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Thursday, March 21, 2013

David Brooks, "Forecasting Fox": Sorry, But I'll Stick With Benjamin Franklin

Several years ago I was asked to opine upon a novel "butterfly option" designed by a professional investor. My conclusion: Perhaps the method could be used to make limited sums of money during nine out of ten years, but if the unexpected were to happen - and it always does - you would lose everything that you earned in prior years. In short, I prefer my own insights based upon intimate study of any situation.

In his latest New York Times op-ed entitled "Forecasting Fox" (, David Brooks describes an international affairs forecasting tournament held by the Intelligence Advanced Research Projects Agency in order to determine if better predictions were attainable. As observed by Brooks, the tournament's results after two years of competition demonstrate that "forecasting skill cannot only be taught, it can be replicated." Brooks concludes:

"If I were President Obama or John Kerry, I’d want the Penn/Berkeley predictions on my desk. The intelligence communities may hate it. High-status old vets have nothing to gain and much to lose by having their analysis measured against a bunch of outsiders. But this sort of work could probably help policy makers better anticipate what’s around the corner. It might induce them to think more probabilistically. It might make them better foxes."

Query: Could the so-called "Arab spring," today more akin to an Arctic winter, and its unsavory consequences, e.g., the rise of the Muslim Brotherhood in Egypt and 70,000 dead civilians in Syria, have been predicted? Yes and no. Poverty, illiteracy and high birth rates are combustible materials, particularly when carelessly mixed. On the other hand, it would have been hard to know in advance of the intentions of a vegetable seller in Tunisia to engage in an act of self-immolation, thus setting the entire Middle East on fire. Mubarak's demise? This also had much to do with the "lead from behind" foreign policy of a young American president being lead by the nose by a bevy of know-nothing itinerant journalists, basking in the bright sun of Tahrir Square.

As Benjamin Franklin wrote in 1789:

"In this world nothing can be said to be certain, except death and taxes."

After 224 years, Franklin's words remain spot-on.

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