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Those who have overcome vulgar superstition tend to base their predictions on past history. They seem to believe that we are condemned to repeat the past, and that understanding the past will offer the surest, and most rational, light on the future.
And yet, trying to predict the future by assuming that the past will repeat itself is more often than not a passport to error. So says Nicholas Nassim Taleb in a great book I have occasionally referred to: The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: "On Robustness and Fragility"
.I was thinking about this book this morning as I was watching the stock market soar into the stratosphere. After an abysmal August, September was looking pretty good indeed.
No one really knows why the market seems to maintain such an optimistic view of the future. And why it has remained stubbornly above 10,000. Something is feeding the speculators, and, if you believe David Rosenberg of Gluskin Sheff, it is not the economic fundamentals.
If investors and speculators are not in touch with reality, then perhaps they are making the mistake that Taleb warned them against: they think that the past is going to repeat itself. For my part I believe that the market is looking at current economic and political activity through the prism of 1994.
In case you have forgotten, November, 1994 saw a Congressional election that was a decisive repudiation of the Clinton presidency. After the Republican tsunami washed out Democratic majorities in the House, the Senate, and State Houses across the country, the stock market began a rise that took it from the upper 2,000s to over 11,000.
The great bull market of the 1990s began with a Republican election victory.
Here we are today, seemingly on the brink of yet another Republican electoral tsunami against a liberal Democratic president. Will history repeat itself on November 2? And even if it does, will that election be the harbinger of an economic boom time?
In reality, the 1994 election marked a turning point because Congress went on to pass the Contract with America and because Bill Clinton signed it.
Do you think that something analogous is going to happen today?
Better yet, do you want to bet your financial future on the chance that history might repeat itself. Taleb would advise you against it. What is going to happen, he might say, is precisely what we do not expect to happen, what is the most improbable, even to the point of being unimaginable.
Don't count on a tomorrow that is just another yesterday.
5 comments:
The future lies in a currencyless, recycleable, resource based economy.
I'm assuming that the medium of economic exchange would then be gold.
No. The resources themselves, continuously recycled for use on an open "market". A green barter system, so to speak. If it does happen, it won't be for probably at least 200 years and would require a fair, just and ethically based small but green-technology savy and yes, global government that doesn't act like any form of government at all - but just a means to keep the recycling going. That's why it may or may not happen, but if it does, it would be til we're dead and gone.
Contrary to popular belief, I think we are slowly progressing to that ideal. But it will be very slow - dependence on oil will have to go and gradually more and more dependence on the sun, water, wind, etc. We already have the technology to power the whole planet like so, but that powers that be are not allowing it to be realized on mass because they have not yet figured out a way they can make as much money on, and take as much personal power (greed) from renewable natural resources.
When there is no "crises" of loss, and something is available to everyone - sun, wind, water - how can they create wars over it?
So this generation of people who think like that have to die off first, and then a few generations of people who think in terms of open source natural resources have to be born and make the technology available on a mass scale at a small price, until we are able to phase out a concept of "currency" altogether.
Let's see.
There are groups of people already mobilizing for this.
And I am sure that there are people mobilizing to take possession of all of the open source resources.
I'm afraid that this feels far too utopian for my tastes. Doesn't it imply that we should all become hunter gatherers, or that we can strive for excellence and achievement without there being any real reason to do so?
If it doesn't then someone somewhere is going to decide to take what we have... and how would we defend ourselves then?
I agree that it is Utopian. It may not even work in the long run, as all systems are temporary anyway. It's an idea, like all others. And a good one, if it could play out the way the visionaries envision it. Of course there are human factors to consider. Not everyone is benevolent.
The model is not based on hunting/gathering. It is based on science developing sustainable and recyclable technologies that can be used, recycled and re-used, free of cost.
Here is one model
http://www.thevenusproject.com/
I recommend the videos here
http://www.youtube.com/watch?v=YxPPnCW6sMo
Like everything and everyone, I don't agree with ALL of it, but the basic premise is wonderful.
Is point about governments and societies lagging far beyond scientific advancement in technology is true. We keep ourselves backward and bound to the currency system when all we need is with us - all the time - and we have the technology to harness that energy for the free use of the whole planet but are not doing so.
Why? Every war throughout history can answer that one for you.
As far as "defending" ourselves - the idea is we wouldn't need to if governments, cultures and societies around the world caught up with actual science.
There may be flaws in this way of thinking, but it sure as well beats what's happening now.
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