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

9

FUN WITH THE PAST

HERE ARE QUESTIONS and brief answers about four really big events in history:

Why did Sparta lose its hegemonic position in Greece just thirty-three years after victory in the Peloponnesian War?

Because Spartans loved their horses more than their country.

Why did Ferdinand and Isabella decide to fund Columbus?

Because he agreed to work cheap.

How could World War I have been avoided?

By British sailors taking a summer cruise to the Adriatic.

How could World War II have been avoided?

By German Social Democrats making nice to the pope.

If the Spartans had not been so fond of horse races, we might all speak Greek today. If the British had been a little more adept at diplomacy in 1914, Austrians and Germans might speak English today, which, come to think of it, many of them do. Maybe in that case there would never have been a Russian Revolution, maybe Adolf Hitler would have stuck to painting, maybe there would not have been a Second World War or cold war or Winston Churchill (at least as we know him), and maybe the sun still would not set on the British Empire. We will never know. But we can approximate what might have happened if Sparta’s horses had run fewer races, or if Britain’s diplomats had shipped some of their sailors up the Adriatic in 1914, or if German socialists had shown more flexibility toward Catholics in 1933.

Let’s be fair to the decision makers of the past. Just like those of today, they were hampered by difficult choices, complicated incentives, and poor foresight. Of course they could have done better if they had had a stealth bomber or a nuclear deterrent or a high-speed computer, but they didn’t. Does that mean their hands were tied? In one sense, yes, it does. They knew what they knew and did not have the technological or scientific foundation to do much better. But in another sense, we should not underestimate what they might have done. They did have logic, and, let’s face it, logic is logic. Its fundamentals have not changed in millennia. With enough people sitting around banging out calculations with an abacus or writing down results in the sand, they might have thought up and solved a model like mine, or one that’s better.

I will explore all of these questions and their answers in this chapter. To do so, however, I have to explain a little bit more about how to think realistically about altering the world. Sure we can play games like “What if Napoleon had had a stealth bomber at Waterloo?” (probably not as useful an advantage as a few machine guns)—but he didn’t, and couldn’t. I prefer to play realistic games. That’s what we will do here. We will ask how some big events might have turned out differently if realistic alternative strategies had been pursued. So, how to think about what might have been? Answer: Think about what people could have done but chose not to do, and why.

An acquaintance of mine studies the history of religion in a mostly political context. He is especially interested in the history of religion in Russia, and especially in its survival despite seventy years of official state-sponsored atheism. He once pointed out to me, both in bemusement and with amusement, that the way I differ from a historian is that I spend 95 percent of my time thinking about what didn’t happen. He is probably right. From the perspective of many historians, how things ended up was either inevitable, or, in a diametrically opposed way, the result of chance that could have swung any which way.

I am not big on the idea of historical inevitability. If that were right, there would be no point in trying to be a political engineer, a predictioneer. The idea that history is a play and that we are acting out scripted parts with little freedom of choice seems silly at best and downright evil at worst. It risks justifying anything anyone does, no matter how terrible. This view says, “Blame the writer, not the actor.” I won’t venture to guess who the writer might be.

Conversely, the notion that the developments that make up history are primarily a series of chance events seems equally odd to me. Why fight over ideas, select governments, build armies, fund research, promote literacy, create art, or write histories if all we are doing is twiddling our thumbs while chance developments send us bouncing around like the physicist’s particles? How can anyone deny strategic behavior and its consequences when we are surrounded by it in almost everything we do?

To be sure, the world as we know it could have swung one way or the other. That’s why neither the past nor the future follows an inevitable path. There are always chance elements behind which ways things swing, but those chance events rarely decide the future. Bad weather may have been important in Germany’s failed invasion of Russia during World War II, but Hitler’s choice to delay his invasion while turning his attention to problems in Yugoslavia was a calculated risk. He regretted it later, but still, he knew delay increased the odds that the German army would face bad weather.

The December 23, 2006, 6.7 earthquake in Bam, Iran, certainly was outside anyone’s control. It cost more than 26,000 lives. That represented nearly 20 percent of the approximately 142,000 residents of the area. Interestingly, just days before, a 6.5 earthquake shook the Southern California town of Cambria. Three people died out of the nearly 250,000 in the surrounding area. The Loma Prieta earthquake in 1989 killed 68 people in the San Francisco-Oakland area, a metropolitan area with a population of more than five million. The 1989 temblor was about five times larger than the Bam quake, and yet it killed—not to minimize the tragedy—only a tiny fraction of the local population, while in Bam the death toll was horrendous. Is the vast discrepancy between deaths in California and deaths in Iran from earthquakes a matter of chance, was it inevitable, or was it a matter of strategic decisions?

The answer the press offered at the time was that people in Bam lived in mud and stone houses and people in California did not. Yet we must ask: Why do people in a wealthy country with vast oil reserves live in mud houses? It is tempting to speak of natural disasters—earthquakes, floods, droughts, famines—as if some parts of the world just have terribly bad luck. That these are dreadful natural events there is no doubt, but are they really natural disasters? Certainly such terrible events are random from a political or social perspective. Their causes are well beyond human control, at least given the current state of knowledge in predicting earthquakes, hurricanes, droughts, and tsunamis. But their consequences are not.

Death tolls from cataclysmic natural events are vastly higher in countries run by dictators than in democracies. Democratic governments prepare for disasters, regulate construction to increase the chances of surviving events like earthquakes, and stockpile food, clothing, and shelter for disaster victims. Why? Because governments elected by the people are largely accountable to the people. Governments selected by the military, or the aristocracy, or the clergy, or the one legal political party are accountable to very few. It is those few they protect, not the many, because it is at the pleasure of those few that they rule. No, even chance events rarely have consequences that are primarily due to chance. Strategic choices lurk behind who wins and who loses, who lives and who dies, even when nature seems to be the prime culprit.

Let’s take a look at some important turning points in history to see how strategic thinking contributed to developments, taking them out of the realm either of the inevitable or of the random and unpredictable. Let’s see how strategic modeling might have altered the direction the world took. Ancient Greece provides a good starting place.

SPARTA’S GALLOPING DECLINE

Sparta, you will recall, won the Peloponnesian War (431—404 B.C.), defeating Athens and emerging as the leading power in Greece and perhaps the world. Yet just thirty-three years later, Sparta was handily defeated by Thebes at the battle of Leuctra. So, in the span of a generation and a half, Sparta went from victory in the age’s equivalent of a world war to a defeat from which it never recovered. How could Sparta go from the pinnacle of glory—the United States of its time, the hegemon, the greatest power on earth—to the nadir of defeat—the vanishing Austro-Hungarian Empire of its day—in a mere third of a century? The answer: They loved their horses more than their country.

Pythagoras died about three generations before Sparta defeated Athens. I mention this to call attention to the fact that the essentials of basic mathematics, especially geometry (but not probability), were readily available to educated Spartans. Their system of government emphasized education, although military prowess was a much greater focus than what we today might call book learning. Still, the Spartans could have assembled a team of mathematicians or political consultants to work out the dangers inherent in the course they followed between their great victory in 404 and their decisive and disastrous defeat by Thebes at Leuctra three decades later. Had they done so, they would have seen that their military success put their state at risk because it changed who got to vote and therefore who got to govern. As we know, voting rules can fundamentally change the very direction of politics. They did for Sparta.

To understand what happened we need to take a brief look at how Sparta was governed. Theirs was a strange and complicated form of government. Citizens, known collectively as Spartiates, were a small part of the population. By 418 B.C. the male Spartiate population fell to around 3,600 from its peak at 9,000. This was out of a total population in Sparta (including a vast majority of slaves) of approximately 225,000. After the defeat at Leuctra in 371 B.C., the Spartiates consisted of fewer than a thousand men, and it kept dropping after that. The number of people who ran the show was plummeting, for reasons directly linked to their victory in the Peloponnesian War. As we saw in Chapter 3, change begets change.

The male Spartiates elected their leaders by shouting loudest for the most desired candidates. How strong the shouts were for different candidates was determined by judges behind a curtain (or in a nearby cabin, unable to see, but able to hear the assembled citizenry) so that they did not know who voted for whom. In this way, the Spartans chose the two people who would simultaneously rule as kings (I said it was a strange and complicated form of government). They likewise chose the Gerousia (a select group of men over sixty who served for the remainder of their lives once elected), and the Ephors, who were elected to a one-year term.

The kings were in charge of military matters and national security. The Gerousia—Sparta’s senior-citizen leaders—set the legislative agenda, while the Ephors had financial, judicial, and administrative power. They even had the authority to overrule the kings, while the Gerousia could veto decisions by the assembly of Spartiates. Under Sparta’s system of checks and balances, Ephors could trump the kings and the Gerousia could trump the Ephors. That made it hard for any one of these elected groups to assert full control over Sparta’s government.

Male Spartiates had the privilege of serving in the army, defending Sparta against its enemies. This was the driving force behind Spartiate life and the defining principle that reflected what Sparta stood for above all else. Spartan citizens were meant to be devoted to their city-state and to be better prepared than any rival to defend themselves and their society. Spartan warriors either died on the battlefield (carried home on their shields) or they returned home alive (and presumably victorious) holding their shields. Any Spartan who returned from battle without his shield was vilified forever as a coward, no matter what heroic deeds he might later perform.

In addition to military service, Spartiates were obliged to sponsor monthly banquets for their groups of fifteen, known as syssitions. Failure to pay one’s fair share to maintain the syssition and its banquets meant losing citizenship. As the term “spartan” now betokens, the banquets were not lavish affairs. They were carefully scripted to ensure equality among all Spartiates. They were occasions for sharing with one’s comrades and also providing for the impoverished masses that benefited from the leftovers.

Victory in the Peloponnesian War, however, created new ways to amass great wealth, especially among the military officers assigned to govern the lands conquered by Sparta. With the empire growing, the uneven distribution of wealth between those Spartiates who controlled colonies and those who did not steadily eroded the Spartan commitment to relative equality among the citizens. This growth in empire led quickly to two disastrous consequences.

First, the newfound wealth led to more lavish banquets. Here, like the earlier example of a failed pharmaceutical merger, the dinner menu turns out to have mattered for the future course of events. This time, however, the cost was much bigger than the failure of a lucrative business opportunity. The more upscale menu may have changed the course of history. As the price of obligatory banquets went up, many Spartiates were compelled to drop out of their syssition because they could not afford the costs. This meant that they lost their rights as citizens. So when it came time to vote for leaders, some citizens were now disenfranchised ex-citizens. They couldn’t satisfy the requirements and so they lost their right to vote. The voting rules, tied as they were to providing what had become expensive banquets, shifted control over Sparta from the relatively many (a few thousand) to the few wealthiest citizens (hundreds rather than thousands).

Second, the cost of maintaining citizenship distorted careers, diminished commitments to remain in Sparta, and turned the political fabric of Spartan life upside down. Young men increasingly chose military commands outside the city-state proper rather than staying at home. They aggressively sought colonial postings because these were the path to wealth and influence. Competition for such positions further corrupted the Spartan system as these lucrative jobs were gained through patronage and cronyism instead of merit and accomplishment.

No longer was Sparta the martial—if I may, spartan—society envisioned by its founder, Lycurgus, four hundred years earlier. Instead, wealth grew in importance, whereas military prowess alone had been the dominant source of prestige before. As wealth grew among a few especially successful military officers, they pushed the cost of maintaining citizenship up, turning themselves into oligarchs. The rising price of banquets compelled more members of the Spartiate to become selfish rather than devoted to the common good. Those who were not driven by greed, or just weren’t good at becoming rich, also tended to be those who could no longer pay for banquets and so couldn’t maintain their rights as citizens. The consequence was that the ranks of Spartan citizens devoted to that city’s founding values shrank. Those who remained became greedier and more self-centered. They needed to be if they were to survive as players on the new Spartiate stage. Greed and self-interest became the way to make a success of one’s Spartan citizenship. Remember game theory’s dim view of human nature? Well, here was that dim view hard at work, gradually transforming a successful society into a basket case.

What, you may well wonder, does this have to do with horses and horse racing, let alone Sparta’s military defeat by Thebes? With this background information at hand, we can now answer these questions and see how game theory could have helped the poor Spartans see where they were headed, even as it predicts that self-interest will beat out the collective good just about every time.

The Greek writer Xenophon provides us with an explanation of what happened to Sparta at Leuctra. Here is what we know from him as Sparta approached its battle against Thebes. We know that the army of General Epaminondas, the leader of Thebes’s military campaign, was greatly outnumbered by the Spartan army under King Cleombrotos. There were about 11,000 Spartan soldiers to only 6,000 for Thebes. The manpower advantage being with Sparta, victory should have been relatively easy, particularly because Sparta had a history of superior cavalry as well as foot soldiering. It also had a phenomenal track record of military success. What was the status of Sparta’s usually exceptional cavalry as the battle approached?

Xenophon reports, regarding the contending cavalries (where Thebes had a numerical advantage):

Theban horses were in a high state of training and efficiency, thanks to their war with the Orchomenians, and also their war with Thespiae; the Lacedaemonian [i.e., Spartan] cavalry was at its very worst just now. The horses were reared and kept by the richest citizens; but whenever the levy was called out, a trooper appeared who took the horse with any sort of arms that might be presented to him, and set off on an expedition at a moment’s notice. These troopers, too, were the least able-bodied of the men—just raw recruits simply set astride their horses, and wanting in all soldierly ambition. Such was the cavalry of either antagonist.¹

The few remaining Spartiates—the richest citizens, as Xenophon reports—withheld their best horses and their best horsemen from the risks of battle. These they thought better kept to run in races on which there would be heavy betting and lots of money to be made. Thus, Sparta’s few remaining citizens, the self-centered and the greedy, chose to put their worst horses and least experienced horsemen in battle and to keep the crème de la crème for themselves. They sacrificed their city-state to preserve their personal prospects at the races. As I said earlier, the Spartans apparently loved their horses more than their country—a telling symptom of the sickness that was draining the life of the famed city-state.

Looking at Sparta’s decline from this particular angle, I constructed a little data set to put into the forecasting program. It shows that the Gerousia and kings were committed to protecting Spartan security from the outset even if it meant personal sacrifices. I assumed that the Ephors started out favoring making money, as indeed it appears they did. The program shows, however, that they would quickly sacrifice their personal wealth (for instance, their horses) to protect Sparta. But what of the colonial commanders and the richest Spartiates, who remained in Sparta? They were the core of the army and the most important people deciding whether to provide their very best for the Spartan cause or for themselves (in horse terms, to use them for the cavalry or to use them for the races). The model shows them to be utterly impervious to pressure from their government, their kings, the Ephors, and the Gerousia. All the government’s checks and balances, all the history of Spartan devotion to the common good, all the threats of the moment couldn’t convince these citizens to do what was best for their country.

It seems that the society’s newfound wealth, and the shift in people’s values produced by that wealth, changed their behavior. Just as in the earlier discussion of Leopold in the Congo and in Belgium, Sparta’s changing conditions led to changed behavior that in turn changed the course of Sparta’s future. Had any smart Spartan looked at the data enough in advance, perhaps they would have seen the threat of collapse that their new “game” exposed them to, and maybe, just maybe, they would have thought more about the long term.

So it was that Sparta fell quickly from monumental power to weak and vulnerable backwater. There was nothing to be done to save Sparta according to the game model. The victory against Athens sowed the very seeds of Sparta’s destruction.

Can we see here a larger lesson to be learned about the risky game that empire expansion might generally entail? Might U.S. efforts to spread democracy, to overthrow “rogue” regimes, come back to bite us, creating the sort of greedy, self-centered egoism at the top that brought down Sparta, or might these efforts rein in the worst abuses suffered by hapless souls elsewhere at the hands of their own greedy, grasping governments? These are questions worth pondering. History certainly has much to teach us.

Sparta’s defeat revolutionized thinking in the Greek world and made possible the resurgence of Athens. The Athenians, with a more democratic—by the standards of the day—and therefore more accountable administration, were able to adjust to their earlier defeat. They could make changes that allowed them to bide their time, rebuild their strength, and reclaim Greek leadership when Sparta faltered. Sparta’s increasingly concentrated oligarchy left it with little to fall back on in the face of its unprecedented defeat. Maybe, then, we are all fortunate that Spartans loved their horses so much. Had they not, the early Greek experiment with democracy might have failed miserably, and this most beneficial form of government would have died so soon that no one would have thought to resurrect it a couple of millennia later.

Sparta’s love of horses reminds me that it is time to get back in the saddle again. You know—where a friend is a friend. I have in mind the friendship that Luís de Santangel—you’ll find out about him soon enough—owed to Ferdinand and Isabella of Spain and the consequences of that friendship for Christopher Columbus and even for those of you reading this book anywhere in the Western Hemisphere, the so-called new world. Santangel is the unsung hero of our next game. He reminds me of the French bankers we met in Game Theory 102. They, like Santangel, understood that demanding too much leads to nothing. Just as the French bankers put a merger together by agreeing to let the German executives remain in Heidelberg, Luís de Santangel figured out how to merge the interests of Spain’s monarchs with those of Columbus, to the benefit of both.

So let’s leap ahead now to the end of the fifteenth century. That time, the age of discovery, created another, new form of challenge to the dominant political order of the day. Whereas Sparta suffered from becoming rich, Spain suffered in comparison to its great-power neighbors like Portugal and the Catholic Church because it was poor. With Santangel’s help, Columbus would change all of that, at least for a century or so, but not before he would have to swallow some pretty bitter pills in order to make a deal.

WHY SPAIN “DISCOVERED” AMERICA

In fourteen hundred and ninety-two Columbus sailed the ocean blue. I know, you already know that. It is curious, though, that most of us know very little about why Columbus, an Italian navigator recently employed by the Portuguese court, sailed under the Spanish flag. The story behind Ferdinand and Isabella’s decision to back Columbus’s journey rests on the thinnest of distinctions between rejection and acceptance. Surely had it not been for Columbus, someone else would have found the “new world,” but then the course of European and American history would have been radically different. There would have been no Spanish empire, no Spanish armada for the British to defeat, probably no Sir Walter Raleigh, no Monroe Doctrine, no Juan or Evita Perón, and who knows what else. (If you will allow me a little personal view on Colum-bus’s importance, probably without him there wouldn’t even be a Bueno de Mesquita family anymore. They were pretty prominent back then, operating within the Columbus family’s fiefdom of Jamaica as—of all things—pirates of the Caribbean.²)

Columbus first put forth his proposal—to find a westward passage to Asia—to the Portuguese crown, then the world’s greatest sea power. He would sail for Japan by going west from the Canary Islands. According to his reckoning, the distance to Asia was about 2,400 nautical miles. He did not think that a significant land mass was in the way of the passage, although he did expect to encounter some unknown islands. Columbus understood that there was a real risk that there would be no opportunity to get fresh water and food for his crew once they left the Canary Islands, but he did not view this as a severe problem. He believed his ships could carry enough food and fresh water for such a journey. He felt that he would have no trouble reaching his destination or returning safely. Columbus asked Prince Juan II of Portugal to fund his project—and was turned down flat.

Many factors worked against Columbus’s effort to sell his ideas to Portugal. Thanks to the vision of Prince Henry the Navigator, they already had lucrative trade routes and colonial expansion along the North African coast and as far away as the Azores, about 900 miles out in the deep water of the Atlantic Ocean. Additionally, at about the same time that Columbus made his offer, Bartholomew Dias discovered the Cape of Good Hope at the tip of Africa, and therefore, implicitly, the passage up the eastern side of Africa and on to Asia. Dias was already under commission by the Portuguese government and had, by the late 1480s, discovered critical features of an eastward path to the Indies. The sea route he found offered ample opportunities for resupplying ships at coastal stations along the eastern shores of Africa. And finally, Portuguese scientists disagreed with Columbus’s estimate that the journey involved only 2,400 miles. They thought that the distance between Portugal and Japan going west was not much different from the distance between these two countries going east around the tip of Africa. They believed the distance from the Canary Islands to Japan was about 10,000 miles (it is actually about 10,600 miles), plus the additional miles from Lisbon to the Canaries. This difference in estimates of the distance was crucial. From the Portuguese perspective, the probability that ships could reach Asia by sailing west was almost zero. No ship of the day was capable of a ten-thousand-mile journey without stopping in ports along the way for food and water. Quite simply, the Portuguese government believed that such a journey was doomed. There just wasn’t much in Columbus’s plan for the Portuguese.

Disappointed, Columbus sought support elsewhere. His brother, Bartholomew, tried to entice the kings of France and England, but they were tied up in domestic political problems at the time and showed no interest. Columbus approached the Spanish government in 1486. As with his brother’s efforts in France and England, Columbus found little to encourage him in Spain. The Spanish monarchy was too busy to pay much attention to Columbus. There was trouble with their Moorish neighbors and with the pope, especially since the Spaniards had backed the schismatic pope in Avignon.

Columbus, having no place else to turn, stayed on in Spain for the next six years, repeatedly being put off, awaiting the findings of governmental commissions studying his proposal. He was told that a firm decision could not be made until Spain resolved some of its internal problems, most notably its war with the Muslim-dominated Spanish state of Granada. That struggle finally came to an end in 1492. In fact, 1492 marked a major turning point for Spain. The defeat of Granada in January meant that all of the important kingdoms of Spain were now united under Ferdinand and Isabella. At last they were ready to turn to the proposal made by Columbus. His time had come, but the circumstances were not so much in his favor, and he knew it.

The Talavera Commission had reported to Isabella in 1490 that Columbus’s plan was weak and advised against backing him. Like the Portuguese, members of Spain’s Talavera Commission felt that Columbus greatly underestimated the distance across the ocean between Spain and Japan. Columbus was able to point to evidence to support his estimate of the distance. He noted that bodies and unknown trees occasionally washed ashore. These, he pointed out, had decayed by amounts that were consistent with his estimate of the sailing distance. Of course he did not know—how could he?—that he was about right regarding the distance to the next really big landmass, but that landmass was not Asia, it was the Americas.

Columbus grew weary of waiting and made a take-it-or-leave-it offer. Given the negative reports on his prospects of success, and given that he was demanding payment up front, Columbus found himself once again facing rejection. Ferdinand, in particular, preferred leaving Columbus’s proposal to taking it. And so Columbus packed his bags and headed out of town. But this time, thanks to the intervention of Luís de Santangel, the course of Spanish-American history was assured.

Santangel, keeper of the Spanish Privy Purse, was roughly the Spanish equivalent of today’s U.S. secretary of the treasury. He saw the potential merits behind Columbus’s plan, and—most important—he saw a way to justify the risks by diminishing the costs. He called on the queen the very day that Columbus left Santa Fe, urging her to meet Columbus’s terms. Santangel feared (apparently mistakenly) that Columbus would sell his plan to one of Spain’s competitors.

Eventually he persuaded Isabella, who was more sympathetic than Ferdinand, to support the proposed journey provided that he, Santangel, would raise the money. It all came down to a matter of price. Columbus had begun by insisting that the Spanish monarchs pay the costs of the expedition in advance, including his compensation. The Spanish crown was unwilling to meet those terms. Later he reduced his price, asking only for the cost of three ships and their provisions and crew up front. He agreed to a 10 percent commission for himself and his heirs drawn from any wealth generated by his discoveries. That meant a smaller upfront cost, and it meant shifting most of the risk to Columbus and his sailors.

Of course, if Columbus succeeded, the value to Spain would be enormous: Spain would dominate a lucrative trade route and would become—as it did—a major economic force in Europe and the world. Under existing circumstances, Spain had no access to the Indies at all. They did not know of the eastward route around the tip of Africa, because the Portuguese kept their navigational charts secret. The Italians, Arabs, and others garnered the benefits from the overland caravan trade. But failure had its risks too. If the monarchs had paid out of Spain’s budget, they would have faced a real prospect of rebellion by Spain’s aristocrats. These very people had tried to overthrow Isabella’s father just a quarter of a century earlier, so theirs was no idle threat. That is why Santangel’s decision to raise the money privately was so crucial to Ferdinand’s change of view. He had removed the threat of rebellion by the Spanish aristocrats, who would have resented being taxed to pay for a scheme with little chance of success. Whatever the modern take on Columbus, we surely owe Luís de Santangel three cheers for a job well done.

The Spanish decision is readily modeled with just four players: Ferdinand, Isabella, Santangel, and Columbus. As is fairly typical of a negotiated contract or business acquisition, price is a big issue. Columbus wants the most he can get. Ferdinand wants to pay nothing now; he wants it all on spec. Isabella is less negative than Ferdinand, while Santangel is supportive of the proposed exploration, but only at a price he can raise. Columbus cares most, of course, followed by Santangel and then Isabella. Ferdinand is least focused on Columbus’s proposal, being more concerned with mending fences with the pope in Rome and managing his newly unified country. As king, Ferdinand has the most clout, but Isabella was no slouch and neither was Santangel. Columbus probably had relatively little ability to persuade anyone. After all, he had failed in his efforts for six years. Here, then, is the data set I constructed:

The initial prediction is between 25 (the weighted median voter) and 37 (the weighted mean voter). You can calculate those values yourself from the table. The eventual prediction after the model simulates the bargaining process and its dynamics is for an agreement to be reached at whatever price Luís de Santangel was prepared to offer as long as he was prepared to pay more than Isabella. If Santangel had offered less than Isabella’s price, no deal would have been reached and world history would be quite different. Santangel was no fool. He was a skilled strategist who understood how to persuade and to whom he needed to make his pitch.

In the model’s logic, Santangel first persuades Isabella and then Ferdinand to go along—at no out-of-pocket expense to themselves—and then he negotiates with Columbus. That seems pretty close to what actually happened. Of course, we don’t know how much he was actually prepared to pay, only what he did pay. That’s just the sort of information that my car-buying technique can ferret out, but to use that approach there have to be multiple bidders. Columbus knew—and probably Santangel, Isabella, and Ferdinand did not—that there were no other credible prospective buyers for his plan. So he probably agreed to a lower price than he could have gotten. Too bad Columbus didn’t have a predictioneer available to help him negotiate a better arrangement, but the important thing is that the deal got done.

While the implications of Columbus’s success are pretty apparent to us in the new world, it also had far-reaching consequences for Europe, which provides a nice little segue to our next case, World War I. You see, Ferdinand and Isabella’s nephew, Philip II, was born in Valladolid and became the Spanish monarch in 1556. Philip was Spain’s king during the defeat of its armada by England in 1588, which laid the groundwork for England’s emergence as a great power and rival to the Spanish empire. Philip also was the Holy Roman Emperor, making him one incredibly powerful fellow. He ruled over Spain and its American empire (thanks to Columbus, Luís de Santangel, and Philip’s aunt and uncle), but he also ruled over Austria, Franche-Comté, Milan, Naples, the Netherlands, and Sicily.

And so the success won by Luís de Santangel’s clever maneuvering translated a generation later into binding Spain and Austria together. It also translated into sustained hostility between the French house of Burgundy and Philip’s Habsburg family in Austria and elsewhere. We already know of the tension between Philip’s family and England following the armada. And so, with lots of action along the way, the times of Ferdinand and Isabella had already set the foundation for “the war to end all wars” in 1914.

Let’s have a look at the aftermath of the assassination of the Archduke Franz Ferdinand, heir to the Austro-Hungarian throne. We can use the history of the crisis precipitated by the Archduke’s murder to ask whether the First World War (the European monarchies’ last gasp) was inevitable or could have been avoided. And if it was avoidable, what needed to be done differently? We will use my new forecasting model to address these questions.

AVOIDING WORLD WAR I

The circumstances of World War I paint a truly sad picture. Wars almost always could be avoided if people just knew at the outset what the outcome would be. They can almost always make a deal before fighting starts that leaves both sides better off than is true during and after the war. This is so for the simple reason that whatever costs the combatants bear in fighting, they could avoid bearing while agreeing to the same conclusion as arises at war’s end. The problem is, of course, that each side is unsure at the outset how things will turn out. They bluff about their own strength and resolve in the hope of extracting a really good deal. Much of the time that may work. Wars, especially big wars, are rare events. Sometimes, however, bluffing is tremendously costly. Rather than reveal the truth, governments sometimes fight wars they would have liked to avoid, or at least know too late that they should have avoided. One way contenders in a fight could use predictioneering is to simulate what is likely to happen before the events actually unfold so that they can avoid this very problem, maybe even saving millions of innocent lives as a result.

My new game-theory model (being applied here for the first time) shows a number of ways the First World War could have been avoided. Tens of millions lost their lives because a handful of diplomats played their cards poorly. That is the essence of Greek tragedy in modern times. Before I address how the war might have been avoided, let me provide a brief background on the circumstances that led to it.

Taking a very broad and long view, it is evident that the eighteenth and nineteenth centuries were a time in which those who adopted more democratic forms of government and more capitalist economic modes, such as the Netherlands and England early on and France later, enjoyed burgeoning wealth and influence in the world. Monarchy seemed to be in decline.

Zooming in on the latter half of the nineteenth century, we see the unfolding struggle to control Europe’s destiny. Germany as we know it did not exist for most of the nineteenth century. Instead, modern-day Germany was divided into many princely states—Prussia, Saxony, Baden, Württemberg, and many others. Austria dominated German affairs.

All of this was to change with the rise of Otto von Bismarck as Prussia’s minister-president (they certainly went in for awkward titles). Bismarck built Germany into a European power. First he united Prussia with several smaller German princely states to fight the Seven Weeks’ War (1866), in which, to the surprise of most European leaders, he quickly and easily defeated Austria. This war marked the end of the post-Napoleonic Concert of Europe system of checks and balances that had been forged half a century earlier to ensure stability among the great powers of Europe (then consisting of Austria, England, France, Prussia, and Russia) and to prevent the rise of another Napoleon.

The Seven Weeks’ War revealed that Austria was much weaker than its status as a European great power implied. Desperate to maintain itself among the ranks of important states, the Austrian government agreed to a merger with Hungary that resulted in the creation of the Austro-Hungarian Empire. This was the same merger deal that the Austrians had rejected just before their 1866 defeat. The creation of Austria-Hungary helped keep Austria in the running as a great power, slowing but not reversing its declining political position. Just four years later, Bismarck went to war against France, defeating Napoleon III in the Franco-Prussian War of 1870—71. With France’s defeat, Bismarck succeeded in unifying the remaining German princely states, creating modern-day Germany. Whereas Austria had dominated the pre-1866 concept of Germany, it was now excluded, not to be reunited with the rest of Germany until Adolf Hitler—an Austrian by birth—rose to power about sixty years later. By 1871, Bismarck had established Germany as the rising power of Europe and helped France to join Austria (now Austria-Hungary) as a state in decline. This set the stage for the First World War.

Revolutions against monarchy and oligarchy were bubbling up everywhere. There was revolt in Russia in 1905, in Mexico in 1910, and in China in 1911. From the Austro-Hungarian point of view, the most threatening emerging nationalist challenge to monarchy came from the Balkans. There the Austro-Hungarians saw in the experience of the Ottoman Empire the foreshadowing of their own demise. The kingdom of Serbia tripled its territory as a result of the Balkan Wars (1912-13), becoming a magnet for Serbian nationalists. They wanted all of Serbia out of the Austro-Hungarian Empire. Those tensions burst to the surface on June 28, 1914, with the assassination in Sarajevo, today the capital of Bosnia and Herzegovina, of the prospective heir to the Austro-Hungarian throne, Archduke Franz Ferdinand.

The assassination prompted Austria-Hungary’s government to issue an ultimatum to the Serbian government: give up your sovereignty, or it’s war. The Serbs were not without friends, and of course they were reluctant to give up their hard-earned independence. It seems that the Austrians were counting on this. The diplomatic records of the day, now open to us, reveal that they chose to make demands that they were confident could not be accepted. Apparently, the Austro-Hungarian leaders wanted a little reputation-building war with Serbia.

Europe’s great powers chose sides in the dispute. Russia sided with the Serbs. Under the terms of the Triple Entente—an alliance between Russia, France, and England—France and England also chose to side with the Serbs. The Russian decision triggered a response from Germany, by then Austria-Hungary’s ally. Under the terms of their alliance with Austria, Germany backed Austria-Hungary. Their broader alliance ties meant a high likelihood of additional support from Romania, Turkey, and especially Italy. The Dual Alliance of Austria-Hungary and Germany had been expanded in 1882 to include the new European power of Italy, with the expanded alliance referred to as the Triple Alliance.

Fearing an aggressive move by Germany in defense of Austria-Hungary, the Russians mobilized. They intended, in game-theory terms, to send a signal that they were committed to Serbia’s defense. This prompted a similar mobilization by Germany. Much as in the prisoner’s dilemma game we discussed earlier, each side could see that conciliation was better than war, but they also could see that trusting their adversary to pursue a settlement was risky. And so they found the result that follows from the logic of the prisoner’s dilemma: they fought instead of settling. In a few short weeks, the conflict over Serbia escalated to involve all of the great powers on the Continent. World War I had begun. The little reputation-building war between Austria-Hungary and Serbia was not to be.

Shortly, I will apply my model to inquire what might have happened if the Triple Entente of Britain, France, and Russia had been more able in 1914, or, for that matter, if the Dual Alliance of Austria-Hungary and Germany had been more skillful. First, however, let’s pretend that there was a little army for hire of people with good math skills pounding out my calculations in 1914. What would they have predicted with no advantages of hindsight?

To address the 1914 crisis—not the fighting of the war, mind you, but the diplomatic run-up to war—I constructed inputs for the computer program that measure the degree to which each of the European countries, plus important non-Europeans including the United States and Japan, favored Serbia’s or Austria-Hungary’s foreign policy in 1914. I estimate salience based on a mix of expert judgments and geographic proximity to the Austro-Serbian crisis. Potential influence is based on a standard measure of “national power” collected for every country in the world for every year from 1816 to roughly the present by the academic enterprise, introduced earlier, called the Correlates of War Project. Of course, I use the estimates for 1914. Since I am examining this case using my latest model, I include the additional variable it requires. This variable measures the extent to which each player is resolute in the position it has taken even if that means a breakdown in negotiations or, conversely, is sufficiently eager for an agreement that it will show considerable flexibility in its approach to negotiations. Put in terms of our earlier discussion of health care, this new model includes an input that calibrates how much a player’s bargaining style looks like Bill Clinton’s (100 on this variable’s scale) or like Hillary Clinton’s (0 on this variable’s scale) back in the early 1990s. This “commitment” variable’s values are based on my reading of the historical record in the run-up to World War I. Any interested decision maker in 1914 would have had access to the information used here. And if they had my equations, they could have done the exact analysis I report.

Austria-Hungary, Germany, Romania, and Italy start off at position 100, indicating a full endorsement of Austria’s position against Serbia following Franz Ferdinand’s assassination. Serbia and Greece start off at a position of 0 on the issue scale, indicating their total opposition to Austro-Hungarian demands for Serbia to surrender its sovereignty. The rest of the European states fall approximately between 33 and 45 on the scale, suggesting that they tilted toward Serbia and against Austria but not decisively.

As seen in figure 9.1, a palace full of bearded mathematicians crunching away on the numbers in 1914 would have anticipated war. They also would have realized that war could be avoided if they just crunched the numbers long enough, reflecting a prolonged diplomatic effort instead of a rush to war. The figure shows that the model anticipates war sometime in August 1914. This is the stage at which the model’s logic says diplomatic efforts to resolve the dispute without resorting to the use of force would have ended.

FIG. 9.1. The Predicted Failure of Negotiations During the 1914 Crisis

You see that the model is constantly calibrating the expected benefits from continuing to negotiate, weighing them against the model’s estimate of the expected costs from continuing to pursue diplomacy. Eventually, in the absence of an agreement, the players conclude that the prospects or value of a future agreement just isn’t worth the effort. In essence, the model’s algorithm makes a judgment about the value the players attach to extracting a concession tomorrow compared to extracting the same concession today. Getting some benefit sooner is always worth more than getting it later. In this instance, the period that corresponds approximately to early to mid-August happens to be the time the model says the game would end because too little progress was being made in closing the gap between Austrian demands and Serbian concessions. So the game predicts its own end in August. At that point there is no agreement between the main antagonists, and so, according to the model, a new game starts, with generals taking over from the diplomats.

Up to this point the Austrians (supported by their German allies) have persisted in demanding enforcement of the Austrian ultimatum. Meanwhile the Serbian government has gone a good distance toward meeting many of Austria’s demands. Still, Serbia shows no willingness to accept the Austrian ultimatum, exactly as the Austrians hoped. Instead, Serbia adopts a moderately conciliatory posture that is consistent with the concessions pushed by the British, French, and Russians. The latter three, according to the simulated crisis, were believed to be strongly committed to finding a settlement. Because of that, neither in reality nor in the simulation did the Austrians and Germans think their foes in the Triple Entente were likely to go to war on Serbia’s behalf.

What were the Italians, members of the Triple Alliance, up to during the crisis? In reality, they indicated on July 28, 1914, that they could not support the Austro-Hungarian ultimatum, delivered just five days earlier. With war imminent, the Italians declared themselves neutral. They resigned from the Triple Alliance on the grounds that Austria-Hungary was launching an aggressive, not a defensive, war.

In the model’s assessment, the Italians start out at the same position as the Germans and Austrians, befitting their membership in the Triple Alliance. As can be seen in the figure, by mid-July in model time the Italians break from the Triple Alliance and become neutral. They adopt a position hovering around 50 on the issue scale. So the model sees the Italians moving a week or two earlier than they actually did, but nevertheless it foresees their shift to a neutral position. In the model’s logic, and in reality, the Italians were not committed to standing by their Austrian and German allies once they recognized that the unfolding events were going to produce something vastly larger than a small Austrian-Serbian war.

The model indicates that Austria-Hungary and Germany expected war over Serbia for the first few weeks of the crisis, while Serbia shared that expectation. Austria actually declared war on Serbia at the end of July while professing to have no quarrel with others. By the start of August the model anticipates that Serbia was relegated to a relatively minor role as events ran ahead of Austria-Hungary and Germany’s ability to cope with them. Germany in fact declared war on Russia on August 1, and the war anticipated by the model’s logic actually began.

Was war inevitable? Emphatically the answer must be no! First, we can see in the figure that had the contending parties sustained negotiations one or two months longer, postponing the decision to go to war, the Germans would have better comprehended the dangerous big picture. They would have (according to the model’s predictive logic) broken ranks with the Austrians and come to agreement with the British and their allies. The Austrians would have gotten the majority of what they wanted under the agreement that the model indicates could have been reached in September or October 1914. Of course, this agreement needed the diplomats to remain in charge instead of turning choices over to the generals. The deal that could have been struck would not have included the surrender of Serbian sovereignty. But all that is beside the point since, alas, the game simulation suggests correctly that the diplomats would not have continued negotiating through the early fall. The diplomatic game ends before September and a new game, war, begins.

The beauty of a model is the freedom it gives us to ask lots of what-if questions. We can replay the World War I diplomacy game, just as I did in an earlier chapter for a litigation client, while changing how players present themselves. That way we can see if this or that player could have approached the game better, producing a happier result from its point of view.

Let’s replay the 1914 crisis, this time making the British diplomats more skillful than they actually were but no more skillful than they could have been. I am going to let them look inside the model’s approximation of what was going on in the heads of the German and Austrian decision makers. In this way I am going to pretend that they had a little army of mathematicians doing the calculations my computer does for me. This will make it easier for the British to be more thoughtful and decisive, instead of as wishy-washy as they were.

The historian Niall Ferguson has argued that a big factor leading to war in 1914 was that the Austrians and Germans were uncertain of British intentions and that this uncertainty was caused by the British.³ Britain may have done well for a long time by muddling through, but that was not much of a strategy in 1914. Did the British really intend to defend Serbia, or were they bluffing? Certainly nothing they said or did at that time was sufficient to convince the powers of the Dual Alliance that defending Serbia was really important to Britain. This was an important failing on their part, and it deserves further exploration.

Remember that when we looked at a lawsuit I worked on, we examined the consequences that followed when I advised my client to bluff having a stronger commitment to their bargaining position than in fact they had. Such a bluff can be risky and costly. If the other side believes—correctly—that a tough posture is just posturing and not the real thing, then they will call the bluff. In the lawsuit, that would have raised the odds of a costly outcome. The client would have faced severe felony charges. They might have been exonerated in court, but trials are, as we’ve seen, always risky business. Without bluffing, they were going to face those charges anyway, so bluffing looked (and proved) attractive.

Think how much costlier and riskier bluffing could have been for Britain in the summer of 1914 than it was for my client in the lawsuit. With hindsight we know that the guns of August were not stilled for more than four years. At the end of the war, the United States—not Britain, not France, not Germany, and not Russia—would be the greatest power in the world. At the end of the war, Austria-Hungary would not even exist. But when decisions had to be made, no one knew any of that. They had to think about what their circumstances would look like if they showed eagerness to compromise or if they showed real resolve to stick to their guns, so to speak. The British looked for compromise, and disaster followed. What does the model say would have happened had they bluffed being resolved to defend Serbia, and how could they have conveyed such resoluteness?

The British were in an odd position. It seems that even they were unsure how resolved they were. They were uncertain not only about others, but apparently even about themselves, about what they should or would do. That, presumably, is why the Austrians and the Germans did not read British diplomacy as signaling real commitment to defend Serbia. We also know that when the Russians—believing they were facing an imminent attack—mobilized, this prompted the Germans to do the same, and war began. The Russian mobilization certainly showed their commitment, but it did nothing to improve the prospects of a negotiated settlement. Their mobilization was a very costly “costly signal.” Would British mobilization have had the same dangerous consequences, or could it have broken the impasse?

The data going into the model treat Britain as highly committed to finding terms that all sides can accept. They were assigned a value of 90 out of a possible 100 on “flexibility/commitment,” indicating they really wanted to negotiate and were prepared to live with a major compromise to avoid war. I have repeated my earlier simulation of the crisis, but with one change. I shifted Britain’s commitment to compromise from 90 to 50. A value of 50 signals a balanced approach. A value of 50 means the player actively pursues a settlement but is sufficiently resolved that it will not make a deal very far from its desired outcome. By placing Britain at 50 I am, in essence, trying to test Niall Ferguson’s insight (and that of other historians too) that the wishy-washy British message contributed to the war. I am simulating an approach that the British leaders probably would have seen as a bluff intended to shake up the situation and promote a war-avoiding deal.

What concrete actions might the British have taken to send the message, “We are serious about defending Serbia’s sovereignty”? I am not a military expert, so my speculation will be just that. I am sure a military specialist or historian of British policy in the run-up to World War I would find countless other ways for the British to send the right message. Here is one:

Britain was the world’s greatest sea power (although the Germans were certainly challenging that claim at the time). They could have filled several of their navy’s ships with a few thousand British troops to be transported to the Adriatic, taking them just a short distance from Serbia. Maybe they could have sent some other ships into the Bosporus, roughly flanking landlocked Serbia from either side. This would have served several potentially advantageous purposes. It is very much, in game-theory lingo, a costly signal. Talk is cheap, but sending a fleet into a prospective combat zone is putting your money where your mouth is.

The Germans and Austrians probably would have taken more seriously the prospect that Britain meant business. As we will see, the model indicates just that. Additionally, a naval mobilization of this sort has none of the grave risks associated with the Russian mobilization of ground forces. Russia could move troops quickly to and across the German frontier. Understandably, that made the Germans more than a little jittery. British ships filled with soldiers would have taken a long time to get into position. Finally, the ships would not have been directly in the path on which initial fighting was expected. Thus the shiploads of troops would very much have been a signal of what was to come without precipitating immediate military action. In reality, British ships under French command headed for the Adriatic a few days after war had been declared: too little too late.

When I simulated the prewar 1914 crisis with the British at 90 as their “flexibility” variable, the model indicated that the Austrians and Germans were as uncertain about Britain’s true intentions as they could be. But when I place Britain’s score on this one factor at 50, the model shows that the Germans and the Austrians are convinced that the British will fight. More tellingly, Austria-Hungary’s and Britain’s pattern of interactions change. When Britain shows little resolve, Austria-Hungary anticipates coercing the British into accepting their position. When Britain shows stronger, but not extreme, resolve (50), the Austrians seek a negotiated compromise with the United Kingdom even as they perceive that if Britain is allowed to move first it will mean war. Not, mind you, the little war that Austria sought with Serbia, but the big war that nobody wanted.

Have a look at figure 9.2. Here we see the scenario in which Britain shows more resolve (50 instead of 90). By simulating a tougher British signal, we uncover the sort of intelligence about an adversary’s thinking that would be a lifetime coup for a real-world spy. We discover that with British ships heading for the Adriatic shortly after the start of the crisis, well before war is declared, Austria-Hungary, Germany, and the U.K. perceive the possibility of settling their differences quickly. The Austrians and Germans saw no such prospect (or reason for it) in the simulation of the actual situation. But with the U.K. showing more resolve, the strategic environment is greatly altered. The Austrians and Germans believe that they can and should make a deal with the U.K. in a matter of days after the start of the crisis.

The model says that the Austrians and Germans recognize that they should give up their demand for utter Serbian capitulation. They see an opportunity to persuade the Triple Entente to agree that Austria-Hungary should have real, but not controlling, influence over Serbia’s foreign policy.

Of course, change begets change. The members of the Triple Entente don’t immediately embrace the new offer that (according to the model’s logic) would have been put on the table if the British had sent navy ships to the Adriatic right away. While not caving in to this simulated proposal, the Triple Entente’s diplomats certainly sit up and take notice. The diplomats remain in charge, keeping the generals on the sidelines. While the negotiators hold out for a few weeks, thinking they can extract more concessions from Austria-Hungary, by early August they realize (in the model’s logic—remember, none of this was actually done in 1914) that the Austrians and Germans are highly reluctant to give more. So they take a deal located at about 75 on the 100-point issue scale. That would have given the Austrians more than was put on the table in the real 1914 crisis, but a lot less than the surrender of Serbian sovereignty. It would have more or less split the difference between the British position and the Aus-tro-Hungarian demand. The simulation under these conditions shows that the French and the Russians would have quickly acceded to this compromise. The war to end all wars would have been avoided.

FIG. 9.2. Engineering Successful Negotiations During the 1914 Crisis

Had there but been a thousand mathematicians crunching numbers in London in June 1914, we might not need to ask the next and final question of this chapter: Could World War II have been prevented by the judicious use of a predictioneer’s skills?

NO MORE MISTER HITLER?

The rise to power of Adolf Hitler is a strange and horrendous tale that could have been nipped in the bud sometime between November 1932 and March 1933, if not sooner. It is a tale worth heeding. Whatever else can be said of Hitler, it must be admitted that he was honest and open about his intentions. Not only did his biography, Mein Kampf, published in 1925, announce his ravings to the world; so did he, in campaign speech after campaign speech in 1932. Having failed to come to power in 1923 through an attempted coup d’état (the Beer Hall Putsch, as it is known) in which both German police and Nazi insurgents were killed (and Goering seriously wounded), Hitler was now determined to rise to dictatorial control through legal means. The ballot box would replace the bullet for the moment.

In one campaign stop after another—several per day, as Hitler was the first German politician to take advantage of air travel to cover vast amounts of ground—Hitler declared his intention to ban political parties and suspend the Reichstag, Germany’s parliament, if he came to power. Now, when a campaigner promises peace and prosperity, motherhood and apple pie, we don’t really learn anything about what they plan to do. Being for hope or change or a thousand points of light says nothing. When a politician promises to overturn democracy, that’s a different matter. You don’t lose votes by promising peace and prosperity. I suppose being denied freedom of choice appeals to some people, but certainly not all and probably not many. So when a politician makes such outrageous declarations, we must ask: What does he have in mind? The answer must be that he means what he says. Hitler certainly did.

Of course, we have little need to pay attention to every fringe movement that makes outrageous declarations. But by 1932 the Nazi Party was no fringe movement. The 1930 German election—they ran elections with incredible frequency—gave it 107 out of 577 seats in the Reichstag. In the July 1932 election, the Nazis became the single largest party in the Reichstag, with 230 seats. By then no prudent person could treat Hitler’s campaign promises lightly. Anyone listening should have understood, given the nature of what he was saying, that he meant what he said and he said what he meant. Hitler was a dictator at heart, one hundred percent.

Hitler’s party lost some seats in the November 1932 election but still remained the single largest contingent in the German parliament. The election gave the Nazis 196 seats. By January 1933, Paul von Hindenburg, the beloved and elderly German war hero and president of the Weimar Republic, acquiesced under pressure to make Hitler chancellor. Now the door was wide open to his dictatorial ambitions. In early March 1933 another election was held, almost immediately after the Reichstag fire on March 3. Hitler was quick to blame the Communists for the fire, using that as a pretext to ban them from the Reichstag. He wanted all Communist leaders executed that night—no more Mister Nice Guy—but Hindenburg refused to go along.

The March election was a mixed success for the Nazi Party. On the plus side (from its perspective), the party increased its seat share in the Reichstag from 196 to 288. On the minus side, the Nazis failed to gain a majority. That meant Hitler still had to make deals with other parties; he was not yet completely in control. He was still vulnerable to defeat if a strong enough coalition of parties in the Reichstag joined together to oppose him. The tragedy is that they didn’t.

Shortly after the March 5 election, on March 23, 1933, he negotiated his way to a two-thirds vote in the Reichstag to change the constitution to comply with the terms of the Enabling Act, a piece of legislation to make him dictator. The Enabling Act gave Hitler as chancellor essentially all of the constitutional authority also granted to the Reichstag so that he no longer needed legislative approval for policy changes he wished to put in place. The Enabling Act made Hitler Germany’s dictator and ended the need for future elections. He was well on the way to doing everything he had promised to do during the previous election campaigns.

Once the Enabling Act was approved, probably nothing short of a military uprising or foreign military intervention could have stopped Hitler on his destructive course. What about between November and March? As I said, Hitler’s intentions were no secret. Could he have been thwarted before the Reichstag fire resulted in the one hundred Communist Party members in parliament being banned, making it much easier for Hitler to put together a two-thirds vote? Hitler was stuck operating within the legal system, at least more or less, before the Enabling Act’s passage. It was far from a sure thing that he could muster a two-thirds vote. The key to his success—or failure—was the Catholic Center Party (BVP).

Allow me for a moment to frame the game as it was set up. There were four principal parties in the Reichstag at this time: the Nazis, the Catholic Center Party, the Social Democrats, and the Communists. The Social Democrats and the Communists generally opposed Hitler, and would resist his Enabling Act (the Communists, of course, irrelevant in the actual voting on account of being barred because of their supposed role in the fire). The Catholic party, however, was divided over whether to support the Enabling Act. Their leader, Ludwig Kaas, was no fan of Hitler’s. Nevertheless, Kaas, a priest, negotiated with Hitler for assurances that Catholic interests—inside and outside government—would be protected if Hitler were given their support. Kaas may also have sought assurances of a concordat with the Vatican. Hitler agreed to his terms, understanding the temporary need for compromise.

Hitler’s deal with the Catholic party was the crucial decision that gave the Nazis the two-thirds majority they needed for the Enabling Act. With the Communists barred, the Social Democrats were the only party to vote against the act, and of course Hitler won the game as a result. But it remains the case that without the Catholic Center Party, the Enabling Act would have been defeated, Hitler would not have been made dictator, and, who knows, perhaps the course of world history would have been completely altered.

Beating Hitler was no easy task. We must admit that he played even the parliamentary game the best out of all the parties. His opponents either underestimated him (with fatal consequences) or were simply incapable of outplaying him. That, however, is not to say that there weren’t winning moves open to them.

What or who could have stopped the Catholic Center Party from going along with Hitler? How could they have made someone—anyone outside the Nazi Party—Germany’s new, democratic boss? Can you see a possible strategy?

I applied my forecasting model to this question, constructing a data set in which the stakeholders are the political parties represented in the Reichstag plus Hindenburg. Their power is proportional to the number of seats they controlled, except, of course, Hindenburg, who had no seats in the Reichstag. His personal prestige and popularity, however, gave him great weight, even more than Hitler and his Nazis. Remember, Hitler could not execute the Communist leadership without Hindenburg’s (withheld) approval. I accordingly assigned Hindenburg 67 percent more clout than the Nazis. Positions on the Enabling Act are and were well known at the time. The Communists and the Social Democrats were utterly opposed, the Nazis utterly in favor; Hindenburg leaned favorably toward the Act and the Catholic Center Party did too, but ever so slightly. The rest were committed to the Act.

Right after the November 1932 election, while Hitler was angling to become chancellor, the Social Democrats and the Communists could (according to my model) have struck a deal with the Catholic Center Party, depriving Hitler of the two-thirds majority he needed. To do so, however, they would have had to move meaningfully in the direction of the Catholic Center Party’s policy desires, perhaps so much so that a member of the Catholic Center Party would have become the chancellor instead of Hitler. That is, the Social Democrats and the Communists needed to provide at least as good an assurance of Catholic interests as Hitler astutely provided months later. The model indicates that they did not believe they had this opportunity. They did not think that the Catholic Center leadership would listen to them or make a deal with them, and so, fearing rejection, they didn’t really try (or at least they didn’t try hard enough). The model says they were wrong. Too bad we can’t go back in time to test the waters and see if the deal could have been made.

We do know that Ludwig Kaas, the Center Party’s leader, had in the 1920s developed good relations with the Social Democrats’ then leader, Friedrich Ebert. It is difficult to imagine that under the circumstances Kaas would not have responded to the Social Democrats, especially if they were prepared to support him as the next chancellor (let’s remember game theory’s view of human nature and what it means for individuals seeking to obtain or maintain power and influence). The model says Kaas would have reached a deal with the Social Democrats and the Communists. Of course, for the Communist Party, atheists that they were, bitter adversaries of both the Social Democrats and the Catholic Center Party, this would have been a bitter pill to swallow. But surely it was better than the easily foreseen fate they met after the Enabling Act was passed. Many Communists were murdered, others sent to concentration camps.

Even after the Reichstag fire, the Social Democrats still had the chance to cut a deal with the Catholics, but didn’t (although whether Hitler could still have been stopped by that stage is questionable). Yes, he could have been deprived of a two-thirds majority, but just barely, once the Communists were out of the picture, and he was, as I noted earlier, playing his strategic cards effectively. In November, December, and maybe through January, however, there is a good chance that a defeated Nazi Party would have been relegated to the dustbin of history. Had Hitler attempted a coup at that stage, it probably would have failed. The German security apparatus would have rallied behind a Catholic Center—led government. The German general staff had no love for Adolf Hitler and his brownshirts, and he was a long way from being the undisputed representative of the people. Remember, the Nazis lost seats in 1932. German popular will was not yet decisively behind Hitler or his party.

Without Hitler, the capitalist, democratic world and the communist, totalitarian world led by Joseph Stalin might have butted heads in the 1930s instead of waiting for the cold war. Perhaps even as bloody a war as World War II would have been fought, and perhaps not. Stalin’s Soviet Union might have successfully defended its frontiers, but it probably had nothing like the capabilities of Hitler’s rearmed Germany to wage an aggressive war beyond its borders.

All this is speculation, of course, but there seems little reason to doubt the model’s accuracy in this or the other cases looked at in this chapter, given its track record over thousands of applications. And if we can replay the past accurately and find ways to improve it, as we just did with World Wars I and II, there is no reason to doubt that we can fast-forward the present and work out ways to make it turn out better. That is the whole purpose of this forecasting and engineering enterprise.

In the next chapter, we will play with some of the big issues of our time. I will use my newest model to make live predictions whose accuracy you will be able to check for yourself.