Part 1 (1/2)

Future babble.

Why expert predictions are next to worthless, and you can do better.

Dan Gardner.

For Mum and Dad, who gave me a future, and for Victoria, Winston, and MacDougall, who are the future.

Preface.

As I read the newspaper this morning, I became engrossed in a story about what would happen in the future.

The story said the latest economic forecast of the Organization for Economic Cooperation and Development (OECD) showed growth over the next couple of years would be stronger than previously projected. I read every word avidly. Like most people these days, I'm worried about the economy. The last few years have not been good ones. There was a calamitous credit crisis, the puncturing of real estate bubbles in one country after another, and a global recession worse than anything since the Second World War. Then came a weak recovery, debt crises, and fears of inflation. Or deflation. Take your pick. Who knows what will come next? Not me, although I very much want to. So when my morning newspaper delivered the knowledge I crave, from the esteemed experts at the OECD no less, it had my full and enthusiastic attention. Growth will be better than expected! Fabulous!

But then I realized something. The phrase better than expected means there was a forecast that preceded this one, and by issuing a new and different forecast, the OECD was conceding that the latest information suggested the earlier forecast was wrong. If the first forecast could fail, so could the second, and yet I had reacted to the second forecast as if it were a sure thing. It was also a little sobering to recall that the OECD had forecast smooth sailing in 2008 and 2009. Hurricane? What hurricane?

And I remembered something else. I had just finished writing a book about how awful experts are at predicting the future and how psychology compels people to take predictions seriously anyway.

Case in point: me.

I mention this because the mistakes and delusions I chronicle in this book are human follies. We are all susceptible to them, even authors who write about the mistakes and delusions of others. The goal of this book is not to mock particular individuals. Nor is it to scorn the category known as ”experts.” It is to better understand the human desire to know what will happen, why that desire will never be satisfied, and how we can better prepare ourselves for the unknowable future.

Although most of the issues discussed in this book are very much in the news today-from the economy, to oil prices, to environmental catastrophe-I generally don't examine current predictions for the simple reason that no one really knows if they are accurate or not. I may feel that a prediction is sensible or silly, but others may feel differently, and arguing about it will get us nowhere. Only the pa.s.sage of time can settle it. And so I focus on recent history: If, for example, someone predicted a second Great Depression would start in 1990 (as one economist did in a wildly popular book), then I can say with considerable confidence that he was wrong. And no reasonable person will disagree.

I should also note that while I have tried to be fair in portraying what experts predicted and how accurate those predictions were, I often had to condense entire books to a few sentences and sum up complex evidence with equal brevity. Inevitably, these summaries are full of subjective judgments: Do not take what I say as the final word. Most of the papers and articles discussed here are available on the Internet; all the books can be found in libraries and used book stores. Have a look and decide for yourself. I know that reading old predictions about a future that is now the past may sound hopelessly dull, but it's not. In fact, it's surprisingly enjoyable and rewarding. It's raw history, after all. There is no better way to climb inside a moment in time and see the world from that perspective. Or to realize that while the future we face may be disturbingly uncertain, 'twas ever thus-which is oddly rea.s.suring.

My profound thanks to Philip Tetlock, for doing the demanding research that is the foundation of this book and for being generous and helpful at an unimaginably difficult time in his life. A gentleman and a scholar, indeed.

Also thanks to my research a.s.sistant, Courtney Symons, and my marvelous editors, Susan Renouf at McClelland & Stewart and Stephen Morrow at Dutton. Many others contributed one way or another to the book in your hands, including Scott Gilmore, Rudyard Griffiths, Liam Scott, Bruce Schneier, and my longtime friends and colleagues David Watson and Leonard Stern. A special thanks to Paul Slovic, John Mueller, Marc Ramsay, and Barry Dworkin for reading early versions and providing invaluable thoughts and suggestions. Of course, having been written by a fallible human, this book will contain errors-for which the author is solely responsible. All corrections and constructive criticism will be gratefully received.

And finally, thanks to my wife, Sandra, without whom I could do, and would be, nothing.

1.

Introduction.

The end of everything we call life is close at hand and cannot be evaded.

-H. G. WELLS, 1946.

George Edward Scott, my mother's father, was born in an English village near the city of Nottingham. It was 1906. We can be sure that anyone who took notice of George's arrival in the world agreed that he was a very lucky baby.

There was the house he lived in, for one thing. It was the work of his father, a successful builder, and it was, like the man who built it, correct, confident, and proudly Victorian. Middle-cla.s.s prosperity was evident throughout, from the sprawling rooms to the stained-gla.s.s windows and the cast-iron bathtub with a pull-cord that rang a bell downstairs. A maid carrying a bucket of hot water would arrive in due course.

And there was the country and the era. Often romanticized as the ”long Edwardian summer,” Britain at the beginning of the twentieth century was indeed a land of peace and prosperity, if not strawberries and champagne. Britain led the world in industry, science, education, medicine, trade, and finance. Its empire was vaster than any in history, its navy invincible. The great and terrible war with Napoleon's France was tucked away in dusty history books and few worried that its like would ever come again.

It was a time when ”Progress” was capitalized. People were wealthier. They ate better and lived longer. Trade, travel, and communication steadily expanded, a process that would be called, much later, globalization. Science advanced briskly, revealing nature's secrets and churning out technological marvels, each more wonderful than the last, from the train to the telegraph to the airplane. The latest of these arrived only four years before George Scott was born, and in 1912, when George was six, his father gathered the family in a field to witness the miracle of a man flying through the air in a machine. The pilot waved to the gawkers below. ”Now I've seen it,” George's grandmother muttered. ”But I still don't believe it.”

And the future? How could it be anything but grand? In 1902, the great American economist John Bates Clark imagined himself in 2002, looking back on the last hundred years. He p.r.o.nounced himself profoundly satisfied. ”There is certainly enough in our present condition to make our gladness overflow” and to hope that ”the spirit of laughter and song may abide with us through the years that are coming,” Clark wrote. The twentieth century had been a triumph, in Clark's imagining. Technology had flourished, conflict between labor and capital had vanished, and prosperity had grown until the slums were ”transformed into abodes of happiness and health.” Only trade had crossed borders, never armies, and in the whole long century not a shot had been fired in anger. Of course this was only to be expected, Clark wrote, even though some silly people in earlier generations had actually believed war could happen in the modern world-”as if nations bound together by such economic ties as now unite the countries of the world would ever disrupt the great industrial organism and begin fighting.”

At the time, Clark's vision seemed as reasonable as it was hopeful, and it was widely shared by eminent persons. ”We can now look forward with something like confidence to the time when war between civilized nations will be as antiquated as the duel,” wrote the esteemed British historian G. P. Gooch, in 1911. Several years later, the celebrated Manchester Guardian journalist H. N. Norman was even more definitive. ”It is as certain as anything in politics can be, that the frontiers of our modern national states are finally drawn. My own belief is that there will be no more wars among the six Great Powers.”

One day, a few months after H. N. Norman had declared the arrival of eternal peace, George Scott fetched his father's newspaper. The top story was the latest development in the push for Irish home rule. Below that was another headline. ”War Declared,” it read.

It was August 1914. What had been considered impossible by so many informed experts was now reality. But still there was no need to despair. It would be ”the war to end all wars,” in H. G. Wells's famously optimistic phrase. And it would be brief. It has to be, wrote the editors of The Economist, thanks to ”the economic and financial impossibility of carrying out hostilities many more months on the present scale.”

For more than four years, the industry, science, and technology that had promised a better world slowly ground millions of men into the mud. The long agony of the First World War shattered empires, nations, generations, and hopes. The very idea of progress came to be scorned as a rotten illusion, a raggedy stage curtain now torn down and discarded.

In defeated Germany, Oswald Spengler's dense and dark Decline of the West was the runaway best seller of the 1920s. In victorious Britain, the Empire was bigger but the faith in the future that had sustained it faded like an old photograph left in the sun. The war left crus.h.i.+ng debts and the economy staggered. ”Has the cycle of prosperity and progress closed?” asked H. G. Wells in the foreword to a book whose t.i.tle ventured an even bleaker question: Will Civilization Crash? Yes to both, answered many of the same wise men who had once seen only peace and prosperity ahead. ”It is clear now to everyone that the suicide of civilization is in progress,” declared the physician and humanitarian Albert Schweitzer in a 1922 lecture at Oxford University. It may have been ”the Roaring Twenties” in the United States-a time of jazz, bathtub gin, soaring stocks, and real estate speculation-but it was a decade of gloom in Britain. For those who thought about the future, observes historian Richard Overy, ”the prospect of imminent crisis, a new Dark Age, became a habitual way of looking at the world.”

My grandfather's fortunes followed Britain's. His father's business declined, prosperity seeped away, and the bathtub pull-cord ceased to summon the downstairs maid. In 1922, at the age of fifteen, George was apprenticed to a plumber. A few years later, bowing to the prevailing sense that Britain's decline was unstoppable, he decided to emigrate. A coin toss-heads Canada, tails Australia-settled the destination. With sixty dollars in his pocket, he landed in Canada. It was 1929. He had arrived just in time for the Great Depression.

A horror throughout the industrialized world, the Great Depression was especially savage in North America. Half the industrial production of the United States vanished. One-quarter of workers were unemployed. Starvation was a real and constant threat for millions. Growing numbers of desperate, frightened people sought salvation in fascism or communism. In Toronto, Maple Leaf Gardens was filled to the rafters not for a hockey game but for a Stalinist rally, urging Canadians to follow the glorious example of the Soviet Union. Among the leading thinkers of the day, it was almost a truism that liberal democracy and free-market capitalism were archaic, discredited, and doomed. Even moderates were sure the future would belong to very different economic and political systems.

In 1933, the rise to power of the n.a.z.is added the threat of what H. G. Wells called the ”Second World War” in his sci-fi novel The Shape of Things to Come. Published the same year Adolf Hitler became chancellor of Germany, The Shape of Things to Come saw the war beginning in 1940 and predicted it would become a decade-long ma.s.s slaughter, ending not in victory but in the utter exhaustion and collapse of all nations. Military a.n.a.lysts and others who tried to imagine another Great War were almost as grim. The airplanes that had been so wondrous to a young boy in 1912 would fill the skies with bombs, they agreed. Cities would be pulverized. There would be ma.s.s psychological breakdown and social disintegration. In 1934, Britain began a rearmament program it could not afford for a war that, it increasingly seemed, it could not avoid. In 1936, as n.a.z.i Germany grew stronger, the program was accelerated.

A flicker of hope came from the United States, where economic indicators jolted upward, like a flat line on a heart monitor suddenly jumping. It didn't last. In 1937, the American economy plunged again. It seemed nothing could pull the world out of its death spiral. ”It is a fact so familiar that we seldom remember how very strange it is,” observed the British historian G. N. Clark, ”that the commonest phrases we hear used about civilization at the present time all relate to the possibility, or even the prospect, of its being destroyed.”

That same year, George Scott's second daughter, June, was born. It is most unlikely that anyone thought my mother was a lucky baby.

The Second World War began in September 1939. By the time it ended in 1945, at least forty million people were dead, the Holocaust had demonstrated that humanity was capable of any crime, much of the industrialized world had been pounded into rubble, and a weapon vastly more destructive than anything seen before had been invented. ”In our recent history, war has been following war in ascending order of intensity,” wrote the influential British historian Arnold Toynbee in 1950. ”And today it is already apparent that the War of 193945 was not the climax of this crescendo movement.” Amba.s.sador Joseph Grew, a senior American foreign service officer, declared in 1945 that ”a future war with the Soviet Union is as sure as anything in this world.” Albert Einstein was terrified. ”Only the creation of a world government can prevent the impending self-destruction of mankind,” declared the man whose name was synonymous with genius. Some were less optimistic. ”The end of everything we call life is close at hand and cannot be evaded,” moaned H. G. Wells.

Happily for humanity, Wells, Einstein, and the many other luminaries who made dire predictions in an era W.H. Auden dubbed ”the Age of Anxiety” were all wrong. The end of life was not at hand. War did not come. Civilization did not crumble. Against all reasonable expectation, my mother turned out to be a very lucky baby indeed.

Led by the United States, Western economies surged in the postwar decades. The standard of living soared. Optimism returned, and people expressed their hope for a brighter future by getting married earlier and having children in unprecedented numbers. The result was a combination boom-economic and baby-that put children born during the Depression at the leading edge of a wealth-and-population wave. That's the ultimate demographic sweet spot. Coming of age in the 1950s, they entered a dream job market. To be hired at a university in the early 1960s, a professor once recalled to me, you had to sign your name three times ”and spell it right twice.” Something of an exaggeration, to be sure. But the point is very real. Despite the constant threat of nuclear war, and lesser problems that came and went, children born in the depths of the Great Depression-one of the darkest periods of the last five centuries-lived their adult lives amid peace and steadily growing prosperity. There has never been a more fortunate generation.

Who predicted that? n.o.body. Which is entirely understandable. Even someone who could have foreseen that there would not be a Third World War-which would have been a triumph of prognostication in its own right-would have had to correctly forecast both the baby boom and the marvelous performance of postwar economies. And how would they have done that? The baby boom was caused by a postwar surge in fertility rates that sharply reversed a downward trend that had been in place for more than half a century. Demographers didn't see it coming. No one did. Similarly, the dynamism of the postwar economies was a sharp break from previous trends that was not forecast by experts, whose expectations were much more pessimistic. Many leading economists even worried that demobilization would be followed by ma.s.s unemployment and stagnation. One surprise after another. That's how the years unfolded after 1945. The result was a future that was as unpredictable as it was delightful-and a generation born at what seemed to be the worst possible time came to be a generation born at the most golden of moments.

The desire to know the future is universal and constant, as the profusion of soothsaying techniques in human cultures-from goats' entrails to tea leaves-demonstrates so well. But certain events can sharpen that desire, making it fierce and urgent. Bringing a child into the world is one such force. What will the world be like for my baby? My great-grandfather undoubtedly asked himself that question when his little boy was born in 1906. He was a well-read person, and so he likely paid close attention to what the experts said. George Edward Scott was a very lucky baby, he would have concluded. And any intelligent, informed person would have agreed. Thirty-one years later, when my grandfather held his infant daughter in his arms, he surely asked himself the same question, and he, too, would have paid close attention to what the experts said. And he would have feared for her future, as any intelligent, informed person would have.

My great-grandfather was wrong. My grandfather was wrong. All those intelligent, informed people were wrong. But mostly, the experts were wrong.

They're wrong a lot, those experts. History is littered with their failed predictions. Whole books can be filled with them. Many have been.

Some failed predictions are prophecies of disaster and despair. In the 1968 book The Population Bomb, which sold millions of copies, Stanford University biologist Paul Ehrlich declared ”the battle to feed all of humanity is over. In the 1970s, the world will undergo famines-hundreds of millions of people will starve to death in spite of any crash programs embarked upon now.” But there weren't ma.s.s famines in the 1970s. Or in the 1980s. Thanks to the dramatic improvements in agriculture collectively known as ”the Green Revolution”-which were well under way by the time Ehrlich wrote his book-food production not only kept up with population growth, it greatly surpa.s.sed it. Ehrlich thought that was utterly impossible. But it happened. Between 1961 and 2000, the world's population doubled but the calories of food consumed per person increased 24 percent. In India, calories per person rose 20 percent. In Italy, 26 percent. In South Korea, 44 percent. Indonesia, 69 percent. China had experienced a famine that killed some thirty million people in the dark years between 1959 and 1961, but in the forty years after that horror, China's per capita food consumption rose an astonis.h.i.+ng 73 percent. And the United States? In the decades after The Population Bomb was published, fears that people would not get enough to eat were forgotten as American waistlines steadily expanded. The already-substantial consumption of the average American rose 32 percent, and the United States became the first nation in history to struggle with an epidemic of obesity.

In 1977, President Jimmy Carter called for the ”moral equivalent of war” to s.h.i.+ft the American economy off oil because, he said, the production of oil would soon fail to keep up with demand. When that happened, oil prices would soar and never come down again-the American economy would be devastated and the American dream would turn brown and die like an unwatered suburban lawn. Eight years later, oil prices fell through the floor. They stayed low for two decades.

A small library could be filled with books predicting stock market crashes and economic disasters that never happened, but the giant of the genre was published in 1987. The hardcover edition of economist Ravi Batra's The Great Depression of 1990 hit the top spot on The New York Times best-seller list and spent a total of ten months on the chart; the paperback stayed on the list for an astonis.h.i.+ng nineteen months. When the American economy slipped into recession in 1990, Batra looked prophetic. When the recession proved to be mild and brief, he seemed less so. When the 1990s roared, he looked foolish, particularly when he spent the entire decade writing books predicting a depression was imminent.

In 1990, Jacques Attali-intellectual, banker, former adviser to French president Francois Mitterrand-published a book called Millennium, which predicted dramatic change on the other side of the year 2000. Both the United States and the Soviet Union would slowly lose their superpower status, Attali wrote. Their replacements would be j.a.pan and Europe. As for China and India, they ”will refuse to fall under the sway of either the Pacific or the European sphere,” but it would be hard for these desperately poor countries to resist. Catastrophic war was ”possible, even probable.” However, Attali cautioned, this future isn't quite chiseled in stone. ”If a miracle were to occur” and China and India were to be ”integrated into the global economy and market, all strategic a.s.sumptions underpinning my prognostications would be overturned. That miracle is most unlikely.” Of course, that ”miracle” is precisely what happened. And almost nothing Attali predicted came true.

Even economists who win n.o.bel Prizes have been known to blow big calls. In 1997, as Asian economies struggled with a major currency crisis, Paul Krugman-New York Times columnist and winner of the n.o.bel Prize in 2008-worried that Asia must act quickly. If not, he wrote in Fortune magazine, ”we could be looking at a true Depression scenario-the kind of slump that sixty years ago devastated societies, destabilized governments, and eventually led to war.” Krugman's prescription? Currency controls. It had to be done or else. But mostly, it wasn't done. And Asia was booming again within two years.