2021 Is done. What will 2022 bring?
Another year has come and gone and what a year it was, in good ways and bad. The whole world has been and is still going through an event that is unprecedented in modern times. We have seen amazing vaccine creation in the shortest recorded time. We have also seen billions of people around the world still not have access to it and millions of ungrateful idiots refuse it. Supply chains are screwed up like never before, having shut down and been in a start-and-go state ever since. We are on the road to normal, but it has taken longer than anyone would have liked. Some of that was inevitable, but most of it, at least in the US, was by choice.
2021 brought both great things and not so great things. The one constant is we are all living in the moment and not thinking much past it. None of us have ever lived through something like this before. Every single one of us has been affected. Years from now, we may look back on what happened and see that many good things came from it, but it is clear that many horrible things have happened and nobody should ever want it to happen again.
The good news is we have the tools we need to get back to normal. Every day, I am increasingly convinced that Omicron is going to turn out to be a good thing. That does not mean it is good in and of itself, it is not and it will cause plenty of harm. What it does mean is it has forced us to realize that our current situation is untenable. Shutting things down every time a new variant shows up cannot continue nor can closing down schools and quarantining people for days. Omicron is getting us to finally realize that this virus is not going away and that we will have to live with it just like we do with all kinds of diseases.
It is why I believe 2022 will be a much better year. I believe that not only because we have vaccines and other very effective treatments, but because it has to be. We simply cannot continue on our current path. While most people were responsible and did their part to avoid getting and spreading the virus before vaccines were available, i.e., wearing masks and distancing, patience for that is running out. Omicron has already accelerated that and will continue to. The way going forward is going to have to be that once someone is vaccinated, they are free to live their lives again. In practice, that will mean no more restrictions of any sort for anyone and that is okay. Aside from the craziest vaccinated people, indefinite mask wearing and other restrictions are not what anyone signed up for.
Mask mandates and other kinds of restrictions are no longer going to be tolerated. That will be true even in the most liberal places. People are tired of being told that they have to keep wearing masks. They are tired of being told to keep their distance and that they cannot take part in large gatherings. They are tired of their kids having to wear masks all day and to quarantine for weeks just because someone they might have been around tested positive. All of this is going to come to an end in 2022 if for no other reason because it has to.
The need for humility
In general, I am very hesitant to make predictions absent extremely compelling evidence. By then, I am usually just jumping on the bandwagon. I try to be as self-aware as I can and to know what I do not know. What I do not know is almost everything. There are so many areas that I am interested in, i.e., monetary policy, but know very little about and so I will not make any predictions about them. Part of that is humility, but also self-interest. Making predictions about things you know little or nothing about is a great way to get an egg on your face and look like a fool.
I mention this because so many predictions over the last two years have aged very poorly. That is true not just with respect to the pandemic, but on the economy, too. This piece by Greg Ip of the Wall Street Journal discusses that phenomenon. Our current mental models are rigid and inflexible, which makes for poor prognostications in a world that is constantly changing. Pandemics were not on anyone’s mind two years ago. Inflation was not something on many people’s radars a year ago, but now is something everyone is talking about. What 2022 holds is anyone’s guess and could be something radically different from today. For example, just because inflation and the pandemic are on everyone’s mind now does not mean they will be in a year.
What is important to remember about almost all predictions is that past is not prologue. Someone can be completely right about one thing and totally miss another. It is why I am inherently dismissive of any story I hear about someone making a prediction about "X" as if that person is some kind of soothsayer. They may be right, but should not automatically be treated as if they will be. Track records matter and hardly anyone, especially in economics, has a great one. The same has been true with the pandemic, not to mention foreign policy (remember all the experts in charge in Afghanistan?). Virtually nobody has been right about every development in their area and the few who have are just lucky and odds are will be wrong about something soon enough.
None of this means we should stop trying to predict things altogether. Never predicting anything would mean nothing would ever change. It just means we should recognize that we all have limits and biases. That is just in our nature, not because of some evil conspiracy. A new virus that constantly changes is going to throw everyone off. An economy that we have very limited data on and acts in response to events none of us have ever lived through before is going to make fools out of all prognosticators. As Yogi Berra said, predictions are tough, especially about the future.
In general, but particularly when applied to economics, when you hear someone claiming that under "X" circumstances, "Y" always happens, be very, very skeptical. You should have the same reaction when you hear someone try to compare any phenomenon today to what has happened before. For example, it has been popular to compare inflation today with the 1970s even though the two are nothing alike. That does not mean what is going on today will not follow the same path eventually (let's hope not), but if it does it will be for entirely different causes and reasons. What is going on today has no historical analogue. In the modern world, with modern technology and a global economy, there has never been anything like what we are going through now.
My predictions for 2022
What will happen with the economy? The hell if I know. I can think of reasons to be hopeful, i.e., improved supply chains, end of the pandemic, greater workforce participation, etc., but none of that is set in stone. I am hard pressed to think things will not be better absent a deadly new variant, but then again, I have no idea. The economy went through an unprecedented situation and there will be unprecedented issues. That is all I have to say on that subject.
As far as the midterms go, historically they almost always go against the party in the White House. Based on the evidence today, I would expect that to happen, especially with the House. The good news is that because redistricting has gone well for Democrats this time around, they could win it back in 2024. Democrats who have spent their time acting like gerrymandering is the end of the world need to wake up and see what is actually going on. If any party has an edge in the House, it may be Democrats, but that is for another blog post.
The Senate is trickier. I would guess Republicans will win it back because they only have to net one seat, but that is not guaranteed. Biden’s approval rating is bad now, but if things go back to normal, they should improve, which would help Democrats in key states. Another wild card that is unknown now is Roe v Wade. If it gets reversed over the summer, that will likely make abortion a key issue in the midterms, maybe even the key issue. That has the potential to fire up Democrats in a way that few other things could, when usually the party in the White House is less fired up for midterms. It also gives Democrats the chance to go on offense on abortion for the first time in fifty years. All of that, however, is speculative at this time so I will not make any firm predictions about what will happen with Roe v Wade or the fallout from it being reversed.
The only firm prediction I am going to make is what I said earlier in this post. There will be a return to normal. Some of the most liberal places with the craziest vaccinated people will be late to the party, but they will get there. It is still fashionable in some places to be bat shit crazy cautious, but that will change. If nothing else, when the craziest vaccinated people realize that they are the only ones living like hermits, even they will go back to normal. It will not be any scientific evidence that prompts them to change (what they are doing has nothing to do with science), just the desire to not be freaks.
I expect to see an end to all restrictions on gatherings and rules about distancing. Mask mandates will be ended, too, even in airports and on planes, though those will probably be some of the last places to do it. Some private places will keep them, but they will be few and far between. Just as social pressure encouraged people to wear masks and keep their distance, social pressure will encourage people to live normally again. I expect to see a big reduction in theater, too, if not a complete end to it, i.e., plexiglass barriers, cleaning surfaces, wearing masks outside, wearing masks other than N95s, etc.
When we return to normal, it will obviously be a great thing for so many reasons. Economically, it will help to reduce the number of “help wanted” signs that are up right now. That will mean better customer service and happier customers and employees. It will probably help some with inflation as people spend more on services and less on goods, helping to rebalance the economy. Mentally, everyone will be much happier just to do things normally again.
Thank you to readers and an explanation of my writing
I want to thank everyone who reads this blog and I wish you a happy new year. I started writing when the pandemic began and have really enjoyed doing it. I hope you all have enjoyed reading it. I plan on continuing to write indefinitely. Luckily, there will always be something to write about.
It has been great sharing my thoughts with anyone who is interested. I hope I have not bored you too much. Many people whose blogs I read have new changes coming for the new year, but I can’t say that I do. I just plan on continuing to write as I have since I started writing more than a year and a half ago.
In case anyone is wondering, I do not have any set agenda regarding when I write or what I write about. I rarely plan in advance on writing anything. More often than not, some event will happen that will prompt me to write about it. Other times, I will stumble upon an article(s) that pricks my interest. Occasionally, I will write book reviews.
Needless to say, I have written plenty about the pandemic because that has been in the news 24/7 for almost two years and will continue to be for a long time to come. My interest is in economic policy more than anything else. That to me is what matters the most because of its impact on people’s lives and it is something politics can address. I try not to write as much about culture because politics can rarely address it and attempts to do so are usually cures worse than the disease.
I can imagine I will be writing plenty more about the pandemic going forward. I am sure I will write about the economy as well. I enjoy writing about elections, but those do not happen very often. I will probably write about the midterms, but not nearly to the extent that I wrote about the presidential election. Beyond those things, I have no idea what else I will be writing about, but there will be plenty of choices, many of which will be about things that none of us right now have any idea are going to happen.