply working from those forecasts given. I would also add that, from the viewpoint of a person working in the USA, that the unemployment picture is complicated by the fact that slack capacity will be first reutilized in low-labor cost areas, as will any new investment. We’re sitting in a troublesome situation here, with the additional fact that the financial sector is now a wasteland, kept alive primarily by vast government subsidies. And not because it’s doing anything productive, but due to bribe power and terroristic threats (‘nice economy you have there; pity if somebody were to blow it all up!’).

I will not comment more directly about Senor, due to the risk of dragging the thread off-topic. However, his presence (and the fact that ‘The Economist’ was a neoliberal cheerleader until we all fell off the cliff) does raise the highly relevant question of ‘why the heck should we care a bout a corp-media fluffing session?’. Why should we consider this any more informative than an AIE ‘black coffee’ session on how well things were going in Iraq, or a CEI/Heartland ‘symposium’ allegedly disproving AGW, or anything ever said on the editorial page of the Wall St Journal?

12: Oh, you mean that the US government repeatedly said that Saddam had WMDs, and he didn’t, and now they’re saying that Iran doesn’t have nuclear weapons, therefore it must have them.

Truly, you have a dizzying intellect…

ajay: No, no, what happens is that when after-the-fact, the WMDs and/or nukes are not found, the US government says they were cleverly moved or hidden somewhere, and then that becomes true because they said it. (They may also mumble under their breath that okay, maybe they were wrong, but they’ll only do that once or twice. This therefore lacks the impact on the universe’s Reality Matrix produced by the powerful technique of the Repetition Effect. It’s all proved by Science.)

14: This is far too obvious to be a political possibility.

Well, ‘weird’s not quite the word – ‘perfectly explicable in terms of the electoral cycle and Tory dog whistle politics’ might be better, but it’s a bit of a mouthful.

ajay: To be a little more serious about the Repetition Effect: the actual experts on the Iran question have of course been screaming “this is a lie” to anyone who’ll listen since the Bush years. But they’re at a disadvantage, because as we see here, even well-educated sources tend not to be familiar with them — they’re relying, like most people tend to do in areas where they don’t specialize, on a vague sense of the media consensus. Had the Obama White House seen fit to challenge the narrative of Iran’s fake “nuclear crisis,” there would conceivably have been a shift in the consensus media narrative. But they didn’t; Obama has if anything pushed it forward with more sophistication and panache. The narrative has a political inertia of its own, even more than it had already, and will continue dragging in the same direction regardless of its utter disconnection from any actual facts. For exactly the same reasons as fantasy-based narratives about Iraq and Afghanistan will persist.

The Repetition Effect is even more effective on Iran than on Iraq because the issue of uranium enrichment and what it means is even more technical, and easy to fog. Even on the eve of Iraq, the Bushies were having to invent obvious absurdities about balsa-wood weapons drones and chemical weapons cooked up in trailers.

ajay 12.10.09 at 5:43 pm

“It’s even weirder than that. In the absence of any evidence in its favour, the belief that Iran has or will soon have nuclear weapons has become so widespread, so uncontroversial, that smart, politically liberal, non-insane people like Maria simply mention it in passing, in the same way as they might refer to Saudi Arabia as “an oil-rich Middle Eastern country” or Liam Neeson as “a very tall actor from Ireland”. ”

This is why I question Senor, and now that I’ve got some background on him (former GW Bush administration advisor, former CPA member), assume anything he says to be a lie until proven to be a lie.

The reason that I harp on thing like this is because I strongly agree with an obscure financial expert from a small island off of the coast of Europe:

“The raspberry road that led to Abu Ghraib was paved with bland assumptions that people who had repeatedly proved their untrustworthiness, could be trusted. There is much made by people who long for the days of their fourth form debating society about the fallacy of “argumentum ad hominem”. There is, as I have mentioned in the past, no fancy Latin term for the fallacy of “giving known liars the benefit of the doubt”, but it is in my view a much greater source of avoidable error in the world.”

(http://d-squareddigest.blogspot.com/2004_05_01_archive.html)

Barry : well, actually I think Senor’s making one reasonable prediction: 2010 may well see an attack of some sort by Israel on Iran. I hope not, and if I had to make a firm prediction I’d say not, but I certainly wouldn’t fault someone for saying the opposite. He’s certainly more likely to be proved right than the chap who tipped Spain for the cup. (He isn’t saying anything one way or the other about these nuclear weapons, notice.)

On the Afghan surge, on the other hand, his prediction is a lot dodgier and his bias a lot more obvious.

Economists learning Yoga! Preferably Vinyasa or Iyengar Yoga. I don’t think we can even start to imagine how that could change our future.

mpowell:

it is far from obvious to me that they need to run into a wall any time in the next decade at least.

I think the wall is labelled “externalities”. The question is, will they be able to avoid an event combining the worst features of Bhopal and Chernobyl? That’s what they’re setting themselves up for, more than strictly economic problems.

Nice to see Matt Damon getting kudos for clearly having the chops on his topic. (He was the great surprise [to me] of the Clinton Global Initiative: much stronger on his topic than the other celebrities, and aligned with someone who knew how to make things happen.)

Since the Republicans won’t do anything about unemployment, and the Democrats (as they made clear with the stimulus and health care) won’t do anything without supplicating themselves to the Republicans, the inevitable conclusion is that the Republicans will take the House back in 2010. (I don’t believe, without having checked, that there are enough contested seats in the Senate for them to take over there.)

So I’m rather surprised that no one listed that as their 2010 prediction.

As for the “recovery,” I stick with my declaration a while back that all of the yoga positions are far too optimistic. Cursive Z is the optimistic scenario for the US. (Republican House in 2010 and you can forget finishing the tale.)

Damon is terribly underrated – I’m serious! And for those who’ve been living under a rock, here’s the “I’m f@cking Matt Damon” video again.

yoga? the idea of economists getting even more able to stick their heads up their arses terrifies me.

OK, are 36 and 38 the same Alex?

No, No, Please – NOT “reign in”!

It is pretty hard to take seriously anything that features Dan Senor. What, exactly, was he supposed to contribute and on what basis would one listen to his opinions? At least the two Republican clowns can lay claim to winning an election.

I’ll take the side that the Democrats keep the House, too. The Republicans seem to be working hard to marginalize themselves by promoting purity tests and sucking up to media extremists like Beck and Limbaugh. If they work hard enough to drive out the moderates, the special election in New York’s 23rd district could be the model for 2010.

#43 bm, I’m a moderately wealthy man. How can I reign except in spending?

@42: and then there’s me, defiantly lower-case.

@48 I mean, of course this is a ‘big’ question that has (I assume) received a lot of laborious attention, but: perhaps China’s faster growth compared to much of Sub-Saharan Africa is due to differences in social and human capital, stuff like how to operate (in) a bureaucracy or run complicated commercial operations, whose direct impact on GDP has tended to be overwhelmed by things like extractive industries and cash crops for most of the past 200 years, but which is crucial to industrialization and infrastructure. Even within China, the regions that grew most in the last 30 years are the ones that were most integrated into the global economy in the 17th-19th c., and benefit from the existence of large networks of “overseas Chinese” who, I think, were very much involved in the ‘foreign direct investment’ that was crucial to this growth. I think the same holds for the Middle East and India.

In fact, the relative wealth of different countries and regions, or at least their relative growth in the past 50 years is much too similar to what it was during the 5 centuries before the industrial revolution for this to be a coincidence. Parts of India and China were among the wealthiest places in the world for most of the 1300-1800 period, sub-Saharan Africa and parts of Central Asia being (or being perceived to be) the poorest, with much of the Middle East, Southeast Asia, and Latin America somewhere in between, depending on the country. I know that within the Middle East and Central Asia, relative wealth of the various sub-regions is not so different now from what it was then.

Of course to the extent that wealth is correlated with existence of a strong state, it’s also inversely correlated with exposure to colonialism.