Wednesday, January 20, 2010

Monday Morning Quarterbacks

Many news stories simply report the facts; the better ones put the facts in the context and explore their likely impact.

Then there are stories that explain "why."

I have a simple assessment for these explanation stories that saves me a lot of time. This is it:

"What's new?"

More specifically, is there anything about the "explanation" that wasn't known before the event actually happened? If not, click on.

A classic example is election-night analysis. Even before all the votes are counted, pundits materialize to explain what message the voters were trying to send, and which campaign screwed up.

Unfortunately, most of what they say was just as true the day before. Sure, they now have more precise results, and maybe a geographic breakdown and some exit polls. But most of the commentators' facts were already known to everyone. Somehow the surrounding story seems more profound once it aligns with actual events--and once the arguments for the other side have been conveniently forgotten.

Stories about stocks can also be amusing, or pathetic. It's hard to find any report on a market move that doesn't attribute it to concern about Chinese exports, or some such. When the market is truly uncooperative, analysts resort to saying that it "shrugged off" some really dire economic news. Sorry, guys. If you knew how the market would react, you'd be rich.

Unfortunately, the challenge of explanation applies to the real economy as well. I'm a regular reader of Paul Krugman, who warned a year ago that the stimulus package would likely not generate enough jobs. Sure enough, we now have an unemployment rate that once would have been thought unacceptable. So was Krugman right? Or were the conservatives who said the stimulus just wouldn't work?

The sad fact is we hardly know any better now than we did a year ago. We know what happened, of course. But we still don't know what would have happened if we had done something different. Evaluating such past hypothetical situations requires the same kind of modeling, and relies on the same ideological assumptions, as predictions do. Unsurprisingly, the experts mostly see the past the same way they saw the future.

The same problem may apply to climate change. I don't usually think of the existence of global warming as a political question (as opposed the policy response). In a hundred years, after all, liberals and conservatives will both suffer the same heat and drought and see the same sea level rise, or not. But even then, they probably won't agree on what we did, or didn't do, to get them there. We don't have a duplicate world to do control experiments on.

As Yogi Berra is quoted, "Predictions are hard, especially about the future." Sadly, they are almost as hard about the past.

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