Sunday, May 17, 2020

The world in straight lines: Why we are not ready for discontinuities

It is not unusual to hear someone make definitive statements about the distant future as if they were facts. How often have we heard something like the following: The world economy will double in size by 2050.

When people represent such "facts" in chart form, those facts become somehow more convincing. (You need to click on the charts below to see them clearly):


But, of course, these charts in no way represent reality, not least because much of the time period covered by them has not happened. Philosophically, the problem represented by those charts is the problem of induction. We assume at our peril that when a pattern is repeated long enough that that constitutes "evidence" the pattern will continue for a long time into the future. Of course, the reason for representing at least some of the past in these charts is to cement just that view.

So, how might we think of the supposed unprecedented declines in oil consumption, air travel and economic activity in general in the wake of the coronavirus pandemic? No one yet knows their true extent worldwide, but the decline in oil consumption has been estimated at 25 million barrels per day or 25 percent of world oil production. GDP estimates for contraction of the world economy are wildly uncertain but dire. One economic forecasting firm predicts that for the current quarter in the United States the annualized rate of contraction will be 37 percent. The most dramatic figure I could find is that the number of airline passengers was down 96 percent in the United States in early April.

Most experts would dismiss these numbers as one-time aberrations that could be safely ignored in the long run. But it is precisely the size of these "aberrations" that makes them hard to ignore. Nevertheless, there is a general view that the coronavirus is an outlier, and when we get a vaccine, the economic and other effects associated with the virus will go away.

Of course, there are several problems with the last sentence. First, the coronavirus may not be an outlier. We humans are now routinely pushing into habitats where all sorts of viruses lurk, viruses which might become the cause of the next pandemic. When we push into these areas, we call it development. Viruses (if they could speak) would call it an opportunity.

Second, vaccines are not always easy to develop and even when they are successful, the viruses at which they are targeted may mutate in ways that make the vaccines useless.

Third, the idea that the problems that have beset us are due to the coronavirus alone is far too simplistic. This assumes that the pandemic came into a social and economic system that was without major fragilities, one that will return to its previous state when the pandemic is over.

Of course, events have now illustrated that global society is not going to return to its state prior to the pandemic. National governments are spending freely and going deeper and deeper into debt. Even so, state, provincial and municipal governments (which aren't allowed to print money) will have to cut back services and employees drastically. A wide array of businesses are going and will continue to go bankrupt. That retail districts throughout the world will have many empty stores formerly occupied by retailers large and small seems inevitable. That airline travel will not reach the heights anticipated by the charts above seems highly likely.

There is no way to know how long the wrenching changes we are experiencing will go on or how our arrangements for commerce, governance and social life will change. What is missing and has been missing is a map our fragilities. The pandemic revealed those fragilities for all to see; but they were not invisible. A belief in the invincibility of our global systems obscured them.

How might we start to map out more clearly what is fragile and what is not and choose better arrangements that will make us less fragile (and possibly prosper) in the face of future disruptions? First, we can identify some characteristics of fragile systems:

  • Centralized
  • Tightly networked
  • Optimized for "efficiency"
  • Lacking redundancy

This is not a complete list, but it is a good start. The implications of these characteristics are now on display practically everywhere in the world. We centralized much of the production of hospital supplies in one country, China.

We created a tightly networked logistics systems based largely on just-in-time delivery methods (meaning minimal inventories), a system that can be crippled by the failure to deliver one component of a product. We optimized our health system for "efficiency" and so lack surge capacity. Surge capacity costs money to maintain and is thus labeled "inefficient." Perhaps the most visible manifestations are the lack of masks and protective equipment for hospital workers.

The pattern just outlined is now almost everywhere embedded into our systems of commerce.

Of course, the challenge is not merely to identify fragility but to suggest an alternative. Nassim Nicholas Taleb, author of Antifragile, provides a book-length guide. I'll quote his definition of antifragile:

Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile.

My attempt to summarize these ideas can be found here. Some general characteristics will seem like a mirror image of the list above:

  • Decentralized
  • Loosely networked
  • Optimized for survival/transformation in the face of shocks
  • Built-in redundancy

Understanding the concept of antifragile really requires of careful reading of Taleb's book. I recommend that book as a companion to our efforts to remake the fragile systems which are crumbling around us.

Kurt Cobb is a freelance writer and communications consultant who writes frequently about energy and environment. His work has appeared in The Christian Science Monitor, Resilience, Common Dreams, Naked Capitalism, Le Monde Diplomatique,, OilVoice, TalkMarkets,, Business Insider and many other places. He is the author of an oil-themed novel entitled Prelude and has a widely followed blog called Resource Insights. He is currently a fellow of the Arthur Morgan Institute for Community Solutions. He can be contacted at


samir sardana said...

Y is the USA and UK not bothered,about the COVID deaths ?

Could it be that they want it ? Who are the dead ? The dead are the pensioners,and the persons,who are fatally sick.dindooohindoo

Posit No.1

Assuming that these persons,had a residual life of 15 years,and we can assume that,by August,2020,there will be around 600000 dead in the West.

The pension to a pensioner would not be less than 12,000 USD per annum, on an average,at the minimum.In addition, the medical and other social costs,on an aged pensioner,would be not less than another 8,000 USD per annum.

If they die,then on 6,00,000 people,if the West saves 20,000 USD per annum,you net USD 12 Billion,PER ANNUM - which will be around 200-300 billion for 15 yeears

One could argue that the US Fed just printed,the USD 12 Billion - but now it need not.The Youth in the west,had to work at high rates of tax and deductions - to finance the aged pension and health care benefits - which ultimately,led to outsourcing.

The scam would be shocking,if the dead,had no insurance ! That would be telling ! If 6,00,000 are dead,with insurance and an average insurance claim,of USD 1,00,000 - then you have a bomb - to wipe out the insurers.

If 10 million die - we are looking at net savings of USD 200 billion per annum and USD 3 Trillion over 15 years.This will also solve the health insurance problems in the US/EU,as the high claim insurers,will cease to exist - and thus lower the insurance costs,for the young,and the cost of labour in manufacturing.

Posit No.2

Large number of services and industries,in the west,will die out.That will release labour and reprice resources and rents - to drastically lower costs - and that will make,"Make in USA",viable

How will the state finance the loss of tax revenue and GDP.Ultimately,the state will have to demonetise the deposits, in banks, of the westerners.Simple ! The USA will not be able to demonetise the PRC holdings of US T-bills - not even if the PRC sinks a US aircraft carrier in the South China Sea.

Posit No.3

All the nations who borrowed loans from PRC - will now force the PRC to do debt write offs.That will be a huge loss to the PRC,after the manufacturing shift from PRC to West.If 200 million people are unemployed in PRC - then you have Tiananmen - Part 2.

Of Course,the PRC could also force the IMF and the WB,to waive loans - but the harm to the PRC,will be done 1st.

Posit No.4

Trump postpones the US Polls,as people cannot stand in queues and no electioneering is possible - and he has the cure - and by September,the pensioners are dead - death rate and infections rates drops ..... who is the gainer ? If Trump is winning - Putin will stay calm - else,he might attack Eastern EU.If Trump is winning - then it will be the last chance for PRC to annex Taiwan and Vietnam - and make Trump lose face. But the odds of PRC action is medium.

Posit No.5

With massive unemployment in the West - the migrants will exit.Asians were made to clean toilets - that is their worth.They will exit.That will solve the migrants problem,rents and property rates will fall,labour will reprice,and the Westerners,will have to,start to work

The West has to take a BIG PICTURE view.South East Asia and Indian and Nepal ,are over populated,and there is no humanity there.There is no sentience,in the "so called humans".They are robots - and 80% of them,have to die.Their time is over - they are obsolete, a dead weight,and a burden on earth.This will de-price the resources sector,lower demand,and solve the environment problem,forever.

Africans have been exploited,for at least ,2000 years - and they deserve,many more chances.

There are 3 simple steps

Are the "so-called humans" - having a sentience - depending on their "individual and collective actions"
If not,then they are "robots"
It is time to "terminate the robots"

sv koho said...

Another concise post Kurt. The fragility of the current civilization is becoming every more evident day by day. The dense urban environments of a good part of the world is every covid's dream and it makes me wonder how viable places like NY and Mumbai and Wuhan are going forward. Nobody is calling the current situation a dieoff but it seems to me that it is an economic dieoff. A population dieoff is possible but it could take place gradually over many years. The assumption that a vaccine will solve this problem could very well be wishful thinking given the failure so far of vaccines against corona viruses. Antiviral treatment seems a more likely hope which is of course every Big Pharma's dream. Imagine the profit with 7 billion potential customers, We are still early on in this pandemic and we can hope for signs of a reversal of fortunes but right now it does feel like we are circling the drain...........