A 'Manhattan Project' for Finance?

Life is complex. Duh, right? Not according to much of the history of Western science and economic thought. Until complexity science and chaos came along and offered new ways of thinking about dynamic systems (ie, most of life) which continues to revolutionize notions of sustainable development. And according to the recent Conde Nast Portfolio (portfolio.com), many of the foremost complexity scientists (inlcuding economists) are claiming that the financial crisis was no 'black swan' (a totally unpredictable event) - but that we have the scientific and technical ability to build models strong enough to predict (and therefore, the assumption goes, to manage) financial downturns. Some are calling for a a 'Manhattan Project'-type approach to approaching Finance, one that uses the knowledge and expertise of more than just economists. Already, Didier Sornette, one of the world's experts on earthquakes, is heading the Financial Crisis Observatory in Zurich.

I'm all for different knowledge-groups coming together to effect positive change. And I don't doubt that there is tremendous potential in modeling. But if there is anything I know from my studies on risk and uncertainty is that you just can't predict everything. That's the whole point of the 'Black Swan' hypothesis. Models are only as good as the information - and the variables - we put into them. And, even if we all pool all of our knowledge, I don't believe we can ever know everything- not least, because we simply don't know what we don't know.

And even if we could predict, that doesn't necessarily mean we will be good at managing. Look at climate change - we can predict it is going to happen and yet as we watch the effects of it happening we struggle to respond.

But the problem with modeling isn't just one of humans using fancy technology to attempt to predict the future with varying degrees of success. Perhaps more problematic is, what if your models (or your intuition) tells you something you don't want to know? I personally know at least three different people, all with connections into the 'high halls' of finance, who predicted the kind of financial crisis we are in now as a result of the housing bubble. They were ignored. Now, they are angry and bitter. Cassandras often are.

It's not just a question of prediction and modeling. It's also a question of, how do we, as a global society, approach massively Inconvenient Truths?