It is the season for journalists to make their predictions for the year ahead. These forecasts are the mince pies of the intellectual world: tempting, enjoyable, but manifestly unhealthy. So let me attempt a loftier task — and one that is consequence free. I’d like to describe the economy not in the year 2018, but in the year 2118.
I’m not the first to attempt a hundred-year forecast. John Maynard Keynes did so in his 1930 essay, “Economic Possibilities for Our Grandchildren”, noting that on average we might expect to be eight times richer in 2030 than a century earlier. We will fall somewhat short of that, but not by much.
I’ll make a more conservative forecast: that we’ll be five times richer in 2118 than we are today. That would put global income at around $80,000 per person — roughly twice the current average salary in the UK today — and income in the leading economies will be more than $250,000 per person per year in today’s money.
This forecast omits and probably understates how much fun one might have with $250,000 in a century’s time. The economist Timothy Taylor sometimes asks his students to reflect on whether they would rather have a comfortable $70,000 today or a stupendous $70,000 in 1900. On paper this is a no-brainer: $70,000 in 1900 was a much larger sum. Yet the question boils down to whether one would rather have servants, status and a mansion — or smartphones, computer games, air conditioning, penicillin, air travel and takeaway pizza. On balance most students decide they’d rather have modern technology than obsolescent opulence.
Similarly, $250,000 a year in 2118 should buy wonders that could not be had today for any money. A new book, Soonish (UK) (US), by Kelly and Zach Weinersmith, is a mischievous guide to the possibilities: ultra-cheap construction, courtesy of smart materials and swarms of robots; and ultra-cheap fuel and bulk chemicals, produced by genetically engineered micro-organisms. We’ll be able to print replacement organs, swallow pills that correct genetic typos and fix cancers with ease.
Is this prediction Panglossian? Perhaps, but it does not presume a century of peace and harmony. It is more cautious than Keynes’s forecast, since which the world has witnessed appalling losses of human life in the Holocaust, Mao’s Great Leap Forward, the second world war and other disasters. We should fervently hope that the atrocities of the 20th century are never repeated, but the forecast merely assumes instead that future enormities do not threaten the human race as a whole. Any nuclear or biological war would have to be a local affair.
The other big question mark over this forecast is whether the planet itself can sustain continued economic growth. Much depends on what this growth looks like. If it means burning more fossil fuels, consuming ever greater raw materials and intensively cultivating more land, we are in trouble. Thankfully, economic growth is decoupling from resource use — not everywhere and not in every respect, but broadly enough to give reason for hope. In the UK, for example, energy consumption per person peaked in 1973.
We need smarter environmental regulations, but even without them, pure profit-seeking pushes producers to achieve more by using less. This is highlighted in Jesse Ausubel’s 2015 report, “Nature Rebounds”, which documents the increasing efficiency with which the US uses farmland, water and energy. In some cases — not all — the efficiency gains are so great that absolute use of these resources is in decline even while economic growth continues.
None of this would be enough if the world’s population was still booming at the rates that caused alarm in the 1960s. But it is not; population growth has been in steady decline for half a century. If the number of people on the planet stabilises, and the efficiency with which we use resources increases, there is nothing implausible about a continued rise in the standard of living.
A final big question is how this bounty will be distributed. In an insightful essay from 1996, Paul Krugman predicted that there would be “no robot plumbers” in 2096. I agreed with him then. I am no longer so confident. It seems quite plausible that in 100 years’ time — and perhaps much sooner — plumbers, taxi drivers and many journalists, too, will simply have nothing serious to contribute to the labour market. If so, we’ll have to abandon the current model of the welfare state in favour of one where unemployment is neither stigmatised nor penurious, but a perfectly respectable lifestyle choice. That will require some kind of universal income for all.
No doubt my forecast will be wrong, although I hope it will take a few decades before its foolishness becomes undeniable. Perhaps by 2118, humanity will have been superseded by hyper-intelligent software. Perhaps cockroaches or smallpox will have taken centre stage. But it seems to me that if we can keep the show on the road, our great grandchildren might have reason to thank us.
Written for and first published in the Financial Times on 29 December 2017.
My new book is “Fifty Inventions That Shaped The Modern Economy”. Grab yourself a copy in the US or in the UK (slightly different title) or through your local bookshop.