Doomster in Chief

And as frightening and tragic as the worldwide COVID pandemic has been, it doesn’t compare to the waves of plague that engulfed the Old World after the fifth century AD. Roubini repeats the canard that modern high transport makes us more vulnerable to global pandemics. While perhaps fleetingly true in the short term, in the long run the modern pandemic burns itself out relatively quickly and with far lower mortality than in the pre-Columbian era of widely separated disease pools. Before the age of cheap and efficient long-distance transport, the world’s pathogen pools remained entirely separate, and thus featured populations utterly lacking immunity to diseases long endemic in distant lands. In the premodern world, a merchant, sailor, or rodent from a neighboring disease pool could touch off an epidemic that might kill up to 90% of a population, as occurred to the New World’s original inhabitants after the arrival of the first Europeans.

For a book that attempts large-scale and long-horizon forecasting, it’s curious that it makes no mention of the work of Philip Tetlock, the world’s foremost expert in that discipline. This is a serious omission. Had Roubini absorbed Tetlock’s nonpareil monograph on the subject, Expert Political Judgment, he’d have done a better job. To wit, humans, in general, are lousy forecasters; rather than deploying extensive narrative arguments, Tetlock demonstrated that it’s nearly always better to first apply the base rate of the event under consideration, then modify it with simple Bayesian adjustments. The forecasting of pandemics illustrates this nicely: The base rate for major global outbreaks seems to be approximately once per century, with less serious major outbreaks, such as swine flu and SARS, occurring approximately once per decade. The careful forecaster might thus avoid predicting, as does Roubini, a future riddled with nearly continuous global plagues based on narrative arguments that invoke climate change and increasingly facile global travel.

Tetlock identified several factors that prove deadly to forecasting accuracy. His primary finding was that intellectual hedgehogs – forecasters who view the world through a narrow, unitary theory of the world – read ideologues – do especially poorly, as opposed to intellectual foxes who view the world through many different lenses. Roubini, a fairly catholic observer, mercifully avoids this pitfall.

Beyond that, Roubini falls victim to the full panoply of Tetlockian pitfalls, the first being a high “moreover/however” ratio that relentlessly piles one supportive narrative argument atop another. Rarely does the Roubini stop to apply nuance by, for example, asking, as does any competent forecaster, “What might prove me wrong?” In his chapter supporting his prediction of a coming global stagflation, he lists no fewer than 11 contributory factors, but not one that might mitigate against it.

Next, Roubini is a doomster, a species of forecasters which Tetlock’s research tags with a particularly poor track record. Worse, he is a media darling, which carries an additional forecasting penalty, since boomster/doomsterism and a bright media spotlight combine in a particularly toxic manner. Boomsters and doomsters attract eyeballs, and thus advertising, and are far more likely to garner interview invitations than more thoughtful, nuanced observers. Most often, even the best-informed experts, if they are honest, respond to difficult questions with some version of “How the heck should I know?” an answer that is unlikely to get them invited back.

The lurid predictions of boomsters and doomsters attract repeated media appearances, which in turn produce an overconfidence that further corrodes forecasting accuracy, in Roubini’s case evidenced by the overuse of the first-person singular. The result is a media-forecasting death spiral populated by extreme, and hence poor, forecasters, whose media exposure then worsens their predictions. Tetlock observed, “The three principals – authoritative-sounding experts, the ratings-conscious media, and the attentive public – may thus be locked in a symbiotic triangle.” Roubini’s spiral is likely accelerated by speaking fees advertised in the $50,000–$100,000 range.

Roubini is at his best when he applies his undeniable expertise to the macroeconomics of debt and monetary policy; he does a superb job with his history of Argentina’s long, sorry default and inflation history, as he also does with his treatment of the hundreds of trillions of dollars of U.S. government “implicit debts” incurred by hard-to-break promises to future retirees and for implied guarantees to back up future contingencies. He fondly quotes Milton Friedman, “Inflation is just like alcoholism. In both cases, when you start drinking or when you start printing too much money, the good effects come first, and the bad effects come later.” But even here, the interested reader can do better with Barry Eichengreen’s Keynesian Golden Fetters on the perils of hard money and Edward Chancellor’s recent exposition of the costs of central bank largess, The Price of Time.

Roubini is at his weakest when dealing with challenges outside of macroeconomics; his analyses of global health threats, big-power security issues, and the risks of artificial intelligence rely heavily on mass-market outlets, as opposed to more primary sources; he is especially fond of the Financial Times, the Wall Street Journal, Bloomberg, The New York Times and the Economist. He predicts, for example, that the mighty Russian military could easily overrun the Baltic republics; it’s too bad his book wasn’t written a few months further into their Ukrainian debacle. His chapter on artificial intelligence cites a widely reported 2013 paper by two Oxford researchers that concluded that 47% of jobs were about to be replaced by AI “soon.” Roubini’s primary citation for this study was a series of pieces in the Economist published in 2016, which in fact cast no small amount of skepticism on the 47% job loss statistic. The magazine got it right; nine years after the Oxford study, “soon” seems not yet to have arrived.

The typical reader will be far better informed in these areas by, for example, the Economist’s superb reporting than by MegaThreats; for those who find the print Economist too much of a weekly fire hose, one can do almost as well with their entertaining podcast series. Better yet, swap out MegaThreats for Toby Ord’s brilliant tour d’horizon of the planet’s existential threats, The Precipice; although an academic philosopher, he deftly channels the expertise in the relevant fields of his colleagues at Oxford’s Future of Humanity Institute.

MegaThreats could also have benefitted from better fact checking and copy editing; the Bank of England Governor is Andrew Bailey, not Martin Bailey, and clichés such as “History does not repeat itself – but it also rhymes” should never escape the cutting room floor.

Perhaps the book’s most glaring deficit is its neglect of the most probable, cataclysmic bullet humanity just barely dodged on multiple occasions since the 1950s, that of nuclear annihilation, an event whose magnitude is beyond comprehension. Its initial blasts would kill hundreds of millions, followed by billions lost to a sequence of firestorms, radiation, and finally a catastrophic nuclear winter that might produce the sort of mass extinction seen only a few times in the planet’s four-billion-year biological history; now that’s a megathreat; the interested reader will be well served by Eric Schlosser’s Command and Control.

Humanity will continue to suffer, as it always has and always will, great calamities, but more often than not these result from events that no one foresees: Who on September 10, 2001 would have worried about nearly unarmed terrorists destroying some of the world’s tallest buildings with hijacked airliners, or, for that matter, before 2022 that Vladimir Putin would invade the Ukraine?

Still, MegaThreats, for all its flaws, was well enough written and fast moving enough to hold this reviewer’s interest. While most of this venue’s readers might find it too basic and slapdash for their tastes, it might make a good Christmas gift for younger family members interested in current events.

William J. Bernstein is a neurologist, co-founder of Efficient Frontier Advisors, an investment management firm, and has written several titles on finance and economic history. He has contributed to the peer-reviewed finance literature and has written for several national publications, including Money Magazine and The Wall Street Journal. He has produced several finance titles, and four volumes of history, The Birth of Plenty, A Splendid Exchange, Masters of the Word, and The Delusions of Crowds about, respectively, the economic growth inflection of the early 19th century, the history of world trade, the effects of access to technology on human relations and politics, and financial and religious mass manias. He was also the 2017 winner of the James R. Vertin Award from CFA Institute.

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