June 15, 1999 | Lecture on Political Thought

Future Forces: Ten Trends That Will Shape American Politics and Policies in 2000 and Beyond

Forecasting the future is a risky business at best, whether it's how high the Dow, which party will win the White House or take control of Congress in 2000, or the length of women's hemlines (which some soothsayers think has a lot to do with the Dow). In any event, in today's modem-paced, speed-of-light, nanosecond world, this year's forecasts could be next year's stupidities.

I suppose we're driven to make predictions, if only to be able to smugly tell the many skeptics among us, "See? I told you so." Still, some of the most famous forecasts should give some of us pause to venture on the side of caution. Among them:

  • Lord Kelvin, the president of Great Britain's Royal Society, confidently predicted in 1895 that "heavier-than-air flying machines are impossible."

  • In 1889, Western Union president William Orten turned down Alexander Graham Bell's offer to sell his then-struggling telephone company for only $100,000, saying, "What use could this company make of an electrical toy?"

  • Yale University professor Irving Fisher, a noted economist, proclaimed in 1929 that "Stocks have reached what looks like a permanently high plateau."

  • And who can forget IBM Chairman Thomas Watson's prediction in 1958 when he said, "I think there is a world market for about five computers."

With age and experience come knowledge and foresight, or so the sages say. But in 1977, Kenneth Olson, the founder of Digital Equipment, declared that "There is no reason for any individual to have a computer in their home." And a few years later, Microsoft founder Bill Gates, long before he was worth $100 billion, give or take a few bucks, predicted that "640K [of memory] ought to be enough for anyone."

My all-time favorite is from Charles Duell, the U.S. Patent Office commissioner, who announced to the nation in 1899 that "Everything that can be invented has been invented."

Sadly, the Charlie Duells of this world are still with us. These are the paragons of pessimism who happily preach decline and doom wherever they go. Whether it is the Y2K computer bug that will shut down everything on January 1, 2000, being fried by global warming, or, as one book predicts, "The Coming War with China," or those good old R&D standbys, recession and depression, take your pick.

The books that have come out in the past six years, all from major publishers, are enough to scare anyone to death. Titles like The Pooring of America: Competition and the Myth of Free Trade, The End of Affluence: The Causes and Consequences of America's Economic Dilemma, Declining Fortunes: The Withering of the American Dream, Silent Depression: The Fate of the American Dream, or The Overworked American: The Unexpected Decline of Leisure.

REFUTING THE PESSIMISTS

Kind of makes you long for the return of that incurable optimist, Ronald Reagan, who once told a White House correspondents dinners that he knew "hard work never killed anyone, but I figure why take a chance." But the pessimists never give up. It wasn't too long ago when the Global 2000 crowd, which guided some of the policies of President Jimmy Carter, was just trembling at the thought that the world was rapidly running out of critical resources, from timber to oil, and some were forecasting that we would be engulfed in a worldwide famine.

Attempting to prove that Thomas Malthus was merely ahead of his time, bug man Paul Ehrlich turned his attention to world population and forecast in a now-famous 1968 book, The Population Bomb, that the "battle to feed all of humanity is over." He predicted that millions around the world would starve to death in the 1970s and the 1980s.

Of course, nothing of the kind ever happened. We produce more food, not less, with far fewer farmers and farmland, thanks to a revolution in farm techniques and genetically engineered high-yield hybrids. Not only did the supply of most natural resources go up substantially, but prices fell while demand rose. A big reason is technology: providing us with less expensive, more efficient ways of extracting natural resources from the earth.

The late economist and noted iconoclast Julian Simon became famous for exposing these nitwit predictions and winning a $1,000 bet with Ehrlich that the prices of any five commodities he chose would decline. Simon's writings showed that on virtually every aspect of human advancement, things were improving on a vast and accelerating global scale: Life spans were rising. Infant mortality was falling and there was a world food glut. Economies were growing thanks to expanding free markets, deregulation, and fewer trade barriers.

Perhaps Julian Simon's most famous prediction-one that still drives the declinists crazy-was his promise that the world will never run out of needed resources-ever-because "knowledge is an inexhaustible resource." Still, the gloom-and-doomers never give up, no matter how many times they are proven wrong. Last year they were doing it again, shaking their worry beads and making preposterous predictions. When the currency crisis was spreading from Malaysia to Brazil, the prophets of fear were everywhere with their predictions that the end was near for the global economy and maybe the U.S. economy, too.

They almost appeared to be paraphrasing Charlie Duell, saying in effect, "Every dollar that can be made, has been made." The Economist ran a gloomy global economy cover story, asking the question, "Has the Bubble Burst?" The New York Times ran story after story, wringing its hands that the growth of the global economy was over and the end was near. Pat Buchanan, never missing a chance to denounce the global economy and predict worldwide catastrophes unless we levy 100 percent trade tax tariffs on just about everything that Americans buy from abroad, predicted last year that the U.S. would be hit by "a tsunami wave of imports" that would undermine the economy and force factories to close.

Of course, nothing of the sort ever happened. While the trade deficit did shoot up, the affluent U.S. economy absorbed it and enjoyed robust growth of nearly 4 percent in the past year (6 percent in the fourth quarter). There was some decline in factory jobs, but production and sales rose, the blue chip corporate earnings were beating the forecasts, and the unemployment rate plummeted to nearly 4 percent, the lowest in three decades. The only tsunami wave that occurred was a wave of growth-produced tax revenues pouring into the U.S. Treasury that eliminated the deficit and was paying down the public debt.

A NEW ERA OF GROWTH AND ACHIEVEMENT

Contrary to all these dire flat-earth predictions about the future and the business cycle downturns we experience from time to time, I believe that we are entering an historic new era of global capitalist growth and human advancement in the United States. Even with all of the problems that still confront and frustrate us as a society both here and abroad, we have every reason to face the future with confidence and a considerable amount of satisfaction about what we have achieved and the promise that awaits us.

I believe that we are in the midst of sea-change trends in this country and around the world that will positively influence the political course of America's future and the way that public policy is shaped in the years and decades to come. But all too often we have underestimated the scale of these changes and their influence on our country. In many cases they have not received the attention they deserve from the news media, from academia, or from our political community.

These trends deserve our fuller attention because within them lie the seeds of the next stage of reforms and economic and social changes that will lift this nation to the next plateau in the tide of human history. The national trends are many, but I have chosen ten that I think will have the greatest influence on our future.

TREND #1: Economic Growth

The breadth and pace of America's economic growth in the past two decades is both historic and inspiring, producing the longest expansion in America's peacetime history and the strongest bull market in Wall Street's history. The Dow was at 2,338 in April 1989, facing a short recession after the crash of October 1987. The bears were prowling Wall Street. The pessimists were out in force. But they were all proven wrong again, reminding some of financier J. P. Morgan's famous admonition: "Anyone who bets against the American economy will lose."

The Dow has gone over 11,000, up 350 percent in the past decade. The Nasdaq, that barometer of U.S. technology, is up 500 percent. The number of shares being traded daily on the New York Stock Exchange has exploded from 160 million to 796 million. And there is now talk of a 24-hour stock market.

But there are bigger, broader political implications in all this that have to do with the spreading prosperity of democratic capitalism. And that is the emergence of what economist Larry Kudlow calls the Investor Class that now owns the American economy and could become the most powerful political force in the 2000 elections and beyond.

And what a force it has become. At the time of the 1987 crash, 25 percent of the population owned stocks. Now over 50 percent, or around 135 million people, own a stake in Wall Street. Moreover, this new Investor Class has "profited mightily from the $16.6 trillion gain in real household net worth over the past ten years," Kudlow points out, "as stock ownership passed home ownership as America's principal wealth holding."

What is especially significant about the new Investor Class is how broad-based it is. Surveys show that since 1989, stock ownership has risen 46 percent among households annually earning between $25,000 and $50,000. It has risen by 78 percent among people earning between $10,000 and $25,000. Notably, 49 percent of these investors are women, while 39 percent are non-professional white- and blue-collar workers.

A good deal of this growth in the Investor Class is a result of one of the most important revolutions in the financial markets: mutual funds which have opened up investing to millions of Americans who might otherwise be out of the stock market. Though the industry itself is relatively young, 66 million Americans, or 40 percent of all households, are now invested in mutual funds, either directly or through their 401(k) plans at work. Here again, the profile of those who are investing in these funds shows that nearly half are largely middle-class and middle-aged.

Mutual fund industry surveys show that 11 percent of all fund owners have incomes of less than $25,000; 15 percent have incomes of between $25,000 and $35,000; and 17 percent have incomes of between $35,000 and $50,000. This Investor Class is going to exert a growing influence on politics, policy, and the future of our economy.

First, these buy-and-hold long-term investors will act as an anchor when the market goes into a slide, providing the market with more stability than in the past. When the mutual fund industry asked fund holders why they were invested in stocks, 85 percent said "for my retirement." When asked what they would do in a major crash like the October 1987 fall, 55 percent said they would stay in the market, 25 percent said they would buy more shares, and only 15 percent said they would sell.

Meantime, these shareholders are also voters who tend to show up at the polling booths in larger numbers. And they are going to respond to political appeals to cut or eliminate capital gains taxes, end the estate tax, and lower the income tax rate.

We are already seeing the Investor Class's influence at work. The capital gains rate has been slashed from 28 percent to 20 percent. The Roth IRA is one of the most popular savings and investment incentives in the past ten years. Congress is in the midst of an ongoing debate about letting workers put a portion of their payroll taxes into their own stock investment funds, an idea that is gathering steam as more Americans join the Investor Class.

Two things are certain at this point. One, the Investor Class is going to grow bigger, richer, more socially diverse, and more politically powerful as the nation's economy grows. Two, as it does, it is going to further influence the direction of economic and tax policy on savings and investment.

TREND # 2: Technology

U.S. technology has been the key strategic force behind this nation's strong economic growth. It is boosting productivity, cutting prices, and outcompeting the global competition. The speed with which it is changing and developing new industries and restructuring old ones is extraordinary. In the beginning of this decade, the fastest computer chips were able to handle 94 instructions per second. The latest generation of chips that came out in 1998 pushed that to 1.6 billion per second. The new generation that is due out next year will push that into the billions.

This is leading to a host of faster, smaller, cheaper technologies that are spreading throughout our society at a phenomenal speed. It took more than half a century for automobiles to be used by one-fourth of our population. It took 26 years after the introduction of TV to reach that number. It took 16 years for the computer and then only seven years for the Internet. But these high-tech breakthroughs, while lifting living standards and making business more efficient, cost-effective, and competitive, are now coming onto the market so quickly that the government cannot accurately gauge its impact on growth, inflation, and progress. Many economists now think that our data misstate all three.

When the cellular phone burst on the market in 1984, it cost as much as $3,995. Now they give them away with the service. The service bill itself fell from more than $100 a month in 1987 to less than $50 by 1995. But cell phones were not part of the consumer price index measurement until last year. "The result, in each of these cases, is an overestimate of inflation or an understatement of real growth and progress," says a study on technology and growth by the National Center for Policy Analysis.

Technological growth remains a central factor in our ability to produce, market, and deliver products and services better, faster, and cheaper. And people who have seen what's on the drawing boards or in prototype stages say that what's ahead will be light years ahead of the global competition-creating new industries and better-paying jobs.

"As the economy evolves, it is delivering not only a greater quantity of goods and services, but also improved quality and greater variety. Workers and their families will be better off because they will have more time off, better working conditions, more enjoyable jobs, and other benefits that raise our living standards," the NCPA analysis says.

The speed with which these high-tech inventions are occurring will put new pressure on policymakers to make changes, too, removing outdated, 1930s-era antitrust, banking, and other financial regulations that stymie future innovations, global consortiums, and new delivery mechanisms for one-stop financial services and home banking by computer.

Government will also need to create new data measurements to track what is happening in our economy. "We are fast departing a time when progress can be measured by GDP [gross domestic product] or any other simple tally of what the economy produces," say analysts W. Michael Cox of the Federal Reserve Bank of Dallas and writer Richard Alm of the Dallas Morning News.

TREND #3: Social Issues

We face deep and disturbing social problems in our society. The Littleton, Colorado, high school shooting massacre has shocked all Americans, though, ironically, it happened at a time when schools and law enforcement authorities have taken steps to reduce youth violence and shootings have been dramatically reduced in recent years.

Still, there are way too much violence and drugs in our schools, too much sex and violence in our movies, TV, videos and music, and elsewhere in our culture. But are we really going into the abyss as a society? I don't think so, and there's a lot of evidence to back this up. Consider these findings:

The illegitimate birth rate among teenagers continues to fall for the sixth consecutive year, dropping from 62.1 to 52.3 births for every 1,000 girls between the ages of 15 and 19. The teen birth rate is not only 16 percent below its peak in 1991, but is falling for every racial group in the country. The out-of-wedlock rate for black women is down 18 percent since 1991, its lowest rate since 1969. The rate for Hispanic women is the lowest it's been since 1990.

Moreover, teenage sexual activity fell 11 percent between 1991 and 1997, after 20 years of steady increases. This has also resulted in a dramatic decline in teen abortion rates for the eighth year in a row, from 43.5 abortions per 1,000 teens to 29.2 per 1,000.

There are other promising trends elsewhere in our society. The values that we prize the most in our communities are being embraced in larger numbers than ever before. Among them: The number of Americans who say religion is "very important in their life" has risen from 52 percent in the late 1970s to 61 percent in 1997. The number of teenagers attending church services each week has risen from 47 percent in 1975 to 55 percent in 1997, while 78 percent of all Americans say they embrace "encouraging a belief in God" versus 15 percent who favor "a modern scientific outlook." Two-thirds of all Americans now say they are members of a religious organization, six points higher than in the 1950s.

"Religious renewal is most visible among the young," says American Enterprise magazine. Religious broadcaster Pat Robertson says we are undergoing a "spiritual revival in our country" that is unprecedented and much of it is focused among young people. Notably, per capita charitable donations have risen sharply from $398 in 1970 to $536 in 1997. Teenage drinking has plummeted from 50 percent in 1975 to 21 percent in 1995, according to the U.S. Centers for Disease Control.

High school dropouts among blacks have dropped from 21 percent in 1970 to 14 percent in 1997, and for all students from 13 percent to 9 percent. Drug use is down dramatically for kids 12 and up, from 18 percent at its peak in the late 1970s down to 11 percent near the end of this decade. And there are data to challenge the predominant view that parents are not as involved in their children's school activities or with younger people generally. University of Connecticut pollster Everett C. Ladd reports that 59 percent of parents of school kids participate in their children's classrooms, up sharply from the 1950s and 1960s.

He finds that parent participation in school board meetings and in parent-teacher groups has also risen substantially in the 1990s, from a decline in the 1960s. National Opinion Research Center "surveys in the 1990s have found the proportion of parents belonging to such groups at their highest levels," Ladd reports in an upcoming book. :The experience of parents and schools simply does not support the argument that America's social capital is eroding," he says.

Americans are also volunteering to work with young people and other civic groups at much higher rates. The percentage of Americans who said they "regularly" did volunteer work went up from 44 percent in 1985 to 58 percent in 1997, according to recent polls. "The Girl Scouts have more adult volunteers now than in any preceding period," says Ladd, up from 535,000 in 1980 to 805,000 in the late 1990s.

So what are we to make of all these data? I agree with Steven Moore, who writes, "It is my verdict that, yes, we are entering a new era of civil virtue and cultural enlightenment in America." Moore acknowledges, as I do, that it's always dangerous to make forecasts on short-term trends, but the data in these charts have been climbing for a decade in many cases, and, as Steve Moore says, "I don't believe the universal patterns in the charts...will simply blow away."

This doesn't mean that the numbers on all of these problems and many others are okay. In many cases, they are still deeply disturbing levels that no one can accept. That is why I think that the attention accorded to these issues is only going to grow, drawing on more volunteerism with younger people, more proactive involvement by our churches and parent groups, and more bully-pulpit involvement from our political community.

Out of the tragedy of Littleton, I think, will come a national outpouring of increased public and private responses. And that bodes well for turning the improving data into even better and more hopeful social improvements in the decade to come.

TREND #4: Culture and Race

Is our culture coming apart at the seams, as some critics would have us believe? I do not think the evidence supports it. On the contrary, most of the data show that there is much more unity in our country racially and culturally than the news media have reflected in their reports.

Perhaps the most underreported and yet racially significant change that is occurring today is the quiet, largely unnoticed migration of minorities from the central cities to the suburbs where there tend to be less crime and better schools. That, after all, is why they moved. The U.S. Census says that 51 percent of Asians, 43 percent of Hispanics and one-third of all black families now live in suburban communities.

This migration has accelerated especially over the past two decades. Census trend experts say that when the next population count is taken in 2000, it will show an even more dramatic movement by minorities out of the cities and into the suburbs as more of them benefit from the nation's surging economic growth and climb the economic ladder.

Especially important in this trend is the fact that these are mostly integrated suburbs. More than a third of the black population lived in integrated neighborhoods in 1990, and that trend was speeding up, according to Brookings Institution scholar Ingrid Gould Ellen. "The number of households, both white and black, living in integrated communities grew markedly between 1970 and 1990," she writes.

Other studies have found similar improvements in the nation's social and racial integration, including a seven-year study, published last year, by Harvard Professor Stephen Thernstrom and his wife, Abigail, a senior fellow at the Manhattan Institute. Titled America in Black and White: One Nation Indivisible, their book concludes that life for most black Americans has "improved dramatically by just about every possible measure of social and economic achievement."

Despite the racist hate crimes that have occurred recently in New York and in Jasper, Texas, the Thernstroms believe race relations nationally have improved significantly. For example, four out of five black Americans and three out of four white Americans "can identify a good friend of the other race, where 20 years earlier only one in five blacks and one in 10 whites could say the same."

The climb up the economic ladder and increasing incomes-the great leveler-has been the major factor in this integrating trend. Despite the image portrayed on television news reports, it is important to note that most minority families are not poor. For example, one-third of blacks are upper-income (that is, above the median income range), one-third are right in the middle-income range, and one-third are low-income.

And things will improve for those who are at the bottom of the economic ladder because of what is happening in the economy. The unemployment data in January showed the jobless rate for blacks and Hispanics dropping to its lowest level since the government began tracking them in the early 1970s.

As a result of strong economic growth, higher wages, and widespread labor shortages, more minorities are being pushed into the labor markets. As a result of welfare-to-work programs, black unemployment has fallen from the 12 percent jobless rate to 7.8 percent, while the rate for Hispanics has dropped from 8 percent to 6.6 percent. Black poverty, stuck on a flat line for years, has finally been declining, dropping sharply from 34 percent in 1970 to 27 percent in 1997 as many blacks leave the welfare market for the job market-a job market which is desperate for labor and is reaching out to the unskilled with higher pay, flexible workweeks, and other incentives.

These trends will significantly affect public policy and politics because more minorities will be voting along a more diverse range of economic, market-oriented issues that they believe affect them the most. As earnings rise for many of them, as they climb the economic and social ladder, issues such as excessive payroll and income taxes, taxes on savings and investment, and school choice are going to become increasingly more important to minorities in future elections.

For example, La Raza, the Hispanic organization, is reported to be much more interested in the idea of letting workers put some of their payroll taxes into their own investment accounts to build wealth that they can pass on to their children. There is also mounting evidence that the once homogeneous minority bloc vote is not voting as a bloc anymore, as we have seen in Texas, Florida, and elsewhere. While this political fragmentation is still small, it is only going to increase as minority economic interests and horizons become broader and more diverse.

TREND #5: Education

The most far-reaching issue in education today that is going to revolutionize the political landscape is school choice, and it is making significant headway in key states against a strong and well-financed public school teachers lobby. I believe that in the next decade, school choice vouchers, school choice tax breaks, regulation-breaking charter schools, and for-profit private elementary and secondary schools will be the driving force behind this change.

Perhaps the most underreported victory in behalf of the school choice cause occurred last year when the Supreme Court let stand a lower court ruling in favor of Wisconsin's school choice voucher program, which lets eligible students attend public or private schools of their choice with state funds. School choice measures are pending in about two dozen other states, and Florida became the latest victory when the legislature passed a school choice voucher law in April that Republican Governor Jeb Bush signed into law.

The new law is based on some tried and true axioms of the marketplace: freedom of choice, competition, and financial incentives if you improve your performance. Students at schools that get failing grades on annual state review tests would be eligible for an "opportunity scholarship" averaging $4,000 to go to a public or private, parochial school of their choice. Failing schools that implement a plan that raises student test scores would get bonus funds.

Other sweeping-make that revolutionary-things are happening on the educational front. The Edison Project, the largest private school venture of its kind, recently reported dramatic increases in student test scores at 17 of its 51 schools around the country-up by 6 percentage points in the past year. That is well above the poor 1 percent national test score increases. Edison's scores show that there is a place for private, for-profit schools in American education that will offer families a broader range of choices for their kids.

But the school choice movement is not the only thing that will change U.S. educational standards for the better in the years to come. Schools around the country are returning to phonics, with predictable results in improved reading skills. More schools are introducing high school algebra or pre-algebra courses in the earlier grades, as well as foreign languages in elementary school. After-school tutoring is now one of the fast-growth teaching businesses in the country.

And if you have been reading the news reports on college admissions in the past year or more, the one common denominator in all of them is the movement toward higher grade point admission standards as public and private colleges compete among one another for the better students. Those standards are going to encourage students to work harder to get into the schools of their choice, and I think test scores are going to begin rising significantly as a result.

Sustained economic growth will also be a factor in the turnaround in American education in the next decade. As state tax revenue surpluses continue to mount as a result of a surging economy, there will be more funding for public schools. And as family incomes rise among workers generally, more of that income will likely be applied to educational costs as well.

TREND #6: Crime and Violence

It almost seems perverse to be talking about a reduction in violence in the wake of the Littleton, Colorado, high school shootings. Yet this terrible tragedy has occurred in the midst of a national trend in which violent crimes, including at high schools, are falling.

The murder rate has dropped to its lowest level in three decades, and the biggest improvement is in our central cities, where violent crime was once endemic. Clearly, the number of murders in this country is still at an unacceptable level, but the progress has been dramatic. According to a Justice Department analysis of the FBI's latest crime data, the murder rate in 1997 was 6.8 per 100,000 people, down sharply from 10 murders per 100,000 in 1991.

Moreover, overall juvenile crime is declining, falling from 52 violent crimes per 1,000 youths in the early 1990s to 36 crimes per 1,000 youths in 1997. That is why we can expect the overall downturn in crime to continue for some time, because most adult criminals begin as juvenile criminals.

So the good news is that crime is down in virtually every category, in part because of tougher crime laws, more prisons, and longer sentencing. "Three strikes and you're out" laws have sharply reduced crime in big states like California and in our major cities. "As the probability of going to prison for murder rose 53 percent, the murder rate dropped 30 percent," says a report in American Enterprise. "As the probability of imprisonment for robbery climbed 28 percent, robbery decreased 29 percent."

Demographic factors are also responsible for the decline. Recidivists-the criminals who commit most of the crimes-are getting older, and due to longer sentences, many of the repeat offenders will be getting out at a much older age and thus performing fewer crimes. That is why I see the crime statistics continuing to fall in the coming decade. Fighting crime comes at a huge cost to our society, but falling crime rates will also breathe new economic and social life into our inner cities as businesses, entrepreneurs, and new homeowners find it safe to return to old, abandoned neighborhoods that will be revitalized as a result.

TREND #7: Government

Nobel Prize economist Milton Friedman says the most important spending number to watch when measuring the growth of the government is to measure its size in terms of the entire economy. The good news is that the size of government has shrunk in the last decade and a half as a share of the nation's gross domestic product. Federal spending as a percentage of GDP has gone down from 23.6 percent of GDP in 1985 to 19.7 percent in 1998.

This is due more to the economy's rapid expansion than it is to a sharp decrease in what government spends, which in dollar terms continues to rise substantially. When President Jimmy Carter left office, the government was spending $600 billion a year. When Ronald Reagan left office, the annual budget had grown to more than $1 trillion. When Bill Clinton leaves the presidency, the budget will be over $1.8 trillion.

Yet there have been decreases in government spending, though virtually all of that has been in defense-the only department whose budget had a net decrease following the end of the Reagan buildup. Domestic spending is up in a number of areas under Clinton, but there have been savings as well as welfare caseloads have declined. Unemployment benefits have fallen as a result of a 30-year low in the jobless rate. Even health care costs have eased somewhat.

Federal employment levels are also down, by about 300,000 workers in the past six years, though here, too, most of that decline is in defense. But there has been a sharp increase in the so-called shadow government-those workers employed on the outside under federal contracts, grants, awards, and federally financed programs.

Congress has moved to hold down spending growth, too. The spending caps put in place as a result of the budget agreement in the 1997 budget bill have curbed spending growth. The GOP's takeover of Congress and the reins of spending has also been a factor insofar as there have been no major new spending programs enacted under their rule. Discretionary spending has largely been held flat.

But the economy's huge expansion has been the overriding factor behind the big budget surpluses, which have eliminated the deficit. The surpluses are expected to total $1.8 trillion over the next 15 years, though I believe the surpluses will be much higher than presently forecast.

CBO budget projections for fiscal year 2000 put GDP at an anemic 1.7 percent growth rate, well below the 4 percent rate last year and the 4.5 percent rate of the first quarter. CBO is betting that the Asian economic crisis is going to slow the U.S. economy dramatically below 2 percent. I think that growth will not be affected that much this year and that GDP will be between 3 percent and 4 percent. Revenues will continue to flow into the U.S. Treasury at very heavy levels. That is going to make the job of cutting taxes while meeting future defense needs in the war in Yugoslavia much easier. Look for Texas Governor George Bush to campaign on a major across-the-board income tax cut next year that will make strong, long-term economic growth much more likely through the next decade.

TREND #8: The Internet

The economy, indeed our entire society, is going to be changed and improved by American technology in ways that we still cannot foresee. The changes will be sweeping-perhaps, some say, as sweeping as the industrial revolution. Perhaps no other development in the technology revolution will be more far-reaching politically and economically than the continuing expansion of the Internet, which is why it deserves its place on the list of major new trends that will have an enormous impact on our country and the world.

There are estimates that 83 million Americans will be linked up to the Internet by the end of this year, and as many as 100 million by the end of next year. Globally, we are talking about hundreds of millions connected to this worldwide communications and information network, making it not only one of the richest economic resources but one of the most politically powerful as well.

Free-market economist Larry Kudlow says "it empowers ordinary people and disempowers government and the elite because it unlocks information-and access to information is power." In politics, voters will be able to go directly to the Internet to check out what candidates are telling them on tax legislation, economic data, voting records, policy positions. People will no longer have to trust what someone in a lofty government position tells them, because more and more information about our government, the economy, and our society will be available at the push of a button, and that will give voters enormous leverage in future policy debates.

Thus, the Internet is the great equalizer, giving ordinary people without any capital to speak of the power to become publishers, to gain access to the media as a player, not just an observer. But you will not need millions to start your own "publication" or media organization. Like a Matt Drudge, anyone can open a Web site and go into business and compete with the big media. It will be the most important democratic tool of the 21st century.

As an inexpensive way to disperse information around the world, the Internet is becoming the enemy of authoritarian governments everywhere, from Russia to China. It will play a role in the pro-democracy movement's activities to force China to liberalize its political system, empowering the Chinese to access information that Peking once kept from the masses. Now the flow of information is pouring into the country over the Internet, through CD-ROM discs distributed among student groups and other pro-democracy supporters, and via fax machines and mobile phones.

Consider this report in The Washington Post about how fast word spread among demonstrators throughout China after the accidental NATO bombing of the Chinese embassy in Belgrade: "Many learned about the initial demonstrations on a popular Web site, www.sina.com, a Sino-American joint venture portal with a widely read bulletin board. Many others flocked to the area after calls from friends with mobile phones."

Information technology is the enemy of the totalitarian state, and blocking it becomes increasingly difficult when people with laptops will be able to tap into digital networks over a cell phone and download what they want and need within seconds, even in rural China. The Internet is the technology of freedom.

Economically, the Internet is inventing an entirely new way to market, sell, and deliver products, services, and information here and abroad that is going to help expand the U.S. economy exponentially in the decades to come. In the process, it will substantially drive down prices because the old economic order of overhead, infrastructure, warehousing, and all that went with it will be a thing of the past. People buying a car will be able to scan the Internet, find out what the car wholesales for, and thus make the best deal being offered by retailers. Banking will be cheaper as transactions will be increasingly handled by computer modem transfers. So will just about everything else.

TREND #9: The Global Economy

The long-term impact of the global economy's steady expansion will dwarf nearly everything else we are concerned about today. It is not, as declinists and trade protectionists would have us believe, something to be feared; rather, it is an historic phenomenon that will further raise our standard of living and that of the world.

The American jobs of the future are going to come from the business we do in the global economy, selling John Deere tractors, McDonald's Big Macs, Disney movies, Coca-Cola, Macintosh laptops, Microsoft software, and banking and investment services, and building Wal-Marts and Home Depots around the world.

We remain unchallenged as the world's largest economy, producing $9 trillion in goods and services every year and selling nearly $1 trillion in products and services around the globe. We are strong economically precisely because Americans are not afraid of competition; we welcome it. Imports do not destroy jobs; they create them for Americans who manufacture, assemble, ship, promote, insure, wholesale, retail, and deliver them.

The Heritage Foundation publishes a valuable nation-by-nation index of economic freedom around the world. One of its most important findings is that the poorest nations are those who have created regulatory and tariff barriers to imports and to foreign investment, and the wealthiest nations are those who have lowered or eliminated those trade barriers.

Many in this country point with alarm to the growing trade deficit with Japan, with China, with Mexico. But I agree with Robert Bartley, the editor of The Wall Street Journal, who thinks the trade deficit statistics have no relevance to a country's economic strength. Japan has a string of trade surpluses as far as the eye can see, yet it has been mired in recession for the past decade. America has had a string of trade deficits in the face of surging economic growth, falling interest rates, and a national jobless rate that is lower than that of Japan or Europe and remains the envy of the industrialized world.

We have been through a global economic crisis that stretched from Asia to South America, sparking predictions from economic doomsayers in this country that America is going to be struck down by the Asian flu and by what the protectionists call "globalism." We did lose some critical export business in manufacturing and in commodities like grain. But after sailing through 1998 with an undiminished GDP growth rate of nearly 4 percent, the Commerce Department announced last week that the first-quarter growth rate was 4.5 percent.

So much for the effect of the Asian flu.

Long-term, the trend in the global economy is up as Japan and some other Asian nations seem to be getting their economic houses in order, cutting taxes, letting bankrupt banks and other sick financial firms fail or closing them down, and agreeing to open up more of their economy to more U.S. investment and trade. China, too, made a major trade-opening concession that the President let slip through his fingers; but it is only a matter of time until a deal will be signed that will let China in as a member of the World Trade Organization, and that will be good for free trade, expanding free markets, and the cause of democratic capitalism everywhere.

TREND #10: Politics

American politics is constantly adjusting to the ever-changing economic, social, and demographic currents that flow through our history. We are in an era where voters remain more conservative in their thinking and in their voting, and I do not see that changing anytime soon.

Ronald Reagan was clearly the most conservative President we have had in the past half century, and to a large degree he defined American politics for the past two decades and perhaps well beyond that. Clinton, for all his pretense to be "an activist President" with big new ideas, has had few if any of them, and instead has pushed a litany of smaller, minimalist initiatives that in the broader scheme of things have not really enlarged government that dramatically.

Republicans have captured the White House in seven out of the last 12 presidential elections, and if the polls are to be believed, it looks like they could win it again next year. The two major political parties are at parity nationally, though GOP governors dominate the state-houses, including the biggest electoral states, with the exception of California. But even here, Democrat Gray Davis won the governorship of California on a generally centrist agenda that focused on improving education.

Yet there are significant, growing signs that the body politic is becoming much more conservative on several strategic economic and social issues. Polls taken by Democratic pollster Mark Penn have found strong support among Democrats and independents for letting workers invest part or all of their payroll taxes in their own retirement accounts that they would control and could leave to their heirs.

Major attempts in the past decade to pass big government social welfare programs, such as a national takeover of the health care industry, enacting new controls on campaign finances and election activities, and imposing a massive regulatory and tax program on the tobacco industry, have all gone down in flames in Congress in the last few years.

Even on the deeply moral issue of abortion, which has been a battleground in American politics for the last few decades, there is new evidence that a majority of women are becoming surprisingly more conservative. A national poll by the liberal Center for Gender Equality, conducted earlier this year, found that 53 percent of women who responded to the Princeton Research Associates survey said abortions should be allowed only in cases of rape, incest, or to save the life of the mother. That is up from 45 percent who said that in 1996.

Moreover, a strong 41 percent of women now believe that the issues that the Christian Coalition promotes-which the news media like to portray as on the fringes of American political life-would improve the lives of women.

I believe that, because of these and other trends, the legislative agenda at the national, state, and local level is going to be dominated by generally conservative ideas: ideas like letting workers use their payroll taxes to build their own investment retirement portfolio; developing a more market-oriented health care system that lets the elderly shop around for health care plans with government vouchers and offers tax breaks to help people purchase health care at a cheaper cost; offering more choice in education; closing, downsizing, and merging federal agencies; and outsourcing more services to cut the costs of government.

I believe that we are in a new stage of expanding global capitalism that will result in a long, historic cycle of unimpeded economic growth for the United States. I further think that expanding trade with China, inundating it with made-in-America goods and the ideas that come from a free and independent people, will lead to China's democratic liberalization. As with the downfall of the Evil Empire, it will probably happen without a shot being fired and will come sooner than anyone thinks.

President Ronald Reagan once said as he began his presidency, "We have lived through the age of big industry and the age of the giant corporation. But I believe that this is the age of the entrepreneur." He was right. We are now entering a new technology-driven, worldwide entrepreneurial age in the growing wealth of nations that the United States is destined to lead, a time when the big strategic battles will be over markets and money.

"The pessimists fret that our best days are behind us," write W. Michael Cox of the Federal Reserve Bank of Dallas and journalist Richard Alm in an economic analysis for the Cato Institute about America's future. "They are wrong," the two men conclude. "We stand poised on the brink of a new era, one endowed with technology and teeming with opportunities. The future offers even faster economic progress. That is the good news."

Donald Lambro is chief political correspondent for The Washington Times.

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