Forty years is roughly the length of a working lifetime—and long enough for history to have taken some unexpected turns. And to have proved that long-term forecasts based on extrapolations of existing trends usually end up wide of the mark.
The list of failed prophecies from the 1970s is rather long. The conventional wisdom of the time was more than usually unreliable.
Example: the Club of Rome’s Limits to Growth report in 1972, predicting that the world was running out of oil and other natural resources. For a while that seemed right, as the 1973 and 1979 OPEC oil price hikes led to gas lines in the United States.
But in the longer run, as the Club came to recognize, engineers and entrepreneurs found more oil and other natural resources and figured out how to get them to market. Capitalism works, and in ways planners don’t expect.
Another common assumption in the early 1970s was that Britain was a fusty, antiquated country that had to join the modern, up-to-date Common Market (now the European Union). Europe’s war-devastated economies had actually grown faster than Britain’s in the quarter-century after World War II.
Fast forward to today. It is Europe that looks out of date, with zero economic growth and economies smothered by sclerotic regulation, overlarge welfare states and the poorly conceived euro.
Britain got rid of much of that under Margaret Thatcher and John Major. And thanks to Gordon Brown, it wisely avoided the euro. Now it’s growing solidly while the continent lags.
A third bit of conventional wisdom from the 1970s is that Asia generally and China in particular could never grow because of the burden of overpopulation.
But Asia’s state-led capitalism and Deng Xiaoping’s adoption of that model in 1978 has made Asia the growth capital of the world. Hundreds of millions have risen from poverty.