Why Experts Can't Predict the Future

In the ancient world, kings would often rely on a special group of priestly advisors to project power over their subjects. These court priests would inform the public that their monarch was divinely inspired, and their actions were guided with supernatural foresight.

In today’s world, fewer rulers claim a religious justification for their grand plans—however the power of expert advisory councils and fortune tellers remain. Rather than being positioned in religious cathedrals, so-called policy experts provide intellectual cover for governments seeking greater and greater power to control society.

In doing so, they reveal how many alleged policy “experts”—including celebrated “economists”—do not “think like an economist.”

For example, economists will often explain all the great things that will happen if the government can spend money on a particular program or create a new policy tool. They might aggregate incomplete data, add certain assumptions, and then project outward a forecast that aligns conveniently with their agenda.

Sometimes these predictions are wrong, and are generally grounded in unrealistic assumptions about the world. Economists can never, for example, project real prices in future markets, because of how the wants and demands of the public can change. Nor can they take into account unforeseen innovation, disasters, or large changes in human behavior.

No expert can predict the future.

This does not mean there is no value in forecasting. Businesses, investors, gamblers, and others may utilize their knowledge of a specific field or industry to make predictions about events with more accuracy than others. Like an entrepreneur, if they are right, they profit. If they are wrong, they lose.

The danger lies in overconfident forecasting that is combined with the powers of the state.

For example, prior to 2008, the Federal Reserve repeatedly denied the existence of a housing bubble that resulted from its low interest rates, which had led to malinvestment in housing. When the Fed’s failures created a financial crisis, the result was the central bank giving itself more power to “fix” the problem. Consistently, central bank experts are wrong in their predictions about economic growth or future interest rates. And just as consistently, they give themselves more influence over global capital markets.

The problem isn’t just with central bankers.

In 2021, many governments decided to shut down based on forecasts about the coronavirus that were wildly incorrect. Many businesses failed and lives were ruined because of bad expert predictions.

Even more horrifying, governments have engaged in programs grounded in bad predictions about resources—like underestimating the global food supply, which resulted in fears about overpopulation. The result has been forced sterilization programs, one-child laws, and other antihuman policies.

The predictions were wrong, and untold numbers lost their lives as a result.

Society is a complex system. The number of uncertainties that exist are impossible to isolate, which makes the future impossible to predict with certainty. This is particularly true for complex systems such as the economy, public health, and the global climate.

Proper economics teaches us how to better understand the world as it exists, the importance of empowering individuals with property rights, and the consequences of misusing state power.

It does not grant us the ability to predict the future.

There is no mathematical formula or complex model that can replace the proper study of human action.

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