It's common knowledge that seeing the future is impossible. Is that really true? The answer, cliched though it may be, depends on what you're trying to predict. If you ask NASA to tell you where Jupiter will be 10 years from now, it can probably give you the position to within several thousand miles. If you ask economists to tell you where the economy will be 10 years from now, you'll probably get a range of answers from "great" to "really poor."
What's the difference? Why is it easy, in principle, to foretell when planets will line up or under which pressures a building will collapse and difficult to tell whether the Dow will be up or down tomorrow or how quickly the economy will be growing or shrinking in 10 years? The answer lies in complexity. If you're throwing a satellite into lunar orbit, you're dealing with a computationally simple problem. On the other hand, the economy is many orders of magnitude more complex; any realistic model must deal with hundreds of millions - perhaps tens or hundreds of billions - of interacting entities exchanging money, goods and services.
Describing that realistically is impossible. So all we're left with are simplified, abstract models - which are powerful but ultimately only shed light on portions of the truth - and imprecise predictions. For instance, it seems likely that wind, solar and hydroelectric power will become more common in the next 10 years; but if I peg a precise number on just how much electricity they'll be used to generate and you believe me, I have some land to sell you.
Is predicting the future impossible? Far from it. But we must be realistic about the precision of our predictions. For example, the mean temperature of the globe is rising. We can predict with certainty, based on the scientific consensus, that, among other consequences, sea levels will rise; the incidence of severe weather will increase; glaciers will melt; and sea ice will decrease. But we cannot - and to my knowledge, neither can the most renowned climate experts - say with precision when these will occur, nor to exactly what extent.
So, for complex phenomena, you can predict what will happen, but not with precision. Now I'm sure if you've bothered to keep reading you're asking: "What has that got to do with me?" A fair question. In fact, this insight is applicable to pretty much any sort of decision-making process. Including, investing in the stock market. Unless you put a lot of time and effort into it, you don't know with any precision (unless you're manipulating the market, which is a whole different can of worms) what any particular stock is going to do or when, so you shouldn't really play the market. But you do know that in the long run markets tend to rise, so it's probably a good idea to invest in an equity fund and sit on it for a long time.
As another example, consider Muncie's long-term future. If the city attracts industry, which in particular should it attract? Well, as I noted above, the alternative energy industry will probably grow even if we don't know by how much or for how long - we can't tell exactly what oil prices will do, though we know they'll rise drastically in the long run. Same with nuclear power. So, based on that qualitative assessment, it's probably a good idea for Muncie to invest in those industries and others projected to grow, even if we can't get any specific notion of what sort of growth will occur.
Write to Neal at necoleman@bsu.edu
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