"Back then, we were living through an inflection point, a moment of tension and uncertainty."

  – President Biden, Remarks to the United Nations, September 24, 2024¹

This has been quite an autumn. Geopolitical developments (ICBMs over Ukraine, North Korean soldiers in the fight, Gaza, Lebanon, Iran, Sudan, Argentina, stunning US election results); economic developments (inflation, a runup in U.S. stock prices around the election, slumps in Germany and China, artificial intelligence, driverless cars, SpaceX, Tesla); and cultural developments (Taylor Swift! Elon Musk! Harry & Meghan!). I’m hearing and reading some buzz that we are treading on one of those razor edges in history, an inflection point after which nothing will be the same. Pundits who loudly backed winners or losers in the US elections are especially prone to this. The aim of this post is to invite you to reflect on the difficulty of calling historical inflections and to take a deep breath. The holiday season worldwide is a prime opportunity to do so.

What is an inflection point?

In mathematics, an inflection point is where the rate of change in a curve changes sign—a rising or falling trend begins to slow down or to accelerate. To the public, an inflection point looks like the moment when a trend crests and begins to fall, or hits bottom and begins to rise. Economists, historians, and political scientists cite inflection points where major change occurs, typically leading to a new direction and marking the end of one era and the beginning of another. Oft-cited examples are the assassination of Archduke Franz Ferdinand in 1914 (the start of World War I), the bombing of Pearl Harbor in 1941 (triggering the entry of the U.S. into World War II), the collapse of the U.S.S.R. in 1991, 9/11, and various revolutions (1688, 1776, 1789, 1917, etc.) No official body designates events as inflection points. Rather, they gain prominence by general assent. Therein lies the weakness of the idea. A year or an event can be an inflection point if some people say so—but who says so?

The idea of an inflection point in history is a modern concoction. As the following Ngram shows, the term grew in frequency among published books during 1940–1960, and again around 1970, plateaued, and then boomed again in the 2020s. 

Figure 1: Ngram plot of the frequency of the phrase, “inflection point” in published books, 1800–2022.

In the wake of the recent Federal elections in the US, pundits on all sides of the political and economic spectrum assert that major change is on the way. Is it? The right answer is that it is too early to tell. The explanation points to the difficulties of forecasting. 

The major problem: inflection points are rarely sudden

The popular conception of an inflection point is of step-function change: radical and sudden. But history shows that change—even after major events—tends to be gradual. And even the identification of inflection points rarely happens in the instant, only after some time has passed. This means that the significance of any turmoil one observed this fall is too soon to tell. It would take a crystal ball, a skill of perfect foresight, to tell whether a particular event will result in major change.

My research on financial crises gives some instructive examples. 

• Events that were not inflections. On one hand, the collapse of long-Term Capital Management in 1998, a sharp stock market crash on October 19, 1987, and the collapse of Enron and the dotcom bust of 2001 led to some hand-wringing that Armageddon was coming around the corner—but in each case it didn’t occur. The stock market crash of 1929 is popularly thought of as the start of the Great Depression. But an article I co-authored argues that it wasn’t.

• Events that triggered a long reaction. A book by Sean Carr and me explains that the Panic of 1907 was rooted in a series of macroeconomic stressors, most notably the San Francisco earthquake of April 1906. I have argued that the collapse of the U.S.S.R. in 1990 accelerated after the oil price slump in 1986. The terror attacks of 9/11 fueled 16 years of warfare in Afghanistan and Iraq. And five years later, it looks like the global pandemic of 2020 left long imprints on culture (work from home), politics (populism), and economics (inflation and public debt).

My point is that it is too early to tell whether any of the events of 2024 matter historically.

Why can’t we foresee?

Predicting economic turns is notoriously challenging. Consider five reasons. First, the economy of the U.S.—and indeed, the world—is immense and complex. Forces such as consumer behavior, government policies, technological innovations and other drivers interact in complex ways that are difficult to model. Second, random shocks (such as natural disasters, political changes, inventions) come along to alter economic expectations. Shocks are inherently unpredictable. Third, information is often out-of-date, incomplete, or inaccurate, meaning that even with the best models, garbage in becomes garbage out. Fourth, people behave in ways that deviate from models of rational action: cognitive biases can prompt people to respond bizarrely to news. Fifth, it can take weeks, months, or years for the consequences of events to show an impact. For instance, money supply changes typically show up in inflation only several months later. These challenges mean that even the most sophisticated models and experienced economists can struggle to accurately predict economic turning points.

The story is much the same in politics. In the past few weeks, we have heard some buzz about how this most recent election is fundamentally “realigning,” meaning an event that marks sharp change in ideologies, voting behaviors, political parties, contestable issues, and/or candidates’ attributes. Two examples of realigning elections are 1860, which precipitated the Civil War and a Republican party hegemony lasting generations, and 1932, which initiated the New Deal and a 20-year political hegemony by the Democratic party.

But identifying federal elections as “realigning” is challenging. First, electoral change emerges gradually. Realignments often occur over several election cycles rather than in a single election. This makes it difficult to pinpoint the exact moment when a realignment has occurred. Second, realignments arise from a host of social, economic, and political factors—in 2024, such factors included immigration, inflation, the rise of anti-elitism, and the lingering effects of the pandemic. Such factors make it hard to anticipate realignments. Third, lagging change occurs in politics as well. Gradually voters can abandon former loyalties and ideologies in search of new advocates for their interests. Finally, even the experts disagree on the occurrence of realignments and their causes. Yale professor David Mayhew examined assertions that many different elections were "realigning" and concluded that "Electoral politics is to an important degree just one thing after another . . . Elections and their underlying causes are not usefully sortable into generation-long spans . . . It is a Rip Van Winkle view of democracy that voters come awake only once in a generation . . .  It is too slippery, too binary, too apocalyptic, and it has come to be too much of a dead end."² And Sean Trende opined, "Almost none of the theories propounded by realignment theorists has endured the test of time . . . It turns out that finding a 'realigning' election is a lot like finding an image of Jesus in a grilled-cheese sandwich—if you stare long enough and hard enough, you will eventually find what you are looking for.”³

So, how should we approach the future?

Some good advice is contained in Superforecasting: The Art and Science of Prediction by Philip E. Tetlock and Dan Gardner. In studying the small population of people who forecast future economic results better than the mass of forecasters, Tetlock and Gardner report three sets of attributes that one would be well advised to adopt today:

1. Philosophic outlook:

   1. Cautious: Nothing is certain

   2. Humble: Reality is infinitely complex

   3. Nondeterministic: What happens is not meant to be and does not have to happen

2. Abilities and thinking styles:

   1. Actively open-minded: Beliefs are hypotheses to be tested, not treasures to be protected

   2. Intelligent and knowledgeable, with a “need for cognition”: Intellectually curious, enjoy puzzles and mental challenges

   3. Reflective: Introspective and self-critical

   4. Numerate: Comfortable with numbers

3. Methods of forecasting:

   1. Pragmatic: Not wedded to any idea or agenda

   2. Analytical: Capable of stepping back from the tip-of-your-nose perspective and considering other views

   3. Dragonfly-eyed: Value diverse views and synthesize them into their own

   4. Probabilistic: Judge using many grades of maybe

   5. Thoughtful updaters: When facts change, they change their minds⁴

So, how should we deal with the unbearable lightness of foresight?⁵

Be grateful for what we do know. Reach out. Take a long view. 

• Avoid agnosticism and cynicism. If we cannot predict major changes from the events of 2024, some might argue that we should give up on being vigilant or engaged. This is the wrong conclusion. The fact that foresight is imperfect should prompt healthy humility and realism, not rejection of what can be known and acted upon. Maya Angelou said, “There is nothing so pitiful as a young cynic because he has gone from knowing nothing to believing nothing.”

• Practice resilience. A friend might say, “After this, nothing will be the same.” This is usually true—and it is banal. Modern societies are dynamic adaptive systems. So are individual people. Are you the same person you were a week, a year, or a decade ago? Change is always around us. What matters is not that change happened, but how resilient society and you are in dealing with it.

• Prepare for surprise. The more emphatically you believe that this is a historical inflection point, the more likely your vision of the future will be wrong in some big ways. Surprises come from changes that differ sharply from expectations. Future outcomes tend not to be kind to dogmatic seers. But not all surprises are big inflection points in history. The runup in stock prices at the recent election may just be another instance of Mr. Market’s overreaction to political news. Almost 60 years ago, economist Paul Samuelson wrote that "stock prices do show more ups and downs than gross national product or business indicators generally. To prove that Wall Street is an early omen of movements still to come in GNP, commentators quote economic studies alleging that market downturns predicted four out of the last five recessions. That is an understatement. Wall Street indexes predicted nine out of the last five recessions! And its mistakes were beauties."⁶

• Get grounded. Context and contingency matter in understanding events. Reach out to others. Tetlock and Gardner’s research emphasizes that there is wisdom in a diverse circle of acquaintances. Get out of your echo chamber of cable news, the Internet, and pundits who profit from inflaming public opinion rather than informing. Widen your circle of acquaintances and listen to them.

• Take the long view. Change is gradual, not sudden. The fullness of time reveals the true inflection points, as experience accumulates, and perspective broadens. Studying history helps to build a long view. If you think we are at a historical inflection point, then check your belief against comparable episodes in the past.

• Get a healthy attitude. Fight panic. Take a deep breath. Remember that fear and outrage can be addictive.⁷ Consider what is going well, even in your depths of apprehension. Think about what you can be grateful for. Perhaps health, family, friends, a dog or cat, the smell of coffee in the morning. The Mayo Clinic says that expressing gratitude can improve your mental and physical health. The global holiday season surrounds us and presents the opportunity to focus on the good things that anchor you.

Endnotes
1.

Joseph Biden, "Remarks by President Biden Before the 79th Session of the United Nations General Assembly," https://www.whitehouse.gov/briefing-room/speeches-remarks/2024/09/24/remarks-by-president-biden-before-the-79th-session-of-the-united-nations-general-assembly-new-york-ny/.

2.

David R. Mayhew, Electoral Realignments: A Critique of an American Genre (New Haven, CT: Yale University Press, 2004), pages 147 and 152.

3.

Sean Trende, The Lost Majority: Why the Future of Government Is Up for Grabs—and Who Will Take It (New York: St. Martin’s Press, 2012) Kindle edition, locations 231 and 238.

4.

Philip E. Tetlock and Dan Gardner, Superforecasting: The Art and Science of Prediction (New York: Crown, 2016).

5.

Pardon my riff on the title of a movie I liked, The Unbearable Lightness of Being.

6.

Paul A. Samuelson, "Science and Stocks: Sense and Nonsense," Newsweek, 1966, page 92, ProQuest. 

7.

From Copilot AI: “Both emotions can trigger powerful responses in the brain, like other forms of addiction.  Fear activates the body's fight-or-flight response, releasing adrenaline and other stress hormones. This can create a heightened state of alertness and energy, which some people might find exhilarating or even addictive.  Outrage, on the other hand, can produce a rush of dopamine, the same neurotransmitter involved in pleasure and reward. This can make the feeling of outrage rewarding in the short term, despite its negative consequences. Outrage can also foster a sense of moral superiority and community among those who share the same feelings, which can be socially reinforcing. Both emotions can create a cycle where individuals seek out situations that provoke these feelings, leading to a kind of emotional dependency. Understanding this can help in developing healthier ways to manage and respond to these powerful emotions.”