These are humbling times for champions of the free market and American-style capitalism. The CEOs of the Big Three car companies are kneeling before Uncle Sam like Henry in the snows of Canossa. The stock market volatility these days is looking more and more like a death rattle. No one wants to check their 401(k) for fear of their face melting like that Gestapo guy in "Raiders of the Lost Ark" when he peeked inside the Ark of the Covenant.
But while we cheerleaders for economic liberty need to take our lumps and spend some time thinking about where things went wrong, it would be nice if the Chicken Littles spent a wee bit of time doing likewise.
Exhibit A: China. You can't pick up a copy of Newsweek without reading something by Fareed Zakaria about how China will only get larger and larger in our rearview mirror. Five years ago, Goldman Sachs predicted that China's GDP would overtake America's by 2041. Now it thinks that China will reach us in 2027. (Of course, with a much bigger population, China's per-capita wealth would be much lower than ours.) The National Intelligence Council's new report, "Global Trends 2025: A Transformed World," echoes these concerns.
Heck, maybe they're all right. Maybe not. The simple fact is that no one knows.
But I'd bet against it.
First of all, there's a long record of very smart people making very bad predictions. Just Google "bad predictions" and you'll see what I mean. In 1943, the chairman of IBM said, "I think there is a world market for maybe five computers." Legend has it the head of the U.S. Patent Office said in 1899, "Everything that can be invented has been invented." Neville Chamberlain prophesied "peace in our time."
And roughly two decades ago, the best and brightest were telling us that "Japan Inc." was going to overtake America any day now.
"Future historians," warned Harvard's Ezra Vogel in 1986, "may well mark the mid-1980s as the time when Japan surpassed the United States to become the world's dominant economic power." Yale's Paul Kennedy wrote a blockbuster of a book concluding that American policies should be designed to manage our decline "so that the relative erosion of the United States' position takes place slowly and smoothly." When Jacques Attali was head of the European Bank for Reconstruction and Development in 1991, he observed that America was becoming akin to "Japan's granary, like Poland was for Flanders in the seventeenth century."
Journalist James Fallows, political scientist Chalmers Johnson and economist Lester Thurow were fawned over for their supposedly incontrovertible conclusion that Japan was the future. "The Cold War is over," Johnson wrote, "and Japan won."