Was Covid-19 NOT a black swan event?! (Part 1)

Nassim Taleb and Adam Tooze say it's not; I disagree. Just cuz' a few experts issued a warning, doesn't mean the disaster was predictable or preventable...

Merry Christmas everyone! I hope you’re all having a restful holidays season with your loved ones. There’s no better time to think about existential risks to humanity than Christmas, so let me spice up your holiday vibes with this email :)

Adam Tooze. Image from the Barron’s article cited below. Photograph by Gary Doak / eyevine / Redux.

Ever since the great intellectual Nassim Nicholas Taleb devised the phrase “black swan,” people have fervently used it to describe abnormal and rare events. When Covid-19 caused a plunge in stock markets in March and forced a global shutdown, many started to call it a black swan event. Narratives spur counter-narratives, and some scholars like Taleb himself and Adam Tooze have now come out to refute that Covid was NOT a black swan event.

I believe Covid-19 is, and we will continue to fail to predict and prevent black swan events that pose existential threats to humanity.

What is a black swan event?

According to Investopedia:

A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, severe impact, and the widespread insistence they were obvious in hindsight.

Classic black swan events include the rise of the internet and personal computer, the September 11 attacks, and World War I. However, many other events such as floods, droughts, epidemics, and so on are either improbable, unpredictable, or both.

The term “black swan” is quite intuitive: You keep seeing white swans in real life, so you develop a psychological bias that there would only be white swans in this world. However, this belief can be easily shattered when a black swan suddenly emerges in your life one day, but when that happens, you might be completely blindsighted and caught off guard. The “collective blindness” and unpreparedness to black swan events could impose great costs to the society – like when the bankers saw that their risk management models worked every single day, until the 2008 financial crisis happened and everything broke down. But by then the realization is already too late.

Adam Tooze and Taleb: Covid isn’t a black swan event

My friend Christian sent me this article two days ago entitled “The Coronavirus Pandemic Wasn’t a Black Swan Event. Why We Must Prepare for More Outbreaks.” It is an interview with Adam Tooze, the Shelby Cullom Davis chair of History at Columbia University. He is one of the world’s most brilliant financial historians and has been very active commenting on Covid’s impact on the global financial system. He was just on our podcast last spring discussing his insightful bestseller Crashed: How a Decade of Financial Crises Changed the World. He is currently working on Shutdown: The Global Crises of 2020, which will come out in 2021, and Carbon, which will be published in 2023.

Tooze’s argument is the following:

The thing that 2020 forces us to come to terms with is that this wasn’t a black swan. This kind of pandemic was widely and insistently and repeatedly predicted. In fact, what people had predicted was worse than the coronavirus. Since the early 1970s, scientists and social scientists have come to the view that humanity’s relationship with the natural world has become unbalanced. One facet of that is climate change. Another is the concern about “emerging infectious diseases,” which is what you get when more people go into areas that hadn’t previously had humans and start interacting with animals and catching new viruses. The classic cases are Ebola and AIDS, but you can also look at the new strains of flu coming from birds and pigs.

…

People knew about all these dangers, and there has been increasingly elaborate modeling about the risk of a catastrophe. What we’ve seen in 2020 was that the risk management failed.

In Tooze’s view, the Covid pandemic was entirely predictable, preventable, and highly probable. To simply attribute such an event to be “black swan” is almost intellectually lazy, and the danger of this line of thinking is that it could excuse the policymakers who screwed up big time.

In fact, even Taleb, the inventor of the term, thinks that Covid is not a black swan event, as reported in this New Yorker article in April:

Nassim Nicholas Taleb is “irritated,” he told Bloomberg Television on March 31st, whenever the coronavirus pandemic is referred to as a “black swan,” the term he coined for an unpredictable, rare, catastrophic event, in his best-selling 2007 book of that title. “The Black Swan” was meant to explain why, in a networked world, we need to change business practices and social norms—not, as he recently told me, to provide “a cliché for any bad thing that surprises us.” Besides, the pandemic was wholly predictable—he, like Bill Gates, Laurie Garrett, and others, had predicted it—a white swan if ever there was one. “We issued our warning that, effectively, you should kill it in the egg,” Taleb told Bloomberg. Governments “did not want to spend pennies in January; now they are going to spend trillions.”

Taleb is coming from the same place as Tooze: stop attributing everything to black swan and actually do your job! Had you done your job and listened to the experts, there wouldn’t have been this “black swan” in the first place!

We have always and will continue to ignore existential risks

I empathize with Tooze and Taleb’s sentiment, but I think they’re too idealistic in implying that we would’ve been able to predict and prevent Covid-19 simply because epidemics have long been recongized as an existential threat to humanity. Yes, we’ve come to recognize that pandemics pose an imminent threat after the AIDS, SARS, and Ebola outbreaks, but they were never bad enough to result in a fundamental shift in public sentiment and social norm that are needed to tackle this threat, especially for the Western developed nations.

Both Tooze and Taleb cite Bill Gates’ remarks in 2019 about pandemics as somehow predicting Covid. No, he didn’t. But even if he did, it had little influence on the public. People like Gates talk about big ideas and urgent issues for the world all the time, and frankly very few people start to seriously give a sh*t about these long-term threats after listening to their TED talks. We didn’t back then; we still don’t today even after Covid happened; and we won’t in the future…

The reason I say this is because along with epidemics, Gates and other public intellectuals also constantly bring up a dozen other existential risks to humanity that are in fact of statistically significant probabilities but we continue to ignore today.

Oxford philosopher Toby Ord projects that humanity has approximately a 1 in 6 chance of going completely extinct by the end of the 21st century (you can listen to his podcast interview with Ezra Klein if you want to learn more).

Specifically, he lists nuclear warfare (1 in 1,000 chance), bioterrorism (1 in 30 chance), unaligned artificial intelligence (1 in 5 chance), collision with asteroids and comets (1 in 1 billion chance)…

For bioterror, there are examples of how even high-level security labs could leak superviruses designed by well-intentioned scientists for the purpose of experimentation (gain of function research). Meanwhile, we’ve been witnessing the democratization of genetic engineering, where you can order CRISPR kits online and genetically edit yourself by yourself. There is little legislative progress on this matter.

So, if we get into a regional nuclear warfare or suffer from bioterrorism in 2021, some experts would come out and say “hey listen I’ve been warning you about this for years.” Yes, they have been, but does their previous remarks make the event no longer a black swan event? Not really. It would still be a catastrophic incident that the majority of the “expert class” and the public didn’t foresee.

Government is not incentivized to work on long-term threats and prevent black swan events

People often cite President Trump’s closing of the White House pandemic office as his failure to predict and prevent the pandemic. There are many flaws in the way President Trump handled this crisis, but I think it is somewhat far-fetched to criticize the shutdown of that specific office.

As I’ve explained above, there are more than a dozen existential risks. So, we’ve all been warned, but if you were President-Elect Biden, would any or all of these risks be on the top of your to-do list when you start in January? And if one of them were to materialize in 2021, could you really be blamed for not taking enough precaution in foresight?

Bruce Schneier is a famous public-interest technologist who came on our podcast to explain why IoT (Internet of Things) inventions like smart thermometers and smart cars pose a great existential threat to humanity in the long term, but nobody is paying attention because policymakers don’t get rewarded for working on long-term trends:

Imagine a politician looking at a large budget allocation for mitigating a hypothetical, long-term, strategic risk. She could designate funds for that purpose, or for more immediate political priorities. If she does the latter, she’s a hero with her constituents, or at least the constituents from her party. If she sticks with spending on secruity, she risks being criticzed by her opponents for wasting money or ignoring these immediate priorities. This is worse if the threat doesn’t materialize (even if it’s the spending that causes that). It’s even worse if the threat materializes when the other party is in power: they’ll take the credit for keeping people secure.

In other words, the incentive to NOT be prepared for long-term threats is quite high. In hindsight, we think President Trump really screwed up by not dedicating more resources to prevent pandemics at large, but going forward, how much resources would you dedicate to all the other existential threats that you’ve been warned about?

If we cannot answer the question above, then we will likely continue to fail to predict and prevent existential crises. It’s not one politician’s fault per se, but the underlying weakness of our socio-political structure.

Can someone give me a reason to be optimistic in 2021?

It is truly difficult to move the needle on these issues.

Just look at climate change – experts have been warning us about this existential threat for decades, and the public awakening and mass social movement probably still wouldn’t have started had Greta Thunberg not gone viral… And had the voter base for the Democratic Party not demanded climate progress more actively, the Party probably still wouldn’t have brought it on its platform this election cycle. And even so, the Biden administration is unlikely to devote its limited political capital on a major climate bill.

This is not to mention that the other half of the Republican voter base is still not convinced that climate change is a real issue, and true bipartisan legislative progress is nowhere to be seen. By the way, climate change is just one of the many existential risks…

Good luck preventing the next black swan existential threat… and Merry Christmas!

I have more objections to Taleb and Tooze’s arguments – to be continued in Part II… As always, please let me know your thoughts. You may leave a public comment, or privately respond to this email which will carry your words directly to my personal inbox.

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