We hear “Black Swan” event thrown around as if the COVID19 virus was totally unanticipated. Yes its timing and specific form were not anticipated, but a global pandemic was.
A black swan event is when we encounter something so exogenous that we had no idea it could even exist. It comes from the European world where everyone knew what a swan was: it was a large white bird. All swans were white in the world as it was known then. But when explorers got to Australia, they encountered a large black bird that in all other respects was a swan.
It is a metaphor developed by Nassim Nicholas Taleb to explain:
- Rare events that cannot be extrapolated from normal expectations in history, science, finance, and technology.
- Rare events that cannot be computed using scientific methods.
- The psychological biases that blind people, both individually and collectively, to uncertainty and to a rare event’s massive role in historical affairs.
The COVID19 (aka SARS-2) virus, while novel, was not beyond the realm of normal historic expectations. It’s also known as SARS-2, since it is Corona virus genetically similar to SARS-1. There have been global or near global pandemics before, some with lethal impact like the bubonic plague, like the influenzas of 1890-2 and 1918 which killed millions, HIV/AIDS, H1N1, Swine flu, Ebola… There have been many. While timing is not precisely predictable, the inevitability of its incidence certainly is.
There is no reason or excuse for otherwise developed “1st world” countries not to be ready for these pandemics. In fact, many so called (inappropriately labeled) “black swan” events are actually “ostrich head in the sand” events. They are predictable, but we don’t want to know.
COVID19 was expected. The problems that have occurred are the failure to manage the social transmission of the virus. This has been exacerbated by the elimination of the pandemic office in the NSA, another symptom more of the ostrich than the black swan.
Businesses are often aware of long shot potential risks but decide to ignore them, feeling the cost of preparing will be more harmful given the low probability of the harmful event occurring.
We learned something from the runs on the banks in the Great Depression. We put aside funds through the FDIC. It was a cost, but we recognized the huge harm that a run on a bank could produce.
We had done some of that preparation by initiating the pandemic office but we didn’t stay the course and now we are suffering as a result.
The risks of not planning and preparing for the long-term low percentage events can be existential. When you look at the data, you can understand that these events will occur. You can only hope that you have time to prepare between events.
We need to listen to and trust the science to protect our ourselves and the good earth.