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The World is Unstable: Surprise!
By Shlomo Maital
In my previous blog, I quoted experts who warned that in a globalized world, an epidemic will spread quickly via travelers – quoted in a book published two decades ago by a brilliant science writer Mark Buchanan * and in an article published in the leading science journal NATURE in 1998.
It is worth another short blog to describe Buchanan’s main message in his book.
Economics is all wet; beware. The world is inherently unstable, including financial markets; markets are not efficient and no, supply does not always balance demand and no, prices do not always and everywhere reflect true underlying value. The opposite: There are frequent ‘avalanches’, and infrequent but massive huge crashes. Earthquakes are unpredictable; because the plate tectonics that cause them are unstable. So are financial markets. A vast industry, and an army of misguided economists, exist based on an enormous fallacy – prediction is possible. Data prove otherwise. Post hoc explanations of crashes are simply amusing; they are ad hoc, not just post hoc. Both physical and human systems are simply – inherently unstable. It is the way of Nature.
There is an important personal lesson in Buchanan’s fine book (he has a Ph.D. in theoretical physics). If the world is unstable, then be prepared to adapt to major, sudden crises. Keep a small reserve of resources on hand. Forewarned is forearmed; if you anticipate avalanches, if you are aware they happen, you may be less shocked when they occur. If you are head of a family or a parent, embrace this in your family setting. If you are a junior or senior manager, prepare your organization.
If you are a political leader, start now – with ‘build back better’, and ‘prepare for an avalanche’ — but, probably, given US, UK, and Brazilian loser-leaders, that is way too much to ask.
- Mark Buchanan: Ubiquity: Why Catastrophes Happen. Three Rivers Press, New York: 2001.
The Real Culprit of the Pandemic: Globalization
By Shlomo Maital
Nov. 9, 1989. The Berlin Wall falls. The two Germany’s unite quickly. The European Union expands. And the age of globalization begins.
December 2019. Wuhan. A novel coronavirus is identified. It spreads globally.
Has the age of globalization ended? And – is globalization the true underlying culprit?
I’ve been reading a remarkable book, two decades old, by a brilliant science writer Mark Buchanan: Ubiquity: Why Catastrophes Happen. Three Rivers Press, New York: 2001.
In Chapter 8, Buchanan recalls the “six degrees of separation” discovery of social psychologist Stanley Milgrom, in 1967 – in which any two people anywhere can be connected, by no more than six direct links, each link comprising someone you know personally. Based on Milgram’s work, Buchanan writes, two scholars, Watts and Strogatz, modeled such ‘networks’ as a tool for modeling the spread of infectious diseases. [Duncan Watts and Steve Strogatz. “Collective dynamics of small-world networks”, Nature 393, 1998, pp. 440-442.]
Their finding: (in 1998): “Watts and Strogatz also modeled the spread of infectious diseases on small-world networks, and found that they spread much faster than they would on ordered networks. What’s more, only a very few shortcut links are necessary to make this happen. This has disturbing implications for how dangerous diseases might be able to spread over the world, carried to or from remote places by just a few long-distance travellers”.
Explanation: “ordered networks” are regular ‘grids’, where your links are your immediate neighbors. Small-world networks are like ‘six degrees of separation’ disorderly ones, like the kind Milgrom discovered – in other words, real networks as they are in the real world.
Globalization has massively expanded trade and travel. The benefits have been massive. Emerging markets, especially in Asia, have grown wealthy. Western consumers have been flooded with inexpensive goods from Asia.
But apparently, the price is the current pandemic. When the whole world is interconnected by flows of goods, people and information, it grows wealthy and prosperous (though not everyone of course) – and also becomes highly vulnerable to pandemics.
I am, and have been, a big fan of the benefits of globalization. But as often happens, we ignored the attendant risks. We were told in 1998 and in 2001. I guess we were not listening too closely.
TIMnovate 