Forecasting

When someone tells me that James is wealthier than I by 2050, I should probably ask him to tell me what would happen to me in 2 days. If he cannot even tell what I shall be like in the coming 48 hours, it seems reasonable to doubt his forecast of what I shall be like in or before 2050, 42 years from now. However, if this person (or entity) who tells me what happens by 2050 is Goldman Sachs, an investment bank, I think I cannot simply ignore it. Goldman Sachs, needless to say, qualifies its work with verbiage such as "if things go right" (p.3, paragraph 4 in its Global Economics Paper No: 99), and it also declares "Our projections are optimistic," and "economically sensible, internally consistent" (p. 3, paragraph 5), which I think is a responsible act. The forecast by itself is sensible and all significant factors are taken into consideration. I think it is a very useful paper for us to visualise what will happen if the global economy trods the path and does not derail in the coming decades. I take the liberty add that it will become even more useful if certain alternative scenarios are added, built upon by using not only change in the scale in the parameters, but also the frame of reference on which certain economic developments are constructed. These scenarios are meant to develop the options to tackle certain issues that are of concern to a party. The scenarios Certain factors that pop out in my mind right now are: a full-blown war triggered by ideology or energy shortage; regional0 natural disasters or change in the mindset of G7 citizens against the rise of the emerging economies. These are by no means exhaustive and probably hundreds or more of these variables can come up on the whiteboard and the picture of the future will become entirely different if a line is drawn from a present situation which is twisted and reformulated by these other factors.