The Black Swan Problem. Håkan Jankensgård
to Rogan's guests) ruthlessly clamped down on and stripped of their sources of funding. There is also the issue of political agendas, where the ruling ideology will only accept facts that support the preferred narrative (currently, man as solely responsible for global warming). Finally, there is the sheer existential discomfort that results from having to ponder the fact that asteroid impacts are a regularly occurring phenomenon in deep history. Many of us just do not like being told that the Earth is essentially a sitting duck in space just waiting for the next swarm of asteroids to come our way. Others, in contrast, remain open to consider what the facts are trying to tell us no matter what conclusions they lead us to. A wide gap in expectations has opened up, and this matters, not least in the kind of competitive interaction we will take an interest in later.
MEET THE PREPPERS
Few would be more open to alternative interpretations of the facts than the so‐called ‘preppers’. These are the folks who take the issue of cataclysms very seriously, and who prepare for them with passion. In fact, you could accuse them of having an overactive imagination, of buying into conspiracy theories left and right. There is indeed a fringe element in this movement, with a clear anti‐government stance and a penchant for organizing into paramilitary units, the so‐called ‘survivalists’. But Professor Bradley Garrett, who has carried out in‐depth investigations of the phenomenon, argues that prepping is actually going mainstream, and has developed into a prospering multibillion dollar industry.18 Interestingly, and perhaps worryingly, the elites have taken a keen interest in preparing for doomsday scenarios. There is now an active market in bunkers offering luxury and comfort, enabling you to sit out the end times in some style. Apparently, well‐to‐do tech‐entrepreneurs are very active in the market because they foresee a breakdown of the social contract as technology continues to remove the need for millions of workers.
If preppers can be accused of having overactive imaginations, perhaps that makes up for the deficiency that the rest of us consistently display in this area. In fact, preppers could be rated the finest Black Swan spotters out there. There are levels to this, and they have explored remote and disastrous possibilities to a degree that the average person is not even close to. Given their orientation, they are not constrained by the need to conform or any stigma that may come from expressing unorthodox views. Instead, they revel in it. Consequently, they have taken the process of turning ‘unknown unknowns’ into ‘known unknowns’ as far as you reasonably could. If they have turned every stone in search of what could trigger an upheaval, why not see what they have come up with? In Table 1.1 I have listed, for future reference, all the extreme events brought up by the preppers interviewed in Garrett's book.
A recurring theme in the prepper world‐view is that many of the events in Table 1.1 will play out in an interlinked sequence. In the parlance, there will be ‘ripple effects’ where various parts of the system fall apart like domino bricks. I have organized the list loosely from meta‐events that trigger a shock to the system, down to some of the societal consequences that could follow. There is no particular ordering implied here. Things further down the list could of course happen for reasons unrelated to those higher up, and the top entry could take us directly to the last, and so on (and government collapse could easily be the precipitating factor for nuclear havoc!). The permutations are endless. The point to be made is simply that misfortune rarely comes alone. When it hits the fan, as preppers like to say, things could quickly be going wrong on multiple fronts. It has long been known that risks are not independent of each other, and that we have to take these tendencies to co‐vary this into account when designing risk management strategies. As per the preppers, the same appears to be true in the tail of things.
TABLE 1.1 The prepper's list
| Nuclear war Nuclear terror Pandemics Synthetic biotech (engineered pandemic by rogue nation/scientist) Asteroid impact Electro‐magnetic pulse from sun (will ‘fry’ all electronics) Man‐made electro‐magnetic impulse (ditto) Mega volcano eruptions Run‐away technology (a bit vaguely) Artificial intelligence turning hostile Hurricanes and floodings and wildfires Sea‐levels rising (by 2040 Florida will be sea‐floor according to one prepper) Desertification (by 2040 Europe will be Saharan, same source) Blackout of electric grids Collapsing eco‐systems Crop failures Cessation of global trade networks Hyperinflation Collapse of paper currency Financial collapse Government collapse World without rule of law |
NOTES
1 1 The Black Swan criterion where the 9/11 attack might falter is the ex‐post explanation part. Black Swans are supposed to make total sense after the fact, once our brain gets to work connecting the dots, which ends up giving it an air of inevitability. At least I struggle to connect some of those dots. Of course, we now know there are Islamic warriors engaged in a cosmic war that ends either in their destruction or in that of their enemies. However, that they would choose that means of meting out their punishment, and that it could be pulled off, remains unfathomable to this day.
2 2 Bernstein, P. L., 1996. Against the Gods: The remarkable story of risk. John Wiley & Sons: New York.
3 3 Frank Knight (1921) first made this distinction and referred to known odds as ‘risk’. This epithet is unfortunate and will not be adhered to in order to avoid unnecessary confusion. In the present book, risk is construed of as the value of a random variable on which our well‐being depends (such as corporate performance) falling below some aspirational or critical level (such as the level needed for debt servicing). Risk is thus a function of uncertainty, but has nothing to do with whether odds are known a priori or not. Knight, F. H., 1921. Risk, uncertainty, and profit. Hart, Schaffner & Marx: New York, NY.
4 4 I leave out a consideration of particles at the subatomic level, which, according to important theories in physics, are governed by pure randomness. This randomness, say the same theories, can be described in precise, mathematical terms (i.e. the odds can be known).
5 5 In Taleb's terminology, wild uncertainty is found in a place called Extremistan, whereas benign uncertainty harbours in Mediocristan (Taleb, 2007, p. 35).
6 6 www.griddy.com, accessed 10 July 2021.
7 7 Some retail customers had opted out of the standard fixed‐rate utility plans and instead bought their electricity from businesses that passed wholesale prices on to them directly. Some of these customers racked up electricity bills in the range of $8,000–10,000 in a matter of days (Winter storm fallout sends Texas power firm Griddy into Bankruptcy. Financial Times, 15 March 2021).
8 8 Taleb, N. N., 2012. Antifragile: Things that gain from disorder. Random House: New York.
9 9 Episode #1564 of the Joe Rogan Experience. Alter is referring to the claim made by some, mostly the young, that they would rather have a finger broken than their phone smashed.
10 10