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

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

  Bruce Bueno De Mesquita

  For my grandchildren,

  Nathan, Clara, Abraham, Hannah,

  and those who may be yet to come.

  They will be fine caretakers

  of the future.

  Contents

  Introduction

  1. What Will It Take to Put You in This Car Today?

  2. Game Theory 101

  3. Game Theory 102

  4. Bombs Away

  5. Napkins for Peace: Defining the Question

  6. Engineering the Future

  7. Fast-Forward the Present

  8. How to Predict the Unpredictable

  9. Fun with the Past

  10. Dare to Be Embarrassed!

  11. The Big Sweep: The History of Worms, or Bali High, Bali Low

  Acknowledgments

  Appendices

  Afterword

  Appendix to the Revised Edition

  Notes

  Introduction

  KING LEOPOLD II, remembered today as Belgium’s Builder King, reigned from 1865 to 1909.1 A constitutional monarch who, like many of his contemporaries, longed for the bygone days of absolute power, he was nonetheless an unusually influential and activist king who helped make Belgians free, prosperous, and secure.

  Belgium’s good works during Leopold’s reign are almost uncountable. He oversaw the expansion of political freedom with the adoption of universal adult male suffrage in competitive elections, putting his country on a firm footing to become a modern democracy. On the economic front, he encouraged free-trade policies that guided Belgium to remarkable growth. In little Belgium, coal production, the engine of industry in nineteenth-century Europe, rose to such heights that it almost equaled that of France. Social policy too moved briskly ahead. Primary education became compulsory, and with the 1881 School Law, girls were assured access to secondary education.2 Moreover, Leopold’s policies provided greater protection for women and children than was then the norm in most of Europe. Thanks to legislation passed in 1889, children under twelve could not be put to work, and after they turned twelve their workdays were limited to twelve hours, a radical departure from prevailing policy of the time.

  When the Belgian economy was racked by a major economic crisis in 1873, Leopold helped improve the lot of the poor with pro-labor reforms, including granting workers the right to strike, a right that was still hotly resisted in the United States half a century later. He promoted truly ambitious public works projects, including massive road and railway construction designed to reduce unemployment, promote urbanization, and increase business opportunities. He was way ahead of Franklin Delano Roosevelt and Barack Obama in recognizing how to stimulate employment and economic prosperity by building up infrastructure.

  Leopold was a great reformer at home, a founder of Belgium’s long years of peace and plenty.

  But then there was the Congo.

  Though he never set foot in Africa, Leopold also ruled over the Congo Free State for nearly a quarter of a century (1885-1908). He built his personal wealth in the Congo first by extracting high-priced ivory from the region and then by exploiting the even more lucrative rubber trade that developed there. Unlike in Belgium, there was no chef de cabinet (roughly, prime minister), and no voters among the Congo’s approximately 30 million people to limit what he could do. Because it was his personal property, Leopold was free to exert the absolute rule he could not have at home. His “police,” the Force Publique, became the key to governing the Congo. Their job was to extract wealth for him (and for themselves) by ensuring the vast exportation of rubber to meet world demand. This band of butchers was led by a small number of Europeans who kidnapped and enslaved Congolese as soldiers who were in turn responsible for making sure that rubber quotas were met. Slave labor was the Force Publique’s preferred mode of production, so its soldiers set about enslaving Congolese men, women, and children.

  Leopold’s “police” received low salaries but could earn big commissions by meeting or exceeding their rubber quotas. Unrestricted by any law governing their conduct except, literally, the law of the jungle, and provided with a huge financial incentive through the commission system, these soldiers of sorrow, from the very bottom of the ladder to the very top, used whatever means they saw fit to meet the quotas. The incentives included not only riches for those who succeeded but the severest punishment for those who failed, including beatings and even death. To avoid this fate the police tortured, maimed, and often murdered those below them who threatened (or could be claimed to have threatened) rubber production. Rewarded for killing people allegedly engaged in antigovernment activities and needing to account for every bullet they spent, soldiers quickly took to indiscriminate mutilation of innocent souls as a way to boost their counts and thereby their fees, going so far as to chop off the right hands of women and children to provide evidence of their work on behalf of Leopold’s interests. Perhaps as many as 10 million people were murdered at the hands of the Force Publique in their pursuit of wealth for Leopold and, of course, for themselves.3

  In contrast to Leopold’s progressive policies in Belgium, virtually nothing was invested in improving conditions in the Congo. Roads were built only where they helped move rubber to market. Laws protecting women and children or worker’s right to strike were unheard of. Much as Leopold worried about protecting the security of his Belgian subjects, he worked to undermine the security of his Congolese subjects. Just about the only items exported to the Congo were weapons for the Force Publique, while vast riches flowed back to Europe. Indeed, it was this extraordinary imbalance in trade that eventually led to the revelation in Belgium that Leopold was growing rich through slavery and much worse. In 1908, the evidence of atrocities reached such a level that they could no longer be denied, and Leopold, with great reluctance, surrendered his control over the Congo to the Belgian government. The ministers certainly did not rule it well, but compared to Leopold, they were a significant improvement.

  How could King Leopold II have ruled two places at the same time in such dramatically different manners?

  It’s easy to blame Leopold’s apparent split personality—a progressive in Belgium and a monster in the Congo—on some character flaw or on a diseased mind. It’s also easy to explain away his horrible rule in the Congo as typical racist behavior. These explanations feel good, but they almost certainly cannot describe the big picture. After all, just think about Mobutu Sese Seko, the Congo’s latter-day Leopold, the monster in a leopard-skin hat who ruled Zaire (largely what used to be the Congo Free State and is today the Democratic Republic of Congo) for more than thirty years (1965—97). During that time he bankrupted his country, stole billions of dollars for himself, and murdered hundreds of thousands of Congolese. Surely we cannot blame Mobutu’s murderous rule on racism. Was he crazy? Probably not, and besides, what are the odds that so many allegedly crazy people would rise to and then successfully cling to power for decades despite their awful rule?

  Leopold and Mobutu are far from unusual cases. Even today, the United Nations reports that people caught up in Sierra Leone’s diamond war have had their hands and feet cut off. Similar policies of mutilation, torture, and murder are reported in Zimbabwe and occurred in the genocide in Rwanda. And then we should not forget the Holocaust or, more recently, Cambodia’s Pol Pot, who ordered the murder of millions of Cambodians for such crimes as wearing eyegla
sses (proof that they were educated and therefore probably a threat to the regime). Such monstrous rulers are not a thing of the past. Murder and misery have been mainstays of long-lasting leaders throughout history, a fact that remains as true today as a hundred or a thousand years ago.4

  It’s nice to think that leaders who provide peace and plenty rule for long, happy years, beloved by the people and content to do good for them day and night. But in fact those who want to run a country for a long time are ill advised to go around promoting peace and prosperity. Not that making people well off is inherently bad for leaders; it isn’t. It’s just that promoting corruption and misery is better. That was well understood by Leopold and Mobutu in the Congo, and is clearly understood today by the governments in places like North Korea, Zimbabwe, Turkmenistan, Chad, Syria … sadly, the list goes on.

  It so happens that leaders who are really good at giving their people life, liberty, and happiness are, overwhelmingly, democratically elected and therefore face organized political competition. It also so happens that they are routinely thrown out after only a short time in office.

  It’s true that Leopold ruled Belgium for forty-four years, but he was a constitutional monarch who had to work within the constraints of the democratic system that governed Belgium if he was to remain in power. Yet in looking at modern democratic governments, we see that doing right by the people is no guarantee of political longevity. During Golda Meir’s period as prime minister, Israel enjoyed a 9 percent average annual growth rate. She held office for just four years. Japan’s Eisaku Sato presided over a 9.8 percent growth rate, surviving as prime minister for less than eight years. Perhaps most famously, in 1945, after five years in office and less than two months after Germany’s surrender in World War II, Winston Churchill was tossed out as prime minister of Great Britain and replaced by Clement Attlee, despite having (allowing for slight exaggeration) saved the United Kingdom itself.

  Why, in contrast, do those leaders who make their subjects’ lives miserable typically die in their sleep or live out their retirement years lounging on a luxurious beach after being in office twenty, thirty, or forty or more years? It’s my claim, and it may seem controversial, that kleptocratic leaders are not inherently evil—at least not necessarily so—and that those who do a great job for their people in hopes of reelection are hardly fit for sainthood. They’re all doing the right things if they want to stay in power as long as possible. Leopold, despicable as he was, did what worked best for him in the politically unconstrained environment of the Congo, and he did what worked best for him in the constitutionally limiting environment of Belgium.

  The difference between doing a good job and doing a lousy job is driven by how many people a leader has to keep happy. Why doesn’t every leader allow cronies to loot and steal the way the Force Publique did? Large-scale democratic leaders can’t—they have to reward too many people to make theft and corruption work for them. In other words, the system does not effectively incentivize that strategy. Virtually all long-lasting (read authoritarian) leaders, however, really depend only on a very small number of generals, senior civil servants, and their own families for support. Because they rely on so few people to keep them in power, they can afford to bribe them handsomely. With such big paydays, those cronies aren’t going to risk losing their privileges. They’ll do whatever it takes to keep the boss in power. They will oppress their fellow citizens; they’ll silence a free press and punish protesters. They will torture, maim, and murder to protect the incumbent as long as the incumbent delivers enough goodies to them.

  The rub is that even when crony-dependent leaders want to do good deeds, they dare not pay for them with money promised to their essential supporters. Taking money from their cronies’ pockets is a sure way to get overthrown. Spend too much on helping the people, and the cronies will find someone new to take over the top spot, someone who will pay them reliably instead of “dissipating” money on the masses.5

  Like autocrats, elected officials are held accountable by people who want to know, What have you done for me lately?—except, for elected leaders, there are millions of such potential backers (or detractors, if not made happy), as opposed to hundreds. Democratic leaders have to act as if they care about the masses. Their campaigns are always an arms race in policy ideas: which candidate has (or appears to have) the best ideas about health care, about taxes, about national security, about education, and on and on. When a seemingly fit democratic leader is thrown out of office, it’s generally because his or her opponent is perceived to be just a little bit better—a remarkably positive condition, particularly when the alternatives are considered.

  So the explanation for Leopold the Builder King and Leopold the Monster has begun to fall into place. When rulers need the support of many—as was Leopold’s situation in Belgium—the best way to rule is by creating good policies. When leaders rely only on a few to stay in control—as was the case for Leopold in the Congo—their best bet is to make the few fat and happy, even if that means making everyone else miserable. But let’s take this a step further.

  Leopold, Mobutu Sese Seko, and Golda Meir were all powerful leaders, but (to state a most obvious but important fact) they were all people, too, and no different from the rest of us. Whether in government or business, we all want to keep our jobs, we all seek advantage in the accumulation of wealth or influence, and we all evaluate our self-interest, often ahead of such lofty ideas as the national interest or notions of corporate well-being.

  With this in mind, if we were to turn back the clock, could we not have made some educated predictions that Leopold, the very same man, would behave differently as the head of the Belgian and Congolese states? Could we not have surmised that Mobutu Sese Seko would rule in the fashion that he did? Or that Churchill would lose power when the attention of the British people turned to postwar reconstruction and domestic matters? Or, in a completely different setting, could we see how a corporate partnership’s structure might encourage its members to overlook fraud? And wouldn’t knowing these things ahead of time be of some potential value?

  I believe the answer to all of those questions is yes, which brings me to the very purpose of my work and to the principal claim of this book: that it is possible for us to anticipate actions, to predict the future, and, by looking for ways to change incentives, to engineer the future across a stunning range of considerations that involve human decision making. That’s not to say it’s easy, or that it’s a mere matter of anecdote and reflection—there’s hard science, theory, and some mind-bending arithmetic that come into play—but it is possible, and given what we’ve seen when humans in power run amok, whether in châteaus or boardrooms, it’s preferable to letting the chips fall where they may or to saving our better ideas, regrets, and outrage for when they usually appear—that is, when they’re too late.

  Who am I that you should care what I think about these big questions? And why in the world should you take me seriously as a predictioneer?

  It so happens I’ve been predicting future events for three decades, often in print before the fact, and mostly getting them right. Don’t get me wrong—I’m no soothsayer and I have no patience for crystal ball gazers, astrologers, or even most pundits. In my world, science, not mumbo-jumbo, is the way to anticipate people’s choices and their consequences for altering the future. I use game theory—we’ll talk later about what that means—to do just that for the U.S. government, big corporations, and sometimes ordinary folks too. In fact, I have made hundreds, even thousands of predictions—a great many of them in print, ready to be scrutinized by any naysayer. There is nothing uncanny about my ability to predict. Anyone can learn to use scientific reasoning to do what I do, and I’m going to show you a bit of how to do it right here. But first, let me fill you in a little bit about how I got into the prediction business.

  I’m a political science professor at New York University, where I also run the Alexander Hamilton Center for Political Economy. The Center and all of my cours
es try to teach students how to solve problems with logic and evidence. The idea is to wean them from knee-jerk conclusions based on gut feel, personal opinions, simple linear reasoning, partisan preferences, or ideology. My colleagues at NYU and I are interested in training students to know how to address problems before they go out into the world. We don’t want them shaking things up without much insight into whether they’re helping to make matters better or worse.

  Besides being a professor at NYU, I wear two other hats. I’m a senior fellow at the Hoover Institution at Stanford University. There my job is to think about finding solutions to policy problems. That side of my research is about putting the ideas I teach at NYU to good use by writing op-ed columns, articles, and books, some very technical and some, like this one, designed to spread the word. My third hat is as a partner in a small consuiting company, Mesquita & Roundell, LLC. M&R, as we call it, also uses some of the game theory models I’ve designed to advise people in the national security community and also in the private sector.

  I didn’t set out to wear these three hats. The opportunity initially fell into my lap back in 1979 when an official at the State Department called me to ask my opinion about a government crisis in India. He wanted to know who was likely to be the next prime minister. At the time I was a professor of political science at the University of Rochester—where the application of game theory to political questions originated—and I had written my Ph.D. thesis at the University of Michigan about winning and losing strategies among India’s opposition parties. So the State Department official was asking me to be a pundit, to use my “expert” knowledge to speculate about the next Indian government.

  It happened that I was on a Guggenheim fellowship at the time, working on a book about war. I had just designed a mathematical model for that project, as well as a little computer program to make calculations that were important for solving that model. The computer program provided a way to simulate decision making under stressful circumstances such as sometimes lead to war. It looked at the choices people could make and calculated the probability that they would get what they wanted if they chose one course of action (say, negotiations) or another (like war), weighting the probabilities by an estimate of how much the decision makers valued winning, losing, or intermediate compromise outcomes. Of course, it also recognized that they had to work out how others might respond to the choices they made.