The Predictioneer’s Game: Using the Logic of Brazen Self-Interest to See and Shape the Future

by Bruce Bueno De Mesquita

  FIG. 11.2. The Withering Will to Regulate Greenhouse Gases

  The most likely value—the heavy solid line—reflects our best estimate of what the big players might broadly agree to if the global warming debate continues without any significant new discoveries in its favor or against it. It tells us two stories. First, the rhetoric of the next twenty or thirty years endorses tougher standards than those proposed—and mostly ignored—at Kyoto in 1997. We know this because the predicted value through 2025 is above 50 on the scale. That’s the green part of the story. Second, support for tougher regulations falls almost relentlessly as the world closes in on 2050—a crucial date in the global warming debate. When we get to 2050, the mandatory standard being acted on is well below that set at Kyoto. By about 2070 it is down to 30, representing a significant weakening in standards. By 2100 it is closing in on 20 to 25. There’s no regulatory green light left in the story by its end.

  Now let’s probe the details a bit. The figure shows us that there are some considerably more optimistic scenarios and also some considerably more pessimistic views that fall outside the 95 percent confidence interval. The most optimistic and pessimistic scenarios are depicted by the dotted lines at the top and bottom of the figure. The most optimistic scenario predicts no rollback in emission controls. It never dips below 50 on the scale. In fact, most of the time in this scenario the predicted level of greenhouse gas reduction hovers around 60, implying a 10 percent or so tougher standard than was agreed to in Kyoto. The pro-control faction in the United States is the driving force behind this optimistic perspective. Their salience rises from its initial level of 70 and remains remarkably high, hovering around 100. Because the issue becomes so salient to them, this U.S. group’s power (resources multiplied by salience) comes to dominate debate. Although their inclination to be tough might not be enough to satisfy diehard greens, keeping this group (mostly liberal Democrats) highly engaged is the best hope for tougher standards.

  Only about 10 percent of the scenarios, however, look optimistic enough to anticipate even holding the line at the standard set in the Kyoto protocol. In contrast, there are dozens of scenarios in which the standard falls close to 0, indicating abandonment of the effort to regulate greenhouse gases. Typically in these scenarios, some mix of Brazil’s, India’s, and China’s salience rises while the salience of the pro-control faction in the United States and in the European Union drops well below their opening stance. They just seem to lose interest in greenhouse gas regulations. That decline raises its ugly head especially during global economic slowdowns, so global economic patterns are critical for us to watch as they can guide our choice of the scenarios that we should pay the most attention to. Without commitment to change by the European Union and the United States, it becomes much easier for the key developing economies to prevail with the support and even encouragement of the anticontrol American faction (mostly conservative Republicans).

  Since many of my twenty-, thirty-, and even forty-year-old readers will be around in 2050, I hope you will remember to take your dusty copy of this book off the shelf then and compare the greenhouse gas predictions to the reality with which you are then living. Perhaps you’ll even think to write to my children, or their children, just to say whether I got it right or wrong.

  So far, there is little basis for believing greenhouse gases will be regulated away. Just in case you’re still a believer in a Kyoto-style regulatory regime, but one with teeth, figure 11.3 zooms in on the biggest of the big players, at least the biggest for now: the European Union, the two U.S. factions, China, and India. Americans who worry about global warming, like their European Union brethren, remain committed through about 2030 or 2040 to tougher standards than were announced in Kyoto. But after that, they join forces with those who put economic growth ahead of regulating carbon dioxide and other emissions. We’ll see shortly why that may not be so bad. The voice that dominates debate after 2040 or so is the voice of Americans who today are not convinced global warming is for real. The Chinese and the Indians support that American perspective, in the process convincing the other big players to adopt even weaker standards than those that were not enforced after Kyoto. Of course, there is little reason to think that these standards will be enforced either. I took a look at an enforcement issue, and believe me, it is not a pretty picture. No one among the real decision makers remains in favor of putting real teeth behind global climate change standards.

  All of this may be leaving you rather depressed, but perhaps it shouldn’t. The likely solution to global warming lies in the competitive technology game that global warming itself helps along; it doesn’t depend on the regulatory schemes that are so popular among the world’s nations. These schemes, well-intentioned though they are, are also predictably vacuous. They are exercises in what game theorists call cheap talk. Promises are easily made but not easily enforced. Just look at the record of the signatories to the Kyoto Protocol.

  FIG. 11.3. What Will the Biggest Polluters Do About Greenhouse Gas Emissions?

  Although the Kyoto Protocol was agreed to in December 1997, it did not take effect until February 2005. That is rather a long time for moving from agreement to presumed action on a matter of long-term global survival. Of the 175 countries, including 35 developed economies, that ratified the agreement, 137 don’t have to do anything except monitor and report on their greenhouse emissions. Counted among those 137 are China, India, and Brazil. With their growing economies and their large populations, these countries are among the world’s great greenhouse gas emitters. They won the battle in the negotiations that led to the Kyoto Protocol. They preserved their right to continue to pollute with no punishment for failing to do otherwise. That’s what cheap talk is all about. How about Japan, one of the world’s big economies that signed on to Kyoto? Remember, Japan’s target is a 6 percent reduction from its 1990 emissions. The Japanese government has stated that it cannot meet its emission reduction target. Britain, while making progress on some dimensions, seems incapable of meeting its pledged reduction in carbon dioxide emissions from its 1990 level by 2010. The picture isn’t pretty.

  To be sure, several European Union states seem to be on track, and Russia does too, but then outside the oil sector the Russian economy has not done that well, and the Russians are only required not to increase emissions. One sure way to reduce carbon dioxide emissions is to have the economy slow down. Of course, that raises difficult political problems because people tend to vote against parties that produce poor economic performance. That could be a problem in the European Union. It’s not likely to be an issue in Russia, where democracy seems to be a victim of increased oil prices. (A global economic crash, however, will bring the price of oil down, and that could jeopardize Russia’s march back to autocracy.)

  Anyway, what all of this amounts to is a record of cheap promises. It is easy to get governments to sign on to deals that have no teeth, no clear way to keep track of violators and to punish them. Kyoto relies heavily on self-reporting, self-policing, and goodwill. That’s no way to make a global arrangement that gets its signatories to make the sacrifices needed to reduce greenhouse gas emissions.

  If I sound downbeat, I am sorry. Actually, I am most optimistic for the future. My optimism, however, is despite—yup, despite—agreements like the ones struck in Bali or Kyoto or Copenhagen. These will be forgotten in the twinkling of an eye. They will hardly make a dent in global warming; they could even hurt by delaying serious changes. Roadmaps like the one set out at Bali make us feel good about ourselves because we did something. We looked out for future generations, we promised to do good—or did we? Unlike the pope and Holy Roman Emperor who signed on to Worms, universal schemes do not put big change into motion. Their all-inclusiveness ensures that they reflect the concerns of the lowest, not the highest, common denominator.

  Deals like Bali and Kyoto include just about every country in the world. Such agreements suffer from the same wrong incentives and weak commitments as Arthur Andersen’s man
agement did in auditing Enron. To get everyone to agree to something potentially costly, the something they actually agree to must be neither very demanding nor very costly. If it is, many will refuse to join because for them the costs are greater than the benefits, or else they will join while free-riding on the costs paid by a few who were willing to bear them. That is akin to the tragedy of the commons. We all promise to protect what we hold in common—such as the earth—and then some of us cheat on the sly to enrich ourselves, figuring our little bit of cheating doesn’t do any real harm. (Remember, defecting is the dominant strategy in the prisoner’s dilemma.)

  To get people to sign a universal agreement and not cheat, the deal must not ask them to change their behavior much from whatever they are already doing, whether that is cleaning up their neighborhood or making it dirtier. It is a race to the bottom, to the lowest common denominator. More demanding agreements weed out prospective members or encourage lies. Kyoto’s demands weeded out the United States, ensuring that it could not succeed. Maybe that is what those who signed on—or at least some of them—were hoping for. They can look good and then not deliver, because after all it wouldn’t be fair for them to cut back when the biggest polluter, the USA, does not.

  When an agreement is demanding, lots of signatories cheat; when it isn’t demanding, there is lots of compliance with what little is asked for, but then there is also little if any beneficial effect. Sacrificing self-interest for the greater good just doesn’t happen very often. Governments don’t throw themselves on hand grenades.4

  It really isn’t easy being green, just as Kermit the Frog has been telling us for years. Who will monitor green cheaters? The answer: interest groups, not governments; and interest groups are rarely a match for governments. Who will punish the cheaters? The answer: practically no one. The cheaters-to-be were among the rule makers when they agreed to the universal protocol. Cheating is an equilibrium strategy for many polluters, a strategy backed by the good faith and credit of their governments. Why will governments back cheaters? The answer: incentives, incentives, incentives!

  Who has what incentives? There is a natural division between the rich countries whose prosperity does not depend so much on toasting our planet and the poor countries who really have no affordable alternative (yet) to fossil fuels and carbon emissions. They have an incentive to do whatever it takes to improve the quality of life of the people they govern.

  The rich have an incentive to encourage the fast-growing poor to be greener, but the fast-growing poor have little incentive to listen as long as they are still poor. As the Indian government is fond of noting, sure, they are growing rapidly in income and in carbon dioxide emissions, but they are still a pale shadow of what rich countries like the United States have emitted over the centuries when they were going from poor to rich.

  If the poor listen to the rich they could be in big political trouble. And when the fast-growing poor surpass the rich, the tables will turn. China, India, Brazil, and Mexico will then cry out for environmental change because that will protect their future advantaged position, while the relatively poor of that day, one or two or three hundred years from now, will resist policies that hinder their efforts to climb to the top. The rich will even fight wars to keep the rising poor from getting so rich that they threaten the old political order. (The rising poor will win those wars, by the way.)

  There is also a natural division between politicians whose constituents care about the planet more than they care about their short-term quality of life—those are few and far between—and politicians whose constituents say they care about the planet but in reality often vote growth, not green. If you doubt it, take a look at the election record of green parties around the democratic world. Moreover, who will endure the political and economic costs when poor countries trot out starving children—children who would not be starving if their families could just keep on burning cow dung! We are quicker to be softhearted than we are to be green, and really, is that so bad?

  So how might we solve global warming and make the world in five hundred years look attractive to our future selves? We twenty-first-century folk know of well over a hundred chemical elements and a long list of forces of nature. In Christopher Columbus’s time, people pretty much only knew rain, wind, fire, and earth. They also knew hardly anything about exploiting rain, wind, and fire, but we sure do, and surely we will know more in the future. Rain, wind, and fire—they can and will solve global warming for future generations. I interpret the figures above to suggest that the reason mandatory emission standards will not be so high in 2050 is because few will care to fight that fight. It won’t matter. New wind, rain, and solar technologies will be solving the problem for us.

  Climate change due to global warming will add to our supply of rain, wind, and fire, and if it raises the oceans, kicks up fierce storms, and bathes us in massive quantities of BTUs, then it also adds to our urge to exploit these ancient forces just as their increased power makes us worry more. As climate change would generate more of these sources of energy, it would also create a beautiful synergy which would in turn prevent global disaster. How could this be?

  There is an equilibrium at which enough global warming—a very modest amount more than we may already have, probably enough to be here in fifty to a hundred years (as suggested by the game’s analysis)—will create enough additional sunshine in cold places, enough additional rain in dry places, enough additional wind in still places, and, most important, enough additional incentives for humankind that windmills, solar panels, hydroelectricity and as yet undiscovered technologies will be the good, cheap, evenly distributed, and clean mechanisms to replace the fossil fuels we use today. Global warming, in other words, induces a self-solving dominant strategy in which everyone elects some mix of wind, rain, and fire technologies (and maybe even some fossil fuels in moderation) precisely because the abundance of these forces, and the attention drawn to them, will make them affordable solutions to arrest further warming—long before we all roast, drown, or are blown beyond the moon, beyond the stars, and all the way to Oz.

  I am optimistic for the long future. We have already warmed enough for there to be all kinds of interesting research going on into using wind and rain and solar fire. Already there are serious discussions of solar panels and cosmic ray catchers in space and more and more windmill farms will sprout up on earth. Today such pursuits take more sacrifice than most people seem willing to make. Tomorrow that might not be true, and at that point, I doubt it’ll be too late.

  And, looking out five hundred years, we’ll probably have figured out how to beam ourselves to distant planets where we can start all over, warming our solar system, our galaxy, and beyond with abandon.

  Remember, we’re looking out for numero uno.

  Acknowledgments

  Every author happily accumulates indebtedness. This is certainly true for me. I have been doing political forecasting and engineering for nearly thirty years cloaked in academic obscurity. Three people have been instrumental in bringing attention to my research beyond the world of political science. Michael Lerner wrote a cover story on my predictioneering for Good magazine. Thanks to that article, Eric Lupfer, my literary agent at the William Morris Agency, suggested that I write a book on the subject. Without Michael’s article and without Eric’s encouragement it would never have occurred to me that people might find this work of interest. Jonathan Jao, my editor at Random House, then turned Eric’s idea and my pages into this book. I am deeply grateful to each of them for inspiring me to do this. Eric deserves additional thanks for being much more than a literary agent. He worked tirelessly at editing, rearranging, and prodding to make this a better book. I am happy to count him as my friend as well as my business associate.

  My family, friends, colleagues, and students have also contributed mightily to this effort. My wife, Arlene, has given me not only the benefit of her critique of sections of this book, but her love and support for all that I do during our more than forty years t
ogether. My daughter Erin and her husband, Jason, two French horn players, not only make great music together but bring great harmony to my life. My son, Ethan, a much better applied game theorist and professor than I can ever hope to be, and his wife, Rebecca, a rabbi and an educator, add further to the harmony of my life. My daughter Gwen and her husband, Adam, two of the most fashionable and business-savvy people I know, add harmony while trying desperately—and hopelessly—to improve my sartorial splendor. They have all given me good ideas and honest feedback as this book took shape. Indeed, the title originated in a brainstorming session with Adam and Gwen, herself a terrific writer. I also owe special thanks to my sisters Mireille and Judy, two great teachers and creative spirits.

  Martin Feinberg, Sam Gubins, Mary Jackman, Robert Jackman, Russell Roberts, Joseph Sherman, and Thomas Wasow discussed the ideas in this book with me and have given me the benefit of their insight and their friendship for many years. Equally, I have benefited from my friends and co-authors George Downs, James Morrow, Randolph Siverson, and Alastair Smith, who were my partners in developing some of the ideas that shape this book. Likewise, my friend and business partner, Harry Roundell, has been front and center in the analysis of many of the cases reported here and has been a source of deep and enduring support. My spring 2008 students—James Henry Ahrens, Jessica Carrano, Thomas DiLillo, Emily Leveille, Christopher Lotz, Kathryn McNish, Christian Moree, Deborah Oh, Katherine Elaine Otto, Silpa Ramineni, David Roberts, Andrea Schiferl, Jae-Hyong Shim, Jennifer Ann Thompson, Michael Vanunu, Stefan Villani, Paloma White, Natalie Wilson, Stefanie Woodburn, and Angela Zhu—and my spring 2009 students—Daniel Barker, Alexandra Bear, Katherine Cheng, Nour El-Dajani, Natalie Engdahl, Sanishya Fernando, Emily Font, Michal Harari, Andrew Hearst, Ashley Helsing, Tipper Llaguno, Veronica Mazariegos, Eric Min, Linda Moon, Shaina Negron, David Schemitsch, Kelly Siegel, Milan Sundaresan, Kenneth Villa, and Yang-Yang Zhou—served as willing guinea pigs who helped shape the chapter “Dare to Be Embarrassed!” All are innocent of responsibility for the remaining deficiencies in this book and each certainly helped eliminate many.