2017 Predictions

Guest Post by The Zman

It’s here! It’s finally here! That’s right, here is my annual prediction post. Last year’s post can be found here. Reading it over, I’m surprised to see I got a lot of them right or at least close enough to pretend I was right.  Looking back on it, I was ahead of the curve on what was going on with Trump in the election. I also got the Fed strategy right, but the timing a bit off. I was hilariously right about the North Koreans and the Muslim diaspora into Europe. In both cases, those outcomes were so obvious there should be a penalty for not getting them right.

On the down side, the Red Sox did not win the World Series and the Patriots did not win the Super Bowl. Even worse, the Yankees did not go 0-and-162. Looking back, the one area where my predictions are never right is in the area of sports. That’s not a surprise as I actually care about sports. The rest of the stuff is just what I do between watching my teams play sportsball. But, The Olde Towne Team had a good year, a great Hot Stove Season and the great Tom Brady is leading America’s Team to another title this year!

So, what are the goat entrails telling me this year?

Part of the return to normalcy in America will be Washington reacquainting itself with economic matters. Trump knows he needs something big to goose the economy and give his presidency a boost. The way forward on that is to start with a big sweeping tax reform package. Given the make-up of the House, expect a package that simplifies business taxes, cuts the corporate rate and offers a big bag of goodies for companies that make stuff and employ people. That means big deductions for capital expenditures like machine tools and heavy equipment.

The signs also point to an effort at peeling back a thick slice of the regulatory state. Trump is a guy who remembers the Reagan years and he knows the impact of deregulation had on the economy. He’s also a guy who has spent his life dealing with government functionaries enforcing bureaucratic regulations. Republicans have been plotting a big rollback for over a decade and now they have their shot. ObamaCare is an obvious target, but look for this to be part of a larger rollback of regulations in an effort to boost the economy…

This is the year we see the floor fall out of the climate change rackets. Most Americans think global warming is nonsense and one of those Americans is Trump. There will be a concerted effort to depoliticize the climate science business by running off some of the fanatics and opening the field back up to sensible skeptics. The main driver will be turning off the money spigot to the fanatics and shifting funds to the honest science.  When the money goes away, the grifters go away…

The problems in the Chinese political economy will become more obvious to western policy makers as the boom times come to an end. There’s not much left the US can outsource to China, even if there was desire to do it. The Chinese know this and they have been feverishly trying to adjust by boosting domestic consumption. The trouble is it will require a vast restructuring of the Chinese society. The ChiComs are not intimated by such a task, but that does not make it less daunting.

China has a lot of smart people, but they have never figured out how to protect themselves from tyrants. That’s the limit on economic growth. When the government can arbitrarily take your property, there is no incentive to invest, unless you have political power. That breeds corruption and it breeds a bandit mentality. That’s the challenge for the ChiComs and what will stymie their efforts to move from a mercantile economy to a market one. This is the year when the problems start to become obvious…

Syria, Turkey, Iraq and maybe even Jordan become less stable over the next year as the West cannot agree on a coherent policy for the region. One reason for the chaos is no player has the resources to impose its will on the rest. The Russians have enough to keep Assad in power, but not enough to wipe out the Saudi and GCC sponsored rebels. The Saudis can keep the kettle boiling, but they cannot do much more without the US. Israel is happy to see her enemies fighting with one another so they will not be pushing for a resolution…

The alt-right will fall prey to infighting and squabbling and slowly burn itself out over the next year. The fighting between Cernovich, Treadstone and Spencer has all the familiar features. On the one side will be the guys who dream of riding their fame as rebels to positions within the establishment. On the other will be those who see legitimization as treason. One side goes one way, the other side goes the opposite and the “movement” splinters and dissolves. This is a common dynamic in radical politics and it will happen with the New Right…

Gene editing will become a very serious topic of conversation among the chattering classes. Ten years ago, no one in science really thought it was going to be cheap and easy to edit the human genome anytime soon. All of a sudden, CRISPR/Cas9 promises to make genetic engineering a reality. Researchers have already done things like edit bone marrow cells in mice to treat sickle-cell anemia. The Chinese have used this technology to edit the genome of human embryos.

We’re still a long way from creating designer humans, but the path is suddenly open to solving a whole host of diseases. The Chinese will rush ahead with human testing, but the West will most likely start on more mundane things like creating disease resistant plants and treatments for insect borne viruses. Tinkering with mosquitoes so they no longer can carry the Zika virus has fewer moral obstacles than tinkering with humans. Even so, the brave new world begins this year…

The coming Trump immigration push will reveal that we no longer have two parties, but one party with two sides, one on each end of the immigration issue. Paul Ryan will lead the open borders wing in opposition to Trump and the nationalist wing. This will be seen as the first steps in the great realignment of the parties as a big chunk of people currently in the GOP camp begin to make their way over to the Democrat side. American politics will begin to resemble Israeli politics, where one issue divides the parties…

That’s it for this year. It has been a banner year for the blog, adding tens of thousands of new readers and many new commenters. I appreciate everyone taking the time out of their day to read and respond.

Happy New Year to one and all.