Home prices keep falling, but productivity is rising fast. GDP grew 5.6 percent in the fourth quarter, yet unemployment remains stubbornly high. Inflation is nonexistent, while the consumer confidence index just rose to 55.9 from 53.6—whatever that means. Can't make sense of these economic indicators? Don't worry, because nobody else can, either.
Here is what you really need to know: a Sonic Boom is coming. It will be caused by globalization. And while globalization may be driving you crazy, it's just getting started. Thirty years ago, Shenzhen, China, did not exist; today, it has nearly 9 million residents, roughly the same as New York City. In a single generation, it has grown from a village of tar-paper shacks into an important urban center. It has become the world's fourth-busiest port, busier than Los Angeles and Long Beach combined. Never before has a great city been built so fast, nor a productive economy established from so little.
The international recession that began in 2008 has made the Sonic Boom quieter, but history shows that when a crisis ends, the larger trends in place before the crisis usually resume. Shenzhen represents the larger trend of growth, change, and transformation at unprecedented velocity. Thanks to vast increases in productivity, worldwide economic growth soon will pick up, creating rising prosperity and higher living standards for most people in most nations. The world will be far more interconnected, leading to better and more affordable products, as well as ever better communication among nations.
But there's a big catch: just as favorable economic and social trends are likely to resume, many problems that have characterized recent decades are likely to get worse, too. Job instability, economic insecurity, a sense of turmoil, the fear that even when things seem good a hammer is about to fall—these are also part of the larger trend. As world economies become ever more linked by computers, job stress will become a 24/7 affair. Frequent shakeups in industries will cause increasing uncertainty. The horizon has never been brighter, but we may not feel particularly happy about it. Here are five things to keep in mind during these dizzying times:
CLIMATE CHANGE WILL CHANGE EVERYTHING
Dramatic economic change will happen at the same time as climate change. Either one would be a challenge in itself. Now, they're going to occur simultaneously, which will cause economic convulsions unparalleled by any event other than World War II. Winners are likely to be those in high-latitude regions. Yakutsk, Russia, located in Siberia just below the Arctic Circle, is currently home to the world's leading museum of woolly-mammoth fossils. But what if Siberia were to become a temperate expanse? The minerals and oil thought to lie beneath the permafrost could boost the global supply of commodities, not to mention Russia's national wealth.
MANUFACTURING WILL BE OBSOLETE
The factory-based economy is nearly over, because of technological improvements. Fifteen years ago, Boeing took 22 days to build a 737 airliner; today, it takes 12 days. Such changes mean fewer factory jobs, even as production rises. China is losing factory jobs much faster than the United States, as efficiency improves. Soon there won't be any nation with a factory-based economy, and that would have happened regardless of whether there was trade liberalization. Higher productivity, in turn, generates the social wealth that creates more jobs for teachers, health-care providers, and other essential needs. The world is actually better off with declining factory employment, which is no consolation if you lost a job.
COLLEGE IS OUR SECRET WEAPON
College is more valuable to the future economy than petroleum. America leads the world in many areas—economics, military power, loud music—but nowhere is the lead more important than higher education. The United States has more great colleges than the rest of the world combined. Yet California, Texas, and other states are cutting back their public-university systems. This is a terrible mistake. In the long run, extra college may even cost society less, because people with college educations are better suited to look after themselves in a turbulent economy, rather than asking the government to subsidize them.
WOMEN WILL DOUBLE THE WORLD'S SUPPLY OF IDEAS
In Western nations, women's education levels and personal freedom already are on track to equal men's; in much of the developing world, this could happen in the next two generations. Throughout history, most women have been denied a fair shot at contributing to research, engineering, business-management, and leadership roles. Asthis changes, there will be twice as many people applying their brainpower to the world's problems.
MILITARISM WILL DECLINE
Iraq, Afghanistan, and Darfur are awful exceptions to a two-decade trend of fewer wars and less combat in the world. Right now a person's chance of dying because of war (via combat or through indirect causes) is the lowest it has been in human history; nuclear warheads are being disassembled instead of built; per capita global arms spending has declined 40 percent in the last quarter century. Some of the reason is economic: nations are more interested in acquiring market share than in acquiring territory. But that's good! And there has never been a superpower relationship like the one evolving between the United States and China. The world's two leading powers are not arming against each other; rather, they're cooperating on economic production.
Many of these developments will have far-reaching positive consequences. But they will all add to our uncertainty. One reason our economic anxiety soared during the recent crisis is that it seems like no one is in charge of the U.S. economy. In fact, there is no one in charge. The president doesn't "run" the economy—no one does. In a way, this is a source of stability. There is no one person who can make a fatal economic blunder. Think of all the crazed, conflicting statements about the economy that were made by government officials, Democratic and Republican alike, in the fall of 2008, as economic grand plans and emergency theories changed daily. Imagine if any one of them had actually been in charge of the economy—surely he or she would have made the situation considerably worse.
Because no one runs the economy, no one knows where the economy is headed. And that means that even when most things are OK for most people, the sense that everything is about to fall apart is palpable. Americans have had this sense before. At many points in our history, it was commonly felt the nation was about to enter a cycle of sharp decline. Probably this won't happen, but we can't know that for sure. Today, this fear manifests as collapse anxiety: the worry that resource exhaustion, or international chaos, or something we haven't even thought of will bring down the Western way of life.
Bear in mind the seemingly iron law of human events—new problems always arise to replace the old. Suppose the economic downturn ends, and what comes next is a flowering of productive efficiency and higher material well-being. The same forces likely to bring about these desirable ends also will cause economic tumult to grow more frequent. Job anxiety will be endless. Celebrity inanity, political blather, targeted advertising, scream-and-shout discourse, the paving over of nature—they're going to get worse. Winner-take-all wealth accumulation at the top, already the worst fault of capitalism and among the least-attractive aspects of American society, may worsen in the West while infecting newly free nations.
Plus, every little thing that goes wrong anywhere in the world will scare us. Now if something explodes in Pakistan or a new product from Malaysia challenges a Midwestern product, we have live television images within minutes. The terrific aspects and the anxiety-inducing aspects will be intertwined, and we're just going to have to live with this. No matter how crazy and chaotic events become, with each passing year, the world likely will be a better place than at any point in the past. A chaotic, raucous, unpredictable, stress-inducing, free, prosperous, well-informed future is coming. It will be a Sonic Boom. Just remember to cover your ears.