Nicholas Taleb, the controversial author of the Incerto argues that we do not understand randomness and consequently do not react well to it. In my opinion, he is right, but there may be some kind of balance in it. I will try to explain it using the coronavirus pandemic as an example.
Indeed, we humans need to know that we "understand" why things happen. People need to build a credible story, with clear cause-effect relationships because it is comforting. In this context, black swans, defined as totally unpredictable events of high impact are too complex, too abstract so we tend to deny their existence or underestimate their relevance. The usual reaction, once exposed to a black swan, is to attribute its effect to a bad previous planning that of course “we are going to correct and that will never happen again” ... the bad news is that the next black swan will not look anything like the previous one, as it is very unlikely that the terrorists will destroy two twin towers with airplanes or that the next technological success will be a new Google.
In addition to our problems with black swans, Kahneman and Tversky showed how bad we are forecasting, which would not be very serious if we were aware of it, but we think that can anticipate things at a high level of accuracy and, what is worse, we are so sure that allow ourselves to advise others and defend our predictive skills beyond reasonable, even when our predictions have showed to be repeatedly wrong. Always next time "we will have taken the appropriate measures" to get it right. And start over.
"we face an exponentially increasing number of events of which we do not know the consequences and their impact on our lives, but we continue to believe that we do"
Thus, and summarizing the theory brilliantly stated by Taleb, we face an exponentially increasing number of events of which we do not know the consequences and their impact on our lives, but we continue to believe that we do. It's like a tourist in Tokyo following the directions of a map of the London Underground and trying to find his hotel.
The coronavirus is not a black swan. Taleb himself already foresaw it in 2008, as he also did with the Lehmann Brother disaster that eventually made him rich. At most, it could be considered a "gray swan" as he defines the “hard but possible to anticipate event”. Although he proposed formulas to protect us, more than a decade after the publication of the book, the financial system remains in the same conditions of fragility, or even worse. The measures implemented, the so-called “stress tests” have been designed for similar crises to that of 2008, but the next one will probably have different causes and be more devastating, as the 2008 crisis had different causes and was more devastating than the previous one. For example, the mentioned tests do not take into account the possibility of a coronavirus that would reduce commercial transactions in the world, say 20, 30 or 40% for one year. (Note to reader: this is an example, not a prediction).
If it seems that nothing essential has changed in the financial systems since the last great crisis, what to say about the pandemic that we suffer. We only have to take a look at how different governments worldwide are reacting to understand the absence of a coordinated plan and to confirm that the committees set up in different countries are being exposed to "expert opinions" completely divergent, when not opposed to each other. Should we isolate, or not do? Since when? At home or in the hospital? Antiviral yes or no? Wear a mask, who? etc. We are told that we learned a lot from the SARS experience, but this should also be put "in quarantine". As an example, traveling between some regions in Italy was recently prohibited and offenders faced fines and possible incarcerations, while the air borders (airports) were still open. Schools and Universities closed their door in a desperate effort to contain the virus propagation, while in other cases, such as Spain or Thailand to name two that I know well, the policy has been "not to say not to alarm". Spain, for instance, skipped 40 to 200 cases in two days. Assuming that these infected people have been asymptomatic and been able to infect many others during the past one or two weeks, it is not an exaggeration to think that there are at least 1,000 or 1,500 cases "undetected", that is, an Italian-like situation. However, in this case, it has not been considered necessary to close public places or cancel or limit access to events such as football matches yet... Similar countries, but totally different strategies.
"Mother Nature is wise enough to find solutions even to our own disability"
However, as I will show here, something that makes us vulnerable as individuals, our inability to manage black or grey swans and to accept things that we can't control, can have a positive aggregated effect: as our reaction to the unexpected is puzzling and chaos, each one goes by his own side and this makes serendipity to occur. In the case of the Covid-19, every country explores by itself the best way to deal with the situation, which can result, by pure probability, in some of the strategies to be successful. As an individual, if I am in one of these countries, I will sigh in relief and if not, I will be furious and claiming against the incompetent guys that have led us to the disaster, assuming I am still alive. That’s the paradox: if all countries knew how to act and did it, it would have been much easier and more effective to control the virus by following the same protocol, but if they don't know, what is actually the case, trying many options, although it has not been deliberately chosen for that purpose, maybe the one that finally protects a part of humans, which in the end could guarantee our survival as a species. Mother Nature is wise enough to find solutions even to our own disability.