Superforecasting 2017

Between the beginning of December and around about this time each year, we are assailed with forecasts for the year ahead. Sometimes the forecasts turn out to be right, other times they are badly wide of the mark. Years of bitter experience have taught me that making a point forecast for any economic quantity one year ahead is often an exercise in futility. But any forecast based on a reasonably well-thought out story is better than taking no view at all and trusting to luck. I was thus intrigued by the findings of the recent book by the political scientist Philip Tetlock and journalist Dan Gardner entitled “Superforecasting: The Art and Science of Prediction” (here).

Essentially, Tetlock and Gardner conclude that forecasting is a skill that can be learned although some people are better at it than others. The so-called superforecasters generally manage to outperform experts in a wide variety of fields because they adopt an eclectic approach to analysis, preferring to process information from a wide variety of sources. Tetlock assumes that forecasters can be divided into two categories – hedgehogs and foxes. Hedgehogs tend to have in-depth understanding of a small number of areas, whereas foxes believe the world is a very complex place and tend to avoid shoe-horning their ideas into a limited number of boxes. Perhaps not surprisingly, foxes make the best superforecasters.

Although they tend to be smart people, Tetlock finds that superforecasters are in no way geniuses. They tend to look at a wide range of information in making their judgements and are happy to revise their assessment if new information becomes available (in the same way as Bayesian statisticians, as I noted here). Whilst my record disqualifies me as a superforecaster, I was struck by one of the lessons which came out of the analysis, which is that they think in fine gradations. Thus, rather than offering an outcome with a probability of 60-40, a superforecaster might carefully weigh up the evidence and instead offer odds of 63-37.

This brought to mind my own deliberations in the immediate wake of the Brexit vote when I was prevailed upon to offer an unambiguous view of what would happen next, but the more I thought about the issues the less clear they seemed. I recall my assessment on 27 June was that the UK was likely to leave the EU with a probability of only 59% whereas in the wake of the Conservative Party conference in October, I raised the likelihood to 90%. As new information comes in, that figure may well change again. This highlights a view which is gaining common credence – and one which I have long been convinced by – that the central case forecast is by itself not much use unless we attach some form of weight to show the degree of conviction with which we hold to the view. Otherwise the forecast becomes a binary decision which is either going to be right or – more often – wrong, which is when forecasters open themselves up to the charge that they have no idea what they are doing.

So in the face of all these caveats, what are the key issues we should be looking out for in 2017? The biggest local risks are: (i) the UK triggers Article 50 in March without making any contingency plans in the event that discussions with the EU prove more difficult than expected; (ii) Marine Le Pen wins the French presidential election; (iii) Angela Merkel fails to win the German election.

As regards (i), I genuinely do not know how this will pan out. I am working on the assumption that the Supreme Court will uphold the High Court judgment and that parliament will be allowed a say on the triggering of Article 50 which will delay its implementation. As a result, I currently assign a probability of 45% to this outcome. On (ii), the polling evidence suggests (for what it is worth) that Ms Le Pen has no chance of winning the second round of voting, and consequently I would give this a probability of 25%. And I see no alternative to Angela Merkel continuing as German Chancellor, so this is assigned a probability of 10%. The joint subjective probability of all these outcomes occurring is just over 1% - negligible but not impossible (which is how in early 2016 I characterised the joint likelihood of the UK voting for Brexit and the US for President Trump).

On the other side of the Atlantic, I would be surprised if Donald Trump can do much damage to the US economy in 2017, although further out it is likely that greater difficulties will become evident. He is unlikely to build his wall on the Mexican border; jail Hillary Clinton; deport illegal immigrants or completely dismantle Obamacare. But I suspect markets will not get the benefit of the hoped-for fiscal stimulus and as a result I would be surprised if US equities continue rising much beyond the spring (I won’t even put a probability on this one).

We should be in no doubt (as if anyone needs reminding) that the year ahead is more plagued by uncertainty than at any time since 2009. But as I say to journalists who ask whether I expect any surprises, it is the unexpected surprises which tend to do the most damage, and since by definition they are unknowable, time has a habit of making fools of us all.

That was the year that was

It has truly been a historic year, the reverberations of which will echo for years to come. Above all, 2016 was the year of politics and will primarily be remembered as the year when electorates in the west decided that enough was enough. And who can blame them? Governments have spent the past seven years trying to convince their electorates that normality is just around the corner, when in reality they should be preparing for the new normal. Conventional countercyclical policy is battling against the headwinds of globalization and rapid technological change, which add up to make this the most unsettling period that many of us have ever experienced.

The geo-political environment is in a state of flux as the tectonic plates of the post-1945 order move again. Far from this being the end of history, as Francis Fukuyama once predicted, we are closer to Yogi Berra’s aphorism that it’s déja vu all over again. Precisely at a time when strong political leadership is called for, we find it is sadly lacking.

In the UK David Cameron – a deeply flawed leader who gambled his country's economic future for short-term political gain – has been succeeded by Theresa May, who gives no public indication that she understands the complexities of negotiating Brexit. In France, President Hollande is the most disliked president in French history, to the extent that he will not stand again next year because he knows he cannot win over the people. There is indeed a non-negligible probability that the French could elect a far-right president next year in the shape of Marine Le Pen, although I would not put money on it. Italian PM Renzi quit after his proposals for constitutional reform were rejected in a referendum which ended being a plebiscite on his own term of office. Only Angela Merkel is still standing tall, but even her popularity could take a tumble in the wake of recent events, as her open borders policy is increasingly scrutinized. With an election due in the autumn, the world will be watching to see whether Germany can uphold the values of liberal democracy which are being eroded elsewhere.

Meanwhile, the political situation in the US is almost beyond parody. Although the economy has recovered more rapidly than most, Barack Obama is unlikely to go down as a great president. A great orator he may be, but he has failed to offer the leadership that the western alliance so badly needs. Whilst his policy of avoiding military entanglements was taken for sound reasons, his Middle Eastern policy has been a failure, and if anything has made a bad situation worse. His attempts to reset relationships with Russia have also been a dismal failure. Moreover, he spent a lot of time and effort battling Congress on basic economic issues such as the debt ceiling (though that is more the result of Tea Party influenced ideology than the president's stance). But as sub-standard as Obama may have been, the election of Donald Trump represents a leap into the unknown. It is a measure of the dissatisfaction which many Americans feel that they are prepared to give the keys to the Oval Office to someone who lied and exaggerated their way through the most unedifying presidential campaign in history.

Vladimir Putin and Xi Jinping can at least look forward with more optimism. Putin has restored some prestige to Russia's tarnished image, and although the economy will continue to suffer from the sanctions which are still in place, he will be taken more seriously on the global stage following Russia's intervention in Syria. China's President Xi will continue to preside over the world's most dynamic large economy as he consolidates his domestic power base. There will be difficulties ahead, however, and as both leaders look to reassert their country's position on the world stage, we will need a cool head in the White House to ensure that matters do not get out of hand. It may indeed be the year when we learn the true value of President Obama.

It is against this backdrop that the world economy will continue to operate and I will save the 2017 economic outlook for another post. What 2016 has taught us, however, is that the shape of the risk distribution has changed. Outcomes which we thought implausible are manifestly not. The good news is that there is profit in uncertainty. Apparently, the bookmakers’ joint odds that the UK would vote for Brexit; that Trump would be elected US president and that Leicester City would win the English Premier League were 4.5 million to one. Paddy Power is offering odds of 33/1 that the existence of alien life will be proven in 2017 (2016 odds are quoted at 80/1, so you have less than a day to place your bets). Meanwhile, Fergus Simpson, a mathematician at the University of Barcelona, reckons that there is a 500/1 chance of a cataclysmic event wiping out human existence in any given year during the 21st century (Don’t believe it? Go here).

Above everything else, however, we have learned not to trust bookmakers odds (a remain victory or a Clinton presidency anyone?) And as Michael Gove so memorably remarked, we have all “had enough of experts” (although only until they are proven right).

It's not only economists who see the obvious

Alan Bennett is best known as a playwright (The History Boys, The Madness of George III) although he is also a prolific screenwriter, actor and author. In addition to all this, he is an inveterate diarist and in his 2015 journal, an edited version of which was published in the London Review of Books (here), he made the following entry: 

“11 September. David Cameron has been in Leeds preaching to businessmen the virtues of what he calls ‘the smart state’. Smart to Mr Cameron seems to mean doing as little as one can get away with and calling it enterprise.“ 

In a recent TV documentary I heard Bennett repeat the comment in his cosy, affable tones which makes it even more devastating. It accurately captures the thrust of fiscal policy over the last six years and is a withering indictment of thirty years of market economics. But before we swallow this soundbite wholesale, we should acknowledge that there is a genuine discussion to be had about the role of the state in a modern economy. One of the big issues is the size of the safety net that the state should be expected to provide, and the answer will differ according to the prevailing mood. Nonetheless, according to Jonathan Bradshaw of the University of York (here) “the real damage has been done by this present government … The uprating of working age benefits by substantially less than inflation since 2010 and cuts made in tax credits has resulted in falling living standards. This was the first time that the real level of the safety net had fallen since Unemployment Assistance began in 1934. 

No one should be in any doubt that life at the bottom is tough, and getting tougher. Ironically, when the German government introduced a series of welfare reforms in the first half of the last decade, which cut benefits in order to force people back into the labour force, it was lauded for the boldness of its move. Other European countries are being urged to follow suit – notably France and Italy. And with Germany today held up as a paragon of economic virtue, there does appear to be some merit in a policy of welfare reform. Indeed, the UK reforms of the 1980s are credited with kickstarting the economic recovery of the Thatcher era. But like many economic policies, there are diminishing returns to more of the same, and I wonder whether in the UK we have hit the limits of what people are prepared to tolerate.

But it is not only those at the bottom who are being squeezed: middle income groups across the industrialised world are not faring well either. According to the Institute for Fiscal Studies, real average wages in the UK in 2021 are expected to be lower than they were in 2008 and it concludes that “we have certainly not seen a period remotely like it in the last 70 years.” At issue is what the government can and should be expected to do about it. In an economy where the government’s direct role has been reduced as many activities have been privatised, it can only play a limited role by setting the framework. After all, it is no longer in a position to set wages for large parts of the workforce.

Bennett’s criticisms go deeper, however. The UK government under David Cameron adopted a laissez faire approach to many economic problems which frankly failed to deliver the desired results. Bennett was undoubtedly referring to Cameron’s flagship Big Society project which was designed to give more power to local communities by encouraging a transfer of power from central to local government. It was a nice idea in theory, but it was the wrong policy at the wrong time. Faced with the aftermath of the biggest economic crisis since the 1930s, most economists would argue that more government rather than less are what is required.

Moreover, with around 60% of UK local government spending being funded by central government, it was always a pipedream to assume that more local decision making was ever going to work without more local control over budgets. With central government funding for local activities such as the police having been cut by 22% in real terms between FY 2010-11 and 2015-16 (source: National Audit Office) Bennett’s criticisms start to hit home. It is indeed hard to avoid the suspicion that government policy in recent years has focused on shrinking the size of the state whilst telling the electorate that it is promoting enterprise or increasing choice. And I still hold the view that at least part of the reason for the Brexit vote was directed at the failure of government to manage the economy in ways that benefited large parts of the electorate.

As we look ahead to 2017, it would be nice to think that the UK government will spend less time fretting about cutting the deficit and more about how to use fiscal policy as an instrument to promote growth. But from what we have heard so far, which amount to words rather than actions, I have to say that I am not confident.

All I want for Christmas ...

… is a Ferrari 250 GTO. Admittedly it’s not a modest request – the last recorded auction price of this widely revered classic was a cool $38 million and there is one on the market today for a reported asking price of $56 million (here). When new in 1962, they cost $18,500. To put this into perspective, I have converted this using prevailing exchange rates into sterling values in order to compare with other so-called safe asset values such as housing.

According to data from the Nationwide Building Society, the average price of a UK house in 1962 was £2,600 – around one-third of the price of a Ferrari 250. By 1965, when the 250 was auctioned for the first time, the selling price was 25% of the original list price and it could be purchased for 40% of the average UK house price. Up until the early 1970s, the selling prices of the 250 were never higher than average house prices but from the middle of the decade, prices began to ramp up hugely (see chart). 

The first $1 million sale occurred in 1986 and by the late-1980s – the peak of the bubble in classic car prices – the 250 GTO was selling for prices in excess of $10 million which was 125 times the price of an average UK house. Following the early-1990s crash, which saw Ferraris changing hands for a mere $3.6 million (42 times house prices), prices began to edge up again but it took until 2010 for prices to exceed the previous 1990 peak. It is notable that the ratio of Ferrari prices to house prices has already gone above the 1990 level and if the current prospective seller realises their expectations, the buyer could in theory buy more than 200 houses for the same money.

If someone had bought this wonder of engineering new in 1962 and sold it for $38 million in 2013, they would have realised an annual average return of 16%. Had they waited until 1965 to buy at auction, they would have realised a gain of 21%. It’s a much better rate of return than housing, where prices have risen at an average rate of 8.5% since the early 1960s. However, the FTSE All-Shares index has posted an average return of 13% since 1962. Investors would not, of course, have realised such stellar gains as they would have had to adjust their equity portfolio holdings in order to replicate the index which would have resulted in transactions costs which eat into returns.

On balance, therefore, the Ferrari 250 looks like a great investment compared to other forms of asset. But we are not all fortunate enough to have the wherewithal to afford such an outlay. Most classic car enthusiasts have to start much more modestly and prices have risen much more slowly over a longer horizon. In any case, the market is highly segregated with top brands showing significant gains whereas at the lower end of the spectrum price inflation has been less dramatic. However, the Historic Automobile Group International (HAGI) index suggests that over the last five years, classic car prices have risen by between 25% and 30% per year. I would attribute this at least in part to the low rates of return on financial assets which have forced investors to look at alternative investment products. It may be a market which, when it pops, does so with a vengeance.

Unfortunately for me, I do not own a classic car, so I am speaking from observational rather than practical experience. But as a reader of classic car magazines in my youth, I used to scan the adverts to check what I may one day have been able to afford. In the late-1970s I recall seeing an ad for an Aston Martin DB5 which was described as being in need of some loving care. I subsequently came to realise that meant a total wreck which was probably held together by rust. However, it was on sale for a mere £750 (no – I have not missed a zero) which was cheap even by the standards of 1978. I barely had 75p to rub together in those days so it was a little out of my league. But a DB5 in even fair condition is today valued at £438,000 with a top notch model able to fetch £958,000. Allowing for £10,000 of maintenance to bring it up to concourse standard, that would have provided a cool annual return of 12.5% over the last 38 years.

They do say that this is the season when dreams come true, so if you’re listening Santa … Merry Christmas!

Called to account

Whilst most of us are thinking about winding down for Christmas, the UK Treasury Select Committee today decided to play Scrooge by announcing that it will hold an inquiry in 2017 into the effectiveness and impact of post-2008 monetary policy in the UK. If the timing was a surprise, then the idea of opening up the conduct of monetary policy to this kind of scrutiny certainly is. Since the BoE was granted operational independence almost twenty years ago, I cannot recall an inquiry into monetary policy on these terms.

The TSC wishes to look more closely at three aspects of policy: (i) The effectiveness of monetary policy in meeting the inflation target; (ii) The unintended consequences of policy and (iii) monetary policy prospects. All of these topics have been covered on this blog at some time or another and the issues at stake here are not simply confined to the UK. The BIS has long pointed out that monetary policy has been kept too lax for too long, and that it indeed has pushed up financial asset prices with at best a questionable impact on the real economy. Of course, the issue is not whether so-called unconventional monetary policy was the right thing to do in 2009: It is whether it is still appropriate in 2016. Indeed, the BIS titled Chapter 1 of its 2015 Annual Report “Is the unthinkable becoming routine?”

I must confess to a couple of contradictory views on the question of whether monetary policy should become politicised in this way. On the one hand, although the BoE does have operational independence it is only right that it is subject to parliamentary account. After all, the decisions which it takes affect those to whom parliament is accountable: the electorate. Yet the BoE Governor and members of the MPC appear before the TSC at least four times per year, and in the course of 2016 Mark Carney has had to endure additional sessions where he has been forced to defend at length the BoE’s conduct both before and after the EU referendum. On the other hand, it is surely no coincidence that the pressure on the BoE has mounted after it in effect backed the losing side in the Brexit debate. I wrote before the EU referendum that in the event of a vote for Brexit “Mr Carney’s position will become extremely uncomfortable given the strained relationships between himself and many Eurosceptic MPs, some of whom sit on the Treasury Select Committee to which he is accountable.”

TSC Chairman Andrew Tyrie also pointed out that “the BoE has been given huge powers but that comes with equally large responsibilities” and in exchange for BoE autonomy, the governor should stick “closely to his statutory objectives.” This follows interventions by the BoE on issues such as the Scottish referendum (although senior civil servants at the Treasury were equally culpable for opining on that issue), climate change, inequality and pensions. The question of whether BoE officials – of which the governor is the most high profile – should be given the freedom to discuss other areas outside their direct remit is contentious. The likes of Tony Yates, professor of economics at Birmingham University and a long-established blogger, has often made the point that the governor should tread carefully. As he wrote earlier this month (here) “reflecting on how to respond to [the risks of social dysfunction] is just not a job the Bank has been mandated to carry out. At least not in public.”

This is fair comment. But as I have long argued, governments are not exactly rushing to fill the gap with policy prescriptions of their own and there is a role for policy heavyweights to speak out. After all the ECB has been doing it for years, and Alan Greenspan was never short of an opinion on policy matters outside the monetary sphere. In any case, many of these issues – notably fiscal policy – do impact elsewhere because they have a bearing on the appropriate monetary policy stance. But it is hard to avoid the suspicion that the decision to scrutinise the BoE’s policy remit is at least in part a response to Carney’s speech earlier this month, in which he called for a greater contribution from fiscal and structural policy to help support growth (here).

Two final thoughts: Given the limited resources available and a pressing time constraint, surely it would make more sense to focus on the policy response to Brexit in 2017 rather than waste energy on this issue. And second, by piling ever more scrutiny on monetary policymakers, the BoE’s policy independence will, at the margin, be eroded. After all, who is going to want to take unpopular decisions if they are going to be put under the microscope at every turn? Like a Facebook relationship status, monetary policy decision-making might be about to become very complicated.

Globalisation: The good and the bad

Around fifteen years ago I was asked by the late Ulric Spencer to review a book for the Society of Business Economists  journal. The book in question was entitled “Localization:A Global Manifesto” by Colin Hines, a former head of economics at Greenpeace. I am rather afraid to say that when I first read the book in 2001, I did not particularly enjoy it and summed it up thus: “ultimately, it is difficult to escape the feeling that the book is a diatribe against the evils of capitalism.” But in the spirit of intellectual flexibility based on empirical observation, I may have been too hasty in my dismissal of some of Hines’ observations.

The basic premise of the book is that the global economic order “must reduce inequality, improve the basic provision of needs and adequately protect the environment.” There is nothing wrong with that, of course, but Hines’ proposed solution is a process of localisation in which policy actively discriminates in favour of the local. It is essentially the polar opposite of globalisation and can (in his view) be brought about by imposing restrictions on global capital flows and using the tax system to discriminate in favour of local interests.

I still think that his economic analysis is naïve and that it is essentially a late-twentieth century first world view of global problems. Nor am I sure that many people in less developed countries would thank Hines: After all, World Bank data suggest that poverty rates (defined as those living on less than $1.90 per day) have fallen from 42% of the world population in 1981 to below 11% by 2013. It is notable, too, that the book was written before China became the global powerhouse which it is today. Arguably, China has used elements of this localisation strategy to benefit the local economy. For example, many of the mighty western multinationals which Hines criticises have been forced to transfer their technology to local Chinese partners in order to be able to conduct business in the Middle Kingdom. Indeed, China has perhaps conducted the biggest poverty reduction policy of all time precisely thanks to globalisation, which has boosted incomes based on exports.

But where Hines’s views may carry more weight is in the process he described which might lead to a pushback against globalisation. In his words, “global deflation is being driven by relocation to cheaper labour countries, automation and public spending cuts.” This in turn results in significant under-utilisation of labour resources in western economies. He could well have foreshadowed the process which has led to the upsurge in anti-establishment political movements in recent years. There is more than an echo of Donald Trump in his assessment that the rolling back of the state has led to a vacuum which has been filled by multinational corporations, which have usurped government’s role in many areas of policymaking.

Part of the Brexit campaign’s appeal was to idealise a version of Britain as a powerhouse of world output, which was wiped out by government’s willingness to sell out the UK’s interests to the EU. I have a different take on it: The anger manifest during the Brexit campaign was partly the result of the failure by successive governments to promote local interests, at a time when the threat posed by globalisation did indeed mean that a lot of British jobs were exported to lower cost locations (a view echoed in the US election campaign). This was given full expression in the immigration debate. But as Beatrice Weder di Mauro points out (here), German immigration numbers are roughly similar to those of the UK. Yet the degree of anger in Germany towards the EU is a lot lower than in the UK. You might conclude from this that the real problem in the UK is not so much the EU, or immigration, but general dissatisfaction with the economic status quo - a view which is increasingly the consensus.

But although Hines appears to have correctly identified the process triggering the backlash, this does not mean that his solutions are necessarily the right ones. Localisation essentially places limits on trade but all economists would agree that trade does lead to higher living standards, although as BoE Governor Carney noted recently, “the benefits from trade are unequally spread across individuals and time.” Hines may be wrong to simply dismiss “the flawed theory of comparative advantage” but he is right in that much greater emphasis must be placed on the negative consequences. The events of 2016 should act as a wakeup call for western governments to look more closely at their policy prescriptions. This does not mean that protectionism is the answer, but it does mean a rethink of a policy which allows markets to provide unfettered solutions may be in order.

Fail to prepare and prepare to fail

I was heartened this week to read the article in The Times by veteran (I hope he will forgive me for saying so) commentator David Smith in which he defended the role of economic forecasters (here). As he pointed out, forecasts may be wrong – indeed, they often are – but they need to be made. In my view, the trick is to know how to present the central case as one outcome amongst many possible paths, rather than focus solely on the one deemed to be the most likely.

This is a critical point. Indeed, part of the frustration which economists have is that their forecasts are often misrepresented. We know we don’t know precisely what the future holds and we are more than happy to say so – it’s just that quite often, that is not what people want to hear (I refer you to my post from July, here). Frequently, economic forecasts are treated with a reverence which they do not deserve. Indeed, this takes us to the heart of one of the subjects I have written about extensively on this blog: The criticisms levelled at some areas of macroeconomics and the degree of attention which we should pay to the work of economic practitioners. They are two different issues and we must be careful not to mix them up.

Whilst I admire the intellectual content of a lot of academic work, my criticism is that it too much of it is arcane and tries to dress up simple analysis in abstract mathematical terms. Practitioners tend to eschew the overly complicated – not because we don’t understand it (though sometimes that might be the case), but partly because we operate under greater time and resource constraints which mean that our analysis falls short of the standards which academics set for themselves. Most of us do have an understanding of the academic material but choose which parts we can use and which parts we can afford to ignore.

But the criticism of economics by outsiders is different. They argue that because we get things wrong, our forecasts are not to be trusted. And that is why (to quote Michal Gove) "we've all had enough of experts." I thus took great exception to an argument used by the FT journalist Wolfgang Munchau who suggested that "Because of a tendency to exaggerate, macroeconomists are no longer considered experts on the macroeconomy." Let's just stop and think about this. Exaggerate what exactly? The pre-Brexit exaggeration came from politicians (George Osborne in particular) who blew up work by the likes of the Treasury to imply it said something it did not. The analysis said that UK output would be anywhere between 4% and 7.5% below that which would otherwise result if we stayed in the EU, over a 15 year horizon. That is a significant welfare loss, but it probably means that the UK would grow at around the same rate as the euro zone rather than what we have experienced here in recent years.

The press is not immune from the tendency to exaggerate. Economists are routinely described as "experts" and forecasts treated with undue reverence – until they turn out to be wrong and are dismissed with Gove-like contempt. Indeed, this term "expert" appears to have a recent provenance and I don't remember being described as such until relatively recently. As a case in point, consider this quote from The Observer suggesting that "Ongoing uncertainty over the manner of the UK’s departure from the EU is likely to weigh down the property market in 2017, say experts, who predict little or no growth in prices amid a slowdown in sales." (here). It is more accurate to say that those who work in the property industry have given an educated guess, based on their experience and knowledge, of what they expect to happen. It’s not as sexy as being an expert but it’s closer to the truth.

Whilst I have done my fair share of forecasting over the years – some of which was accurate, a lot of which was not – we have to recognise that economics is not a predictive discipline. Economists have no better idea than the next person what will happen next week or next year. But what we can do is put issues into context, based on past experience, and we try to offer an evidence-based view of what might happen in future. That does not guarantee we will be right. But as director of the NIESR, Jagjit Chadha, has pointed out “It is quite obvious that we cannot know the future. But it is equally obvious that we cannot afford not to think and plan for the future.” In other words, fail to prepare and prepare to fail.