The Coronavirus Pandemic, Expectations of a “Black Swan”?

499 山ㄖ尺ᗪ丂 

ཌ꧂ ꧁ད ꧁ད

The Covid pandemic, touching on two years old now and into its third or fourth viral mutation, has led many to label it metaphorically as a “Black Swan event”, an unpredictable and unexpected event with dire consequences. But not everyone agrees with this description of the current circumstance, least of all the very person who coined the concept itself, statistician and one-time Wall Street trader Nassim Nicholas Taleb. Taleb in fact disparages the widespread misuse of  Black Swan, “a cliché for any bad thing that surprises us” (‘The Pandemics Isn’t A Black Swan But A Portend Of A More Fragile Global System’,  Bernard Aviashai, The New Yorker, 21-Apr-2020, www.thenewyorker.com).

In his 2007 book—subtitled “The Impact of the Highly Probable”—Taleb sets down three principal characteristics necessary to constitute a Black Swan event: first, it is unprecedented and unexpected, “it is an outlier, as it lies outside of the realm of regular expectations, because nothing in the past can convincingly point to its possibility”. Second, it carries “an extreme impact”. Third, notwithstanding its outlier status, its occurrence “makes us concoct explanations after-the-fact, making it explainable and predictable”.

If we take the first of Taleb’s criteria, sheer unpredictability, the pandemic falls short...prior to the outbreak of Coronavirus, at least two recent US presidents, Bush (Junior) and Obama, had formally warned of the next pandemic in speeches. Bill Gates was another, such soothsayer, in forewarning of the pandemic to come. Furthermore it has a raft of precursors, a glance at the annals of epidemiological history shows the pandemic to be a recurring presence in human history. Looking at the world’s major epidemics (defined as killing 500,000 or more people), history records some 16 such events since 1850, both viral (influenza, smallpox, etc) and microbial (cholera, typhus, etc) (‘Was Covid-19 A Black Swan Event?’, John Drake, Forbes, 11-Nov-2021, www.forbes.com).

Willem  de Vlamingh, the first European to see a black swan ... in Western Australia in 1697 – hitherto they were thought not to exist 

Has the Coronavirus pandemic had a large, negative consequence?  Short of burying one’s head in the ground for the last two years it’s nigh on impossible not to arrive at the conclusion that the pandemic has had a massive impact on individuals, on public health systems and on national economies, one still being felt and likely to do so well into the foreseeable future.

Taleb’s conclusion is that the global pandemic unleashed by the Coronavirus is actually a “White Swan” event, “something that would  eventually take place with great certainty” (‘Corporate Socialism: The Government is Bailing Out Investors & Managers Not You’, Nassim Nicholas Taleb (with Mark Spitznagel), Incerto, 26-Mar-2020, www.medium.com).

So, if the all-embracing Covid-19 pandemic doesn’t cut it for a Black Swan event in Taleb’s book, what does? The options trader-cum-college professor offers the following partial list: the rise of the internet, the PC, the success of Google, the 9/11 disaster, WWI, the dissolution of the Soviet Union.

Rareity | Extreme impact | Retrospective predictability (Taleb’s ‘triplet’)