Viewing events in isolation, without an appreciation for their deep roots, helps explain everything from why forecasting is hard to why politics is nasty. Ignoring that family tree can muddy your understanding of events, giving a false impression of why things happened, how long they might last, and under what circumstances they might happen again. And when do so you get these crazy connections, like a terrorist attack leading to student debt a decade later.Įvery current event has parents, grandparents, great grandparents, siblings, and cousins. Well, 19 hijackers crashed planes on 9/11 that spooked the Fed into action to prevent a recession. Well, interest rates were slashed in the early 2000s. Well, there was a financial crisis in 2008. Well, in part because millions of people ran to college when job prospects were dim in the mid-2000s. Take the question, “Why are student loans so high?” To see how powerful these chain reactions can be, look at history, where it’s easy to skip the question, “And why is that?” The point is that every event creates its own offspring, which impact the world in their own special ways.įorecasting, “ If this happens, then that will happen,” rarely works, because this event gives rise to another trend, which incentivizes a different behavior, which sparks a new industry, which lobbies against this, which can cancel that, and so on endlessly. Then maybe the suburbs become more popular – and people end up driving even more than before. Then prices fall, all while people own more efficient vehicles. And the oil industry knows two speeds: boom and bust. Oil company CEOs are hauled before Congress OPEC is asked to drill more. They’ll complain to politicians, who will offer tax breaks to buy those vehicles. Well, people have to drive, so maybe they’ll look for more fuel-efficient vehicles. Saying, “higher gas prices will cause people to drive less,” seems logical. Forecasting is hard because it’s easy to skip the question, “And then what?”
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