Big Thinkers Often Make Big Mistakes
Foreign Policy magazine is devoted to big thinking about big issues and its December issue -- "The 100 Top Global Thinkers of 2010" -- is bigger than most. I commend it. For two reasons.
First, there's the entry for the Harvard psychologist Steven Pinker, who is No. 69 on FP's list of Global Thinkers. Pinker is asked for recommended reading. He suggests a book called Future Babble, which is a fine book. It's about the dismal record of expert predictions and the psychology that compels people to believe them anyway. It is also written by me. Which makes this paragraph shameless.
But self-promotion aside, there's a reason for mentioning my book: The key themes of Future Babble are illustrated on almost every page of this issue of Foreign Policy. And given that the media are now filled with expert predictions for the coming year, it's a good time for a review.
First up: the tendency to celebrate hits while ignoring misses.
FP's editors praise Richard Clarke (No. 76 on the FP list), Nouriel Roubini (No. 12), Niall Ferguson (No. 80), and others for foreseeing the 9-11 attacks, the financial crash of 2008, and so on. These wise people are prescient, we are told. And so we should listen carefully to what they are predicting now.
But there is no mention of failed predictions. Like the 2005 essay Clarke wrote warning of a half-decade of catastrophic terrorism ahead. Or Roubini's many bad calls on recession, stocks, and commodities. Or Ferguson's confident claim that the financial crisis of 2008 would produce a global surge in political violence; two years on and no surge has been sighted.
This imbalance matters because it encourages us -- and the experts themselves -- to believe they are far better at prediction than they really are.
But even awareness of past failures won't make some experts humble about their abilities, as Paul Krugman -- columnist, economist, Nobel laureate, and No. 26 on the FP list -- illustrated in an article he wrote in 1998.
Krugman started by recalling that, in Herman Kahn's 1968 book The Year 2000, Kahn had predicted that, by the end of the 20th century, the average worker would put in 30 hours a week and would enjoy 13 weeks of vacation. Quite wrong, Krugman noted. Kahn had been far too optimistic about the advances of technology and the benefits they would deliver. But Krugman had learned from Kahn's mistake, he said, and so he was able to make a series of predictions, including: "the growth of the Internet will slow drastically"; it will become clear by 2005 "that the Internet's impact on the economy has been no greater than the fax machine's"; and "10 years from now the phrase 'information economy' will sound silly."
This pattern appears time and again. The wise man acknowledges past failures. But he claims to have learned from them. He is wiser than the wise men who came before. And so -- to borrow a phrase made famous in another context -- this time it's different.
Except it isn't. Time passes, the prediction fails. And another generation of pundits thinks it knows better than the generation before.
The December issue of Foreign Policy illustrates this pattern perfectly with a theme that runs through its pages. "Economists debate whether China or India will dominate the world economy of the 21st century," the editors write. And so they ask the profiled Global Thinkers to choose: "China or India?"
Naturally, lots have an answer. They're experts, after all. They know what's coming.
But do they?
Go back to the 1960s and you will find experts trying to answer the same question about who would dominate the economy of the future. Except the options weren't China and India. In fact, the experts of the day thought both those countries were hopeless. Especially India. Many experts were sure it would not survive to the end of the century.
In that era, a magazine that wanted to know who would dominate the economy of the future would ask: "U. S. or U.S.S.R.?" Answers varied. But many leading economists -- including the esteemed Paul Samuelson -- picked the Soviet Union to win.
Of course it did not. Much to the surprise of experts, the U.S.S.R. collapsed in 1991.
So would that mean the United States would dominate the economy of the future? In 1991, most experts said no. The U.S. was struggling. They were sure it would continue to decline.
No, the two dominant economic powers of the 21st century would be Europe and Japan. There was almost an expert consensus on this point.
As for China and India, they were irrelevant in 1991. In most of the major books of the era, neither country is even mentioned, while the few that do acknowledge the Asian giants are dismissive. The influential MIT economist Lester Thurow actually declared in 1992 that China "will not have a big impact on the world economy in the first half of the 21st century," while the French banker and intellectual Jacques Attali -- No. 47 on the FP list -- expected that China and India would serve as spoils in the battle for economic supremacy between Europe and Japan.
It didn't quite work out like that, did it?
On FP's list of Global Thinkers, No. 4 is Zhou Xiaochuan. He's China's central banker. And he holds "the world's economic fate in his hands," wrote the FP editors.
That sentence would have been inconceivable just 15 years ago. It should inspire humility. And yet it does not.
Experts never learn. And neither do we.