A thought on New Year predictions


Predictions are almost always based on logic and the future is almost always outside the logic box of the present. In very late 1979, the Soviet Union invaded Afghanistan and, in retaliation, in even later 1979 or early 1980, then President, Jimmy Carter announced that the United States would boycott the 1980 Summer Games in Moscow.

At the time, I thought that it was a bad move on Carter’s part and have come to think even less of it as I look back. In 1980, the Olympics were advertised as being about the amateur joy of Sport and one of the – alleged – differences between the Soviet Union and the United States was that our athletes were independent amateurs and the Soviets were state sponsored professionals. How could the President tell them to stay home? But he did; and they did. I still think that the boycott made us look petty and powerless.  It was a childish, If you are going to invade Afghanistan, I’m taking my toy and going home (when the team wasn’t even – theoretically – the President’s toy).

More importantly to my argument here, I also thought that it was a bad precedent. The next Summer Games would be in Los Angeles and it seemed to me that the Soviets would probably return the favor by boycotting our Olympic fifteen minutes of fame. After that, would come the Olympics in Seoul, an American client state, which would not even allow the North Koreans, a Soviet client state,  into the country  so the Soviets would most likely pull out of that Olympics. This was less than twenty years after Khrushchev had – reportedly – banged his shoe on the lectern at the UN, saying We will bury you. and the Cold War was still going strong. Of course. none of this happened. None of this came even close to happening and I realized how weak my chain of logic was.

By the 1992 Olympics, the Soviet Union no longer existed, something that had never occurred to me (or the CIA, I might add).

In the 1950s, General Electric starting building their Appliance Park in Kentucky and by the 1980s, it was the largest production facility in the world; bigger than FoxCom. But, during the late 1990s and the oughts, GE shipped production overseas leaving much of the Appliance Park empty. A couple of years ago, there were rumors that the Appliance Park was being put up for sale, but nobody wanted it because everybody was shipping production overseas as fast as possible. The experts were writing about the almost universal job flight to some cheap, offshore, factory. We lamented that, with the loss of manufacturing jobs, went the machinery and the collective memory needed to compete for future production.

Then a funny thing happened, Jeff Immelt, GE’s CEO, started to actually look at the numbers. The costs of sending production offshore were more than expected, the cost of bringing the produced items back is increasing with the increasing cost of oil, and the problems turn out to be more extensive than projected (what a surprise). It began to look like it might be slightly cheaper to manufacture some high-end stuff here, so GE brought back the production of a high-end water heater. It turned out that, because we have lost alot of our production ability, the water heater, as designed, was too complicated to build in the USA. But the engineers, the designers, were right next door and they could walk over and talk to the – probably few remaining – production guys. They could work back and forth, making the water heater simpler, easier, to build. While they were at it, they redesigned the production line.

In the end, General Electric was able to drop the sales price of the water heater by about $300, form about $1600 to $1299 and – probably – make more money. As a bonus, the quality of the water heater has gone up and GE was able to cut their inventory because it is so much easier to ship from Kentucky than China. Now GE is bringing back some manufacturing capacity from Mexico and I just read General Motors is bring back the production of the new Camaro from Canada.

None of this was projected – say five years ago – when jobs were  being shipped overseas like crazy and we were all worried that we would end up not actually making anything. The problem with projecting the future is that we almost always project the present out into that future void and, often, that is not what happens. Back when Jimmy Carter protested the Soviet intervention to basically protect the pro-Soviet Norther Alliance, nobody would have believed that – some twenty years later – we would be in Afghanistan arming, training, and protecting the Northern Alliance against the Taliban. The unknown future is often ironic.

In an asides, one of my favorite movies is Personal Best which is about a group of women competitors vying for berths on the 1980 U.S. Olympics team which did not go to Moscow.



Leave a Reply

Your email address will not be published. Required fields are marked *