All signs point to junking most of our specialist forecasting models

Unforeseen events in all corners of the world are very evidently not unfolding in predictable or orderly ways

Theresa May supremely in control of her country and party and the Brexit process; Angela Merkel, the indispensable leader of the western world, cruising to a resounding win in the German election; Donald Trump on course to blow up the US economy or to impeachment; Nkosazana Dlamini-Zuma odds-on favourite to succeed her namesake as South African president. Cape Town mayor Patricia de Lille unassailably coasting through her second term. Steinhoff and its CEO, Markus Jooste, exemplars of this country’s corporate excellence — built for export into the rough and tumble of European retail markets.

The above, to cite key top-line examples, is precisely how the world and this country were projected exactly a year ago. Just as with our local climate patterns, as drought-ravaged SA is learning, the political and economic weather forecasting proves to be wildly unpredictable and often inaccurate.

In short order, in mid-2017 the British prime minister lost control of her electorate and her party and faces diminishing returns from the Brexit negotiations. Merkel led her party to its worst electoral result since the restoration of democracy in Germany in 1949, leaving her political authority severely dented.

Trump, however “deplorable” (to borrow Hillary Clinton’s arch phrase), pushed through Congress the largest tax cut in 40 years and a cull of regulations not sighted for 30 years. Economic windfalls await businesses and investors, if not all of the US citizenry, and his state of the union speech last week — itself an event of utter implausibility just 14 months back — headlining this economic good news won plaudits. He will see out his first term unless the Russian probe finds evidence of obstruction of justice.

Here at home, both Zumas lost. Jacob, an alleged master chess player, is discovering anew the meaning of the term “zugzwang” — when you have to make a move on the board and you don’t have a good one left. De Lille is en route to a Valentine’s Day termination of her mayoralty at the hands of her own party, which just 18 months back won over two-thirds of the votes in the Cape Town local government election.

Of Steinhoff, the collapse of its share price and the company’s decision, on the eve of a parliamentary grilling, to report Jooste to the Hawks on suspicions of corruption are a sad corporate morality tale that no one saw coming until a tiny, obscure research outfit in the US blew its whistle just two months back.

There are a number of clear signposts as to why we can junk most of our forecasting models and explain, in Joe Slovo’s vivid phrase, why hindsight is the most “perfect and irritating of all sciences”.

May’s British cabinet colleague and leading Leave campaigner Michael Gove caused outrage during the bitter Brexit referendum in June 2016 (another result that was spectacularly miscast) when he proclaimed on the eve of poll amid dire warnings over the costs of uncoupling the British economy from Europe: “People in this country have had enough of experts.”

Gove, who combines a first-rate mind with third-rate populism, has proven to be both right and wrong in his remark. He’s correct that the elite bubble inhabited by most politicians and pundits is often utterly useless at discerning the huge, sometimes barely discernible, shifts in the political tectonic plates. But the very ground on which Gove’s government stands is being shaken by the truth of the forecasts he rubbished.

Last week, two-thirds of Britain’s largest companies — mostly bedrock supporters of Gove’s government — declared that “they do not trust the government to negotiate a good deal on Brexit”. This headline news led the Financial Times to cynically note: “The only surprise should be that the proportion is not higher.” This follows a leaked Whitehall study finding Britain will be “worse off under all Brexit scenarios”.

The election of Trump, a political outsider who won the highest office in the world at his first run for any political post, is proof that the utter disparagement of expertise now washes across both sides of the Atlantic. In similar vein, and with just one speech in Hollywood recently, Oprah Winfrey is now being plausibly cast as a possible Democratic Party replacement for Trump.

Joseph Epstein in The Wall Street Journal noted that Winfrey would be ideally suited for the role of “therapist in chief”, and like Trump has perfected her image not on qualifications but via reality television shows. Echoing Gove’s warning, he writes: “Qualifications have of late had less and less to do with electoral politics. The one person who seemed most qualified in 2016 by experience in domestic and foreign policy, Hillary Clinton, lost chiefly because she was unable to do a decent imitation of a pleasing person.”

That’s almost a perfect fit for the frame of mind that accompanied ANC delegates at Polokwane in 2007 when they dumped a user-unfriendly president, Thabo Mbeki, and replaced him with the unqualified — indeed, legally disqualified — Zuma. Emerging from the rubble in December, the same party chose the incontestably wellqualified Cyril Ramaphosa to dig the party out of the ruinous decade of the Zuma empire. No forecasts, though, on how this will pan out.

Why, then, are our best predictive models often so lousy? To the intense irritation of the local BDS crowd and the high-minded 204 South African academics who have decided to cut themselves off from a vital intellectual current, three Israeli academics provide some compelling answers. Yuval Noah Harari, with two blockbuster books, Homo Sapiens and Homo Deus, offers in his phrase “a brief history of tomorrow”. But in the current climate, politically, economically and weather-wise, he offers a fundamental caution.

“Tone down the prophecies of doom and gloom and swap panic for bewilderment. Panic is a form of hubris. It comes from feeling one knows where the world is headed. Bewilderment is more humble and therefore more clear-sighted. If you feel tempted to declare the apocalypse is upon us, try telling yourself instead: ‘I just don’t understand where the world is headed.’”

In other words, unforeseen events — from large black swans to lesser ducks — do not unfold in either a predictable or an orderly way. This is, though, of cold comfort to decision-makers, or those not cloistered by the academic armchair.

Long before Harari exploded on the best-seller lists, two of his erstwhile colleagues at Hebrew University, Daniel Kahneman and Amos Tversky, provided the hard data and original research. They demonstrated, with dozens of experiments, irrefutably the mostly flawed decision-making processes of even five-star experts.

Happily for our decision makers in SA, you don’t have to delve into their original research (which bagged a Nobel Prize in economics for Kahneman). It is all vividly captured in the marvellous book by Michael Lewis (of Liar’s Poker fame) – The Undoing Project. What this extraordinary Israeli duo “undid” was the assumption that human intuition, however learned and objective, delivers more right than wrong answers. They did not so much push the boundary of behavioural economics as pioneer it.

We might be well and rightly scared at the rise of the machines but, more often than not, an algorithm will trump human intuition, however objective. So before you bet big on a dead certainty, check out your own mind and predictive bias.

Lewis, incidentally, also authored The Big Short. As the Steinhoff and Capitec share plunges prove, you cannot rely on the wisdom of the market, nor headline assumptions.