The History of the Future

“There are none so blind as those who will not see” – The Bible, Jer. 5:21

The premise of my most recent lectures on the economy, titled “The History of the Future,” is that since the beginning of time people have tried to predict the future and have consistently been spectacularly wrong. Only the greatest minds in world history with the courage to overcome systemic bias and the risks of thinking outside the box have been able to see what others could not. The great visionaries include well-known names like Da Vinci, Galileo and Copernicus. But history is littered with the failures of so-called visionaries, most recently including Alan Greenspan’s failure to predict the 2008 financial crisis.

Two recent books sum up the challenges of not only predicting the future, but accurately describing the present. The first is “Makers and Takers” by Rana Foroohar, global business columnist for the Financial Times and global economic analyst for CNN. She contends that the U.S. is controlled by Wall Street, which through “financialization” is the root cause of just about every major woe in the world, from economic inequality in the United States to food shortages in emerging economies. In short, the world is going to hell in a handbasket and Wall Street is flying the plane with only one parachute for itself.

Ms. Foroohar’s decidedly pessimistic outlook stands in marked contrast to her personal charm, intellect and more moderate public stances. I had the pleasure of debating her on stage a few weeks ago at the CBRE Capital Markets Symposium in Phoenix. While I tried to push her to predict doom and gloom, she didn’t take the bait. But she did maintain a default position that because of the greed, group think and other excesses of what I call the “Wall Street industrial complex” (the three-headed Cerberus of Wall Street banks, regulators and business schools that teach greed is good), it’s all bad and going to get worse.

Conversely, in his new book “It’s Better Than It Looks,” Greg Easterbrook, author of  10 books and contributing editor to The Atlantic and The New Republic, contends that the world is much better off than it has ever been by most objective economic measures, but people just don’t feel this way. While Mr. Easterbrook does not deny some of the central problems laid out by Ms. Foroohar, his central tenet is that pessimism has become fashionable and that any respectable person should feel that the “world is falling apart.” A lot of this has to do with politicians stirring the pot of discontent in an effort to sell their agendas and, more likely, to get elected. In short, he contends, making people feel bad sells.

This wildly divergent world view from two well-respected writers/commentators led me to two questions that I wrestle with every day. How can two really smart people who are armed with the same facts, come to such wildly different conclusions? The second question is who am I going to believe—Mr. Easterbrook and his recitation of objective positive facts, or my own lying eyes that see all the negative issues laid out by Ms. Foroohar?

Here is where I fall: The world is much better off than Ms. Foorohar describes, but Mr. Easterbrook’s rose-colored glasses miss several key items that not only make people (disproportionately middle-class Americans) perceive that they are worse off, but actually do make them worse off. Chief among these are the costs of higher education and health care, and the subversion of democracy in which the Democrat and Republican oligopoly shuts out anyone they can from the process (see my blog post The Democracy Solution for further insight on this). Like Pavlov’s dog, lack of control in the democratic process—even if the outcome is the same—makes people worse off. That is not perception.

The bottom line is that people’s inherent biases will shape not only their perception of the facts but which facts they actually accept. The key isn’t to stop being biased, which I suggest is impossible, but to understand one’s biases and not act upon one’s worst impulses.

In my mind, while the world isn’t perfect, it is improving by most objective measures of wealth, health and poverty (thumbs up to Mr. Easterbrook). Conversely, the world is being divided by politicians of all stripes who have incentive to make us feel bad and push to the sidelines those they can’t control.

What is the solution to seeing the world clearly and having insight into the future? Courage. Call it like you see it and be prepared to face the consequences of political and social ostracism that comes with it. Courage has a cost, but the prize is being able to see the future.

By Spencer Levy, Americas Head of @CBREResearch | Senior Economic Advisor