The Fallacy of Predictions & The Year Ahead

Who would have thought, just three weeks ago, that Bashar al-Assad’s 50-year old autocratic and horrifyingly violent regime in Syria, would so easily collapse under the pressure of a ragtag rebel force? Or that both Russia and Iran, long-in-the-tooth allies of Assad, would so quickly withdraw their officials, after long defending one of the worst dictatorships in history?

Who would have predicted that Donald Trump would propose Kash Patel as his first pick to head the FBI, an ex-public defender who has little law enforcement experience, who is a dyed-in-the-wool Trump loyalist and who has vowed to shut down the FBI building and re-open it as a museum of the Deep State?

And who, on the question of political ethics, would have predicted that Joe Biden, who swore he would never do it, would pardon his son of all criminal convictions, both past and future, as his last hurrah for what has undeniably been the slow, but accelerating, self-immolation of the Democratic Party?

Geopolitically, the world is even more uncertain than it was in early-November, after Trump’s sweeping victory over Kamala Harris. We thought that election outcome would elicit some clarity, but it has made forecasting even more opaque.

It is that time of the year again, however, with market forecasts and political prognostications flooding the global media. As an example, each year in November, The Economist publishes The World Ahead, in which its editor on 18 November offered ten trends to watch out for in 2025. These included generalised prophesising, such as “geopolitical realignment, heightened tensions, and even nuclear proliferation.” Also included were some more specific musings around the potential ending of the Ukraine War, the outcomes for Gaza and Lebanon, and again, whether China would invade Taiwan.

The impact on China of Trump tariffs was contemplated, but this was before Trump posted that he would impose crippling tariffs on Canada, Mexico, and even more on China for aiding and abetting the Opioid Crisis in America. That particular global trade curveball, carrying in its spin enormous economic implications, could surely not have been anticipated.

In fact, economists across the board, perhaps wisely, have become increasingly vague in their forecasting. Some political scientists have pondered the interplay between Donald Trump, technology and radical uncertainty, which seems tautological at best. Others, such as Gillian Tett of the Financial Times, have made the point that we should be thinking more about so-called black swans. In early August this year, after a critical undersea cable had suspiciously been severed, she posed the question, “what is the greatest tail risk stalking global finance today?” She offered a brief list including surging debt, volatile rates, geopolitical conflict, and cyber failures. Then she turned the screw, going on to say, “but there is another far more deserving debate: underwater sea cables.”

Think upon that: an unanticipated risk that could bring an economy such as ours here in South Africa, with only a very few undersea cables connecting us to the rest of humanity, to our knees. A risk never before properly contemplated. In reading about where the dollar will go, or whether the GNU will work in this province or that, our prognostications may be unduly narrow.

More broadly, in thinking about the year ahead, it has to be acknowledged that there exists an extreme degree of hubris baked into the innate human belief in our ability to predict the future. There have been repeated failures, over a protracted period of time, of people of far greater existential importance than mere economists, to predict major, and sometimes catastrophic, geopolitical events.

From the September 11, 2001, attacks on the World Trade Centre, to the rise of the Islamic State, to its overrun of Syria and Iraq, to the disastrous outcome of the US exiting Afghanistan, to the Russian invasion of Ukraine, to the October 7, 2023, Hamas attack on Israel, and most recently to the sudden implosion of the Syrian regime, there was persistently a dearth of adequate intelligence.

As it pertains to the world of financial markets, the record is no less dismal. The total failure of the financial system to recognise the risks that led to the 2008 Global Financial Crisis have never truly been acknowledged, the effects of which are still being felt today. The onset of raging inflation, kicked off during the Covid years with excessive money printing was repeatedly ignored by the Fed and the ECB, causing untold damage to peripheral countries such as our own, who suffer the iniquities of US supervisory missteps.

And, on the topic of Covid, surely we can acknowledge that there was a total failure of the WHO to anticipate this pandemic, which utterly altered the lives of every citizen of the world. The social consequences of the shutdowns, lockdowns and crackdowns that overly-zealous bureaucrats enacted, were catastrophic. And yet, there is still wanting a valid, authoritative explanation for where Covid-19 came from and what it actually was.    

In this season of cheer, in our sacrosanct December holidays, between overeating on Christmas Day, and overindulging on New Year’s Eve, we may be tempted to engage in thinking about what lies before us in 2025. Given the inherent uncertainties and the unnecessary anxiety, and given the essence of life that we should be inhabiting, I would suggest switching the TV off, unless to watch the cricket, and returning to an old unread novel. At least that is my plan for myself.

By David Buckham

Buckham is founder and CEO of Johannesburg-based international management consultancy Monocle Solutions and author of “Orthogonal Thinking: My Own Search for Meaning in Mathematics, Literature & Life” (Exclusive Books, Amazon)