The 2015 Intergenerational Report is reminiscent of a comment by that great 20th century philosopher and baseball player Yogi Berra: 'It’s tough to make predictions – especially about the future.'
Trying to anticipate how Australia will change over the next four decades may be an entertaining guessing game, but to think that present policy can be meaningfully shaped by such crystal ball gazing is a bizarre conceit.
That the Treasurer, Joe Hockey, immediately tried to use the report to justify current government policy only demonstrated either the shallowness of his understanding or the depths of his political cynicism.
Many economic commentators have pointed out, rightly enough, that Treasury cannot even get its one year predictions right. Believing that 40 year predictions are going to be in any way useful is simply silly.
Nevertheless, it is worth looking at how the forecasts are constructed to see the kind of thinking involved. The report says there are three 'long run drivers' of the Australian economy: population, participation in the workforce and improved productivity. It masterfully concludes, employing all the power of the circular argument, that the population will increase, people will live longer so they must be encouraged to keep working and it is important to become more productive.
Are these factors the 'long run drivers' of future events? They certainly have an effect, but they are only three of the many influences that shape nations (war and disease have influenced events from time to time, for example). The suspicion is that they are chosen because they are the easiest to analyse. It is not difficult to create a trend line for population growth, or ageing, or to assert that productivity is important. What is difficult is to anticipate the impact of discontinuous change, the effect of something genuinely new.
To get the point, think back 40 years. No Internet. No mobile phones. No laptops or tablets. No electronic banking. No $700 trillion mountain of financial derivatives dwarfing the 'real' world economy. No Facebook, no selfies, no social media.
Currencies were actually used to facilitate international trade. Manufacturing mattered. The finance sector was small and for the most part peripheral. Newspapers made enough money to employ journalists. Musicians sometimes got paid. Buying a television or a washing machine was considered a major expense. Flares were thought to be a legitimate item of clothing.
The next four decades will be see even greater changes. We are living in an era that