This Never Happened

Future scenarios require a past, because there’s no data about the future.

I thought of this because of a blog post I ran across this morning.

A sentence only a 20- or 30-something could write:

“Almost literally, everything that has ever happened has happened in the last decade or less.”

I get what he’s saying. The number of transactions on line dwarfs the number that were possible prior to the advent of the on-line world.

That said, this is the mentality that made the 2008 financial and economic catastrophe possible.

Because the youthful programmers restricted themselves to the “quality data,” all the econometric analysis was being run on the last few years of data, leaving out, oh, the 1982 recession, the 1970s stagflation, and the Great Depression.

Because, you see, they hadn’t happened. Because the data quality was so poor.

Nasim Nicholas Taleb noted in The Black Swan that this was like basing weather predictions in Florida on a 2-year period in which no hurricanes happened.

Other things that apparently just didn’t happen:

• The Reagan Revolution
• The Cold War
• World War II
• The Holocaust
• The Great Leap Forward and associated tens of millions of deaths
• The British Empire
• The Roman Empire
• Prehistory
• Dinosaurs
• Seinfeld
• Disco

This is one argument (perhaps the only argument) for hiring consultants who have grey hair. It’s because they might be able to bestir themselves from their midday naps long enough to say something like, “Hey, aren’t you forgetting THIS?”

One other key point here: the quality of data is not suddenly going to stop improving. So the author’s pride in the existence of whatever he’s doing right now is really unwarranted, because his current activity is not going to even qualify as data in five or ten years. It’s going to have been recorded on the equivalent of 8-track tapes or VHS recordings or floppy disks. Be here now, Mr. Coast; because you won’t exist in five or ten years.

This also makes me think that the price of actual books (or more probably, the returns to scanning in physical books) might shoot up at some point, as the on-line world realizes that the highest returns come from exactly those ideas that are not on line yet.

Librarians, expect trench-coated men in sunglasses to descend upon your branch shortly. They are the Reverse Men in Black. Instead of using technology to erase memories, they will be coming to redeem the past.

Because until they put it all on line… it never happened.