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Economic Forecasts

Why I'm an Optimist

Pessimism has a poor track record. Remember the dire predictions in the late '80s that Japan and Europe would soon leave us in the dust?

When I tally up this nation's strengths and weaknesses, the credits exceed the debits. This makes me optimistic about the future, despite the daily drumbeat of negative news.

I realize the risk that I take by expressing such confidence, especially among self-styled intellectuals. Many of them view optimism as naive, and they see pessimism as smart, sophisticated and worldly. The pessimist warns his fellow citizens, "If you knew what I know, you'd be worried, too."

The trend line

This is quite puzzling, given the poor track record of pessimism. Remember alarmist forecasts in the 1960s of widespread global famine from overpopulation? Or the dire predictions in the late '80s that Japan and Europe would soon leave us in the dust?

My optimism is not based on blind faith. It's rooted in a study of history, which shows a long, gradual improvement in the human condition, both in our nation and around the world, driven by science and technology. It is not uninterrupted, as there are often lengthy setbacks -- decades of epidemic, oppression and devastating world war. Human folly and cruelty are as timeless as human ingenuity.


But over time, material well-being tends to improve, as measured by life expectancy, education and living conditions. There have also been gradual but impressive gains in individual liberty and social mobility. Pessimists who refuse to recognize this long trend glorify a past that was never as good as they remember. Nostalgia is usually based on amnesia -- or at least highly selective memory.

We all engage in this self-deception, to some degree. Sure, I yearn for some aspects of the America of my boyhood, the 1950s, when there was better social order and respect for authority, fewer divorces and no public vulgarity in popular culture.

But that was also an era in which a higher proportion of Americans lived in poverty, air and water pollution was far worse, fewer young people could go to college, the average standard of living was much lower, and discrimination against women and racial minorities was rampant -- and legal -- in all aspects of American life.

No, I wouldn't trade today's America -- chaotic and coarse though it often is -- for the U.S. of the 1950s, '80s or any other decade. I will accept a lot of messiness as a reasonable trade-off for the vastly greater opportunities that Americans have now.


Being a realist, I know that our nation faces many serious economic issues, including overconsumption by both individuals and government, a negligible savings rate that has resulted in a dependence on foreign loans, soaring health-care costs, underfunding of prior commitments to future retirees, a reliance on imported oil and fierce competition from low-cost global producers. These challenges are different from the dilemmas of previous generations, but they are no less solvable, given some creative thinking, political will and collective sacrifice.

Our advantage

America's ace in the hole is our openness to the rest of the world. In an increasingly close-knit economy, no other advanced nation -- not Japan, Canada, France or Britain -- embraces the world more than we do. The U.S. is more welcoming to ambitious immigrants, whether highly educated or unskilled. We erect fewer barriers to imported products, giving consumers unlimited choices and a low cost of living. We allow foreign firms to acquire U.S. companies or start their own divisions here with relative ease, creating good American jobs. Most important, America is open to new ideas from all over the world.

These are just a few reasons why the U.S. economy continues to innovate and grow -- and why I continue to be optimistic about our future.

Columnist Knight Kiplinger is editor in chief of Kiplinger's Personal Finance and of The Kiplinger Letter and