1 00:00:15,410 --> 00:00:22,170 Speaker 1: Pushkin Cautionary Tales is teaming up with the Risky Business 2 00:00:22,210 --> 00:00:26,210 Speaker 1: podcast for a special Q and A collaboration. Hosts Maria 3 00:00:26,290 --> 00:00:30,250 Speaker 1: Konikova and Nate Silver, both journalists who moonlight as high 4 00:00:30,290 --> 00:00:37,250 Speaker 1: stakes poker players, are joining me to answer your questions economics, scammers, robots, 5 00:00:37,570 --> 00:00:41,690 Speaker 1: board games, poker, human instinct, something that sparked your interest 6 00:00:41,730 --> 00:00:44,970 Speaker 1: from either podcast. We are up for any question. Just 7 00:00:45,050 --> 00:00:45,570 Speaker 1: send your. 8 00:00:45,410 --> 00:01:01,250 Speaker 2: Ideas to Tales at pushkin dot fm. 9 00:01:01,330 --> 00:01:05,410 Speaker 1: Late one evening on the twentieth of December nineteen fifty four, 10 00:01:05,970 --> 00:01:08,810 Speaker 1: a small group of people sat together in a living 11 00:01:08,850 --> 00:01:13,210 Speaker 1: room in Oak Park, a suburb of Chicago, waiting for 12 00:01:13,290 --> 00:01:16,290 Speaker 1: the end of the world. They were led by a 13 00:01:16,330 --> 00:01:20,490 Speaker 1: woman named Dorothy Martin, who was a conduit for messages 14 00:01:20,530 --> 00:01:27,210 Speaker 1: from aliens or God, or both. The messages were alarming. 15 00:01:28,010 --> 00:01:31,930 Speaker 1: At midnight, the aliens would land a flying saucer in 16 00:01:31,970 --> 00:01:35,610 Speaker 1: the backyard and convey the true believers to the safety 17 00:01:35,650 --> 00:01:41,930 Speaker 1: of a planet named Clarion. Then at dawn, a cataclysmic 18 00:01:42,050 --> 00:01:48,090 Speaker 1: flood would destroy much of the world. Now, at five 19 00:01:48,210 --> 00:01:52,650 Speaker 1: minutes to midnight, the believers were waiting. Some were disheveled 20 00:01:52,810 --> 00:01:55,890 Speaker 1: since the aliens had demanded they remove all metal from 21 00:01:55,930 --> 00:02:00,170 Speaker 1: their clothing. Bra clips, buttons, even trousers. Zips had been 22 00:02:00,210 --> 00:02:04,650 Speaker 1: hastily slashed away by fumbling hands wielding scissors or razors. 23 00:02:05,450 --> 00:02:08,370 Speaker 1: Some of the group were there out of mere curiosity. 24 00:02:08,770 --> 00:02:13,330 Speaker 1: Others had sacrificed almost everything for this moment. They'd quit 25 00:02:13,410 --> 00:02:16,650 Speaker 1: their jobs, given away their possessions, and said farewell to 26 00:02:16,690 --> 00:02:23,010 Speaker 1: their families. But what distinguishes this particular apocalyptic cult from 27 00:02:23,090 --> 00:02:26,890 Speaker 1: all the others is that a small team of social scientists, 28 00:02:27,290 --> 00:02:31,730 Speaker 1: led by the world renowned psychologist Leon Festinger, had managed 29 00:02:32,010 --> 00:02:38,170 Speaker 1: to infiltrate it. They were there to witness what happened 30 00:02:38,250 --> 00:02:43,130 Speaker 1: at midnight, and in particular, how the group reacted to 31 00:02:43,170 --> 00:02:49,970 Speaker 1: the appearance or possibly the non appearance, of the aliens. 32 00:02:51,290 --> 00:03:21,570 Speaker 1: Gather round, and I'll tell you another cautionary tale. I'll 33 00:03:21,570 --> 00:03:24,970 Speaker 1: tell you all about what happened with Leon Festinger, Dorothy 34 00:03:25,050 --> 00:03:28,690 Speaker 1: Martin and the aliens in due course, but for a moment, 35 00:03:29,090 --> 00:03:33,050 Speaker 1: let's leave them there in Chicago, anxiously waiting for the 36 00:03:33,210 --> 00:03:36,890 Speaker 1: end of days, because I have another story to tell you. 37 00:03:37,370 --> 00:03:40,410 Speaker 1: And it's not a story about crazy cult members, but 38 00:03:40,530 --> 00:03:46,450 Speaker 1: about two economists, Indeed, two of the most celebrated economists 39 00:03:46,650 --> 00:03:50,130 Speaker 1: who ever lived? And what do these economists have to 40 00:03:50,170 --> 00:03:54,450 Speaker 1: do with a UFO cult in nineteen fifties Chicago. It's 41 00:03:54,530 --> 00:03:58,210 Speaker 1: very simple. Just like Dorothy Martin, they tried to see 42 00:03:58,250 --> 00:04:01,410 Speaker 1: into the future, and trying to see into the future 43 00:04:02,170 --> 00:04:06,170 Speaker 1: it's a dangerous business. One of the economists I want 44 00:04:06,170 --> 00:04:08,930 Speaker 1: to tell you about is the great British polymath John 45 00:04:09,130 --> 00:04:11,570 Speaker 1: Maynard Keynes. You may have heard of him. He's a 46 00:04:11,610 --> 00:04:15,570 Speaker 1: colossal figure in economics, overturning the ideas that had gone 47 00:04:15,610 --> 00:04:19,410 Speaker 1: before him and then reshaping the post war economic system. 48 00:04:19,930 --> 00:04:24,890 Speaker 1: Many economists still call themselves Knesians, like him or hate him. 49 00:04:25,050 --> 00:04:29,330 Speaker 1: In economics, you can't get much bigger than John Maynard Keynes, 50 00:04:30,610 --> 00:04:36,170 Speaker 1: except that in his day you could. When Caines first 51 00:04:36,330 --> 00:04:39,690 Speaker 1: strode the world stage, he did so in the shadow 52 00:04:40,050 --> 00:04:43,850 Speaker 1: of another man. In nineteen twenty four, The Wall Street 53 00:04:43,930 --> 00:04:47,450 Speaker 1: Journal tried to describe John Maynard Keynes, this up and 54 00:04:47,490 --> 00:04:51,450 Speaker 1: coming economist. They reached for a comparison that everyone in 55 00:04:51,530 --> 00:04:56,770 Speaker 1: America would have known, Caines said the Journal was England's 56 00:04:56,970 --> 00:05:02,130 Speaker 1: Irving Fisher. And Irving Fisher was the most famous economist 57 00:05:02,410 --> 00:05:06,570 Speaker 1: on the planet. But Irving Fisher wasn't just more famous 58 00:05:06,610 --> 00:05:10,730 Speaker 1: than Kiness. He was brilliant. There's one Nobel Prize winner 59 00:05:10,770 --> 00:05:11,090 Speaker 1: put it. 60 00:05:11,210 --> 00:05:16,130 Speaker 3: Fisia was anywhere from a decade to two generations ahead 61 00:05:16,170 --> 00:05:16,890 Speaker 3: of his time. 62 00:05:17,290 --> 00:05:21,010 Speaker 1: Some would say he was the greatest economist who ever lived. 63 00:05:22,050 --> 00:05:24,930 Speaker 1: But if you're thinking I don't hear much about Irving 64 00:05:25,010 --> 00:05:29,570 Speaker 1: Fisher these days, you're right. He's not the household name 65 00:05:29,610 --> 00:05:32,970 Speaker 1: he was one hundred years ago. If you're wondering why 66 00:05:33,130 --> 00:05:37,970 Speaker 1: his reputation faded while Canes is lived on, that is 67 00:05:37,970 --> 00:05:44,770 Speaker 1: what our cautionary tale is all about. Irving Fisher and 68 00:05:44,890 --> 00:05:48,730 Speaker 1: John Maynard Keynes were very different men in some important ways, 69 00:05:49,290 --> 00:05:51,890 Speaker 1: but they also had a great deal in common. Both 70 00:05:51,890 --> 00:05:55,490 Speaker 1: were stars at their universities, Canes at Cambridge and England, 71 00:05:55,690 --> 00:05:59,890 Speaker 1: Fisher at Yale. They were both physically impressive. Canes was 72 00:05:59,970 --> 00:06:03,610 Speaker 1: thin and very tall, with piercing eyes. Fisher had the 73 00:06:03,650 --> 00:06:07,250 Speaker 1: broad chest of a competitive rower. They were both skilled 74 00:06:07,250 --> 00:06:12,250 Speaker 1: writers charismatic speakers too. After witnessing Canes giving a speech, 75 00:06:12,570 --> 00:06:16,410 Speaker 1: the Canadian diplomat Douglas Lapan was moved to write. 76 00:06:16,370 --> 00:06:20,010 Speaker 4: I am spellbound. This is the most beautiful creature I 77 00:06:20,010 --> 00:06:23,530 Speaker 4: have ever listened to. Does he belong to our species 78 00:06:24,130 --> 00:06:26,010 Speaker 4: or is he from some other order? 79 00:06:27,090 --> 00:06:31,330 Speaker 1: And Fisher and Kanes were also both active investors. They 80 00:06:31,330 --> 00:06:35,530 Speaker 1: weren't just Ivory tower economists, but men who believe that 81 00:06:35,610 --> 00:06:39,730 Speaker 1: their mastery of economics would enable them to make profitable investments. 82 00:06:40,290 --> 00:06:45,210 Speaker 1: That is where their interest in forecasting came in. An 83 00:06:45,250 --> 00:06:48,890 Speaker 1: academic economist might be content to describe and explain the 84 00:06:48,930 --> 00:06:53,130 Speaker 1: economist's past, but to make money, Fisher and Canes would 85 00:06:53,170 --> 00:06:56,770 Speaker 1: have to catch a glimpse of the economy's future. Let's 86 00:06:56,770 --> 00:06:58,730 Speaker 1: meet the young Irving Fisher. 87 00:06:59,650 --> 00:07:02,930 Speaker 5: How much there is I want to do? I always 88 00:07:02,930 --> 00:07:05,330 Speaker 5: feel that I haven't time to accomplish what I wish. 89 00:07:05,730 --> 00:07:08,530 Speaker 5: I want to read much, I want to write a 90 00:07:08,570 --> 00:07:12,770 Speaker 5: great deal. I want to make money. 91 00:07:12,890 --> 00:07:16,730 Speaker 1: He's writing from Yale to an old school friend. Money 92 00:07:17,050 --> 00:07:21,730 Speaker 1: was important to Fisher. His father had died of tuberculosis 93 00:07:22,050 --> 00:07:25,450 Speaker 1: the very week that Irving had arrived at Yale. The 94 00:07:25,530 --> 00:07:28,890 Speaker 1: young man needed to scramble for funds throughout his studies. 95 00:07:29,250 --> 00:07:33,610 Speaker 1: He understood what it was to struggle financially while surrounded 96 00:07:33,650 --> 00:07:37,250 Speaker 1: by wealth. At the age of twenty six, however, Fisher 97 00:07:37,290 --> 00:07:41,050 Speaker 1: found himself with a small fortune at his disposal. He'd 98 00:07:41,050 --> 00:07:45,010 Speaker 1: married a childhood playmate Margaret Hazard, who was the daughter 99 00:07:45,090 --> 00:07:49,170 Speaker 1: of a wealthy industrialist. Irving and Margaret's wedding was sumptuous 100 00:07:49,250 --> 00:07:51,810 Speaker 1: enough to be covered by the New York Times. With 101 00:07:52,130 --> 00:07:57,450 Speaker 1: two thousand invited guests, three ministers, an extravagant lunch, and 102 00:07:57,490 --> 00:08:02,130 Speaker 1: a wedding cake weighing sixty pounds, They commenced a fourteen 103 00:08:02,290 --> 00:08:06,610 Speaker 1: month European honeymoon and returned to a brand new mansion 104 00:08:06,890 --> 00:08:10,210 Speaker 1: in New Haven. It had been built in their absence 105 00:08:10,570 --> 00:08:13,850 Speaker 1: as a wedding present from Margaret's father, and was furnished 106 00:08:13,970 --> 00:08:18,570 Speaker 1: with a library, a music room, and spacious offices. If 107 00:08:18,650 --> 00:08:23,850 Speaker 1: marrying your childhood sweetheart sounds a little too wholesome, I'm 108 00:08:23,850 --> 00:08:27,730 Speaker 1: just getting started. There are three things you need to 109 00:08:27,770 --> 00:08:31,170 Speaker 1: know about Irving Fisher. The first is that he was 110 00:08:31,210 --> 00:08:36,330 Speaker 1: a health fanatic. He abstained from alcohol, tobacco, meat, tea, coffee, 111 00:08:36,370 --> 00:08:41,330 Speaker 1: and chocolate. One dinner guest enjoyed his hospitality while noting 112 00:08:41,370 --> 00:08:42,130 Speaker 1: his quirkiness. 113 00:08:42,490 --> 00:08:46,370 Speaker 6: Well, I ate right through my succession of delicious courses. 114 00:08:47,170 --> 00:08:50,650 Speaker 6: He dined on a vegetable and a raw egg. 115 00:08:52,290 --> 00:08:56,810 Speaker 1: He founded the Life Extension Institute and persuaded William Taft, 116 00:08:56,810 --> 00:09:00,050 Speaker 1: who had just stepped down as president to be its chairman. 117 00:09:00,490 --> 00:09:03,610 Speaker 1: In nineteen fifteen, when he was nearly fifty years old, 118 00:09:03,850 --> 00:09:07,810 Speaker 1: he published a book titled How to Live. How to 119 00:09:07,970 --> 00:09:12,130 Speaker 1: Live Now, that's some real ambition. It was a huge bestseller, 120 00:09:12,370 --> 00:09:16,370 Speaker 1: the freeconomics of its day, and from a modern perspective, 121 00:09:16,970 --> 00:09:17,890 Speaker 1: it's hilarious. 122 00:09:17,970 --> 00:09:22,130 Speaker 5: I advocate a sunbath, common sense must dictate its intensity 123 00:09:22,170 --> 00:09:27,410 Speaker 5: and duration. It is important to practice thorough mastication, chewing 124 00:09:27,410 --> 00:09:30,170 Speaker 5: to the point of natural involuntary swallowing. 125 00:09:30,370 --> 00:09:33,650 Speaker 1: He even adds a discussion of the correct angle between 126 00:09:33,690 --> 00:09:35,250 Speaker 1: the feet while walking. 127 00:09:35,330 --> 00:09:38,650 Speaker 5: About seven or eight degrees of outtying in each foot. 128 00:09:39,090 --> 00:09:43,050 Speaker 1: And there's a short section on eugenics, which really hasn't 129 00:09:43,090 --> 00:09:47,010 Speaker 1: aged well. But while it's easy to laugh, How to 130 00:09:47,090 --> 00:09:49,450 Speaker 1: Live is in many ways as far ahead of its 131 00:09:49,490 --> 00:09:55,290 Speaker 1: time as Fisher's economic analysis, describing exercises preaching mindfulness, and 132 00:09:55,490 --> 00:09:58,210 Speaker 1: at a time when the majority of doctors were smokers, 133 00:09:58,570 --> 00:10:03,610 Speaker 1: correctly warning that tobacco causes cancer. The second thing you 134 00:10:03,650 --> 00:10:05,850 Speaker 1: need to know about Irving was that he believed in 135 00:10:05,890 --> 00:10:08,970 Speaker 1: the power of rational quantified analysis. 136 00:10:09,330 --> 00:10:12,090 Speaker 5: In the modern study of scientific clothing, there is a 137 00:10:12,210 --> 00:10:16,730 Speaker 5: new unit, the cloe. This is a technical unit for 138 00:10:16,770 --> 00:10:19,050 Speaker 5: measuring the warming power of clothing. 139 00:10:19,530 --> 00:10:22,810 Speaker 1: There's also the money. That's the third thing you need 140 00:10:22,850 --> 00:10:26,930 Speaker 1: to know. Irving Fisher was rich, and not just because 141 00:10:26,930 --> 00:10:30,330 Speaker 1: of his wife's inheritance. Making money was a matter of 142 00:10:30,410 --> 00:10:33,570 Speaker 1: pride for Fisher. There were the book royalties from How 143 00:10:33,610 --> 00:10:37,570 Speaker 1: to Live. There were his inventions, most notably a forerunner 144 00:10:37,650 --> 00:10:40,810 Speaker 1: of the rolodex, a way of organizing business cards. He 145 00:10:40,930 --> 00:10:44,610 Speaker 1: sold that invention to a stationary company for six hundred 146 00:10:44,650 --> 00:10:48,690 Speaker 1: and sixty thousand dollars in cash, many millions of dollars 147 00:10:48,690 --> 00:10:52,450 Speaker 1: in today's terms. Fisher turned his academic research into a 148 00:10:52,450 --> 00:10:57,050 Speaker 1: major business operation called the Index Number Institute. It sold data, 149 00:10:57,290 --> 00:11:02,010 Speaker 1: forecasts and analysis as a syndicated package to newspapers across 150 00:11:02,050 --> 00:11:07,410 Speaker 1: the United States. He called it Irving Fisher's business Page. 151 00:11:07,450 --> 00:11:10,770 Speaker 1: With such a platform, Fisher was able to evangelize about 152 00:11:10,770 --> 00:11:14,490 Speaker 1: his approach to investment, which broadly speaking, was ti bet 153 00:11:14,570 --> 00:11:18,170 Speaker 1: on American growth by buying shares in the new industrial 154 00:11:18,210 --> 00:11:24,010 Speaker 1: corporations using borrowed money. Such borrowing is called leverage since 155 00:11:24,050 --> 00:11:28,850 Speaker 1: it magnifies both profits and losses, but during the nineteen twenties, 156 00:11:29,090 --> 00:11:32,970 Speaker 1: stock market investors had few losses to worry about. Share 157 00:11:33,050 --> 00:11:39,090 Speaker 1: prices were soaring, Fisher wrote to his old childhood friend 158 00:11:39,410 --> 00:11:42,610 Speaker 1: to inform him that his ambition had been fulfilled. 159 00:11:42,970 --> 00:11:45,890 Speaker 5: We are all making a lot of money. 160 00:11:46,690 --> 00:11:50,090 Speaker 1: In the summer of nineteen twenty nine. Irving Fisher was 161 00:11:50,130 --> 00:11:55,530 Speaker 1: a best selling author, inventor, data pioneer, friend of presidents, entrepreneur, 162 00:11:55,650 --> 00:12:00,490 Speaker 1: health campaigner, syndicated columnist, and the greatest academic economist of 163 00:12:00,610 --> 00:12:04,210 Speaker 1: his generation, and in that summer of nineteen twenty nine, 164 00:12:04,610 --> 00:12:08,850 Speaker 1: a millionaire many times over. Irving Fisher was able to 165 00:12:08,850 --> 00:12:12,250 Speaker 1: boast to his son that a renovation of the family 166 00:12:12,290 --> 00:12:15,810 Speaker 1: mansion had been paid for not by the hazard family money, 167 00:12:16,250 --> 00:12:22,650 Speaker 1: but by Irving Fisher himself. That achievement mattered to him. 168 00:12:22,850 --> 00:12:26,490 Speaker 1: Fisher's own father hadn't lived to see his seventeen year 169 00:12:26,530 --> 00:12:30,330 Speaker 1: old boy grow into one of the most respected figures 170 00:12:30,450 --> 00:12:33,970 Speaker 1: of the age. As Irving and his son watched a 171 00:12:34,050 --> 00:12:54,370 Speaker 1: mansion reshaped before them, he could perhaps be forgiven his pride. 172 00:12:54,530 --> 00:12:59,330 Speaker 1: John Maynard Keynes was the ultimate insider. As a schoolboy, 173 00:12:59,490 --> 00:13:03,410 Speaker 1: he was educated at Eton College, just like Britain's first 174 00:13:03,450 --> 00:13:07,410 Speaker 1: prime minister and nineteen others. Since like his father, he 175 00:13:07,490 --> 00:13:11,490 Speaker 1: became a senior academic, a fellow of King's College, the 176 00:13:11,530 --> 00:13:16,410 Speaker 1: most spectacular of all the Cambridge colleges. His job during 177 00:13:16,410 --> 00:13:20,210 Speaker 1: the First World War was managing both debt and currency 178 00:13:20,450 --> 00:13:24,210 Speaker 1: on behalf of the British Empire. He had barely turned thirty. 179 00:13:24,730 --> 00:13:28,970 Speaker 1: He knew everyone. He whispered in the ear of prime ministers. 180 00:13:29,250 --> 00:13:32,330 Speaker 1: He had the inside track on whatever was going on 181 00:13:32,530 --> 00:13:33,650 Speaker 1: in the British economy. 182 00:13:34,690 --> 00:13:36,010 Speaker 5: Maynard, Bank of England. 183 00:13:36,050 --> 00:13:38,290 Speaker 4: Here, I just wanted to let you know that interest 184 00:13:38,370 --> 00:13:39,730 Speaker 4: rates will be rising tomorrow. 185 00:13:40,490 --> 00:13:41,210 Speaker 7: There's a good chap. 186 00:13:43,690 --> 00:13:46,970 Speaker 1: But this child of the British establishment was a very 187 00:13:46,970 --> 00:13:51,010 Speaker 1: different person to his American rival, Irving Fisher. He loved 188 00:13:51,050 --> 00:13:54,330 Speaker 1: fine wines and rich food. He gambled at Monte Carlo. 189 00:13:54,850 --> 00:13:57,890 Speaker 1: His sex life was more like a nineteen seventies pop 190 00:13:57,890 --> 00:14:03,450 Speaker 1: star than a nineteen hundred's economist, bisexual, polyamorous, eventually settling 191 00:14:03,490 --> 00:14:07,650 Speaker 1: down not with his childhood sweetheart but with a Russian ballerina. 192 00:14:08,210 --> 00:14:11,010 Speaker 1: One of Kynes's ex boyfriends was the best man at 193 00:14:11,010 --> 00:14:15,930 Speaker 1: their wedding, and Caines was adventurous in other ways too. 194 00:14:16,610 --> 00:14:19,730 Speaker 1: In nineteen eighteen, for example, as the First World War 195 00:14:19,890 --> 00:14:23,610 Speaker 1: was raging and the German army was camped outside Paris, 196 00:14:23,970 --> 00:14:27,170 Speaker 1: Caines caught wind of the fact that in Paris, the 197 00:14:27,210 --> 00:14:31,530 Speaker 1: great French Impressionist artist Edgar de Gart was about to 198 00:14:31,570 --> 00:14:36,210 Speaker 1: auction his vast collection of pieces by France's greatest nineteenth 199 00:14:36,210 --> 00:14:41,890 Speaker 1: century painters, and so Caines embarked on an insane adventure. First, 200 00:14:42,090 --> 00:14:45,570 Speaker 1: he spoke to the Chancellor of the Exchequer, the UK's 201 00:14:45,610 --> 00:14:49,650 Speaker 1: senior treasury minister, asking for a fund for purchasing art 202 00:14:50,210 --> 00:14:53,730 Speaker 1: twenty thousand pounds. That's millions in today's money. 203 00:14:54,410 --> 00:14:57,530 Speaker 3: Maynard, It's the first occasion that I've ever known you 204 00:14:57,610 --> 00:15:00,370 Speaker 3: in favor of any expenditure whatsoever. 205 00:15:00,730 --> 00:15:04,530 Speaker 1: Remember, the British Treasury was four years into fighting the 206 00:15:04,570 --> 00:15:08,610 Speaker 1: most devastating war the planet had yet seen, but Caines 207 00:15:08,690 --> 00:15:10,010 Speaker 1: knew to get his way. 208 00:15:10,250 --> 00:15:13,090 Speaker 7: My picture coup was a whirlwind affair, carried out in 209 00:15:13,130 --> 00:15:15,210 Speaker 7: a day and a half before anyone had time to 210 00:15:15,210 --> 00:15:18,650 Speaker 7: reflect on what they were doing. I think the Chancellor 211 00:15:18,810 --> 00:15:21,290 Speaker 7: was very much amused at my wanting to buy pictures, 212 00:15:21,610 --> 00:15:24,210 Speaker 7: and eventually let me have my way as a sort. 213 00:15:24,010 --> 00:15:26,210 Speaker 1: Of a joke, some joke. 214 00:15:27,130 --> 00:15:32,370 Speaker 7: Escorted by destroyers and a silver airship watching overhead. 215 00:15:32,010 --> 00:15:35,410 Speaker 1: Canes crossed the Channel to France with the director of 216 00:15:35,450 --> 00:15:39,090 Speaker 1: London's National Gallery, who had shaved off his mustache so 217 00:15:39,170 --> 00:15:43,130 Speaker 1: that nobody recognized him. And just as Dagar's auction begins, 218 00:15:44,210 --> 00:15:48,490 Speaker 1: the German artillery starts up. Some people panic and hurry out. 219 00:15:48,850 --> 00:15:53,850 Speaker 1: Canes pounces, buying twenty seven pieces at rock bottom prices 220 00:15:54,010 --> 00:15:57,810 Speaker 1: for the National Gallery, and he buys a few for himself, 221 00:15:58,250 --> 00:16:01,810 Speaker 1: including a Sizan, which these days would be regarded as 222 00:16:01,810 --> 00:16:05,050 Speaker 1: a better buy than anything the National Gallery director chose. 223 00:16:05,450 --> 00:16:10,970 Speaker 1: It costs Canes just three hundred and seventy. They then 224 00:16:11,250 --> 00:16:14,210 Speaker 1: flee back to the English Channel and cross home with 225 00:16:14,290 --> 00:16:19,330 Speaker 1: a convoy of hospital ships. Exhausted after his non stop adventure, 226 00:16:19,810 --> 00:16:21,730 Speaker 1: Camees calls in on some friends. 227 00:16:21,810 --> 00:16:24,490 Speaker 7: I've got a Sazan in my suitcase. It was too 228 00:16:24,530 --> 00:16:26,570 Speaker 7: heavy for me to carry, so I've left it in 229 00:16:26,570 --> 00:16:27,810 Speaker 7: the ditch behind the gate. 230 00:16:28,490 --> 00:16:31,130 Speaker 1: What Irving Fisher would have made of it all, I 231 00:16:31,210 --> 00:16:35,610 Speaker 1: do not know yet. Like Fisher, Caines was also pursuing 232 00:16:35,650 --> 00:16:38,970 Speaker 1: an investment career. It wasn't just in art. He set 233 00:16:39,050 --> 00:16:42,290 Speaker 1: up what some historians describe as the first hedge fund 234 00:16:42,450 --> 00:16:45,770 Speaker 1: to speculate on currency movements. He raised money from rich 235 00:16:45,850 --> 00:16:49,090 Speaker 1: friends and from his own father, to whom he made 236 00:16:49,170 --> 00:16:51,890 Speaker 1: the not entirely reassuring comment. 237 00:16:51,770 --> 00:16:55,210 Speaker 7: Win or lose. This high stakes gambling amuses me. 238 00:16:55,610 --> 00:17:00,370 Speaker 1: Initiallykines made money fast, but then a brief spasm in 239 00:17:00,410 --> 00:17:05,690 Speaker 1: the currency markets wiped out his fund in nineteen twenty awkward. 240 00:17:05,810 --> 00:17:08,930 Speaker 1: But he went back to his investors, including his own father, 241 00:17:09,410 --> 00:17:12,130 Speaker 1: and asked them to trust him with more of their money. 242 00:17:12,530 --> 00:17:15,810 Speaker 7: I am not in a position to risk any capital myself, 243 00:17:16,770 --> 00:17:18,850 Speaker 7: having quite exhausted my resources. 244 00:17:19,250 --> 00:17:24,010 Speaker 1: Remember this is John Maynard Kaynes, the man who persuaded 245 00:17:24,010 --> 00:17:27,530 Speaker 1: a wartime government to speculate in a Parisian art auction. 246 00:17:27,930 --> 00:17:31,130 Speaker 1: The man, a Canadian diplomat, mistook for an angel. 247 00:17:31,330 --> 00:17:35,890 Speaker 7: I anticipate very substantial profits with very good probability if 248 00:17:35,930 --> 00:17:37,810 Speaker 7: you are prepared to stand the racket for a couple 249 00:17:37,850 --> 00:17:38,370 Speaker 7: of months. 250 00:17:38,850 --> 00:17:41,890 Speaker 1: Of course, they gave him the money he wanted. Caines 251 00:17:42,210 --> 00:17:48,130 Speaker 1: was back in profit by nineteen twenty two. So, having 252 00:17:48,170 --> 00:17:51,210 Speaker 1: made a small fortune, lost it and made it again. 253 00:17:51,690 --> 00:17:55,610 Speaker 1: Caines turned to the vast investments of his own college, 254 00:17:56,010 --> 00:18:00,650 Speaker 1: King's Cambridge. Caines persuaded his fellow academics to let him 255 00:18:00,690 --> 00:18:04,610 Speaker 1: adopt a radical money making strategy. He would forecast booms 256 00:18:04,610 --> 00:18:08,730 Speaker 1: and recessions and move in and out of different economic sectors. 257 00:18:08,730 --> 00:18:12,330 Speaker 1: A call such an approach makes sense only if you 258 00:18:12,530 --> 00:18:17,930 Speaker 1: actually can forecast recessions. But Kines was the leading economist 259 00:18:17,930 --> 00:18:20,370 Speaker 1: in the country and a man who remember would get 260 00:18:20,450 --> 00:18:24,370 Speaker 1: friendly phone calls from the Bank of England. If anyone 261 00:18:24,490 --> 00:18:27,890 Speaker 1: could see into the future of the British economy, it 262 00:18:27,970 --> 00:18:33,730 Speaker 1: was John Maynard Keynes. By late nineteen twenty nine, both 263 00:18:33,930 --> 00:18:39,850 Speaker 1: Irving Fisher and John Maynard Keynes were rich, famous, respected, 264 00:18:40,610 --> 00:18:44,490 Speaker 1: and standing on the brink of a financial precipice. The 265 00:18:44,530 --> 00:18:48,810 Speaker 1: cataclysmic Wall Street Crash followed by the Great Depression, the 266 00:18:48,850 --> 00:18:53,490 Speaker 1: worst peacetime economic calamity to befall the Western world, and 267 00:18:53,530 --> 00:18:57,650 Speaker 1: the two greatest economists of the age, Fisher and Canes, 268 00:18:58,810 --> 00:19:10,770 Speaker 1: both of them failed to see it coming. Experts don't 269 00:19:10,810 --> 00:19:14,930 Speaker 1: have a stellar reputation for forecasting. In nineteen eighty seven, 270 00:19:15,250 --> 00:19:20,370 Speaker 1: a young Canadian born psychologist named Philip Tetlock became curious 271 00:19:20,410 --> 00:19:25,690 Speaker 1: about the entire prognostication racket. Tetlock had been interviewing Cold 272 00:19:25,730 --> 00:19:29,450 Speaker 1: War experts, and he soon found himself frustrated by their 273 00:19:29,490 --> 00:19:33,090 Speaker 1: wildly different predictions, their refusal to change their minds when 274 00:19:33,090 --> 00:19:37,330 Speaker 1: they were wrong and the endless excuses for their forecasting failures. 275 00:19:38,170 --> 00:19:44,010 Speaker 1: Tetlock's response was patient, painstaking, and quietly brilliant. He began 276 00:19:44,130 --> 00:19:49,530 Speaker 1: to collect forecasts from almost three hundred experts, eventually accumulating 277 00:19:49,730 --> 00:19:54,530 Speaker 1: twenty seven thousand, five hundred predictions. He focused on politics 278 00:19:54,570 --> 00:19:58,410 Speaker 1: and geopolitics, throwing in a few questions from areas such 279 00:19:58,410 --> 00:20:03,530 Speaker 1: as economics. Tetlock sought clearly defined questions, enabling him, with 280 00:20:03,570 --> 00:20:08,050 Speaker 1: the benefit of hindsight, to pronounce each forecast right or wrong. 281 00:20:08,810 --> 00:20:13,130 Speaker 1: Then Tetlock simply waited while the results rolled in for 282 00:20:13,330 --> 00:20:18,370 Speaker 1: eighteen years. Tetlock published his conclusions in two thousand and 283 00:20:18,530 --> 00:20:23,210 Speaker 1: five in a subtle and scholarly book, Expert Political Judgment. 284 00:20:23,650 --> 00:20:27,530 Speaker 1: He found that his experts were terrible forecasters, both in 285 00:20:27,570 --> 00:20:30,690 Speaker 1: the simple sense that what they predicted often didn't happen, 286 00:20:31,050 --> 00:20:33,450 Speaker 1: and in the deeper sense that the experts had little 287 00:20:33,490 --> 00:20:36,450 Speaker 1: idea of when they should be confident and when they 288 00:20:36,450 --> 00:20:40,450 Speaker 1: should admit that they didn't have a clue. Expert forecasts 289 00:20:40,490 --> 00:20:46,450 Speaker 1: were barely more accurate than chimpanzees throwing darts. Most people 290 00:20:46,650 --> 00:20:51,010 Speaker 1: hearing about Tetlock's research simply conclude that either the world 291 00:20:51,090 --> 00:20:54,650 Speaker 1: is too complex to forecast, or that experts are too 292 00:20:54,690 --> 00:21:00,770 Speaker 1: stupid to forecast it, or both. On April Fool's Day 293 00:21:00,850 --> 00:21:04,490 Speaker 1: in twenty thirteen, of all days, I received an email 294 00:21:04,570 --> 00:21:08,850 Speaker 1: from Philip Tetlock inviting me to join what he described as. 295 00:21:09,210 --> 00:21:12,010 Speaker 4: A major new research program. 296 00:21:12,330 --> 00:21:16,210 Speaker 1: It was funded by the US Intelligence Services. This program 297 00:21:16,250 --> 00:21:19,810 Speaker 1: continued and expanded Tetlock's long running study in the form 298 00:21:19,850 --> 00:21:21,290 Speaker 1: of a forecasting tournament. 299 00:21:22,170 --> 00:21:24,850 Speaker 4: You would simply log onto a website, give your best 300 00:21:24,930 --> 00:21:27,850 Speaker 4: judgment about matter as you may be following anyway, and 301 00:21:28,050 --> 00:21:30,650 Speaker 4: update that judgment if and when you feel it should be. 302 00:21:31,490 --> 00:21:35,130 Speaker 4: When time passes and forecasts are judged, you could compare 303 00:21:35,170 --> 00:21:36,490 Speaker 4: your results with those of others. 304 00:21:36,890 --> 00:21:41,130 Speaker 1: More than twenty thousand people signed up, some professionals and 305 00:21:41,210 --> 00:21:45,090 Speaker 1: some amateurs. Tetlock and his colleagues ran experiments on this 306 00:21:45,330 --> 00:21:48,730 Speaker 1: army of volunteers, giving them different kinds of training or 307 00:21:48,810 --> 00:21:52,130 Speaker 1: assembling them into teams to see if that helped. I 308 00:21:52,290 --> 00:21:55,290 Speaker 1: didn't join in. I told myself I was too busy. 309 00:21:55,690 --> 00:21:59,050 Speaker 1: I suppose I was chickening out too. But the fundamental 310 00:21:59,090 --> 00:22:02,570 Speaker 1: reason that I didn't participate was because Tetlock's work had 311 00:22:02,690 --> 00:22:07,770 Speaker 1: already persuaded me that the forecasting task was impossible, but 312 00:22:07,850 --> 00:22:13,010 Speaker 1: it wasn't. This vast new tournament identified a select group 313 00:22:13,050 --> 00:22:16,890 Speaker 1: of people whose forecasts, while by no means perfect, were 314 00:22:17,010 --> 00:22:21,930 Speaker 1: vastly better than the dark throwing chimp standard. Tetlock, with 315 00:22:22,050 --> 00:22:28,090 Speaker 1: an uncharacteristic touch of hyperbole, called them super forecasters. So 316 00:22:28,570 --> 00:22:32,210 Speaker 1: what makes a super forecaster? It was more a matter 317 00:22:32,450 --> 00:22:38,370 Speaker 1: of personality. The super forecasters are what psychologists call actively 318 00:22:38,570 --> 00:22:42,770 Speaker 1: open minded thinkers, people who didn't cling too tightly to 319 00:22:42,810 --> 00:22:46,290 Speaker 1: a single approach, who were comfortable abandoning an old view 320 00:22:46,330 --> 00:22:49,530 Speaker 1: in the light of fresh evidence or new arguments, and 321 00:22:49,810 --> 00:22:53,930 Speaker 1: who embraced disagreements with others as an opportunity to learn 322 00:22:54,730 --> 00:22:58,810 Speaker 1: the secret of super forecasting. It's a willingness to change 323 00:22:58,810 --> 00:23:13,610 Speaker 1: your mind. Philip Tetlock's work on super forecasting has rightly 324 00:23:13,650 --> 00:23:17,090 Speaker 1: attracted a huge amount of attention, But I think there's 325 00:23:17,130 --> 00:23:21,370 Speaker 1: a message in that work that's often overlooked. A willingness 326 00:23:21,370 --> 00:23:24,850 Speaker 1: to change your mind doesn't just help you make better forecasts, 327 00:23:25,370 --> 00:23:30,570 Speaker 1: it helps you cope with failed predictions too. Let's return 328 00:23:30,770 --> 00:23:35,170 Speaker 1: to John Maynard Keynes and Irving Fisher. Both of them, remember, 329 00:23:35,330 --> 00:23:39,570 Speaker 1: had persuaded themselves that their expertise in economics should lead 330 00:23:39,650 --> 00:23:44,130 Speaker 1: to investment success. Both of them were wrong. The stock 331 00:23:44,170 --> 00:23:47,170 Speaker 1: market crash of nineteen twenty nine caught each of them 332 00:23:47,210 --> 00:23:51,530 Speaker 1: by surprise. Both lost a lot of money. Yet here's 333 00:23:51,570 --> 00:23:57,650 Speaker 1: a curious fact. Despite his failure, Canes dyed a millionaire 334 00:23:58,090 --> 00:24:03,410 Speaker 1: and perhaps the most celebrated economist in the world. Fisher 335 00:24:03,490 --> 00:24:06,810 Speaker 1: made basically the same mistake, yet it ruined both his 336 00:24:06,930 --> 00:24:12,330 Speaker 1: finances and his reputation. Why the difference in their fortunes. 337 00:24:13,210 --> 00:24:18,050 Speaker 1: In a way, the answer is ridiculously simple. Caines changed 338 00:24:18,050 --> 00:24:24,010 Speaker 1: his mind and changed his investment strategy. Fisher changed neither, 339 00:24:25,010 --> 00:24:28,930 Speaker 1: But that only raises a deeper question. Why did Caines 340 00:24:29,050 --> 00:24:36,970 Speaker 1: change while Fisher didn't. Caines had lost one fortune in 341 00:24:37,050 --> 00:24:41,690 Speaker 1: nineteen twenty and survived the experience by nineteen twenty nine. 342 00:24:41,850 --> 00:24:45,970 Speaker 1: Before the crash, he was again pondering his shortcomings. His 343 00:24:46,090 --> 00:24:49,290 Speaker 1: investment strategy, based on the assumption that he could predict 344 00:24:49,330 --> 00:24:52,810 Speaker 1: the ups and downs of the business cycle, wasn't working out. 345 00:24:53,650 --> 00:24:57,810 Speaker 1: He started thinking about how to change his approach. Caines 346 00:24:57,850 --> 00:25:00,770 Speaker 1: lost more than eighty percent of his net worth in 347 00:25:00,890 --> 00:25:04,010 Speaker 1: nineteen twenty nine, but even afterwards he was still rich. 348 00:25:04,490 --> 00:25:07,490 Speaker 1: In short, he had plenty of evidence that had made 349 00:25:07,490 --> 00:25:10,490 Speaker 1: a mistake. He had experience of making mistakes in the 350 00:25:10,490 --> 00:25:13,970 Speaker 1: past and bouncing back, and he was still comfortably off. 351 00:25:14,690 --> 00:25:18,770 Speaker 1: Why not change. By the early nineteen thirties, Caines had 352 00:25:18,810 --> 00:25:23,970 Speaker 1: abandoned business cycle forecasting entirely. The greatest economist in the 353 00:25:24,010 --> 00:25:27,210 Speaker 1: world had decided he just couldn't do it well enough 354 00:25:27,250 --> 00:25:27,970 Speaker 1: to make money. 355 00:25:28,450 --> 00:25:31,610 Speaker 7: As time goes on, I get more and more convinced 356 00:25:31,770 --> 00:25:34,530 Speaker 7: that the right method in investment is to put fairly 357 00:25:34,610 --> 00:25:38,210 Speaker 7: large sums into enterprises which one thinks one knows something 358 00:25:38,250 --> 00:25:42,130 Speaker 7: about and in the management of which one thoroughly believes. 359 00:25:42,850 --> 00:25:46,330 Speaker 1: Forget what the economy is doing. Just find great companies 360 00:25:46,610 --> 00:25:49,090 Speaker 1: and invest for the long term. And if that approach 361 00:25:49,250 --> 00:25:54,170 Speaker 1: sounds familiar, it's most famously associated with Warren Buffett, the 362 00:25:54,210 --> 00:25:58,090 Speaker 1: world's richest investor, that a man who loves to quote 363 00:25:58,330 --> 00:26:02,490 Speaker 1: John Maynard Kynes. Kaines is rightly viewed today as a 364 00:26:02,530 --> 00:26:06,130 Speaker 1: successful investor at King's College. He recovered from the poor 365 00:26:06,170 --> 00:26:10,170 Speaker 1: performance of the early years. He secured high returns with 366 00:26:10,290 --> 00:26:14,130 Speaker 1: modest risks, outperforming the stock market as a whole many 367 00:26:14,210 --> 00:26:18,530 Speaker 1: times over. It's an impressive reward for being able to 368 00:26:18,650 --> 00:26:27,770 Speaker 1: change your mind. Irving Fisher was in a very different situation. 369 00:26:28,170 --> 00:26:32,690 Speaker 1: Irving Fisher's business page had graced newspapers across the country. 370 00:26:32,890 --> 00:26:35,930 Speaker 1: When things turned sour, Fisher was a scapegoat in front 371 00:26:35,970 --> 00:26:40,250 Speaker 1: of the entire United States. The New York Times reported 372 00:26:40,250 --> 00:26:42,010 Speaker 1: that the bubble had been blamed on. 373 00:26:42,330 --> 00:26:47,130 Speaker 6: US Treasury Secretary Mellon, former President Coolidge, and Professor Irving 374 00:26:47,210 --> 00:26:49,130 Speaker 6: Fisher of Yale. 375 00:26:49,170 --> 00:26:53,850 Speaker 1: And Professor Irving Fisher of Yale was in deep financial trouble. 376 00:26:54,330 --> 00:26:57,530 Speaker 1: The fact that his investments were made using leverage meant 377 00:26:57,530 --> 00:27:02,290 Speaker 1: that both gains and losses were magnified. What had seemed 378 00:27:02,330 --> 00:27:07,690 Speaker 1: like brilliance before the crash was catastrophic afterwards. Fisher was 379 00:27:07,730 --> 00:27:10,130 Speaker 1: staring in the face of bankrupt see the loss of 380 00:27:10,130 --> 00:27:14,890 Speaker 1: his house, his businesses, everything. For example, one of Fisher's 381 00:27:14,930 --> 00:27:18,730 Speaker 1: major investments was in the stationery company Remington Rand. It 382 00:27:18,850 --> 00:27:22,010 Speaker 1: was fifty eight dollars a share before the crash, dropping 383 00:27:22,050 --> 00:27:25,690 Speaker 1: to twenty eight dollars within a few months. At that point, 384 00:27:25,850 --> 00:27:29,930 Speaker 1: Fisher borrowed more money to invest, but the share price 385 00:27:30,090 --> 00:27:34,530 Speaker 1: kept falling all the way to one dollar. You could 386 00:27:34,530 --> 00:27:39,090 Speaker 1: imagine his desperation, But surely, being in such a tight 387 00:27:39,170 --> 00:27:43,930 Speaker 1: spot would have made Fisher more likely to adapt his strategy. 388 00:27:44,010 --> 00:27:45,690 Speaker 1: Not necessarily. 389 00:27:50,770 --> 00:27:59,610 Speaker 6: I've received another message. Everyone get your overcoats and stand by. Okay, okay, guys, okay, 390 00:27:59,690 --> 00:28:03,090 Speaker 6: everyone sit quietly in the living room. We shall act 391 00:28:03,090 --> 00:28:05,930 Speaker 6: as if this were just an ordinary gathering of friends. 392 00:28:06,890 --> 00:28:11,090 Speaker 1: Remember Dorothy Martin and her Ua Foe cult. They've persuaded 393 00:28:11,090 --> 00:28:13,650 Speaker 1: themselves that the world is about to be flooded and 394 00:28:13,690 --> 00:28:17,370 Speaker 1: that they will be saved at midnight by aliens delivering 395 00:28:17,370 --> 00:28:21,490 Speaker 1: them safely to planet Clarion. And remember too, that the 396 00:28:21,490 --> 00:28:26,250 Speaker 1: psychologist Leon Festinger has infiltrated the cult. His researchers were 397 00:28:26,290 --> 00:28:30,730 Speaker 1: there that night to observe what happened. Festinger had a 398 00:28:30,770 --> 00:28:35,530 Speaker 1: striking prediction that when the aliens didn't appear, many cultists 399 00:28:35,610 --> 00:28:39,250 Speaker 1: wouldn't be discouraged by the clear failure of missus Martin's 400 00:28:39,250 --> 00:28:44,210 Speaker 1: prophecy or feel angry and betrayed. Instead, they would redouble 401 00:28:44,250 --> 00:28:45,850 Speaker 1: their efforts to believe. 402 00:28:48,370 --> 00:28:52,730 Speaker 6: Another reporter, no doubt. Just hang up. Our preparations cannot 403 00:28:53,010 --> 00:28:56,210 Speaker 6: be interrupted. We'll call them later if we have anything 404 00:28:56,250 --> 00:28:57,010 Speaker 6: for them. 405 00:28:57,330 --> 00:28:58,650 Speaker 2: As the clock has midnight. 406 00:28:59,330 --> 00:28:59,930 Speaker 1: That's wrong with that. 407 00:29:01,130 --> 00:29:02,050 Speaker 4: Take a couple of minutes. 408 00:29:02,370 --> 00:29:06,370 Speaker 7: That clock is love. Look at the other clock. I 409 00:29:06,410 --> 00:29:09,290 Speaker 7: said it myself this afternoon, and it's not midnight yet. 410 00:29:10,250 --> 00:29:12,410 Speaker 6: One minute to midnight, and not a. 411 00:29:12,370 --> 00:29:13,410 Speaker 2: Plan has gonistry. 412 00:29:16,090 --> 00:29:22,450 Speaker 1: At midnight, the aliens did not appear. Nobody said a word. 413 00:29:23,530 --> 00:29:26,770 Speaker 1: One of the more casual cult members, who had expressed 414 00:29:26,770 --> 00:29:31,570 Speaker 1: skepticism before, picked up his coat and hat and walked out, 415 00:29:34,690 --> 00:29:35,250 Speaker 1: no comment. 416 00:29:35,530 --> 00:29:36,890 Speaker 7: We have nothing to tell you. 417 00:29:37,690 --> 00:29:40,330 Speaker 1: People tried to make sense of what was happening, or 418 00:29:40,490 --> 00:29:45,970 Speaker 1: rather not happening. The theories grew ever wilder. People were confused, exhausted. 419 00:29:46,330 --> 00:29:50,410 Speaker 1: Leon Festinger's observers tried to ask why the saucer hadn't come. 420 00:29:50,930 --> 00:29:55,010 Speaker 1: The group didn't want to talk about it, and then 421 00:29:56,010 --> 00:30:01,010 Speaker 1: at four o'clock in the morning, Dorothy Martin put her 422 00:30:01,050 --> 00:30:06,210 Speaker 1: face in her hands and began to weep. One of 423 00:30:06,250 --> 00:30:10,170 Speaker 1: Festinger's researchers stepped outside for some air and discussed the 424 00:30:10,210 --> 00:30:12,170 Speaker 1: situation with a leading cult member. 425 00:30:13,690 --> 00:30:15,970 Speaker 3: I've had a long way to go. I've given up 426 00:30:16,010 --> 00:30:19,490 Speaker 3: just about everything. I've cut every tie, I burned every bridge. 427 00:30:19,890 --> 00:30:22,410 Speaker 3: I've turned my back on the world. I can't afford 428 00:30:22,450 --> 00:30:24,810 Speaker 3: to doubt. I have to believe. 429 00:30:27,810 --> 00:30:32,730 Speaker 1: They went back inside. But at four forty five am, 430 00:30:32,810 --> 00:30:38,410 Speaker 1: Dorothy Martin, with hand shaking, picked up a pencil and 431 00:30:38,450 --> 00:30:43,330 Speaker 1: began to write. It was, she said, a new message. 432 00:30:43,850 --> 00:30:47,650 Speaker 1: Because of the faith shown by that small group of people, 433 00:30:48,250 --> 00:30:53,050 Speaker 1: the earth had been spared destruction. A higher power would 434 00:30:53,090 --> 00:30:57,370 Speaker 1: save not only the small cult but the entire human race. 435 00:30:59,490 --> 00:31:03,410 Speaker 1: At this the cultists acquired new fervor, going out to 436 00:31:03,450 --> 00:31:06,290 Speaker 1: greet the dawn and tell people the good news. They 437 00:31:06,330 --> 00:31:10,850 Speaker 1: suddenly became evangelists, issuing stufatements to the press rather than 438 00:31:10,930 --> 00:31:11,730 Speaker 1: batting them away. 439 00:31:12,490 --> 00:31:15,570 Speaker 5: Dorothy, is this the first time you've called the newspaper yourself? 440 00:31:16,530 --> 00:31:20,010 Speaker 6: Oh? Yes, this is the first time I've ever called them. 441 00:31:20,250 --> 00:31:23,810 Speaker 6: I've never had anything to tell them before, but now 442 00:31:24,210 --> 00:31:25,850 Speaker 6: I feel it's urgent. 443 00:31:26,290 --> 00:31:28,890 Speaker 3: We should call the Associated Press and the Oneida Press. 444 00:31:29,250 --> 00:31:32,410 Speaker 3: This thing is pretty important. It's a very big thing, 445 00:31:33,290 --> 00:31:34,850 Speaker 3: bigger than just one newspaper. 446 00:31:35,370 --> 00:31:37,490 Speaker 2: I don't think the creator would want this to be 447 00:31:37,570 --> 00:31:40,450 Speaker 2: an exclusive story, you know, definitely not. 448 00:31:40,570 --> 00:31:43,250 Speaker 6: Oh no, right, correct, It's got to be for everybody. 449 00:31:43,290 --> 00:31:44,450 Speaker 7: It's for everybody who wret. 450 00:31:45,050 --> 00:31:49,330 Speaker 1: Yes, Festinger had been right. His view that the cultists 451 00:31:49,370 --> 00:31:52,170 Speaker 1: would redouble their efforts to believe in the face of 452 00:31:52,210 --> 00:31:56,090 Speaker 1: failure was based on a theory he called cognitive dissonance. 453 00:31:56,890 --> 00:32:01,010 Speaker 1: Cognitive dissonance predicts that people will start to squirm when 454 00:32:01,010 --> 00:32:05,570 Speaker 1: they hold contradictory thoughts, such as it's worth quitting my 455 00:32:05,810 --> 00:32:09,650 Speaker 1: job in order to be collected by aliens, and the 456 00:32:09,730 --> 00:32:14,690 Speaker 1: aliens did not show up. People often deny the obvious 457 00:32:14,730 --> 00:32:18,090 Speaker 1: in order to reduce the discomfort, and the more suffering 458 00:32:18,170 --> 00:32:21,090 Speaker 1: people have put themselves through on behalf of a belief, 459 00:32:21,410 --> 00:32:24,730 Speaker 1: the more likely they are to cling onto it. Otherwise, 460 00:32:25,490 --> 00:32:33,530 Speaker 1: all that suffering would seem ridiculous, would it not. Festinger's 461 00:32:33,610 --> 00:32:38,890 Speaker 1: theory applies perfectly to poor Irving Fisher in the nineteen thirties. 462 00:32:39,170 --> 00:32:42,250 Speaker 1: He believed himself to be a man of logic and reason, 463 00:32:43,330 --> 00:32:47,450 Speaker 1: and yet he was deeply in debt, the most famous 464 00:32:47,490 --> 00:32:52,610 Speaker 1: financial basket case in the country. In fact, if people 465 00:32:52,650 --> 00:32:56,610 Speaker 1: today know just one thing about Irving Fisher, it's this. 466 00:32:57,810 --> 00:33:01,130 Speaker 1: Two weeks before the Wall Street crash began, he was 467 00:33:01,210 --> 00:33:03,450 Speaker 1: quoted by The New York Times. 468 00:33:03,730 --> 00:33:07,250 Speaker 5: Starks have reached what looks like a permanently high plateau. 469 00:33:08,530 --> 00:33:13,490 Speaker 1: How do you away from that? Fisher went deeper and 470 00:33:13,570 --> 00:33:17,050 Speaker 1: deeper in debt to the taxman and to his brokers 471 00:33:17,890 --> 00:33:21,090 Speaker 1: towards the end of his life. He was a marginalized figure, 472 00:33:21,610 --> 00:33:25,330 Speaker 1: a widower, an easy target for scam artists and their 473 00:33:25,410 --> 00:33:29,250 Speaker 1: get rich quick schemes because he was always on the 474 00:33:29,250 --> 00:33:33,690 Speaker 1: lookout for a way to revive his fortune. He never did. 475 00:33:35,810 --> 00:33:38,730 Speaker 1: Although Caines had much in common with Fisher, he was 476 00:33:38,770 --> 00:33:43,930 Speaker 1: a different kind of character. Recall Kine's comment to his father, this. 477 00:33:44,130 --> 00:33:46,570 Speaker 7: High stakes gambling amuses me. 478 00:33:46,970 --> 00:33:51,090 Speaker 1: The Monte Carlo gambler knew all along that while investing 479 00:33:51,210 --> 00:33:55,090 Speaker 1: was a fascinating game, it was a game, nonetheless, and 480 00:33:55,090 --> 00:33:58,090 Speaker 1: one shouldn't take an unlucky throw of the dice too 481 00:33:58,130 --> 00:34:02,730 Speaker 1: much to heart. When his investments flopped, he tried something else. 482 00:34:06,010 --> 00:34:08,970 Speaker 1: Fisher and Canes died within a few months of each other, 483 00:34:09,290 --> 00:34:11,730 Speaker 1: not long after the end of the Second World War. 484 00:34:12,570 --> 00:34:18,130 Speaker 1: Fisher had become irrelevant. Caines was the most influential economist 485 00:34:18,290 --> 00:34:22,090 Speaker 1: on the planet, fresh from shaping the World Bank, the IMF, 486 00:34:22,450 --> 00:34:28,930 Speaker 1: and the entire global financial system. Looking back, Cain's reflected. 487 00:34:28,970 --> 00:34:32,370 Speaker 7: My only regret is that I have not drunk more 488 00:34:32,450 --> 00:34:33,650 Speaker 7: champagne in my life. 489 00:34:33,970 --> 00:34:37,050 Speaker 1: But he's remembered far more for words that he probably 490 00:34:37,130 --> 00:34:42,970 Speaker 1: never said. Nevertheless, he lived by them. When my information 491 00:34:43,250 --> 00:34:47,890 Speaker 1: changes I alter my conclusions. What do you do, sir? 492 00:34:49,530 --> 00:34:59,570 Speaker 1: If only he'd taught that lesson to Irving Fisher. You've 493 00:34:59,610 --> 00:35:02,770 Speaker 1: been listening to Cautionary Tales If you'd like to find 494 00:35:02,810 --> 00:35:05,930 Speaker 1: out more about the ideas in this episode, including links 495 00:35:05,930 --> 00:35:08,690 Speaker 1: to our sources, The show notes are on my website, 496 00:35:09,090 --> 00:35:13,610 Speaker 1: Tim Harford dot com. Cautionary Tales is written and presented 497 00:35:13,650 --> 00:35:17,650 Speaker 1: by me Tim Harford. Our producers are Ryan Dilly and 498 00:35:17,730 --> 00:35:21,650 Speaker 1: Marilyn Rust. The sound designer and mixer was Pascal Wise, 499 00:35:21,850 --> 00:35:27,050 Speaker 1: who also composed the amazing music. Starring in this season 500 00:35:27,250 --> 00:35:32,170 Speaker 1: are Alan Cumming, Archie Panjabi, Toby Stephens and Russell Tovey, 501 00:35:32,570 --> 00:35:38,930 Speaker 1: alongside Enzochilente, Ed Gochen, Melody Gutteridge, Massaamnroe and rufus Wright. 502 00:35:39,370 --> 00:35:45,250 Speaker 1: And introducing Malcolm Gladwell. Thanks to the team at Pushkin Industries, 503 00:35:45,530 --> 00:35:50,770 Speaker 1: Julia Barton, Heather Faine, Mea LaBelle, Carl Migliori, Jacob Weisberg 504 00:35:51,010 --> 00:35:54,450 Speaker 1: and of course the mighty Malcolm Gladwell. And thanks to 505 00:35:54,490 --> 00:35:56,490 Speaker 1: my colleagues at the Financial Times