More than ten years ago, we were involved with a study on the Future of the Kitchen 2010 – 2020, in which we forecast appliances using the Internet.
Crazy, am I right? It’ll “never happen.”
This is the fun part of having been in the business of trend analysis, forecasting and scenarios for over a decade. You are around long enough to see what works out and what doesn’t.
Perhaps you did or did not make it through the entire lecture and Q&A with Prof Niall Ferguson in yesterday’s post. Either way, you may have missed the key forecast that underlies all of his thinking about the future of the American economic system:
The U.S. is poised to run major budget deficits in addition to its current debt through 2080.
Take a second to think about that.
This morning’s papers, in advance of the Republican takeover of the House of Representatives, are reporting the upcoming “serious budget cuts” to be proposed by the new house members. It makes for good copy – after all, things might soon be different!
Let’s look at the actual projections from the Congressional Budget Office.
Ferguson points out that there is not currently the political will to reverse this trend since it involves the sweeping entitlements of Medicare and Medicaid. These two programs alone will, by 2080, equal the entire size of the United States government in 2010, never mind military and education and all the rest. Ferguson is not bullish on the notion that future generations of politicos will stare into the eyes of retiring Baby Boomers and say, “sorry, no pensions for you, and you can buy your own healthcare.”
So America, despite its headlines, will still engage in deficit spending unless something very drastic and unexpected comes to pass. That’s an important long view to have as the politicians take to the airways.
When you’ve been in the business of forecasting for more than a decade, it’s fascinating to see how your past scenarios become current events.
More than ten years ago, I remember discussing the conundrum of digital imaging with the executives of Kodak. It’s not that they didn’t see this coming, it’s that there was no elegant way to repurpose billions in chemical factory infrastructure for a world of integrated circuits and hard drives. Looking back at 1999, it was difficult to see a world where Kodak thrived using anything resembling their old model of competitive advantage.
Today, Kodak has now been delisted from the S&P 500, along with the New York Times and Office Depot. Added onto the list of bellweather stocks is Netflix, a company whose shared are trading near $200, a company whose business model seemed like a long-shot at the time.
The whole point of analyzing future is to understand upcoming competitive dynamics. There will be new winners and new losers.
Competitive…Futures…yeah, I like the ring of that.