Sunday, July 31, 2016

Foresight Versus Insight: Learnings from Brexit and the problem of forecasting.

Brexit and Causal Strands

Brexit, the British exit from the European Union is at the tail end of an extraordinary succession of events—the Syrian civil war, the forced migration of thousands of refugees, the flight of desperate families to the West, the German impulse to act morally by accepting refugees, the European Union’s less than willing subordination to German policies, Islamic fundamentalist violence in the heart of Europe,  Eastern Europe’s anxiety about being overwhelmed with foreigners they could not support and did not trust, and Russia’s impulse to destabilize the European Union, one reason among several of why it has supported Syria’s Assad.
These casual strands merged in Brexit as the people of “little England” recoiled from the prospect of being overwhelmed by refugees, while also being drawn to the prospect of  revitalizing their cultural identity separate even from Scotland, Wales and Northern Ireland. In this regard, they participated in a pan-European movement that calls into question the salience of nations as loci of identity, as is evident in Scotland, Catalonia, Flanders and Northern Italy. One serious question is whether this new localism will strengthen or undermine democratic traditions. Both Russia and China have staked out a future in which democratic practices are subordinate to the rule of elite cliques who seek legitimacy by mounting programs of imperial expansion. A weakened democratic Europe strengthens their political and moral legitimacy.
In responding to the initial phase of the Syrian conflict in 2011, as Jeffrey Goldberg reports in his comprehensive  article in the Atlantic, Obama felt that engaging directly in the Syrian civil war would distract him from a larger and more longer-term agenda of confronting China in the East. As he notes, Obama, “Gets frustrated that terrorism keeps swamping his larger agenda, particularly as it relates to rebalancing America’s global priorities. For years, the ‘pivot to Asia’ has been a paramount priority of his. America’s economic future lies in Asia, he believes, and the challenge posed by China’s rise requires constant attention. From his earliest days in office, Obama has been focused on rebuilding the sometimes-threadbare ties between the U.S. and its Asian treaty partners, and he is perpetually on the hunt for opportunities to draw other Asian nations into the U.S. orbit. His dramatic opening to Burma was one such opportunity; Vietnam and the entire constellation of Southeast Asian countries fearful of Chinese domination presented others.” This is also why he mobilized twelve countries in the Pacific Rim to create a free trade zone, the Trans-Pacific Partnership, as a counter to China’s own expansion in the region.
Yet, as  the sequence of events outlined above indicates, the Syrian crisis, in its wider meaning, influences China’s ability to project its power. What we face here is the complexity of causal strands. In one tradition of thinking, associated with the work of Fred Emery and Eric Trist, this complexity gives riser to our experience of turbulence. Obama can plan for the rise of China by looking to East Asia, but fail to anticipate the rise of China as one end result of the crisis in the Middle East.
One question is, should we and can we hold our leaders accountable for anticipating the evocation of these causal strands? I want to distinguish here between foresight and insight. Obama demonstrates foresight in creating what he and his advisors have called the “pivot to Asia” as the primary focus of his foreign policy. It takes account of the obvious fact that China is a rising power, whose mercantilism --it's press to secure trade channels for its imports and exports --underlines its globalist stance.
The problem with this forecast is that it is in fact both too obvious and too simple. For example, it does not take account of the forces for stability and instability in China itself. The Communist Party’s claim to its monopoly on decision making rests in part on its ability to secure economic growth while limiting corruption. But is this twin goal achievable?
State-owned and locally-owned government enterprises play a significant role in the Chinese economy. This gives the Party leverage over the scale and scope of economic activity. But it also means that party-members, their families and their political allies can control enterprises without being accountable to customers, investors or the public. As Daniel Bell of Tsinghua University writes, “The overall level of corruption has exploded over the past three decades, and it has become a visible political problem the past few years due to the glare of social media and more conspicuous consumption by political elites.” It is reasonable to ask if the Party can enforce a corruption free culture while also limiting the rule of law. After all, the best vehicle for limiting corruption is a free press and independent courts. But should the latter institutions develop, they would threaten the Party’s monopoly over political life.
Moreover, corruption is also self-reinforcing. People who hold an image of the state in their mind as “corrupt” treat the state’s institutions badly. Why protect these institutions when they are the source of ugliness and the venue for other people’s corrupting activities. Instead, they should be exploited. This is why corruption stimulates what political scientists and economists call “rent seeking activity” as party-members work to secure resources through state-owned and state-influenced enterprises without regard for the wider and longer-term impacts of their decisions on the fabric of urban and rural life.
It is also why wealthy Chinese look for safe havens for their money abroad. For example, Bloomberg News reported in November of 2015 that China’s wealthy citizens were sending money overseas, “at unprecedented levels to seek safer investments — often in violation of currency controls meant to keep money inside China. This flood of cash is being felt around the world, driving up real-estate prices in Sydney, New York, Hong Kong and Vancouver…While this year’s numbers aren’t yet in, during the three weeks in August after China devalued its currency, Goldman Sachs calculated that another $200 billion may have left.”
This is also why Chinese enterprises take decisions without regard for the longer-term impacts of their activities on pollution, food safety, and the quality of construction. If an executive’s self interest is focused on his or her extended family, and he or she sees settings outside China as vehicles for accumulating family wealth, why worry about the longer term impacts of their investment decisions within China. But as these severe indirect effects of economic activity take hold of, and reshape, urban and rural life, political instability increases. This can lead the Communist Party to try to exert even greater control, through undemocratic means, triggering yet again the cycle of corruption and its untoward consequences. In Albert Hirschman’s inimitable terms,-- “exit, voice and loyalty” -- the wealthy cannot exercise their “voice” in an undemocratic setting, nor are they “loyal” to the ideals of the Party that has long ago forsaken them. So they must prepare for the possibility of exit.
Of course, I am writing out a forecast or a “scenario,” which we could name, “China’s Communist Party undermines its own legitimacy.” No one can tell now whether it or not is accurate. Nor is it clear how, should such a scenario come to past, the “pivot” to Asia would increase, decrease or render irrelevant current, U.S policies in East Asia. But it does highlight how the interplay of causal strands makes a long-term vision and its associated forecast a problematic foundation for strategy formation. Indeed, management theorists such as Elliot Jacques, Russell Ackoff, and Eli Goldratt, who have examined the challenge of forecasting in some depth, have concluded that forecasting is a fool’s errand. Instead, executives should focus on constructing a desired future rather than trying to anticipate one.
But in some degree this perspective kicks the can down the road. One cannot construct a future, particularly one based on a long-term time horizon, without at the same immersing oneself in the immediate causal strands that create the conditions for the elaboration of any desired future. In this sense there is no escaping the present moment, what psychoanalysts refer to as the “here and now,” and Kurt Lewin, one of the founders of social psychology, called, “the force field.” This stance, I suggest, is the foundation stone for insight and is best vehicle for assessing if and how the Syrian crisis provides a new venue for the projection of Chinese power. In other words, insight is a precondition for foresight. But is it possible to effectuate such a stance and should we hold our leaders to account for this kind of understanding?

Philip Tetlock and the Super-forecasters

I am drawn here to Philip Tetlock’s work of assessing how effectively people can in fact forecast political events, for example the likelihood of a war, a coup, a riot, a strike, or a secession. He found surprisingly, that generalists were better forecasters than experts with specialized knowledge of particular countries, regions or disciplines. To use Tetlock’s  term, experts often predicted no better than “dart throwing chimps.”
Why should this be? Surprisingly, temperament plays a role. The best forecasters had an ironic stance toward the judgments they made, were less emotionally connected to particular forecasted outcomes, were more “actively open-minded” in their consideration of information, blended different perspectives, tended to see events in the round, that is, as instances of a larger class of events rather than as unique stories, were skeptical of deductive reasoning, were more likely to question analogies, and could decompose likely events into the separate components that underpinned them. Following the philosopher Isaiah Berlin’s metaphor, Tetlock characterized these good forecasters as” foxes” who know many things if sometimes superficially, rather than as “hedgehogs” who know only one big thing in depth, as experts do. 
One basic reason foxes outperformed hedgehogs is that the former reason from a “base case” and use statistical reasoning, while hedgehogs rely on the emotional salience of a particular story or case. For example, I might ask you to estimate the likelihood that a young suburban couple without children and with a good income, has a pet. Perhaps you, like most people, would turn the question into a story about how such a prototypical couple would conduct their lives, investing the story with emotional meaning. For example, you might imagine that the couple has discretionary income and no children, and so are likely to have a pet to keep them company, perhaps as a trial for their later child bearing and rearing. By contrast, the good forecaster starts with the base rate and asks, “What percent of households own pets?” (the answer is 62%), and then revises this estimate based on the additional facts provided. (Some readers will recognize this as a form of Bayesian reasoning.)
Consider as well the following example. As Tetlock reports, “In 2013 the Obama administration nominated Chuck Hagel to be defense secretary, but controversial reports surfaced, and a hearing went badly, and some speculated that Hagel might not be confirmed by the Senate. ‘Will Hagel withdraw?’ wrote Tom Ricks, a defense analyst. ‘I’d say 50-50 but declining by the day. Bottom line: Every business day that the Senate Armed Services Committee doesn’t vote to send the nomination to the full Senate, I think the likelihood of Hagel becoming defense secretary declines by about 2%.’”
Tetlock compared this forecast to a super-forecaster who reasoned statistically, noting that, ‘Since the establishment of the secretary of defense position soon after World War II, it looks like only one of 24 official nominees has been rejected by the Senate, and none has withdrawn. So the base rate is 96%.’ Using statistical reasoning analogous to the way in which we evaluate whether or not someone has cancer, just because he or she tested positive for cancer, the super-forecaster predicted that Hagel had an 83% chance of being nominated, which in fact he was. One reasonable hypothesis is that Ricks, the defense analyst in Tetlock’s example, was drawn to the emotional drama of Hagel’s confirmation hearings -- to the story of the possible rejection of a nominee and implicitly his president --and that this story biased his judgment about the facts shaping Hagel’s prospects.
Cognitive psychology, helps explain this phenomena. Daniel Kahneman, the major theorist of cognitive biases, argues that people are prone to an “availability bias,” the tendency to use available examples and stories, often with emotional salience, as the basis for making meaning of a situation. We reason from the inside out, ”How are pets substitute children?”  rather from the outside in, “What are the many reasons that people own pets?”

The Case of Libya

Compelling emotions probably distorted Hillary Clinton’s judgment when she  supported using U.S. air power to interdict Gaddafi’s troops in Libya. In retrospect, the intervention to topple Gaddafi turned out very badly. As one author wrote in the Journal, Foreign Affairs, “Libya has not only failed to evolve into a democracy; it has devolved into a failed state. Violent deaths and other human rights abuses have increased several-fold. Rather than helping the United States combat terrorism, as Gaddafi did during his last decade in power, Libya now serves as a safe haven for militias affiliated with both al Qaeda and the Islamic State of Iraq and al-Sham (ISIS). The Libya intervention has harmed other U.S. interests as well: undermining nuclear nonproliferation, chilling Russian cooperation at the UN, and fueling Syria's civil war.”
At the time of the Libyan intervention, March 2011, the  Arab Spring was bringing democracy to Tunisia,  Mubarak had recently been deposed in Egypt, and ISIS was still an embryonic terrorist group. There were grounds for optimism. But let me suggest that this optimism was distorted by a kind of romanticism. Most telling, Christopher Stevens, later appointed as the American ambassador to Libya after Gaddafi’s overthrow, released a video to the Libyan people, shortly before he travelled to aid in the rebellion, comparing their revolution to the U.S. Civil war. This analogy suggests that Stevens and others thought it reasonable to hope that any post-Gaddafi Libyan leaders would have the caliber of an Abraham Lincoln, that is leaders who could oversee catastrophic destruction while planning for a post-war setting where, “malice toward none and charity toward  all” would reconcile grievous enemies. But in fact, the U.S., in supplying 20,000 tons of weaponry to anti-Gaddafi militias, wound up buttressing hard core Islamic Jihadis. As one reporter notes, “That they were the heart of the opposition was inevitable: Salafist Sunni jihadis had been Gaddafi's principal opposition for more than three decades.”
In advocating for intervention, Clinton bet on Mr. Jibril, who as head of the Transitional  National Council, became Libya’s interim prime minister after Gaddafi’s overthrow. Yet he was a political scientist with a doctorate from the University of Pittsburgh, who had weak ties to Libyan tribes and sects. Reflecting later on his failure to build an institutional framework that supported liberalism and democracy, he noted that, “We  had a dream, and to be honest with you, we had a golden opportunity to bring this country back to life. Unfortunately, that dream was shattered.” The notion of a “dream” particularly in a deeply factionalized society, evokes the image of romantic rather than pragmatic aspirations. Indeed, one possibility is that Christopher Stevens’ later murder in Benghazi also highlights the romanticism of the moment. He did not attend to his own security, because he underestimated the venom associated with tribal and religious warfare.

Detached Immersion

Many of the findings associated with the literature on cognitive bias and decision making are linked to the broader idea that people do not naturally think in terms of probability and statistics. Stories pull them toward what is specific and unique rather than what is general and rule-governed. But the “probability way of thinking” entails a level of abstraction from everyday life, and in that regards constitutes a burden on cognition. One measure of civilization’s progress is the degree to which the senses are subordinated to thoughts, whether in science, in the use of money -- now only digits on a computer disk -- or in the concept of regularities that govern social life. This is also why modern societies are vulnerable to attacks on science as a mode of thought, the quintessential expression of abstraction, even though science has provided so many benefits. 
I want to suggest that Tetlock’s findings point to a mode of apperception consistent with the demands of abstraction, which I propose to  call, detached immersion. This term is paradoxical for good reason. On the one side, there is no substitute for engaging with the “here and now” in all its complexity, with Kurt Lewin’s force field. But this engagement should be accomplished through a stance of emotional detachment. Immersion draws our attention to the obvious fact that any future will and must emerge from the present. Detachment ensures that we are not seduced by the emotionally compelling stories we tell ourselves about the present. In describing the analyst’s stance toward a patient, the psychoanalyst Wilfred Bion counseled attending to the present moment in the analytic process, “without memory or desire.” This too is a good model of detachment as a vehicle for gaining insight and guiding intervention.
One hypothesis is that Obama, in confronting the Middle East, uncharacteristically lacked detachment. He pivoted to Asia to escape from the ugliness and hopelessness of the Middle East. Yet early in his presidency he invested in the image of himself as a leader who could help reconcile the Arab world to modernity, by offering its people and their leaders understanding and respect. This was one meaning of his speech entitled, “A New Beginning,” that he delivered in Cairo in 2009. Yet he ultimately failed as an agent of “hope and change” in the region. This undermined an idealized image he had of himself as a global leader, and according to this hypothesis, he turned away from the Middle East in part to protect his self-esteem.  

Purposes versus objectives

I raised the question at the beginning of this post about what should we hold our leaders accountable for when they make strategic decisions? One answer is that we expect them to take pragmatic decisions based on detached immersion. But there is fly in the ointment here, one that Tetlock identifies as a limitation of this own research. His super-forecasters were great at answering questions, “Will Russia stay the course in Syria until Assad wins, will Saudi Arabia reduce its support for Wahhabi Imams in other countries, will Hungary withdraw from the EU? But who determines what the best questions are? Who are the “super-questioners?
In the normal course of executive decision-making our best questions come from our objectives. If, for example, as the owner of a small business in the U.S., my objective is to start selling my products abroad, my questions are all about how to accomplish this. My scenarios are about what obstacles I may face in pursuing this objective, and my plans are about how to overcome these obstacles. But in the turbulent environment we are describing, objectives are forever unstable, always undermined by the unexpected confluence of causal strands.
Brexit is the quintessential case in point. The main elements of the Conservative party’s platform in 2015, as reported by the BBC, were to reduce the deficit, extend the right of housing association tenants to buy the homes they lived in, to increase spending on the National Health Service, and to sponsor a referendum on Great Britain’s membership in the EU. David Cameron sought the referendum for tactical reasons; to unite the Conservatives, contain the challenge on his right from the UKIP, and “give himself the space to implement his legacy agenda of One Nation reforms to improve people’s life chances.”
But Brexit upended all these objectives and raised serious questions about the capacity of either Labour or the Tories to govern, and about the integrity of Great Britain as a federation of identities. One hypothesis suggested by Russell Ackoff’s thinking is that under these conditions leaders are guided by ideals or purposes rather than goals and objectives. It then becomes a matter of statecraft to determine what objectives under present conditions best instantiate these purposes. To use an analogy, purpose is to an objective as climate is to weather. Moreover, purposes are not so much achieved as they are expressed. For example, if my purpose is to conduct my business honorably, I don't achieve honor by a certain targeted date. Rather I instantiate it everyday in the pursuit of my objectives.
To be sure, the moral quality of a purpose is contingent and is in the “eyes of the beholder.” To give an example, one hypothesis is that Putin’s political strength comes from his singular purpose of reanimating Russia as an empire, an identity it lost with the collapse of the Soviet Union. Or China’s purpose is expressed in its mercantilism, that is, to secure for its 1.36 billion people (!), an unimaginably large population, the resources it needs to advance its citizens’ living standards. Similarly, in the 19th century, people in the United States imagined that they had a “manifest destiny” to expand westward and appropriate the whole continent, even when this meant riding roughshod on Native Americans. The power of purpose is that it confers flexibility in the face of turbulence. As causal strands intersect and upend inherited objectives, purpose readily directs the search for, and discovery of, new ones.
The rise of China, Russia’s adventurism, the image of the EU as an undemocratic polity, and the belief that democratic capitalism is inequitable, all raise questions about democracy’s viability. It is reasonable to ask if the United States could take up the purpose of representing the moral meaning of democratic traditions and practices throughout the world. This is what Christopher Stevens, the ambassador murdered in Benghazi, represented. But there is a sense in which the U.S. has soured on this purpose, no doubt partly in response to what Trump derides, quite reasonably, as its failed attempt at nation building in Iraq. Libya in this sense was simply a repetition. Perhaps Trump’s dark speech in accepting the Republican Party’s nomination for president resonates, because in a time of terror preserving safety is the overriding purpose.