Is globalization a black swan?  A what…?  Nassim Nicholas Taleb’s book, “The Black Swan: The Impact of the Highly Improbable” gives us lots of food for thought about globalization.

So what is a black swan?  Before the discovery of Australia, Europeans believed that all swans were white because only white swans existed in Europe.  In fact, "black swan" even became an expression to describe rare or nonexistent things, like Juvenal's Latin expression "as rare as a black swan". 

But when Dutch sailors visited the Swan River in Western Australia in the 17th century, lo and behold, they discovered black swans.  The discovery of the black swan highlighted the fragility of knowledge – all swans are not white.  One single observation invalidated the certainty of knowledge from millennia of observations.

But, come on, Taleb is no ornithologist, he is an applied statistician and derivatives trader-turned-philosopher.  What’s this all about?  For Taleb, the black swan is a metaphor for an event with three attributes.  First, it is an outlier, as it lies outside the realm of regular expectations.  Second, it carries an extreme impact.  “Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.”

Taleb believes that almost everything in the world, from the success of ideas and religions, to the dynamics of historical events, to elements of our personal lives, are all black swans.  And yet social scientists of all stripes are blind to this randomness. 

So, this brings us now to globalization.  Thus, the sudden end of the Cold War, the rapid spread of the Internet, the stock market crash of 1987, the 9/11 terrorist attacks and even today’s financial crisis are all black swans.  We would not be living in the age of globalization without black swans. 

This scholar of randomness goes on in his book to argue that the future will be increasingly less predictable, while both human nature and the social sciences will conspire to hide this from us.  So, this means that the future of globalization will also be very different from what the economists predict.  To get an idea of the future development of globalization, it is best to focus on antiknowledge.

But black swans also offer many opportunities.  With imagination, we can exploit these by even exposing ourselves to positive black swans.

With tensions riding high now, especially between the US and China, we could well be on the verge of another black swan event!

References:

Nassim Nicholas Taleb's home page -- http://www.fooledbyrandomness.com/

The Black Swan: The Impact of the Highly Improbable -- http://www.amazon.co.jp/Black-Swan-Impact-Highly-Improbable/dp/1400063515