Monday, December 31, 2012

2013: Some Predictions, Mostly Unpleasant

In my final post of the year, here are Unforeseen Contingencies' predictions for 2013.  As suggested in the previous post, some of these are rather dire.  They largely concern the United states, and at present America seems to be increasingly divided into camps with nothing in common.  Mike Vanderboegh of Sipsey Street calls it "two countries."  At least two. Our current political situation is a mess, and to the extent it affects our economic situation, so is that.  Given that we have at least two fundamentally incompatible worldviews competing, one based on individualism and one based on socialism, with a roughly evenly balanced electorate on each side (most of whom seem to have only a dim view of what is going on), there's no way to achieve any sort of stability, and increasingly we seem to be in what amounts to a cold war.  I'm not so sure it couldn't become hot.

Currently the left, represented politically by the Democrat leadership and the mainstream media, appears to smell blood.  In my opinion they want to crush their Republican opposition at the national level and move on a number of issues, and set the stage for taking the House in 2014.  And roughly 50% of the American population is dead set against them.  I hope it's more, maybe it's less, but regardless, consensus, agreement, and compromise seem nearly impossible under the current situation.  And the sorts of things the Democrats favor -- draconian gun controls, economic regulation, expansion of entitlements, and general big government -- are practically an existential threat to a substantial share of us.  I don't see how anything good can come of this.  The best we might hope for is incompetence and gridlock, because instituting major change when the country is so deeply divided will unleash terrific backlash, regardless of whether the changes are good, bad, or indifferent.

Against this happy backdrop, here are my predictions for 2013.  Needless to say, I sincerely hope I have no idea what I am talking about.

First, I refuse to make predictions regarding gun control in the U.S.  Sipsey Street Irregulars is doing an excellent job of covering the growing threat and counseling how to respond should the state try to disarm us.  But there are some very good arguments for why legislative attempts impose a new and more draconian AWB will fail.  This post on the AnarchAngel blog does an interesting political analysis of why it will fail.  Gary North on Lew Rockwell's site has a nice piece on why the gun control movement will prove an utter failure, more of an economic argument.  Suffice it to say the laws of demand and supply can't be repealed, and demand won't go away and will be satisfied. (You know it's serious when I'm endorsing Gary North and Lew Rockwell!)  And Cody Wilson of Defense Distributed  (the 3D printer firearms makers) explains in this great interview why gun control is in essence technologically impossible.  (This one is particularly worth reading for its philosophical insights, especially into  how the progressive mindset devolves into a regressive, ultra-conservative "ban, ban, ban" kneejerk reflex.)

I hope they are right.  If the Republican House has any principles and courage, then there's no reason why new gun controls should pass in the next two years.  OTOH, President Obama has vowed to impose new controls.  It's not unthinkable that he'd try to impose them without new legislation, perhaps by executive order, or by administrative regulation.  In this regard, it would be easier to go after manufacturers, importers, and retailers than citizen-owners, but conceivably any could be targeted.  But it strikes me that so far Obama has been relatively ineffective at getting things done; he's seemed unengaged and not particularly competent, and certainly not the genius his fawning sycophants in the MSM claim him to be.  With Obama, when it comes to anything other than campaigning, failure is definitely an option.  I certainly hope so, at least.

But also, if the feds do manage to get a bill or regulation passed that requires confiscation, or mandates transfer of our arms to NFA status (National Firearms Act), or requires federal registration, and they try seriously to enforce it, all bets are off.  Forbes just posted an op-ed correctly pointing out that the real purpose of the Second Amendment is to help ensure of civilians are armed and prepared to put down a tyrannical domestic government.  If our federal government decides it is time to disarm us, we'll face the choice of defending our liberty or surrendering.  I see nothing good about civil conflict, but surrendering liberty is far, far worse.  I fervently hope we do not face this choice.  But if we do, never surrender.

So, some predictions...

1. Solar Storms will not shut down the American power grid to any appreciable extent.  I raised this issue, mostly for the sake of dark humor, in my previous post, but I might as well deal with it here.  I've read estimates that put the risk of this occurring as high as 7%...YIKES!  But while I think it's a genuine possibility and that we should take measures against it, it's still low probability.  Incidentally, protective measures would probably not be very costly at all, but there's no constituency for tackling this because the problem doesn't serve anyone's ulterior political motives, the way climate change does.

2. Assad's regime will fall and Syria will remain enmeshed in civil war.  Syria is now a battleground for a war between various forces in the Middle East, particularly the Shiites led by Iran and the Sunnis.  Assad himself will soon go, either fleeing or sent to the next world.  But the conflict will continue as Syrian ethnic and religious factions battle it out as proxies for their supporters in Iran, Saudi Arabia and the Emirates, Turkey, etc.  It's easier for these enemies to fight it out in Syria than in direct confrontation with each other.  The difference between Syria and post-Saddam Iraq is the absence of the United States military, which was sufficiently powerful to subdue the civil war.  Let's hope we remain absent!  The U.S.has absolutely no business in Sunni-Shia religious wars.

3. The Democrats in the Senate will invoke the "nuclear option" and eliminate or greatly constrain the filibuster.  This one is a very risky prediction, but supposedly Harry Reid already has the votes and has declared the intent to do this. This would be very interesting.  To me, the nuclear option makes sense only if one controls both houses of Congress.  Invoking it when the Republicans control the House is very likely to inflame partisanship and gridlock, rather than help one advance anything.  While I think the Democrats are very dangerous, I kind of hope they do trigger the option.  In general, the more rapidly they move and the more radical their actions, the more likely they are to generate political backlash that will cook their geese.

4. There will be at least one violent act of domestic terrorism against American gun owners.  Progressive politicians, the mainstream media, and leftist political organizations are engaging in an astonishing hate-fest against American gun owners and against groups like the NRA and Gun Owners of America.  Excuse me for putting it so bluntly, but one would have to be stupid to think the campaign of vitriol and demonization directed against law-abiding American gunowners (about 50% of the population) has anything to do with preventing crimes such as the butchery at Newtown.  For example, the Journal News of White Plains NY is publishing the names and addresses of handgun permit owners, for no other reason than to harass and possibly endanger them.  We've already noted the demonstrators claiming the NRA is responsible for the murders and the tweets by people calling for the killing of NRA members.  Most of this is hysteria or propaganda, but there's always likely to be a small share who take this literally -- maybe a large share even.  Hence, I predict that someone will attempt an act of terroristic violence against American gunowners this year.  I don't limit this to non-state actors, BTW; if "Fast and Furious" taught us nothing else it's that the administration and the ATF include people who have no compunction about seeing innocents killed if it serves their purposes.  Of course, any ATF action would likely have the smokescreen of "enforcing" some "law," so a "hit" for UC would be difficult to show in this case.  And I hope I entirely miss on this one.

5. The opening of the PPACA exchanges will prove to be a shambles.  I'm not sure how to phrase this one, after being stung on last years' prediction on the unemployment rate.  Maybe the opening (scheduled for fall) will be postponed.  Maybe they will function, but not particularly well.  Maybe they'll be a total disaster.  Any way about it, I think the only people smiling like this will be the ones who said "we told you so."

6. It will become apparent that health insurance premiums will rise sharply.  "Sticker shock," it's called.I'm not on a limb here; Bob Laszewski has been predicting this for some time, and it seems to be common knowledge among insurance experts.  For individual and small group insurance predictions run as high as a doubling of rates, owing to the new rating requirements and mandatory coverage.  Incidentally, changing the rating and the requirements of what was covered always meant that "you can keep your old insurance if you're happy with it" was a bold-faced lie, and Obama, Pelosi, and co. always new it.

A Digression on PPACA: Why should the PPACA (Patient Protection and Affordable Care Act a.k.a. Obamacare) be expected to perform poorly?  In January 2012 at the American Economic Association meetings there were several sessions devoted to studies of the Massachusetts health care reform (Romneycare) on which it is based, and in some sense this reform "works."  (That's not to say it's desirable, but it it does seem to have functioned as it was supposed too, for the most part.)  But here's the problem.  Romneycare and Obamacare are different animals and are being implemented in very different settings.  The basic insurance structure works perfectly well on the blackboard; the primary designer, Prof. Jonathan Gruber of MIT, is a very competent blackboard economist.  But the blackboard and the real world are very different environments, and a design that does not take into account how people can be expected to behave (instead of how one wishes they would behave) is a bad design.  Consider that the Massachusetts act was implemented in one state, by a single government agency, for a population facing a common set of problems arising from a common institutional framework -- the state laws.  The market for health insurance was probably more screwed up there than anywhere else in the nation.  The reform act itself was relatively simple, less than 100 pages long.  Given all this, it's not surprising that it "worked" in many respects.

Contrast this with Obamacare.  The PPACA must be implemented across 50 states, all with differing laws, regulations, populations, and problems.  It must be implemented between the State and Federal governments.  And the act is a nightmare of complex and yet unknown details; the damned thing is over 2000 pages long -- we still don't know what's in it.  Gruber's basic plan gave zero consideration to questions of federalism, Constitutionality, political incentives, and then has incredible numbers of additional programs, initiatives, and regulations tacked on; just the sort of thing we'd expect if Franz Kafka and Rube Goldberg got together to design a Frankenstein's monster of bureaucratic central planning.

In sum, Unforeseen Contingencies recommends a bear position on PPACA.

7. Chinese recession in 2013.  Nothing has happened to make us change our view here.  This prediction is just a matter of getting the timing right.

8. Civil disturbances in the U.S.  More bad news.  But there are a couple of things that point to this.  First is the increasing divergence among various political factions in the U.S.  Second, there seems to be a disturbing rise of anti-white racism among some sectors of the black population. Third, I don't see economic conditions improving much and very possibly worsening.  There's also the class war card played by various politicians.  We've already had racially-motivated flash mob violence in the past couple years (ignored by the MSM) and the occupy movement, plus there's a contingent of dangerous white racists who want a race war and would happily start one.  A few years back, I heard from a friend that a very successful portfolio manager for whom he'd worked was predicting relatively serious violent civil disturbances in the U.S. in a few years.  At the time I was skeptical.  Now I'm not.

9. Success of Wiki weapons AR platform. Unforeseen Contingencies predicts that before the end of the year they'll have one that will fire a thousand rounds without breaking down. (Finally, some GOOD news!)

10. A bill to ban or strictly regulate information on firearm design, software that encodes it, and 3D printer hardware and materials that will print it will be introduced into Congress. I also think it won't pass, but that's not part of the prediction, only the attempt to violate the First Amendment is.

11. Wild card: Scientists will announce discovery of life on a planet in another star system.  Yes, again.  If I keep predicting this, eventually I will get it right.

12. Wild card #2: Scientists will announce discovery of evidence of life on Mars.  It's no fun if I don't go out on a real limb, so there it is; any evidence of life, past or present, will be a hit.

So there they are.  I particularly hope that there's no civil conflict, that predictions 4 and 8 prove to be creations of my own imagination, and that liberty and prosperity dominate in 2013.  If they do, it would not surprise me much.  I predict based on what I have seen and what I foresee, but the very nature of human knowledge is that we mostly face sheer ignorance, and that unforeseen contingencies dominate.  And as it has been in the past, so I expect it will be in the future.  Even if 2013 turns out as badly as I've predicted here, I still expect reason and liberty and civilization to continue to expand over the long run.

Happy 2013!  May my predictions be wrong, and may the year bring us liberty and prosperity.

What of the student debt loan crisis? Do you anticipate a collapse or significant change in the market for student loans in the next year?

Thanks for the question. I have not read or thought much about this one. But my answer is no -- I think student debt is just a subset of consumer debt. I don't expect a collapse of peoples' ability to service existing debt, unless there's a general financial crisis. That's always a possibility but I am not predicting one now.
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