Jay Reding.com

Every year, I put up my list of predictions for the coming year. Sometimes they come close to the mark, most of the time they do not. Regardless, it’s fun to stare into the crystal ball and make a few predictions about the coming year. Without further ado, here are my predictions:

Politics/National

• President Barack Obama’s popularity with the left will bleed away as he moves to governing as a centrist.
• Card check legislation will be narrowly defeated in Congress, preserving the rights of the American worker to a secret ballot.
• The Republican Party will continue to spend a year in the wilderness, while the seeds of political renewal will come from outside the party structure.
• Vice President Biden will say something incredibly stupid, creating a great deal of tension between him and President Obama.
• Congress will continue to be unpopular as the economy continues to backslide and more and more scandals mount. By the end of the year, faith in American government will be at a new low.

International

• Iraq will be a bright spot as its nascent democracy continues to develop. Rather than terrorism, its main problem will be corruption and governmental issues. Iraq will start looking less like Lebanon and more like Jordan in terms of its development. The media will basically ignore Iraq, even though there will be no major U.S. troop drawdowns until mid-year at the earliest. President Obama’s Iraq strategy will be a continuation of the existing strategy, not a clean break from the Bush years.
• Israel will again stop short of destroying their enemies, slowly backing down after token military actions on the ground in Gaza. Seeing another Lebanon, the Israeli people will reject Kadima and elect Netanyahu as Prime Minister.
• India and Pakistan will be at the brink of war throughout the year, but neither side will pull the trigger. This issue will dominate Secretary of State Clinton’s efforts throughout the year.
• Iran will test a nuclear weapon, leading Israel to formally announce that they possess nuclear weapons and that they will use them if necessary. Israel will work to expand ts fleet of ballistic missile submarines.
• Russa’s Gazprom state-owned oil company will collapse, causing massive unrest in the country. Vladimir Putin and his puppet Dmitri Medvedev will use the unrest to further restrict freedoms and consolidate their own power.
• Due to oil prices plummeting, Hugo Chavez will be deposed in a bloodless coup.

Economics

• The recession will not go away in 2009.
• Obama’s $1 trillion stimulus bill will narrowly pass on a party-line vote. It will not stimulate the economy, but will cause further job losses as small businesses prepare for the worst.
• The Dow will sink below 8,000 and not stay above that level for most of the year.
• By the end of 2009, the U.S. will face double-digit unemployment, economic recession, and massive deflation as the credit markets remain frozen.
• Congress will pass a protectionist trade measure that will have massive ripple effects throughout the world economy. The European Union will push for the WTO to punish the U.S. for their actions. Rather than improve our relations worldwide, America will be disliked ever more intensely across the globe.
• The one bright spot will be that consumers begin shedding their debts and living more fiscally responsible lifestyles.

Society/Culture/Technology

• The last MacWorld will annonce the iPhone Nano, a new Mac Mini, and a quad-core iMac. It will be revealed that Steve Jobs is in fact unwell, which will cause Apple shares to slide. However, the corporate culture that Jobs has created will keep Apple innovative.
• Microsoft will release Windows 7 by years-end. It will be better than Vista, but still not sell well due to the decline of the industry.
• The economic downturn will cause a widespread cultural re-examination. Church attendance will climb as people look for stability in their lives.
• The New York Times will file for bankruptcy protection. Liberal investors will save it from falling, but circulation will continue to drop.
• Star Trek will be a major hit as the public rejects the gloomy outlook of other summer films. Chris Pine will become a breakout star from his role as James T. Kirk.
• A major network will announce a new series to be aired entirely on the web rather than through traditional channels. It will be a major hit and the start of a new trend away from traditional media towards online distribution.

I hope all of you have a wonderful New Year, and thank you for reading!

Every year I do my annual round-up of predictions for the coming year, some of which come true, many of which, well, do not. Last year’s predictions turned out to be less than accurate—let’s see how I did.

Politics/National

• Hillary Clinton defeats Obama for the Democratic Nomination. She picks Mark Warner as her running mate. — Nope, instead Obama managed to run a better ground game, and buoyed by a synchophatic media, he took the nomination. Instead, Clinton gets to be Obama’s Secretary of State, where she will enjoy the Sisyphean task of trying to create peace in the Middle East rather than resurrecting her political career. It’s essentially like being exiled to Siberia for her.
• She then narrowly loses to the Republican candidate (who is not Mike Huckabee). — Instead, Obama won by a convincing margin and an Electoral College blowout. But Huckabee was not the nominee, thankfully.
• Sensing a weak field, Michael Bloomberg runs for the Presidency on a third-party ticket, picking CNN anchor Lou Dobbs — Chuck Hagel as his running mate. He barely registers in the polls, despite pouring millions of his own money into the race. Not even close. Apparently Bloomberg isn’t a dumb as I thought.
• The Democrats retain control of Congress, but not be margins large enough to threaten vetos. Pelosi and Reid remain in control of their respective chambers, but end up being just as ineffectual as they have been over the last major year. Congress still does almost nothing throughout the year, and this Congress leaves with no major legislative achievements to its name. — The Democrats won’t get their veto-proof Senate majority, but this year was another GOP bloodbath. The Democrats have to lead now, however, and that will be more challenging for them. The only legislative “achievement” this year? A massively unpopular “bailout” bill that represents one of the biggest dangers to this Republic in decades. Congress is and will remain profoundly unpopular because of it.

International

• Violence in Iraq remains sporadic, as US forces slowly withdraw. Iraq becomes less and less of a domestic political issue. Al-Qaeda attempts a Tet Offensive, but it is quickly crushed thanks to solid intelligence provided by Iraqi civilians. — I was correct on the first part, but al-Qaeda hasn’t been able to push back in Iraq. For all practical purposes, the “war” in Iraq is over, and our mission will be to train the Iraqi police, military, and government as best we can. President Obama seems like he will not precipitously withdraw from Iraq, and there’s no reason to. Gen. Petraeus and the U.S. military has done its job in Iraq. What’s sad is how little recognized their monumental achievement has been.
• The center-right remains triumphant as Nicolas Sarkozy, Angela Merkel, Kevin Rudd, and Stephen Harper all work towards free market reforms in their respective countries to great popular acclaim. — For the most part, this is true. Stephen Harper’s problems in Canada may end up hurting the divided Canadian left more than him. The big problem is whether the financial crisis will lead to a dangerous expansion of government or the realization that the more control government has over industry, the more problems with one will harm the other.
• The situation in Pakistan remains deeply unsettled, with Musharraf having only a tenuous hold on power. — Musharraf is out of power, and so far Pakistan has not yet exploded as some had feared. But it hangs on the knife’s edge, and if Pakistan collapses, the effects would be catastrophic.
• Iran continues to rattle sabers, and continues to enrich uranium, while the Bush Administration tries to ratchet up diplomatic pressure—to no avail. — This was a sure bet. Iran has no reason not to rattle their sabers, because they know that no one has the stones to stop them. However, with oil price plummeting, it may be domestic turmoil that does what the rest of the world won’t.
• The Annapolis Peace Conference accomplishes nothing as once again Israel offers concessions and the Palestinians end up being too divided to offer anything in return. — This was like predicting that the sun will rise in the East and set in the West.
• China improves its image with the Beijing Olympics. — They did, but they remain a curious hybrid of free-market optimism and state-run oppression. China remains a country that is divided between the future and the past, and what is keeping that arrangement together is the entrepreneurial spirit of their people. They could be a superpower, or their country could collapse, and it’s hard to tell which way things will go. There is the potential for a major economic crisis in China this year, and the effects could be massive.

Economics

• While the media continues to paint their picture of economic despair, the real story continues to be the “Goldilocks economy” of low unemployment, high economic growth, and steady wage growth. — Oh, how I wish that came true. While the first half of 2008 was relatively strong, the economic crisis of the last half was the beginning of a fundamental economic shift. What happens from here is anyone’s guess, but it seems likely to get worse before it gets better.
• The sub-prime mortgage issue fades as the impact becomes more fully known. As the uncertainty fades, it becomes clear that the fears of recession were baseless. — I don’t think that the assumptions about the recession were right at that time (although there is some evidence that the recession did start around December of 2007), but there is little question we’re now in a recession. While everyone blames Bush, the real culprit is years of Washington and Wall Street engaging in an incestuous relationship—and both parties are guilty of that. We need to realize that in many cases regulation does not level the playing field, it tilts it.
• Oil prices stabilize around $100/barrel. — Oil has fallen to around $40/barrel this month, which is probably too low. The equilibrium price is probably closer to $100, but right now the market is seeing a major collapse in demand. That means cheaper oil, and more hurt for petro-dictators like Chavez and Ahmadinejad. However, we can’t expect the prices to stay this low forever.

Society/Culture/Technology

• At MacWorld, Apple announces iTunes movie rentals – in HD, with a new Apple TV to match. They also announce an enhanced iPhone, an ultraportable MacBook with a flash-based hard drive and long battery life. Apple stock continues to climb. — This all turned out to be true. The MacBook Air is not quite the machine I imagined, but I love mine and think it’s the best built laptop I’ve ever bought.
• However, Amazon’s DRM-free MP3 download store starts stealing some marketshare from iTunes. More studios embrace selling their music unencumbered by DRM, leading iTunes to abandon their FairPlay DRM on music by the end of the year. — Amazon’s store is still very nice, and Apple would love to ditch DRM, but the music labels are still resisting. The day the RIAA and the labels become irrelevant is rapidly approaching, however.
• Despite blockbusters like Indiana Jones and the Kingdom of the Crystal Skull and Star Trek, box office receipts decline both in number of tickets and dollars grossed as the price of high-def movie equipment declines. While movie ticket sales decline, sales of HDTVs, home theater setups, and HD-DVD and Blu-Ray players soar. HD-DVD players hit the $100 mark by the end of the year, meaning that HD-DVD adoption pulls away from Blu-Ray. — Star Trek was pushed back to next summer. HD-DVD lost the format war. But the larger point remains, movies are becoming more of a personal thing, and with the economic downturn, that’s going to be ever more of a factor next year.

Also, No Country for Old Men did win Best Picture, as it very well should have.

My predictions were widely off the mark in a year of phenomenal “change.” Obama’s surge, the economy’s collapse, and the aftereffects of both were currents that will carry us into a turbulent new year. But every new year is a turbulent one, and the assumptions we all make now may be as broken as the ones I made a year ago.

Later, my predictions for 2009, as well as an important announcement.

The Asia Times has an interesting, if disturbing look at how the world’s “intellectual capital” is making an unprecedented shift to the East:

Chinese parents are selling plasma-screen TVs to America, and saving their wages to buy their kids pianos – making American kids stupider and Chinese kids smarter. Watch out, Americans – a generation from now, your kid is going to fetch coffee for a Chinese boss. That is a bit of an exaggeration, of course – some of the bosses will be Indian. Americans really, really don’t have a clue what is coming down the pike. The present shift in intellectual capital in favor of the East has no precedent in world history.

Our language is shaped by the way we think, and we have an entire generation where the ability to think critically has withered. When we replace Homer with Homer Simpson, can we really expect people to be able to think deep thoughts?

Sadly, that analysis is likely correct. The United States is losing its competitive edge. We are not preparing our children for the future. We immerse then in Barney rather than Bach, and the results are a generation that simply can’t think. The Asia Times talks about the value of classical music in forming a strong and supple mind:

Any activity that requires discipline and deferred gratification benefits children, but classical music does more than sports or crafts. Playing tennis at a high level requires great concentration, but nothing like the concentration required to perform the major repertoire of classical music. Perhaps the only pursuit with comparable benefits is the study of classical languages. It is not just concentration as such, but its content that makes classical music such a formative tool. Music, contrary to a common misconception, does not foster mathematical ability, although individuals with a talent for one often show aptitude for the other.

The problem is that the concepts of “discipline” and “delayed gratification” are practically foreign to Americans these days. We’ve become a nation that has begun to systematically rout out the qualities that make us strong. Instead of allowing children to explore, we coddle them. Instead of teaching the classics, we teach drivel. We teach “self esteem” instead of formal logic. A classical education trained young minds to think critically, appreciate culture, and inculcated them with the values necessary for life in a democratic society. Now, thanks to the relentless dumbing-down of society, that sort of education has been cast out as being “patriarchal,” “ethnocentric” and even just plain “racist.” It is any irony that the Chinese seem to have a finer appreciation for our culture than we do.

Our pop culture hardly helps. As one former teacher finds, many American students are unable to express itself in any meaningful way. As the retired English teacher in the article noted: “When you read, you get to see the language used correctly, and you’re exposed to a range of vocabulary far beyond your own. I listen to students today, and the number of words they use is limited to slang and colloquialisms.” That dumbing-down will have a major effect on this nation’s ability to compete. Our language is shaped by the way we think, and we have an entire generation where the ability to think critically has withered. When we replace Homer with Homer Simpson, can we really expect people to be able to think deep thoughts? Because we never expose our children to culture, they never learn to truly appreciate it.

Not only that, but the values of hard work and diligence are not just values that enhance one’s own life. In his fascinating new book, author Malcom Gladwell notes it takes 10,000 hours of practice to excel at a given task. That’s three hours a day for a decade—which requires patience, determination, and a strong work ethic. But if we do not have a culture that supports patience, determination, and work ethic, then our chances of creating great artists, scientists, engineers, and scholars diminishes. Culture plays a major role in the success or failure of a nation, and we are losing the cultural basis for our success.

We can, and must, do better. We need to radically reform our educational system and reform our culture, or we will be unable to remain the superpower that we are today. Our competitiveness is based not as much on GNP or military power as it is in our ability to innovate and explore. We have the world’s greatest economy because we have the most innovative and entrepreneurial people on the globe. But it does not have to stay that way. We have to recognize that our education and our culture has to be about developing the skills needed to compete, and rewarding success while marginalizing failure. We cannot be a nation that has full self-esteem about our own decline.

It is time to dust off the Caesars and the sonatas, and push our children to be something more. Each generation has the potential to outshine the last, but only if we push them to do so. The United States can remain a superpower, but only if we are willing to keep it so.

President-Elect Obama has chosen to embrace some of the worst economic thinking in his recently announced economic recovery plan. The buzzword he’s following is “infrastructure”—and it’s a strategy that is doomed to fail.

Reason’s Nick Gillespie sarcastically looks at the plan:

When the history of this awful moment of bailout hysteria is written, there’ll be a chapter or 20 on the complete bogosity of what might call “the infrastructure flim-flam”—the idea that government can boostrap the economy out its funk by hiring two guys to dig a hole and a couple more to fill it in.

Don’t you see? It’s the perfect plan!, as Batman’s Riddler might exclaim. In fact, one only wonders why they don’t hire three guys to fill the holes, thereby cutting unemployment to negative-something.

There are so many flaws with Obama’s plan that one hardly knows where to begin. For one, there’s no way to “create” 2.5 million jobs through infrastructure improvements alone. Unless Obama wants to pave over Iowa, there isn’t going to be enough work to make a significant dent.

Then there’s the issue of the utility of taking a bunch of unemployed stockbrokers and autoworkers and having them pour concrete or lay cable—they’re not trained for either, and it doesn’t help them build the skills they need for the future. It’s busy-work, and it’s economically counter-productive. Something like job retraining would be valuable, not more government-run “public works” projects.

There’s also the fact that if you believe that government is more efficient at allocating goods and services than the private sector, you probably missed the whole “collapse of the Soviet Union” thing. Who will decide what “infrastructure” gets built where? A bunch of Washington nomenklatura? That creates a system where superhighways get built in places where politically powerful Congresscritters live while real needs go unmet. Government is simply not designed to do what Obama wants it to do, and as much hyperbole is there is about Obama being a “socialist” in this case his policies are the sort of thing we’d see from the leader of some banana republic. Economic troubles? Just round up some plebs and have them start digging ditches.

The Obama plan is not a viable solution. We do need better infrastructure, but not through wasteful, inefficient, and crude make-work programs. There is no future in the American economy if we start making our workers dig ditches or pour concrete rather than innovate in nanotechnology, alternative energy, or space. We need an economy for the 21st Century, and Obama keeps playing from the dusty playbook of the 1930s.

What should Obama do? What we need in this country is a high-tech economy. We need more civil engineers to design all those bridges. We need more innovation, more risk-taking, and more entrepreneurialism. What can government do? It can incentivize innovation and risk-taking. If you’re a college student and you want to be a civil engineer? Graduate in engineering and go into government service for 5 years, and you get your college loans forgiven. Obama should direct NASA to give a $1 billion prize to the first company that can demonstrate a workable prototype for a replacement for the Space Shuttle. (Limited versions of such a prize system are already in place, and helping generate high-tech jobs.) Instead of another government make-work project to lay fiber-optic cable, Obama should incentivize companies to develop wireless technologies that can help remove the need for physical connections. These are just a few examples of what would be a, dare I say it, progressive approach to this economic crisis.

But Obama, listening to the radicals of his party, is not really a “progressive” in this sense. He has picked up the failed FDR playbook and seems hell-bent on making the economy worse by embracing the same failed plans as before. We cannot bootstrap a modern economy through government spending. If that were true, the Third World wouldn’t be the Third World. Government spending always comes with prohibitively high administrative costs that creates a severe dead-weight loss on the economy. It is always less efficient than a market-based approach.

Government has a role, but it is a limited one. It can incentivize innovation, but it shouldn’t be in the business of picking winners and losers. It can support the development of a healthy economy, but it cannot create one by fiat. It can help regulate the marketplace, but it can also stifle the entrepreneurial spirit. It is a tool, like a hammer, but you shouldn’t use a hammer to fix a watch.

Obama’s economic plan is based on a fundamentally flawed view of government and the economy. No matter how well thought-out it may be, it will never achieve its objectives because of that basic flaw. Now, more than ever, we need to embrace what actually has worked, not reach back to the failures of the past. The process of economic transformation can be painful, in what the great economist Joseph Schumpeter called the process of “creative destruction”—but without that creative destruction we cannot move forward. Obama wants to move us back to the socialized economy that devastated Britain in the 1970s. If he wants to give us the “change we need” then he must realize that change cannot come from a government program, but from allowing ordinary men and women the opportunity to take risks, innovate, and succeed.

President-Elect Obama has unveiled his national security team, and it’s hardly what his supporters would have suspected. Hillary Clinton gets the thankless job of Secretary of State, ensuring that she’ll never be President and keeping her well away from Washington. Robert Gates remains as Secretary of Defense, meaning that the chances of Obama “ending” the war in Iraq any sooner than McCain would have seem slim. Former General Jim Jones, who probably would have served in a McCain Cabinet, will be National Security Advisor.

Putting Clinton in as Secretary of State is an excellent way that she’ll be sidelined for the next four years. Secretaries of State tend not to have political careers after their service, mainly because it is nearly impossible to build up political capital when you’re rarely in the US. Not only that, but Obama knows quite well that the position will not be a very happy one. Tasking her with something like the Israel-Palestine crisis is Obama’s way of ensuring that she’ll be set up to fail from the beginning.

Keeping Gates at Defense is a smart move. The military was quite pro-McCain, and is suspicious of what Obama’s brand of “change” will be. There is little doubt that Obama will not pull us out of Iraq any faster than McCain or Bush would have. The war is largely won, and the media will happily ignore what bad news there is. The anti-war faction was played for the fools they are—Obama’s policies towards Iraq will be the same as if Bush got a third term, and keeping Gates is just one sign of that. It’s bad news for the Kossacks and Code Pink, but a smart move on the part of the President-Elect.

Gen. Jones is a strong pick for NSA. Obama needs military advisors who aren’t Wesley Clark, and Jones’ records seems relatively strong. That pick is another sign that Obama will not pull out of Iraq on an arbitrary timetable. It would be even better if Obama put Gen. Petreaus on the Joint Chiefs and Col. H.R. McMaster in at CENTCOM—it would drive the left nuts, but it would also be a continuation of Obama’s independent-minded defense policy choices.

Janet Napolitano and Eric Holder are less strong picks. Napolitano has a mixed record on immigration, and it doesn’t look like Obama has much interest in defending this nation against illegal immigration—not when they can be used to buttress Democratic numbers through voter fraud. Eric Holder made some very questionable choices with the pardon of Marc Rich, and is anti-Second Amendment. Both, however, will be confirmed, and probably by a large margin.

The Obama national security team does not stand for “change”—which is a reassuring move on his part. In a time of turmoil, making dramatic moves like pulling out of Iraq is not smart policy. Instead, Obama seems to be making pragmatic moves when it comes to foreign policy. Rather than providing a clear break with the policies of the Bush Administration, Obama is likely to continue many of them, including the Bush Doctrine.

Unsurprisingly, Victor Davis Hanson puts it adroitly:

I think we are slowly (and things of course could change) beginning in retrospect to look back at the outline of one of most profound bait-and-switch campaigns in our political history, predicated on the mass appeal of a magnetic leader rather than any principles per se. He out-Clintoned Hillary and followed Bill’s 1992 formula: A young Democrat runs on youth, popular appeal and charisma, claims the incumbent Bush caused another Great Depression and blew Iraq, and then went right down the middle with a showy leftist veneer.

At least in foreign policy, that may be the case. But the reality is that even if Obama really wanted radical change, it would be politically suicidal to do so. The world is dangerous, and getting more so by the moment. Obama the freshman Senator could play fast and loose, but President Obama will not have that luxury. Why the left may hate it, the “change we need” in terms of foreign policy may end up looking much more like “staying the course.”