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Eschatologist #11: Black Swans
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February 2020, the last month of normalcy, probably feels like a long time ago. I spent the last week of it in New York City. Which was already ground zero for the pandemic—though no one knew that yet. I was there to attend the Real World Risk Institute. A week-long course put on by Nassim Taleb, who’s best known as the author of The Black Swan. The coincidence of learning more about black swans while a very large one was already in process is not lost on me.
(Curiously enough, this is not the first time I was in New York right before a black swan. I also happened to be there a couple of weeks before 9/11.)
Before we go any further, for any who might be unfamiliar with the term, a black swan is an unpredictable, rare event with extreme consequences. And, one of the things I was surprised to learn while at the institute is that Taleb, despite inventing the term, has grown to dislike it. There are a couple of reasons for this. First people apply it to things which aren’t really black swans, to things which can be foreseen. The pandemic is actually a pretty good example of this. Experts had been warning about the inevitability of one for decades. We had one in 1918, and beyond that several recent near misses with SARS, MERS, and Ebola. And that was just in the last couple of decades. If all this is the case, why am I still calling it a black swan?
First off, even if the danger of a pandemic was fairly well known, the second order effects have given us a whole flock of black swans. Things like supply chain shocks, teleworking, housing craziness, inflation, labor shortages, and widespread civil unrest, to name just a few. This is the primary reason, but on top of that I think Taleb is being a little bit dogmatic with this objection. (I.e. it’s hard to think of what phrase other than “black swan” better describes the pandemic.)
However, when it comes to his second objection I am entirely in agreement with him. People use the term as an excuse. “It was a black swan. How could we possibly have prepared?!?” And herein lies the problem, and the culmination of everything I’ve been saying since the beginning, but particularly over the last four months.
People excuse their unpreparedness because they don’t understand how random the future really is.
Technology and progress have given us the illusion of predictability, but it has actually made black swans more common.
Because of their impact, the future is almost entirely the product of these black swans.
And more terrifying than that, technology has made apocalyptic black swans possible.
Accordingly saying “How could we possibly have prepared?” is not only a massive abdication of responsibility, it’s also an equally massive misunderstanding of the moment. Because preparedness has no meaning if it’s not directed towards preparing for black swans. There is nothing else worth preparing for.
You may be wondering, particularly if black swans are unpredictable, how is one supposed to do that? The answer is less fragility, and ideally antifragility, but a full exploration of what that means will have to wait for another time. Though I’ve already touched on how religion helps create both of these at the level of individuals and families. But what about levels above that?
This is where I am the most concerned. And where the excuse, “It was a black swan! Nothing could be done!” has caused the greatest damage. In a society driven by markets, corporations have great ability to both help and harm by the risks they take. We’re seeing some of these harms right now. We saw even more during the 2007-2008 financial crisis. When these harms occur, it’s becoming more common to use this excuse. That it could not be foreseen. It could not be prevented.
If corporations suffered the effects of their lack of foresight that would be one thing. But increasingly governments provide a backstop against such calamities. In the process they absorb at least some of the risk. Making the government itself more susceptible to future, bigger black swans. And if that happens, we have no backstop.
Someday a black swan will either end the world, or save it. Let’s hope it’s the latter.
One thing you might not realize is that donations happen to also be black swans. They’re rare (but becoming more common) and enormously consequential. If you want to feel what it’s like to have that sort of power, consider trying it out.