LETTERS FROM THE GLOBAL PROVINCE |
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GP 11 October 2006: Never Say Never Never Make Predictions, Especially about the Future. Sam Goldwyn’s renowned piece of wisdom, “Never make predictions,” has always tickled our funny bone, and we had always thought it a wonderful way to put forward such an eminently sensible truth. Oh boy, did we have it wrong! Sam was simply one of a huge tribe that uttered something along these lines, and we simply don’t know who said it first. Casey Stengel; naturally Yogi Berra; Shaw; Churchill; Woody Allen—they all chided us to avoid risk and deny we had a clue about the future. One dogged wordsmith has collected no less than 29 admonitions against taking on the future. The Soothsayers Have It Right. But like all truths uttered repetitively by all the wise men around us, this stricture is eminently wrong. We only need to hearken back to William James, the father of American pragmatism, to learn how off the mark it is. Pragmatism is America’s greatest and possibly only original contribution to Western philosophy, and it has a great deal to say to us even now. James worshipped the future, as evinced in “The Will to Believe” and his other works. The future, in his eyes, is plastic and can be molded: it is a belief in the future and a will to sculpt it to fulfill our visions that leads to progress. That means you have to talk about the future with optimism and with certainty about its outcome. We buy into James. But with a qualification. The soothsayers of old generally had it right. Often as not, they were blind and could not see what was in front of them or lay out much about the next 24 hours. You did not consult Tiresias to find out the price of corn over the short term. But the prophets did divine the distant future, and gave us hints as to what directions we should pursue, if we could interpret what their musings meant. In fact, our ability to figure out the far-flung future has atrophied because we focus today so narrowmindedly on the here and now. There is quite a need to know what’s well over the horizon. And to forget about tomorrow and the day after tomorrow. Don’t Give Guidance. Because one’s forecasts about tomorrow will be lousy and because intuitive people can say useful things about what might come to pass in 5 years, we have cautioned companies to give up conventional financial guidance. In “MisGuided Guidance,” we suggest that predictions about the next quarter or the next year will only get you into trouble. The pernicious consequences of quarterly public guidance are manifold, an outgrowth of the unhealthy influence Wall Street has brought to bear on Corporate America. It asks for crazy, near-term predictions. As well, we have saluted the huge list of smart companies that have given up quarterly guidance. Short-term forecasts are very high risk, with very low rewards, except perhaps for shabby characters who are after a quick killing. But this is not a caution to give up predicting: every institution in our society needs to celebrate intuiters who can lay out where companies, industries, and nations are headed for the next few years so that we can better deal with a world which is breaking away from yesterday. As James would have it, we have to learn to play with the future if we are to continue to have a great America. There’s no tomorrow if we do not have individuals who can see it. Without such insight, we are bound to mismanage the future. Rule Breakers. Of course, like all mortals, we are all too prepared to break our own rules and give you a couple of predictions about the next 365 days. First off, we’re warning all who are near and dear not to rely on the sudden 23% price decline in gas. We think politicians across the world have been ratcheting down prices before the American elections: we will not be surprised if the drop in oil prices and the upward blip in our stock market come to a rude end after the elections. Fires Aburning. Nor do we see an end to the current rash of rather severe urban fires. On October 5, Apex, North Carolina exploded into flames as a waste disposal facility filled the skies with chemical detritus and 17,000 were asked to evacuate the area. On October 6, in Tennessee, flames swept through the historic United Methodist Church and leapt into other nearby buildings, including Lincoln American Towers, once the tallest building in old Memphis. Needless to say, the waste facility should not have been located in a dense urban area. More broadly, these devastating events are one more hint that the country’s infrastructure is worn out in many places. Systems and other frameworks are so fragile that little tragedies are becoming more frequent, and floods and fires and tornados wreak much more havoc than they should. That is, planning at all levels of government has a weak grasp of the future, since planning has come to mean dealing with the day after tomorrow. As we pointed out in “Investment Outlook: Infrastructure” and in “Courtly Congressman: Amory Houghton, Jr.,” our infrastructure is in crisis, presenting a massive opportunity to those who are willing to make some big bets on the future. Cool Thinking. In “Cool Customers,” we learned that we “tend to use different parts of our brain for near-term and long-term decisions, with emotion often coming more into play for matters involving some immediacy.” Maybe we can make some better decisions if we spend a lot more energy on long-range thinking. |
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