Every time I travel to London and other parts of Europe, I find that most Europeans have a pessimistic view of the future, and a recent trip was no exception. They also have a negative attitude toward American politics, especially after former President Donald Trump was indicted. But perhaps it’s also “tech envy,” opines Mark Skousen, editor of Forecasts & Strategies.
My wife, Jo Ann, and I just returned from an 11-day whirlwind tour of the United Kingdom—London, Edinburgh, and Glasgow—where I gave a series of lectures in honor of Adam Smith’s tercentennial. (He was born in 1723 in Scotland.)
The British are finding Brexit (leaving the European Union) to have been a costly mistake. Plus, they have other issues to worry about: The war in Ukraine, inflation, potential energy shortages (due to their excessive “green” policies), and uncertain government leadership.
But then there is “tech envy.” Almost all the major global tech companies are headquartered in the United States—Apple (AAPL), Microsoft (MSFT), Meta (META), Alphabet (GOOG) and Amazon (AMZN). Even the internet is US-based.
American exceptionalism is still alive and well. But we have our own issues. Here in the United States, we worry about rising interest rates, a recession, inequality, air pollution, problems on the US-Mexico border—the list seems endless.
That said, bull markets climb a wall of worry. At the beginning of 2023, I noted that the stock market traditionally has its best year after the midterm elections. Jeff Hirsch, editor of the Stock Market Almanac, was the first to tell me about this.
Many people scoffed at this upbeat prediction, but it has turned out to be another good year on Wall Street (so far). While the Dow has struggled, the SPDR S&P 500 ETF Trust (SPY) has advanced over 12%, and the Technology Select Sector SPDR Fund (XLK) has ballooned by 33%!
Both funds have major positions in technology stocks, which have led the rally this year. And one of the big drivers behind the surge in tech stocks is the new developments in artificial intelligence (AI), especially ChatGPT, which have led some to dub the time we are living in now as the new “Roaring Twenties.”
Recently, my wife and I had lunch with Robert Skidelski, a member of the House of Lords and the world’s expert on John Maynard Keynes. He’s writing a new book on the Age of the Machine, and worries that AI and other technologies will finally do us in and eliminate jobs by the millions.
I’m not that pessimistic. New technologies have always created more job opportunities in other sectors of the economy. The late Harvard management guru Clay Christensen called this transition period “creative disruption,” and the long-term results of such a period have always been positive.