ENROUTE
an editorial opinion

In the future these could be the good old days

By Marvin Cetron
President, Forecasting International


As drones largely replaced manned military aircraft, pilots retrained as UAV flightcrews (above), moved to airlines and corporate fleets, took specialized jobs like fire bombing, or left aviation behind.

There are varying explanations for this catastrophic inactivity. In the US, some political leaders were philosophically opposed to government intervention in the economy. Others may genuinely have feared the consequences of growing deficits more than they did those of a recession. Some politicians, it has been suggested, may have made a calculated decision that an economic rebound before the elections of 2012 was not in their party's interest.

In Europe, Germany and other fiscally disciplined northern lands opposed using tax money to bail out their less cautious southern neighbors. And Brussels had not yet corralled the $1 trillion or more required to ensure an orderly Greek default and prop up the larger economies of Italy and Spain. The political will to do so could not be found.

In the end, the reasons didn't matter. The US and European economies staggered on through 2012, slipping in and out of negative territory. By 2Q2013, the US was clearly in recession. Greece had defaulted on its debt, and last-minute efforts to cushion the shock were only partly successful. Europe, too, fell into recession.

At another time, China might have kept the West's problems from spreading. Its strength, after all, had helped lift the global economy out of recession in 2001. But, by 2013, Beijing had problems of its own. Its efforts to slow inflation had finally worked, but at the cost of bringing GDP growth down to 5%.

It was barely enough to create jobs for the young people entering the workforce. The optimism that created China's housing bubble soon collapsed, and the bubble with it. The underground banks responsible for much of the country's credit market began calling in loans to companies and local governments that could not repay them. The growth rate dipped to 4%, then to 3%.

Beijing had been trying to make the transition from an economy based on infrastructure spending to a modern consumer economy. In 2013, it began to build again. It fast-tracked cities, airports, roads and rail lines that had been scheduled for completion as late as 2025—projects that in many cases would not be needed for years. By 2015, the crisis was past.

That was too late for China to help America and Europe. By 2015, 18 months of deficit spending had stabilized the world's largest and 3rd-largest economies. They were growing again by 1–2% per year—rates they have yet to improve on for more than a quarter or two. The US had added $1.4 trillion to its federal debt. Europe had added nearly $1.7 trillion to its debt.

In the US, the results could have been much worse, but Washington had finally chopped its military budget drastically. Its last few soldiers finally came home from Iraq. It declared victory in Afghanistan and brought those troops home as well, much as it had done some 40 years earlier in Vietnam.

Then the US did the unthinkable—it pulled all its ground and air forces home. By Jan 2015, there were no US soldiers or airmen in Europe, none in Japan, none in Korea, none in Panama, none in the Middle East. The US Navy still patrols the world's shipping lanes, but the only soldiers to be found outside the country are the tiny protection details at US embassies.

Tactical changes supported that strategic revolution. The military shrank from 1,450,000 men and women in 2009 to just over 1 million in 2015—a number it maintains today. Most of those reductions occurred in the Army, which began with 548,000 people and declined to about 300,000. Another 75,000 were pulled from the Air Force as unmanned aircraft replaced those human pilots and the crews needed to keep them in the sky.

Today, US manned missions are limited to the Marines and their Army counterparts. They combat small uprisings in strategically important lands, support multinational UN forces, and most often carry out relief work after natural disasters. The deterrent role they used to play using overseas bases has been turned over to drone aircraft, which can strike with precision targets around the world within hours of the decision to send them.

These changes reduced the American military budget by almost 40%. But they had another effect that was less welcome. Between 2014 and 2016, some 400,000 former military personnel flooded into the civilian labor market, where there were few jobs for them.

Aviation was probably hit hardest. Some redundant military pilots retrained to fly drones from bases in the US. Many left aviation entirely. But large numbers entered civilian aviation, where they competed for cockpit seats with airlines, freight haulers and business fleets. It was a difficult time for professional flyers.

After the recession of 2007, economists predicted that it would be 2015 before the US economy replaced the 4 million jobs it had lost. But by 2015, another 3 million jobs were gone, and the target date had been moved back to 2023.

In 2021, we know the truth. None of those jobs will ever return. Unemployment rates will continue to grow long into the future, because the world no longer needs much human labor to get its work done.

Before we look at why this is so, there is one more set of problems to consider.

Resource issues

Thanks to overuse, climate change and other problems, water shortages have spread from places like India, where they were caused by poor distribution, throughout much of the world.

By 2011, the world had been debating the question of "peak oil" for decades. M King Hubbert first suggested it in the 1950s, predicting that oil production would follow a curve, rising to a peak and then declining rapidly as exploitable petroleum supplies were exhausted.

Hubbert believed that that peak would occur in the 1970s. The discovery of new oil fields and new recovery methods set it back repeatedly, but by 2011 it was clear that some of the world's most important oil reserves were starting to run out.

America's once plentiful supplies were all but exhausted. Saudi Arabia's production was tapering off. The world's output of petroleum was stuck at 86 million barrels per day, while demand had grown to 85 million barrels per day. It would have been higher if the recession of 2007 had not stunted economic growth. As a result, the price of oil in the US floated between $75 and $110 per barrel. In Europe, Brent crude cost about $25 per barrel more.

In 2011, the US Dept of Energy predicted that demand for liquid fuels—mostly oil—would grow to 106 million barrels per day by 2030. At the same time, it predicted that production from conventional wells would decline to about 35 million barrels per day. In a time of slow economic growth, the department estimated that oil would cost $105 per barrel by 2015 and $130 a barrel by 2030.

Growth has certainly been slow. Yet, in 2021, oil prices float between $110 and $120 per barrel. Energy demand has grown a bit less quickly than expected. But production has expanded even less rapidly as extracting crude oil from depleted wells, tar sands and shale, and from deep-sea fields has proved more difficult and costly than anticipated.
Looking back from 2021, this seems almost inevitable.

Forecasters have known since the late 1950s that complex technologies almost always take longer to develop than people expect because putting them into practice requires solving difficult engineering challenges.

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