The “Chartball” statistics in The Wall Street Journal (page since removed) are a new visualization covering the Soccer World Cup. One that reminds me instantly of one of the biggest fallacies in our economic theories and the flaws in the remedies we deploy to correct their undesired outcome.
Heavy reliance on data leads to the systematic confounding of consequence and cause, and thus in the words of Nietzsche, to grave manmade depravity of reason—no need to be an economist to understand how.
Data is hindsight
The statistics offered by The Wall Street Journal display a timeline of each team’s shots and goals, touches, passes, and total possession time. Different from the many statistics we rake up daily for American-borne sports like baseball, basketball, and others. With sports analysts propped up in importance and invited to take center stage in the media, “entertaining” the public by making wild predictions based on their unique interpretation of such a vast amount of consequential data.
The danger of confounding consequences with cause becomes immediately clear from the chart capturing the World Cup soccer game between The Netherlands (yes, I am biased) and Costa Rica. Let me explain.
Without looking at the outcome of the game just yet, the overwhelming orange presence in the colored chart would lead most of us to suggest The Netherlands should have had a landslide victory over Costa Rica. The ball possession time was in overwhelming favor of The Netherlands throughout the game, equally the shots on goal, touches, and passes.
And yet, The Netherlands left their victory up to chance. The consequential data is not an accurate indicator of success, with a goalkeeper’s intuition defining the outcome in a shoot-out after some hundred-and-twenty minutes of play.
The point is that none of the data, despite its presumed accuracy, supports the thesis The Netherlands was eerily close to losing the game. In the same way, vast amounts of consequential economic data, like (nebulous) GDP, job reports, manufacturing indices, and import/export numbers, form an equally weak prognosticator of the outcome of our economy.
The saying goes: with statistics, you can prove anything you are biased toward. I co-opted and rephrased its meaning as no extrapolation of hindsight leads to a reliable prognostication of meaningful foresight.
It is doubtful that an identical performance of shots on goal, passes, touches, and possession time would lead to the same outcome at any other time in any other soccer game. In the same way, the identical performance of economic metrics from our high-flying past is unlikely to lead to a similar performance of our economy at any other time.
Change is not an option
We must steer clear of consequential economics. Not just because the outcome, to achieve the same metrics, leads to the depravity of reason, but more importantly, because the result itself is unacceptable.
No society should be proud of being perceived as the most powerful nation when 25% of its children in more than one state do not know where their next meal will come from, a pitiful sign of admission we cannot reinvigorate our human capital. We should be embarrassed every significant financial institution has been accused and convicted of fraudulent behavior that damages the trust in finance eleven times the size of production.
The world is waiting for us to reinvent ourselves, not for us to fool it with more consequential change sold as reform. But to truly reform our economy, we need to rely less on consequential data that leads us back down the same old rabbit hole. We must develop the foresight to rebuild our economy, not guided by numbers, but on ways and rules by which we most efficiently interoperate as human beings and establish a healthy equilibrium with nature.
Change is not an option. We must lead the world to a better place. We must detach from hindsight steeped in statistical analysis, held firm by the populism of oligarchic control, desperately holding on to a fabricated consequential past. And instead, develop the foresight of a world we envision in which we do good to all of humanity.
Refrain from expecting that change from our local government, with a dismal approval rating of over 15% of the U.S. population. Expect it to come from within ourselves, from bright-eyed people fed-up with our outdated economic religion and the nerve to make change happen.