We’re Not Ready for Another Black Swan Event
By: Jay Michaelson
Tags: Current Events, Media, Economy, Money, Elections

Let’s work the problem in reverse order, starting with the coronavirus. While it’s somewhat specious to call this virus an outlier, there’s no denying that its impact has been significant, and that the overwhelming lack of capacity to respond to it has come as an unpleasant surprise to the majority of the globe. However, we are already starting to see articles, and research being done, which suggest that certain warning signs were missed, not about the virus itself, but about the state of global pandemic response mechanisms. If nothing else, the coronavirus should qualify as a Black Swan on the strength of the revelations it has made about our preparedness to deal with something like this.

Secondly, the economic impact of the electoral gunfight between Sanders and Biden. Elections in the US typically have some measurable effect on the stock market, and there is ample statistical data to back that up. What makes this particular election a Black Swan is the impact that even the smallest shift in polling has. It’s almost as if the stock market, in some way, is tied to the two Democratic contenders, with Sanders pulling one way, and Biden pulling another. It remains only left to the imagination as to what forces of economic instability may be unleashed come late summer, when the Democratic nominee is officially declared and begins to square off against President Trump.

Finally, the economic instability already created by the political environment and the unrelentingly bad news regarding the COVID-19 response measures is being dealt another blow by the ongoing fiasco of OPEC’s failed dealmaking. If any of the three events of the past few days can be said to be the straw breaking the camel’s (or swan’s) back, this is it. While oil price fluctuations and market tremors are anything but new, the confluence of circumstances that led not only to the breakdown of the OPEC pricing deal, but also the swift and catastrophic response by the government of the largest, and most powerful member of OPEC have caught the global community flatfooted.

Each of these events, in their own right, could be labeled a Black Swan, and each, collectively, is contributing to the larger, more deadly event that I’m choosing to call the Super Swan: A total breakdown of global infrastructure and communication. As each successive wave of bad news crashes against the shore of society, it seems to compound the problems we face. For the first time, rather than seeing the news media collectively shift focus to the next bad thing that happens, we’re starting to see them finally get it. That it’s all interconnected, and always has been.

The next few days, and weeks, will determine the overall impact of this Super Swan, but the traditional systems that we have in place as a global society seem to be increasingly powerless, or swamped, to deal with it effectively. The fact is that our way of life has become one of increasing interconnectivity, and constant “uptime” in terms of our major infrastructure systems. We don’t possess the capability to rely on fallback measures anymore, because the very measures that were put in place are themselves susceptible to the Super Swan. The old mantra of divide and conquer, that worked for governments ranging from the New Deal under FDR to the French under Napoleon will no longer have the positive effects at stemming the tide of defeat. Dividing and conquering, or attacking systemic infrastructure problems piecemeal will not work any longer. We have to, as a society, focus our efforts not on one thing at a time, but on all things, at once. This will require a fundamental shift in the way our social structures are organized. It will require a new set of mental models to properly understand the interplay between and among the various factors, the various Black Swan events, and how each of them separately feeds into the Super Swan maelstrom. How we organize ourselves to battle the forces of entropy, systemic breakdown, and social change will, in all likelihood, set the tone for several years, if not longer, of our existence as a society.

That’s why it’s so important that everyone, from our leaders on down to you and me, get it right the first time. It’s past time we admit and embrace the interconnectedness of events in our modern day, and start tackling all of our problems holistically, rather than piecemeal. It’s time to form new systems that are capable of addressing intertwined, complicated problem sets, rather than our traditional model of compartmentalizing.