That which is certain is uncertain.
For extended periods, some as long as centuries, people, almost unanimously, held incorrect or unproven beliefs. They believed that the earth is flat, and that it is the center of the universe.
In 1798, The Reverend Thomas Robert Malthus postulated that food production was growing arithmetically while population was growing exponentially, implying a dreary future for mankind. So far, wrong.
In 1977, President Carter said “…our energy problem is worse tonight than it was in 1973 [when long gas lines were common] or a few weeks ago in the dead of winter…. It will get worse every day until we act.” For a few years, the prediction did not seem wrong. But it was wrong, spectacularly wrong, as were the statements about the geometry and location of earth and the pending demise of mankind due to food shortages.
“Global warming,” is the popular belief today. Persons running for public office use the topic in speeches, while columnists and academics push the subject forward. Some earn consultant or speaking fees by colorful presentations, a prominent example being Al Gore and his movie “An Inconvenient Truth.” Hyperbole is everywhere, with declarations such as “all scientists agree . . . ,” or “[a specific number] of experts have unanimously concluded that . . . .” Believers allow no room for disbelief or disagreement, and those who contradict are ridiculed or called names such as “know-nothings.”
The “global warming” idea has several components. The first component appears to be factual: global temperatures have been rising, and the atmosphere is tolerating more and more greenhouse gases. These facts have become the basis for predictions for a dreary future. Accordingly, some postulate the oceans will rise, coast lines will flood, hurricanes and tornadoes will inflict heavy damage, glaciers and ski areas will disappear. They also assume that human activity is the cause, and that human activity is subject to self imposed change. These are not facts. They are assumptions presented as facts.
The difference between fact and prediction is crucial. A fact is proven, such as that gravity pulls objects toward the center of the earth, and water seeks its own level. A prediction is an assumption derived from those facts, but unreliably. While we confidently believe that a ball thrown tomorrow will head toward earth, we cannot know that food production will run short or that natural disasters will result from global temperature increases.
In the stock market, predictions are an extrapolation of what has happened recently. If prices have been rising in the last few weeks or months, commentators assume a continuation of the trend. Similarly, if Hurricanes Katrina and Sandy are anomalous, observers correlate them with global warming, and further assume increasing anomalies.
Studies of prediction arrive at three conclusions: Humans need to both create and to consume predictions. Once created and accepted, humans rarely abandon conventional beliefs. Finally, all predictions, on subsequent study, are wrong, with the exception of weather forecasting, which has an excellent two- to three-day record of accuracy.
My mind closes when I see a prediction, especially politically-motivated predictions, such as lower taxes will lead to better growth, The Affordable Care Act will sink the economy or it will lower costs of medical treatment, hurricanes will be especially tough and frequent this season, and the Cubs will do poorly next year. These are prophecies, no more meaningful than offered by magical healers and medicine men, and they have little chance to prove correct.
If I were a political leader, or news cycle commentator, I would read the science, distinguish between fact and prediction, and give some weight to proposed responses and improvements. However, while perhaps voting for many proposals, such as taxes on pollutants, treaties, and projects, I would do so with humility and doubt. I would not engage in hyperbole. I would not ridicule or trivialize non believers because they might turn out to be right.
John Guy is an investment advisor in Indianapolis and author of two books: Middle Man, A Broker’s Tale, and How To Invest Someone Else’s Money.