According to the Lebanese-American author Nassim Taleb, every event in history that is rare and impactful are “black swans”. The phrase is based on an old proverb that believed black swans never existed – a statement that was reinterpreted to teach a new lesson after the discovery of black swans in Australia. Any event in history can be categorized according to a white, grey of black swans. A white swan even can be predicted with a high level of accuracy because of facts and data available. A grey swan event that is probable and should be anticipated. Black swan events are surprising, have an unprecedented consequence and are often rationalized by hindsight. An example of a black swan in history is Arab spring. Self-immolation by a fruit vendor led to a backlash by oppressed people that toppled governments and gave birth to extremist groups like ISIS in the middle east and north Africa.
But does the coronavirus pandemic satisfy the three criteria for a black swan event: surprisingly rare, historically consequential, and rationalized by hindsight. First, let’s dive into the coronavirus outbreak itself. Was the event surprising? I guess not, because there are numerous researches and people like Bill Gates warning us since the SARS outbreak back in 2003. The only surprise with this pandemic has to be the way China and the WHO relayed the information regarding the origin, spread, and containment of the disease. In my opinion, this is not a white swan event either, though it was known to researchers that an event like this is due to happen but when will it occur was an open debate. Ironically, the outbreak started before the Chinese new year which was the worst time possible as about 3 billion people travel to and from China during that period. Was it a grey swan event then? Probably yes. Because although it was known that something like a pandemic can occur and that too in China, the surprise really was how fast it engulfed Wuhan. Viruses can be notorious but this one exceeded challenged our understanding of the pathogen in general and what it is capable of. More importantly, the probability of such an event was very high and the wet markets of China were thought to be one of the most likely breeding grounds of a new virus.
Secondly, as in a black swan event, the destruction has been unprecedented. The impact has been massive but was it not due already. The IMF clearly suggested that the world economy is undergoing a revised growth trend and the progress would be a more conservative one. Countries like Italy, Spain and even Germany were under immense pressure and were devising ways to bail out banks and financial institutions. Although the coronavirus crisis has further pushed European giants to the edge of a complete collapse, in my opinion if the European Union would have stuck together, they would have done much better. I am not saying that these countries would have curbed the losses both financial and human, but certainly, the numbers would have been much different. They stood oblivious to threat until it was uncontrollable. The impact of the disease would have been controlled if the Americans and the Europeans would have taken it seriously.
Lastly, since we know that this type of event is often inappropriately rationalized, it is important to ask which factors were the real reason for the spread of the coronavirus. Many theorists, scientists, and researchers feel that the spread happened due to the negligence of the Chinese authority and WHO. But, did the countries accusing China and WHO take appropriate measures to ensure that the pandemic is contained? There are many unanswered questions like why is the virus so damaging for some and gives a mild illness to some? Is this virus genetically modified or mutated? Will the spread increase or will it wear down after some time? The effects of this pandemic on the world economy after it gets over and so on.
The coronavirus pandemic for me is a grey swan event. The probability of an outbreak and anticipation by countries like Taiwan, Singapore, and South Korea make it difficult to be categorized under a black swan event. Neither, we knew in advance that a pandemic of this proportion will just shatter the economies and leave humans defenseless against an invisible foe as in the case of a white swan event. In this crisis cascading of impacts was probably because so many governments, people, institutions and media were involved. It has become a fiasco in some places like Ecuador and in some countries the COVID-19 crisis is collapsing economies like Italy and Spain.
How will you define this event?