MURKY CRYSTAL BALLS

Why the experts tank on predicting what's going to happen?

The Advocacy Newsletter: Connecting.... the Dots

Volume 7 Number 357

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When important things happen that impact our everyday lives, one thing you can be sure of, the supposedly wise prognosticators haven’t accurately predicted the impending calamities. Just now, it is rapidly becoming apparent that we are going through the start of an inflationary period, unlike any we have seen in a generation. By hindsight It stands to reason why this is happening. Along with the pent-up demand created by coronavirus home restrictions, it stood to reason that at the end of this cycle people would be on the hunt for goods and services. Obstacles would be empty pipelines and an absence of workers to carry out deliveries to the point of sale. This sounds like a reasonable explanation about what has caused that which we are now going through. But do you remember the “talking heads” predicting this coming inflation?

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A noted economist, Joseph E. Gagnon, said, “Economists are just “slightly better” than the typical supermarket shopper who notices that the price of milk has risen lately.” Think about it. One of the most important things economists must do is predict the rise and fall of inflation. And they are admittedly lousy at it. But they keep doing it, and people keep listening.

Another case in point occurred just at the end of August 2021. After a 20-year misadventure, we abruptly pulled a couple thousand of our troops out of beleaguered Afghanistan. What the military advisors foresaw as an orderly withdrawal turned into a mess. This was because our commanders figured the departure would be gradual and our Afghanistan allied troops would battle toe-to-toe with the Taliban.

The first sign that wasn’t about to happen was when the country’s president, Ashraf Ghani, took a powder with his billions in loot. He subsequently emerged in the United Emirates, which took him in with all his dough for “humanitarian reasons.” Ghani knew what our military leaders didn’t want to acknowledge to our president– that those so-called “fierce Afghan fighters,” renowned for thousands of years, didn’t have any stomach for this battle. Come on. They too wanted to pack up their dough and flee to some friendly country.

When the Taliban said they would spare those who threw down their arms and behead those who didn’t, almost the entire vaunted army went home. So in a week or two the whole country had collapsed, leading to a disaster as our allies sought to leave the country from the Kabul International Airport. Thousands got out, and thousands didn’t.

President Biden had set that tight withdrawal date after listening to our army brass about the Afghan fighters. He should have been suspicious, knowing what had happened to President John F. Kennedy back in 1961. Kennedy was also a new president then, when he bought into a cockamamie plan to fund a bunch of Cuban exiles in what turned out to be an aborted invasion to topple the Castro regime. They got stopped at the beaches. Biden should have known better, having been around the Capitol for over a third of a century. But he turned out to be a rube who listened to the experts over reason. Better luck next time.

Just as in 2016, we had a major shocker. Even Donald Trump had never expected to become the 45th president of the United States. After all he saw, as did all of us, the polls overwhelmingly showing he would be a loser. He hadn’t even prepared an acceptance speech.

But that didn’t take into consideration that a lot of people who liked Trump were unwilling to admit to an interviewer, in person or over the telephone, that they favored an autocratic, racist candidate. The only pollsters that got it right were the ones who relied on automated or online methodologies to conduct their interviews. In this impersonal, voters were able to express their true choice, and Trump was their winner. The experts discounted these polls as being unrepresentative.

They should have been paying attention to the huge crowds Trump was drawing, the fervor of his supporters compared to the tepidness toward Hillary Clinton. Also, she was running a pathetic campaign and ignoring the swing states needed to win the election. The whole thing begged for an upset, and so it occurred. Why were the experts so surprised?

An easy example of a failed expert is Jim Cramer, the celebrated stock picker of CNBC, and host of “Mad Money.” He is out there every day, ranting and raving with his picks, which are right or wrong about half the time, just like you could be doing with your eyes closed. He was notably bullish about the continued growth of the market in 2008 when the Dow Jones was at about 13,000, echoing a 1999 publication that predicted a 36,000 Dow market was coming up soon. Came the crash that year, fueled by mortgage “liar loans.” We are now first approaching that 36,000 mark, only it’s13 years later. Cramer never apologized or looked back. He is still out there with his rolled-up sleeves, and the same devoted followers swearing by him.

What about the coming of the year Y2K? Remember how we were all waiting with bated breath for the ball to come down in Times Square, and God only knew what would happen. After all, there were a lot of experts and quacks out there saying the world will end (or at least computers will fail) because of Y2K. It’s hard to remember hearing of one computer glitch at that time. Admittedly, that may be down to the many IT jocks working round the clock to prevent it….

Back on Christmas Day of 1991, Soviet President Mikhail Gorbachev shocked the world by announcing “We’re now living in a new world.” He went on to announce the formal dissolution of the Soviet Union after three-quarters of a century of existence. Just like that, the Cold War was now over, and there were now 15 independent countries. No one predicted this one, although there were signs of a diminished empire.

That winter’s failure of the grain crop counted on to provide the basic bread to feed the masses should have been considered by experts to be a major blow to the regime. Also, Communism had fallen in recent years in neighboring Warsaw Pact countries such as Czechoslovakia, Poland, and Hungary. All of this led up to that eventful night.

But there were small signals if one was on the lookout. I remember hearing at my son’s high school about a group of their students who had toured Eastern Europe that summer, putting on performances of the extremely popular Broadway musical, Hair. We were surprised to hear that the students received adoring accolades and adulation wherever they went. This was because to these confined people this show signified “protests against war and military service, against intolerance, brutality and the dehumanization of society.” They were told that young people especially identified with the show because they were seeking to overcome the tyranny of Communism. At the time we were incredulous to this development and shrugged it off. It became a reality when, that winter, the Soviet Union collapsed.

One who got it right, back in the 1930s, was Winston Churchill. Labeled a “has been” in the UK political world of the time, he was incessant in his prediction of the German menace. He correctly identified what a threat to world peace Hitler and Nazism were. Meanwhile, the UK government headed by Neville Chamberlain and, indeed, the rest of the world, was giving the National Socialist German Workers' Party a pass. Comes 1939 and the Nazi aggressions in Czechoslovakia and Poland, and King George VI had to call on Churchill to become Prime Minister. He was the logical choice for the post because he was virtually the only one around who had been correct in his assessment of this threat. For his actions before and during the war, Churchill is considered by historians as the “greatest man of the 20th century.” That’s a neat payoff for a good predictor.

Sometimes it’s not even a bad prediction, it’s a failure to recognize what is happening. Thomas Bell, the president of the Linnean Society of London (the oldest society devoted to the study of natural history) summed up the year 1858. That year, which marked the announcement of Charles Darwin’s theory of evolution, he managed to observe, “no discoveries of significance had occurred.” He was off by a little.

An interesting observation was by Philip Tetlock, an American science writer. He observed that not only are experts often wrong, but they are also never even taken to task for it. Not only do they not admit to being wrong, a lot of time they just forget about it, or self-justify their prediction by saying that things changed or that an unknown factor entered the situation. They are also not inclined to change their beliefs about the way the world works just because they made a mistake.

Years of experience is also not a good yardstick for prediction. It has been found that in fields like stockbrokers predicting the market, scouts forecasting the success of young athletes, college admission officials predicting applicant academic achievements, and even parole officers predicting recidivism, those experienced have no greater chance of accuracy than those with little experience. Be aware of the old adage about being on the lookout for “errors of omission and commission.”

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Never make predictions, especially about the future. ...by Samuel Goldwyn

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