37. What Should No Scholar Ever Do?
Predicting the Future
Predicting the future is a perilous exercise. But that has not stopped us trying. Hunter-gatherers carefully studied their natural environment to predict food availability. The earliest farmers developed sophisticated ways to predict rain. In the eighth century BCE the oracle of Delphi attracted to her temple those who wanted to know the future. Others have searched for clues to future events in bones, marbles, cards and crystal balls. For a quick fix, just page to the horoscope section in your daily newspaper.
It makes sense to want to know the future. Knowledge is power. And power is money. Entrepreneurs must predict the future demands of their customers, the behaviour of their competitors, and the cost of their inputs. In more volatile environments prediction is more difficult, which increases risk and requires higher reward. That is why it is so difficult to attract investment in unstable times. It is also why there’s a lot of money in prediction – and why the tools we use have become increasingly sophisticated. Financial analysts and traders use elaborate econometric and machine-learning techniques to forecast stock prices. A better forecast yields higher returns. Epidemiologists, as Covid-19 has shown, build mathematically complex models to predict the spread of diseases. Climatologists do the same to study weather patterns and climate change. Even governments need accurate predictions of the future: a sudden economic downturn could result in a surge in unemployment insurance applications and a collapse of tax revenue.
Despite all this effort to understand the future, we remain pretty bad at predicting it. That is because we are human. The future depends on millions of daily decisions made by billions of humans. But even if these things were predictable, our predictions are biased in ways we are unaware of. Between 1956 and 1962 the psychologist Kurt Danziger asked 436 South African students to imagine how the twentieth century might unfold. Two-thirds of black South African students imagined that apartheid would end; only 4 per cent of white Afrikaners did.1 His point was clear: we are likelier to predict what we want to see happen. Our biases are programmed into our DNA.
The rigorous forecasting methods we use to circumvent these biases only take us so far. We may be able to predict fairly accurately the weather or the price of oil next week, but the complexity of the world we live in reduces our ability to forecast far into the future. Our models struggle to comprehend the compounding effect of innovation, for example. Globalisation amplifies this. The telephone took more than seventy years to reach 100 million users worldwide and the mobile phone fifteen. Instagram reached 100 million users within two-and-a-half years. OpenAI’s ChatGPT, launched in November 2022, took just two months.2
Does this mean we should just give up trying to predict the future? Not if we use history as our guide. We study history, as we have done in this book, to help us understand the world we live in. To make sense of all the noise, we construct theories of human and social behaviour. Our theories, then, have predictive power. But it is useful to keep in mind that these are not precise forecasts like those of the weatherman or the financial analyst. Any theory or model is, at best, a simplified representation of the world, a map. We use these maps to navigate our way through the complexity. On the basis of these theories, we can delineate a map of the future. The map will be imprecise and frequently wrong, but when we are wrong we update our map – our theories – and we become more confident in our next prediction.
Let us, then, return to a theory we introduced early in this book. In Chapter 6 I explained that there are three ways to solve economic problems: custom, command and the market. We can now apply these to our reality. The three solutions become the three domains of social life: command becomes the government, which typically relies on hierarchy and coercive forms of authority; the market becomes the private sector, which organises cooperation and the allocation of goods and services through competition; and custom becomes civil society, which can be defined as formal and informal institutions, organisations or cultures that affect our beliefs and behaviour. These may include anything from family units to global religious denominations, from book clubs to environmental-activist organisations, from amateur sports teams to academic societies.
All three of these domains are important for successful societies. In The Narrow Corridor, Daron Acemoglu and James Robinson argue that only a few societies in history have managed to grow and become prosperous.3 This is because most could not find a balance between the power of government and the power of citizens. In many societies throughout history, citizens had too much power, and thus a government that provides the public goods that a prosperous society requires could never be formed. In those places where governments could form, it often gained too much power, and would just extract rents from its citizens to benefit the powerful elite. What is necessary, then, is for societies to find the narrow corridor, a delicate power balance between government and citizens.
How we find the balance between government and citizens will be affected by technological change. When we think of economic systems we tend to think of a continuum, with socialism (where everything is owned by the state) at the one extreme and free-market capitalism (where everything is owned privately) at the other. But the triangle helps us to understand that ownership is not only a choice between free markets and government. When we want to think of the future, therefore, it might be more useful to consider the many ways that technology could change the way we think about ownership.
Ownership refers to the right to possess something. The concept of ownership has changed considerably throughout human history. For much of our history, as we discussed in Chapters 8, 12 and 15, people owned other people. It is only in the recent past that we have considered this an abhorrent practice, a crime against humanity. And although the practice still exists in many guises today, from sex trafficking and forced marriages to child labour, it is a hidden crime, very different from its public practice only two centuries ago.
Yet we may see ownership of people re-emerge in future, although we will hardly recognise it. Consider the world’s top football players. An investor can now perfectly legally own ‘all or part of the financial rights to a player’. Hedge funds now acquire the rights to young players, and cash in when the best ones are sold to top clubs. If it works in football, why not elsewhere? Could a brilliant young mathematician without the resources to study at university sell a part of her future income to an investor? Crowd-funding platforms already allow this possibility. It is not impossible to imagine that stock markets will develop where shares in people are sold. New technologies could take such human ownership to the extreme: what if governments were to abolish personal income taxes and simply ‘own’ a tenth of all newborn babies in their territories? Would politicians then not have the incentive to not only encourage higher fertility rates, a particular concern in rich societies, but also to invest in the health and education of young people so that future government revenue would be higher?4 And what about parents? If parents could use the shares they own in their children as their pensions, would they not be more willing to invest in their children’s development? There is little doubt that these possibilities will raise knotty ethical issues, issues that civil society would have to solve.
Such debates are not new. Philosophers have debated the ethics of land ownership from the time of the earliest agricultural societies. Beliefs about land rights varied – and continue to vary. In some parts of the world all land is privately owned. In others most land is communally owned, or owned by the state. In Chapter 7, for example, we discussed how most land in feudal Europe was the property of princes, vassals and the Church, with serfs, the actual farmers, having no ownership rights. I argued that this is not too different from the land rights of those living in South Africa’s former homelands today.
What we do learn from history is that, although private property rights are not sufficient for economic development (and some would argue they are not even necessary), where private property rights have expanded, so too has productivity. When the return on our effort goes into our own pocket, our output is likely to increase. The opposite is, of course, equally true. In Chapter 23 we showed how collectivisation in the USSR caused catastrophic famines. And in Chapter 25 we discussed how the Great Leap Forward in China abolished property rights in cattle, only for people to start culling theirs, thereby killing productivity.
That property rights can affect behaviour may also help us to respond to one of humanity’s greatest challenges: climate change. We now know that the release of carbon dioxide causes the earth’s climate to heat up, leading to both more frequent and larger natural disasters, ecosystem destruction and poorer health for people. In fact, we can even put a number on it: one additional ton of carbon dioxide today will lead to an increase in damages of about $37 due to climate change-related deaths, a figure much higher than we had previously thought.5 But there is hope. When we tax the ownership of pollution, firms will produce less of it. A global carbon tax is essential if we are to preserve both our natural environment and our high levels of prosperity.
Taxes are one way to pivot economic growth in a direction that minimises our impact on the environment. Higher asset taxes may force us to use the assets we own more productively (or, if taxes are too high, get rid of them entirely). Our houses are empty while we are at the office. Our cars sit idly in parking garages. Governments own many things – land, buildings, patents – that are not used optimally. Technology can change that. Uber allows car owners to be matched to car users. Airbnb is the world’s largest hotel chain without owning any hotels; it has created so much wealth for ordinary people, not because it owns properties, but because it uses technology to make existing assets more productive and profitable. Expect more of such asset utilisation apps that lift the returns on capital.
Technology will allow us not only to borrow the weed eater from our neighbour’s house, but also to reach for the stars. We will soon settle on other planets. We will do so faster if we can make money from it. Elon Musk is already building a planetary transport system. Jeff Bezos envisages our moving all heavy industry to the moon and Mars. But there are many questions unanswered: Who would lay claim to these lands? Who will pay for the (mis)adventures of the pioneer settlers? Will governments, much as we discussed in Chapter 11, grant charters to private firms? Will it give rise to a new class of interplanetary haves and earthly have-nots? As Mark Twain said, history may not repeat itself, but it often rhymes.
Until we have discovered the riches of these foreign lands, the most valuable commodity at home is not land but data. Facebook earns 98% of all its revenue from targeted advertisements – targeted because of the data its users generate. Who owns this data? On its own, tracking my online behaviour is not of much value to anyone. But combine it across millions of users and, with artificial intelligence, it becomes extraordinarily valuable, not only to market but also to manipulate. Algorithms developed by Californian teenagers now determine our daily moods. And as the Bell Pottinger saga in South Africa or Facebook’s Cambridge Analytica scandal have so vividly demonstrated, our data can be weaponised against us for devious ends.
The irony of data aggregated across millions of users is that ownership is often in the hands of a few. Market concentration within the tech industry, as we suggested in Chapter 33, is worrying. It means that large firms can collude with governments to create what Shoshana Zuboff has called ‘surveillance capitalism’.6 What is needed, indeed, is broader participation of civil society in counteracting these monopolising forces.
One obvious tool to spread ownership and broaden participation in the economy is to give citizens a monthly cash stipend, with no questions asked. The economic security a Basic Income Grant provides is certainly worth considering – and many developed countries have launched pilots to test its efficacy. But the evidence remains inconclusive. To make a difference the monthly stipend must be large, and developing countries often do not have the fiscal capacity to afford it. And it’s not just about money: there is dignity in work. What will people do with their lives when robots are simply better at everything?7 Just giving cash stipends is a start, but we need smarter and more innovative solutions to expand economic freedoms.
One obvious thing to do is to expand ownership rights. A central theme of this book is that living standards have suffered when economic participation in the economy, including the ownership of assets, has been suspended or suppressed. Consider colonisation in Latin America or Africa (which expropriated land and labour from locals), or Idi Amin’s post-independence Uganda (which expropriated the assets of European and Asian residents), or apartheid South Africa (which denied ownership rights to black South Africans). Imagine what would happen if instead of paying corporate taxes to government, companies ‘paid’ their taxes by giving shares to every citizen, just as many companies now give share options to their employees. For this reason, it is more important than ever that more of the tech giants list publicly. The profits of an unlisted firm only benefit the founders and a few shareholders, but anyone, from small-scale investors to pension funds, can own Apple or Alphabet, Tencent or Tesla. This changes corporate behaviour. Responsible investing integrates environmental, social and corporate governance (ESG) factors, such as climate change, diversity, human rights and animal welfare, into investment strategies. It is civil society that keeps the abuses of both government and the private sector in check.
Even if everyone can be empowered, some may still benefit more than others. While the last half-century’s globalisation has undoubtedly made the world more prosperous (and more equal), there were some who lost out, notably those in the developed world whose jobs were outsourced to the developing world. This creates resentment among the ‘losers’, a feeling that is often followed by the emergence of politicians who exploit the frustrations of ordinary people. Such populism usually leads to exaggerated nationalism, isolationism, inward-looking policies – policies that exclude rather than include. The sad truth is that those policies are back in vogue, on both the left and the right.8 If history is any guide, they are likely to impede our long walk to economic freedom.
Such economic frustrations have political repercussions. One is the idea of the nation-state. As the size and power of central governments increase, many citizens may feel unrepresented by a political elite in a distant capital city. Social media allow them to connect to like-minded people. Independence movements in many parts of the world indicate that national boundaries – often those forged through conquest or colonial rule – are being increasingly questioned. Residents want to see their taxes used in their own communities. They want control over decisions that affect them directly. Local government elections may soon become more important than national elections.
When people cannot make their voices heard at the ballot box, they will vote with their feet. Despite the high walls many countries are building – literally and figuratively – pressures to migrate from the developing to the developed countries will only grow. And it will be necessary: the rich world is growing older. Predictions suggest that 23 countries will see their populations shrink by more than 50% by 2100, including Japan (from around 128 million people in 2017 to 60 million in 2100), Thailand (71 to 35 million), Spain (46 to 23 million), Italy (61 to 31 million), Portugal (11 to 5 million), and South Korea (53 to 27 million).9
The cultural clashes associated with migration will, however, further feed the frustrations of those feeling disempowered. The demand for higher walls will rise. This populist trap, much like climate change and pandemic responses, cannot be addressed at the local level. Because these problems affect all of humanity, they require global solutions. This is where civil society will have to intervene. Governments currently have little incentive to introduce expensive remedial measures when the benefits will only materialise after the next election cycle.
One way to do that is through the media, a sector which has changed substantially over the last two decades. We now consume most of our news online, often on social media where fake news is peddled alongside credible reporting. Distinguishing between ‘deep fake’ videos and reality will become increasingly difficult. Algorithms will amplify echo chambers. Malicious attacks to divide us will become more frequent. Media watchdogs will have to find a delicate balance between freedom of speech and protection against predators. The only cure against bullying – bullying that can come from both corporates and governments – is broad-based economic participation.
Economic participation will also aid the pursuit of scientific knowledge. Science spans the entire triad of business, government and civil society. Firms invest in research and development; governments fund research at public universities and research institutes; and civil society, most crucially, not only provides the infrastructure that nurtures scientists and disseminates their findings, but fosters the values and beliefs that underpin science. These values and beliefs are important, because too much government involvement or too much private-sector power can lead to perverse outcomes.
As history shows again and again, the countries most successful in escaping the bonds of poverty and entropy are the ones where government, the private sector and civil society collectively endorse the pursuit of useful science. These societies cultivated – as the Enlightenment philosophers discovered and as Joel Mokyr has so eloquently phrased it – the belief that our understanding of nature can and should be used to advance the material conditions of humanity. We are rich because we have learned how to use nature to provide for our needs.
But it is not just about efficiency. We have discovered that governments are there to serve not just the rich and powerful, but society at large. Yes, scientific knowledge has made us prosperous beyond the wildest imaginings of our ancestors, but it was not only science: many of us live longer, better and more meaningful lives because economic freedoms have been expanded beyond just a tiny elite.
The beliefs that knowledge should be used to make us more prosperous and that governments should serve the needs of the poorest have made the world a better place. True, not everyone shares in the benefits of our scientific accomplishments equally. There is still much work to do, especially for those of us who live on the continent I call home. But the lesson from history is clear. As long as we continue to empower ordinary people to contribute to and benefit from the remarkable advances in scientific knowledge, the future, for Africa and beyond, will be bright.
K. Danziger, The psychological future of an oppressed group, Social Forces, 42 (1), 1963, 31–40.↩︎
K. Hu. ChatGPT sets record for fastest-growing user base - analyst note. February 2, 2023. Reuters. https://www.reuters.com/technology/chatgpt-sets-record-fastest-growing-user-base-analyst-note-2023-02-01/↩︎
D. Acemoglu and J. A. Robinson, The Narrow Corridor: States, Societies, and the Fate of Liberty (London: Penguin, 2020).↩︎
This is not so unrealistic. In 2020, Hungary implemented a policy granting complete exemption from personal income tax to all mothers who are currently raising at least four children or have raised four or more children throughout their lifetime.↩︎
Carleton, Tamma, Amir Jina, Michael Delgado, Michael Greenstone, Trevor Houser, Solomon Hsiang, Andrew Hultgren et al. "Valuing the global mortality consequences of climate change accounting for adaptation costs and benefits." The Quarterly Journal of Economics 137, no. 4 (2022): 2037-2105.↩︎
S. Zuboff, Big other: Surveillance capitalism and the prospects of an information civilization, Journal of Information Technology, 30 (1), 2015, 75–89.↩︎
The philosopher Nick Bostrom wrote about this topic in Deep Utopia: Life and Meaning in a Solved World (Ideapress Publishing, 2024).↩︎
Guriev, S., & Papaioannou, E. (2022). The political economy of populism. Journal of Economic Literature, 60(3), 753-832.↩︎
Vollset, S. E., Goren, E., Yuan, C. W., Cao, J., Smith, A. E., Hsiao, T., ... & Murray, C. J. (2020). Fertility, mortality, migration, and population scenarios for 195 countries and territories from 2017 to 2100: a forecasting analysis for the Global Burden of Disease Study. The Lancet, 396(10258), 1285-1306.↩︎