You are currently browsing the tag archive for the ‘unstable’ tag.

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.      

 

 

Blog entries written by Prof. Shlomo Maital

Shlomo Maital

Pages