I enjoy making predictions. I have a folder full of forecasts about the economy, stocks prices, elections, and sporting events made over the years. For me it’s a way to organize my thoughts and to challenge my decision making process. More broadly, the topics that get forecasted most frequently can reveal a lot about our collective hopes and fears.

In 1972, a book was published called, The Limits to Growth by five scientists from MIT. In it were several predictions, the most dire of which was their prediction that the world would run out of oil by 2022. Based on that forecast, the authors predicted the world economy would subsequently collapse. Thankfully their forecast was way off. According to an article in Business Week – “Everything You Know About Peak Oil Is Wrong,” the world currently has proven recoverable reserves of natural gas and oil to last over 400 years.

For much of modern history, it is very rare that actual events match extreme forecasts. In the vast majority of situations our ability to adapt, to alter course individually as well as collectively, prevents our worst fears from being realized. To move forward despite dire predictions or worst case scenarios requires some degree of faith in oneself, our fellow man, and our institutions. Have we lost this? In many ways I think so.

The well chronicled economic and market woes over the past decade, as well as the ever-polarizing political process, have largely shattered our faith in our ability to solve the challenges we face. It is not surprising that there are so many doomsday predictions being made following these difficult times. Nevertheless, it is still possible that we can rediscover our faith in order to tackle these challenges with confidence. But how?

Here I go again… Over the next decade there will be game-changing events that will provide the inspiration for an entrepreneurial explosion of innovation and opportunism. Over this same time frame, inspirational leaders will emerge leading the effort toward solving our most formidable challenges. If you doubt this then ask yourself when has America never faced challenges? When has America not risen to the occasion to solve whatever problems we faced?

The fact that over the past few decades we have worried about running out of oil as well as other natural resources has led to incredible technological advancements in terms of discovery and conservation. That is how the process works.

Another source of doomsday forecasts… The February 17th edition of the Wall Street Journal included an interesting article about health care spending – “The Myth of Runaway Health Spending.” According to the Centers for Medicare and Medical Services, the growth rate of health care spending has actually moderated since 2002, despite widespread fears that health care costs are out of control. The article contends that the combination of more informed consumers, effective new medicines and technologies, and more proficient use of health care information have made the entire system more efficient.

The process of facing challenges head on, and ultimately overcoming them, is in America’s DNA. It is who we are and who we have always been. The challenges change, but so do the scientific and technological solutions.

All this begs a particular question, which honestly, I am not sure how to answer – How does government fit into all this? That is a critical question our country is facing and one which it may in fact answer in the November elections.

We better have the right answer... It is critically important that we figure out just what government should and should not control in our country, economy and markets. And over time, we will figure this out. It is just one more challenge we all face.

Michael Kayes, CFA