The difficulty of predicting the future
On April 11, 2001, Defense Secretary Donald Rumsfeld sent a memo to President George W. Bush and Vice President Dick Cheney that might never have seen the light of day but for its timing.
“I ran across this piece on the difficulty of predicting the future,” wrote Rumsfeld. “I thought you might find it interesting”. The “piece” was a short article written by Linton Wells that examined the political situation at the start of each decade in the 1900s. In every case, there was a startling change from ten years earlier.
Exactly five months after Rumsfeld wrote this memo, two planes flew into the Twin Towers in New York. This shaped the following decade in ways few could have imagined at the turn of the millennium. Even fewer could have foreseen the onset of the Global Financial Crisis or the smartphone revolution ignited by Steve Jobs in 2007.
It is quite clear that economic or geopolitical forecasters cannot accurately predict events ten years before they occur. Humanity progresses in rapid step-changes rather than gradual linear growth. Events also do not occur in a vacuum, but instead influence the future through complex cause-effect relationships.
And yet, this sort of forecasting is common, even amongst institutions that should know better. Every four years, Congress requires the Department of Defense to produce a twenty-year forecast of the natural security environment- the Quadrennial Defense Review (now the National Defense Strategy). It was this exercise that prompted Lin Wells to write the above article as a form of intellectual rebellion.
However, Wells’ last remark points to a better way. If you have to plan far into the future, plan for surprise. Work from the assumption that reality will catch you completely off-guard and think about how to respond.
“Plans are useless. But planning is indispensable”
— President Eisenhower
Nassim Taleb has taken this idea one step further, calling for critical systems- such as the global banking system…