4 Predictions About 2014 That Are Wrong
We’d all like to know what will happen in 2014, and the thoughtful journalists at the Economist magazine have published an intriguing set of predictions that give us some clues, as they do every year.
Some of them are quite a stretch, however. So in the spirit of respectful debate (which the Economist basically encourages with every issue) here are five things the magazine thinks will happen next year that probably won’t:
A coming “tech-lash.” The idea is that a tech backlash will occur as ordinary folks begin to view tech barons such as Mark Zuckerberg, Larry Ellison and Sean Parker as greedy villains akin to Wall Street banksters and heartless Big Oil environment wreckers. Doubtful. Superrich tech titans have shown themselves to be plenty crass and dismissive of the little guy, but with an important difference: Many of the most popular tech offerings, such as Facebook (FB), Twitter (TWTR), LinkedIn (LNKD) and Pandora (P), remain free to the public or cheap if you upgrade. And new services come along all the time to keep the supply-demand equation balanced in favor of consumers. Oil companies and banks suffer from the perception that they gouge consumers and enrich themselves at the public’s expense. Zuckerberg, et. al. don’t.
The Twitter IPO will produce many more social-media offerings. Twitter got right what Facebook got wrong, with a flawless IPO that valued the company at a vertiginous $25 billion or so. The thinking now is that many more social-media startups — think Snapchat, for instance — will follow with even richer IPOs. However, Twitter stock has drifted down by about 6% since the IPO, while the broader market has climbed by nearly 3%. There’s plenty of evidence that Twitter’s lack of profitscould soon bring the stock back to earth. Plus there’s the broader risk of an overall market correction that could cool the market for all IPOs. Twitter may be a solid business, but it's not necessarily a trendsetter.
“Many will wonder if central banks know what they are doing.” Ya think? This would have been a great prediction in 2008 or 2009. As for the Federal Reserve — the most powerful central bank of all — critics have questioned and even lampooned its policies for several years now. The Fed’s penchant for “printing money” was a big issue in the 2012 U.S. elections. Criticism intensified this year as the Fed gave a head fake about pulling back on quantitative easing — which sent bond markets into a frenzy — then basically said “never mind” a few months later. A sizeable posse of economists and business leaders already feel the Fed has lost credibility by keeping money too loose for too long. So while this prediction isn't wrong, per se, it's just dated.
China will become “top dog. ” There’s no doubt the size of China’s economy will eventually eclipse that of the United States, if only by virtue of its massive population. But whether that will automatically make China a global leader is highly debatable. China still has hundreds of millions of rural citizens living at or below subsistence levels, and 2013 exposed levels of inbred corruption in the communist government that makes the childish politicians in Washington look positively statesmanlike. For all their flaws, Europe and the United States have proven institutions such as the rule of law and relatively transparent governments that remain huge holes in the Chinese system. The demise of the West is a popular economic meme, but Monty Python could have written the ending: “I’m not dead yet.”
The Economist makes many other predictions that are incisive and entertaining, on far-flung topics including the rise of Africa, Scotland’s bid for independence, reusable rockets, India’s chronic toilet shortage and William Shakespeare’s 450th birthday. It’s hard to find so many through-provoking forecasts in one place, even if a few of them turn out to be wrong.
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success . Follow him on Twitter: @rickjnewman .
