Airplanes tend to have redundant subsystems and other design features that let them keep working even after a certain amount of abuse. The first dozen rivets falling out might never be missed. But, the thirteenth rivet popping out may cause the wing to fall off.
Perhaps no one knows this better than our friend Wile E. Coyote.
Perpetually chasing his nemesis, the roadrunner, he often finds himself thinking he is on the verge of finally catching the speedy devil only to realize that he is suddenly “gravitationally challenged.”
There is a whole class of systems that, like Wile E. Coyote, “work until they don’t.”
Like airplanes, ecosystems also tend to have redundant subsystems. The first dozen species going extinct might never be missed by the remaining inhabitants (or not for a long time). But, the thirteenth species may cause systemic collapse.
As a result, many systems tend to be explained by punctuated equilibrium – long periods of relative calm and equilibrium punctuated by periods of rapid change.
To trot(sky) out my favorite Vladimir Lenin quote:
There are decades in which nothing happens and weeks in which decades happen”
How can we identify these sorts of risks and explain them in a way people will understand?
This is a particularly sticky problem because people want “hard data.” In a system defined by punctuated equilibrium will show long periods of tranquility that make any claims about hidden risk seem to most like paranoia.
The stock market through the end of 2019 was one of the longest and lowest volatility bull markets in history. Why should anyone be concerned? Then March was the most volatile month of our lifetimes.
As Nassim Taleb has stated, an absence of evidence is not evidence of absence. Just because you haven’t seen a system exhibit particular behavior does not mean that it is incapable of it.
I think one can develop a certain intuition for these sorts of things. I have long been a student of complexity science because it deals with the class of problems and ways to address them.
If concepts like nonlinear systems, the butterfly effect, exponential growth, and fractals were more widely understood, I think we would have a better societal intuition for these types of things. (Though, admittedly, one must be careful because it is just as easy to abuse these concepts as it is to use them).
It’s not a perfect solution, but it’s a start. If you have other thoughts on the topic, I’d love to hear them.
P.S. I’ve been tweaking the typography to try and make the newsletter easier to read. Feedback on my success (or lack thereof) on that front is welcome as is advice on making it better.