The Fallacy of Forecasting

"It's tough to make predictions, especially about the future."

Physicist Neils Bohr (1)

For all of human history man has longed to know the future. We Jews had our prophets, the ancient Greeks had their oracles, Renaissance people had their Nostradamus. Modern Man has astrology, Tarot cards and.......forecasters.


With modern astrophysics we can forecast astronomic events such as eclipses and appearances of known comets with exceptional accuracy decades in advance. Meteorologists have become adept at forecasting major weather events up to a week in advance.


But forecasting events in human history, such as wars, revolutions, and economic catastrophes is still no better than guesswork , according to a remarkable new book entitled "The Black Swan: The Impact of the Highly Improbable" by Nassim Nicholas Taleb. (2) The term "Black Swan" used in the book is a metaphor for an event (such as the 9/11 attacks) that is totally unexpected and has a major impact, either good or bad.

It is characteristic of the human mind to see events as part of a pattern, so that after a Black Swan event has occurred we try to fit it into a historical narrative that makes sense. According to Taleb, people strive to find a logical cause and pattern to even the most random incidences, which may explain the popularity of conspiracy theories (3). Evidence that confirms an accepted theory is welcomed, while equally valid evidence that points the other way is ignored.


Here are some myths blown away by The Black Swan:


1. The past is a good guide to the future.
In July of 1914 Europe had enjoyed over 40 years of peace, and many believed the age of war in the heartland of Europe was over. Within weeks, western Europe was the scene of the most destructive war in the history of the world at that time.
Remarks such as "The stock market goes up about 10% per year" and "Real estate prices always increase over time" indicate that the same tendency to extrapolate from the recent past holds sway today.


2. Experts can forecast economic trends.
In 1970 an official US government estimate, signed by the Secretaries of Interior, Treasury, State and Defense, predicted that the price of foreign oil in 1980 would not "experience a substantial increase." It went up tenfold!
On October 19, 1987, the Dow Jones Industrial Average dropped over 500 points. How many Wall Street analysts predicted that "Black Swan"? None-----all the charts and financial data they had failed to anticipate the historic plunge.
In January, 2006, The Wall Street Journal forecast that 2006 would be a bad year for stocks; the Dow went up 16% over the next 12 months.
Psychologist Philip Tetlock (4) asked 300 credentialed experts in economics and politics to judge the likelihood of a number of specific world events in the coming five years and to estimate the "error rate" of their predictions. The actual error rates were many times higher than the estimates; the predictions of the best-known experts were the worst of all! They thought they knew much more about the future than they really did.

3. The Theory of Games can be applied to the real world.
If you flip a coin 99 times and get heads each time, what is the probability of getting another head on the 100th trial?
Any mathematician will tell you that the probability of heads is 50%, since the coin has no memory. But a gambler will tell you that it is nearly 100%,, since a coin that did that is bound to be loaded to land heads-up. This is a paradigm of the difference between a theorist and a practitioner----- in the real world, believe the practitioner!
Unlike the world of mathematical games with their simple and fair rules, the real world is full of cheaters, liars, charlatans and the like. Just ask anyone who ever bought Enron stock!

According to Mr Taleb, the world is much more complicated and less predictable than we think it is. The main reason is that people, unlike planets and comets, have free will, so events dependent upon human actions can never really be determined in advance. This is a lesson we all can use!

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(1) Quoted in The Black Swan, p.136. According to the book, Yogi Berra often said this, but Bohr originated the saying.

(2) Random House, New York, 2006. The name of the publisher is too appropriate to be true!

(3) See the Feb.19, 2008, Glazerbeam on conspiracy theories.

(4) "Expert Political Judgment" by Philip E Tetlock, 2005.

Re-Elect Langley et al.

Of all the Milwaukee citywide officials seeking re-election on Tuesday, April 1, only City Attorney Grant Langley faces serious opposition.

Langley, who was elected in 1984 and re-elected every four years since then, is opposed by State Representative Pedro Colon, who represents the near South Side of the City of Milwaukee. Colon intended to run for Mayor in 2004, but quit the race when he realized he could not beat Tom Barrett.

Colon says that the City Attorney should take a pro-active role in solving City problems, while Langley maintains that the proper role for the official is to provide legal advice and services to City departments. I agree with the incumbent on this; once the City Attorney becomes involved in setting policy, his legal judgment may be clouded by his advocacy of a particular idea or program. The Mayor and Common Council should determine policy, and the City Attorney should provide legal counsel as needed. Grant Langley has over 36 years of experience in municipal law, and Colon has none. Langley should be retained for another term.

Tom Barrett beat nine other candidates to become Mayor in 2004, and faces only Attorney Andrew Shaw this time. The fact that no elected official, present or former, is running against him is a sign that he has kept the political powers of this City rather happy these past four years. Barrett played a major role in persuading Manpower (1) to move back into the City, and his administration has been instrumental in the boom in condo and commercial construction near Downtown. Unfortunately, crime remains a major problem, but I do not believe than anyone else could have done more to solve it. Barrett will win easily, and he deserves another term.

City Treasurer Wayne F Whittow has done his job of collecting the City's property taxes since 1972 without any major problems or scandals, so he might as well keep doing it. His opponent, Rick Kissel, would introduce a left-wing political agenda into the Treasurer's office, which we do not need.

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(1) Manpower, the world-class temporary placement firm, was founded in downtown Milwaukee in 1948, but moved to Glendale about 1967.

Keep Butler, Elect Dallet

1. Retain Justice Louis Butler on Wisconsin Supreme Court
Justice Butler was appointed to the State Supreme Court by Governor Jim Doyle in 2004, two years after he was elected to the Circuit Court of Milwaukee County. He had been a City of Milwaukee Municipal Judge since 1992. He taught law part-time at Marquette University Law School and is now on the faculty of the National Judicial College. Butler is the only member of the Supreme Court from Milwaukee County at this time.
His opponent, Judge Michael Gableman of Burnett County, is a former district attorney. He has served on the Circuit Court since 2002, but has no appellate experience.
Since Justice Butler has served honorably in three judicial positions for the past 16 years, his record and experience give him a considerable edge over Gableman. Judges should not be replaced unless a challenger makes a convincing case that the incumbent has been unsatisfactory and that the challenger is likely to do better; Judge Gableman has not made this case.
Butler has been the target of a particularly vicious campaign of negative ads, similar in some ways to the 1988 "Willie Horton" ads. His endorsement by the Milwaukee Police Association and District Attorney John Chisolm should dispel any suspicions that he is "soft on criminals."
He has been criticized for successfully defending a client as a public defender about 25 years ago; apparently the only defense lawyers worthy of becoming judges are those who lose every single case!
Gableman has also been the target of unfair ads, including one that blames him for plea-bargaining when he was DA. As fans of TV's Law and Order know, all DA's plea-bargain because otherwise there would be too many jury-trials and quite a few guilty defendants would be acquitted.
Ignore the diatribes, and give Louis Butler a full term on the Court.

2. Elect Rebecca Dallet Circuit Judge
Judicial Court Commissioner Rebecca Dallet has a stronger background for election as judge than her opponent, Attorney Jeff Norman. She supervises ten other judicial court commissioners, who exercise the powers of a judge in chambers. (1) Prior to this job, she was a state and federal prosecutor for ten years. Mrs. Dallet also teaches part-time at Marquette University Law School.
Although Mr Norman's experience as a police officer is also relevant, particularly in criminal cases, he cannot match Mrs Dallet's courtroom record.
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(1) A judicial court commissioner can take depositions, accept pleas, schedule trials, and approve out-of-court settlements.