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7 Aug, 2020 06:37

Nassim Taleb: Covid-19 brought socialism to America

The Covid-19 pandemic came as an external shock, almost unprecedented. How can we navigate the uncertainty of the post-pandemic future? We talked to the author of bestselling books ‘The Black Swan’, ‘Antifragile’, and ‘Skin in the Game’, risk analyst Nassim Nicholas Taleb.

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The text of the interview has been edited for clarity 

Sophie Shevardnadze: Nassim Nicholas Taleb, risk analyst, author of best-selling books The Black Swan, Antifragile, Skin In The Game, so great to have you with us. It's been three months I'm dreaming of talking to you and asking you all these questions. So the day has come. Hi. 

Nicholas Nassim Taleb: Well, thank you. Very, extremely honoured to be speaking to you again. 

SS: Alright. So Nicolas, at The Synergy Online Forum, you've talked about making societies more resilient to the future challenges without trying to predict them exactly but making sure we'll be ready for the unexpected. I mean, do you expect the COVID-crisis to be teaching us anything in that regard? 

NT: Definitely. But there are two central things I have to say. The first one is that you don't have to be paranoid in general about a lot of things, just have to be paranoid about a small number of threats and the main one is the pandemics. Pandemics are the main thing. People just worry about global wars. No, the biggest threat we have, has been and will be pandemics. And because of the structure of modern society germs can travel much faster. So something I was saying at The Synergy, describing the difference in structure between today and the past is, you know, that Silk Road is very interesting - it brought a lot of merchandise, but guess what came with merchandise on both sides? Germs. Germs were travelling, so with the first globalisation (actually it was not the first globalisation) we've had merchandise moving without anybody understanding how from town to town to reach Roman Empire and back and forth, and horses travelling for, you know, since Roman days, anyway. But let's say it's globalisation - you get germs of it. But at that time it took a long time, you know, it took a long time in the ancient Mediterranean, Northern Europe and what’s now the Middle East for these people to be infected. Today, you can set up a conference - and pick your town...Tbilisi, one of my favourite cities - a conference there, 30,000 specialists of, I don't know what, say, lungs or something more boring, say, of liver - liver specialists come in from all around the world. So people come from Afghanistan, Argentina, Cincinnati, they all mingle. And guess what? They go back home four days later, and two weeks later, they start to spread on their own, they become super-spreaders. We have many more super-spreader events today. So the good news is that now we understand the problem. And the pandemic we had was not very severe. It was a small thing. It could have been a lot worse. But it was not, it was, you know,a small thing... it's not small but I'm saying it could have been a lot worse, it could have been like something of the order of smallpox, or something similar, or some bacteria that's antibiotic-resistant. So now we have an awareness of it. And the idea of antifragility is that every time a plane crashes, the next plane ride you get on will be safer. That is to say the system learns from mistakes and improves based on mistakes, that is a good system. So the world will be different - wiser, but hopefully, it's good for peace because people will understand tomorrow, that the enemy is not some person with weapons. The enemy is that thing you don't see - a tiny little germ you can have on top of a pencil. That's the enemy, all these military threats are the same because the world is a different place, and now people are aware of it. 

SS: But will they really be smarter, you think? Because I'm looking back at SARS outbreak and had we paid more attention to it and got the vaccine back then it would have been so much easier to get the vaccine done for COVID-19 now. It seems like we don't really learn that much from our mistakes, do you really think it's gonna…? 

NT: The vaccines are not the solution, by the way, connectivity is the solution because we're still waiting for an HIV vaccine. So, whenever you discuss medical improvements, these take a lot of time. And it can happen on an unpredictable pace. So if I say, when did HIV, AIDS started? About 35-40 years ago? No vaccines yet. Treatments - maybe, no vaccines. So you can have more steady improvement in treatments. We may have a vaccine tomorrow, it's like winning a lotto, and even then vaccines may prove to be short-term effective, you know, not long-term effective because, as you know, things mutate. So I think a more robust world will be one in which we do business as usual. But guess what? We’re prepared for quarantines. Quarantines are a lot cheaper, reduced mobility of the germs - it's a lot cheaper than having lockdowns. We lost trillions from lockdowns, it's vastly cheaper. So [we need to] have some measures for that. 

SS: So, when you talk about being prepared for quarantines and that will take care of everything in terms of connectivity being the danger - okay, I get that. But is this like a temporary thing? Or should we stay in this sort of quarantine  mode forever? Can we ever somehow go back to the seamless world, fast travel, hassle-free borders, all that stuff? 

NT: No, no, you will have free borders, everything as long as people are prepared if there's an eruption of something like a pandemic, to have border control to reduce connectivity, because the germs don't travel by phone, they don't travel on  Zoom. They travel, you see, on Air France and Aeroflot and on carriers. So you want to reduce that. And let me tell you something I said at Synergy. As you look at history, and the Black Death, the plague, took place and the 1300s, they still had quarantines in 1850 and every ship - I'm talking about the psyche of the people, they were prepared for it. Sometimes maybe they were relaxed, not using the lazarettos where they put the people for actually 40 days, where they put sailors before releasing them, but they had a system in place for 500 years, non-stop. You could not go from the Ottoman Empire into the Habsburg [Monarchy] without quarantines whether or not there was a pandemic, they had a system. Now, I'm not asking to quarantine all the time but to have a plan in place to enforce three levels: check passengers, test passengers or quarantine passengers. You see level 1, 2, 3 and stay at level zero most of the time until you have information and then you can act. If you acted that way out of Wuhan we wouldn’t have the problem. 

SS: Alright. So here's the thing. In the beginning of the pandemic, when it all started, and we understood that it was global and it was irreversible, everyone hysterically started remembering the notion of the Black Swan.  

NT: Yeah.  

SS: And then it sort of got you annoyed and you were saying, this is really not a black swan, it's a white swan and then just the latest interview I've read of yours in International Business Times you're saying, uh, yeah, actually, it could be a black swan... Is it because the pandemic itself, the virus itself is not the black swan, but the black swan is the handling of it, the aftermath, or the mishandling? 

NT: No, no. What I said is, after we saw Ebola and the incompetence of people handling it, my black swan, I said, is not the disease, but the lack of logical behaviour on the part of people in handling it. That I don not foresee .No, I do not predict. So let me tell you why it's not a black swan. A black swan is something you don't see coming, something that... They have movies about pandemics. How could it be a black swan? Even in The Black Swan I discussed connectivity and I say how because of the structure of the world we can expect to have maybe fewer pandemics but deeper, the ones that happen will be vastly deeper. And let's not trust medical knowledge too much because it has improved for a lot of diseases but the diseases are smarter than medicine. 

SS: Okay, but whatever is happening now, now that the disease is sort of going backwards but we're left with the economic consequences, with fractured societies, with minorities rebelling all over the world, with all the consequences that we have on our hands... 

NT: What I think is going to happen is a transformation of economic structures to accommodate potential pandemics. Even if they never happen again, people will be prepared for them. Like, for example, in the United States, we have a migration out of New York City, where you have a super-spreader event, maybe in the subway. So even if we control this one, and it's gone, and you don't have to worry and goodbye, even if you control this one, there will be a paranoia about what can happen next. So we have some people leaving New York. Plus, there's another thing. There is a permanent structural transformation in the way things are happening with academia and with the conferences, that for the same reason, we're talking onZoom, I'm not in your studio now and it seems to work okay and as a matter of fact, it's facilitating the thing that wouldn't have happened in the physical world, we are learning to do things offline and the things that have taken place, you know, in the remote are causing growth of economic activity in some sectors. So I think one of the transformations is dachas in Russia or the country houses here are in demand, people want to move there because you can do remote from there and once in a while go to the city. At the same time real estate is going to be depressed in cities. People learn to do online shopping, it's not as entertaining as going to the mall but you do half-and-half which means that malls are going to suffer big time, everywhere. But also if you live in a remote place, it's good news for you because you may find an employer who'll come to you. For example, now there's a crisis in Lebanon and people want to emigrate and I say, no, stay there, try to be hired remote somewhere. It's much easier, you don't have a visa problem. So it’s like people can travel without a visa and do a lot of other things like that. So there have been some positive transformation coming out of this, coupled with some bad news for some industries, some businesses and, of course, to me it's bad news for all this political top-down geopolitical discourse because the enemy isn't some foreign country anywhere - the enemy is a germ for now, and we are all facing the same germ. 

SS: Let's hope so. Let's hope so. Let's hope that we will actually learn something and really draw a lesson out of it. Nicholas, anti-fragility is achieved by de-centralisation, you say, propping up the capabilities of local governments, preventing huge monopolies from forming, strengthening links in a chain so that “too big to fail” is not a problem for the future. Do you see anyone in the world now going down that road? I mean, is anyone actually doing that?  

NT: Definitely. So let me explain what has happened. If you see the reaction to the virus, the lower the unit in the scale, the more responsible it is, like the city of Atlanta wants to mandate masks [acting] much smarter than the state of Georgia. So if you look at towns in Italy, they do far better than the central government. So what happened is that the bottom-up process worked fine for this pandemic because in the Renaissance, or, you know, after the Black Death we had the Renaissance, towns were closing by themselves. I mean, there was a threat and those who were paranoid enough to close early or escape most of Black Death and the other subsequent diseases that they had that came later, you know they shut down the town, you can’t go in, you can’t go out, or you can go out but you can’t go back in. So my idea is the higher you go in any organisation, the worse. So what is on top? The most incompetent organisation in history is the World Health Organization, the most incompetent.  

SS: Agree.  

NT: They could not understand that masks are symmetric. Like if I wear a mask, they said, well, there's no evidence. This is called naive evidence. I’ve attacked them with and I’ve published some scientific papers explaining they don't understand the terminology they use, is mathematics that's hundred years old, and the scientific understanding isn't science. They say, there's no evidence masks work. There's no evidence that I'm going to have a car accident today - should I not wear seatbelts? They don't understand. So the idea that the higher-up people should be more competent is bust. The higher up, the more incompetent. CDC was incompetent in the United States, the Center for Disease Control, same thing. They had the same attitude towards masks. When we were barking in January to say, okay, this is serious, the World Health Organisation was saying, oh, there's no evidence that this disease can transmit from human to human. This is a lunacy. Alright, January 26. So, so the World Health Organisation led to a lot of problems and probably accentuated it. So if we didn't have it, wel would be better off. So I like bottom-up structures. I'm a localist, so subsidiarity, in other words, if you cannot do it at the local level, maybe you go up, okay. And for things like the military, for things like deployment, okay, that's fine, you do it at the top level, you can’t do diplomacy at the village level. But for things like water, electricity and basic safety like quarantines - leave it to the town, some towns in Italy decided to close to strangers, others were open. Let them compete, who's going to do better, you know, facing the classes of random events. So this is leading people to understand localism. 

SS: So where is your smell in terms of regionalised economy? Because a lot of great minds in economy that I’ve spoken to from different countries, they're saying, you know, we're going from global to regional economy. 

NT: Let me explain. Nobody wants to go to autarky where you just eat off of, you know, your garden and that’s it on one extreme, and nobody wants to, you know, have absolutely no control. So it's somewhere in between. So I think that the fight is between those who wants a 70% or 75% you see? Because if the Chinese make something a lot cheaper and it's no threat to you and it’s not pharmaceutical, okay, that's fine, or they can make half the pharmaceutical that we use, that's fine. But you cannot have them control hundred per cent pharmaceutical because when there is a disruption, then you're cut off from the sources. So for vital things, maybe we'll go into a world where the vital things must be produced locally within an area that's easily reachable, okay? And the non-vital things, who cares? You see? his glass of water, they can make it wherever they want. They can make it on the Moon if they want, that's fine. If there’s a disruption that's fine. I can live without the glass, alright? But pharma - no. So there's some items and what I think that will happen is countries will say, okay, we need to stock up on this, this, this and that or make sure it’s produced locally and the rest - we don't care. So the impact on the general economy is going to be not big because I really don't think anybody wants autarky. 

SS: So you don't believe in this big slowdown in globalisation? You think things are going to pick up? 

NT: There will be a transformation, it will be a more guarded globalisation. In other words, what I say is like, globalisation and this economic boost we got with it is partially or maybe totally or whatever it is, definitely has a role in pulling a billion people out of poverty. We didn't pull a billion people out of poverty by sending their kids to study at Harvard and NGOs, you know. No, that's not how it works. … and messing up their place. No, we got them out of poverty thanks to globalisation by having the growth in one area leading to growth in another area, we've had that. So the thing is, we don't want to mess it up. We want to protect it. But, on the other hand, if you listen to the enemies of globalisation, say, hey, what's your problem? They say, well, China makes 95% of the vital drugs. Okay, that's fine now, produce them here, it's not a big deal, non-vital drugs, if you want, I don't know, some kind of whatever, that's fine let’s make it. So what I'm saying is that if you have to make a list of things that government will insist to not be globalised the list will not be large. And then also the supply chains - the pandemic handled them rather well, I mean, it was not a big deal. What I think is happening now, the big transformation is that the physical movement of population like me travelling would be reduced, and business travel will not be as active as we saw in the past.  

SS: Some say the office life is over, we've now understood that we could work with Zoom and who wants to spend three hours in traffic every day? 

NT: No, you will still have business travel but for me to go... You know, I don't mind going to… 

SS: Georgia. 

NT: ...or Moscow once a year and having my pelmenis and all this... I love the food. I don't mind going once a year and then spending more time there. But travelling, you know, back and forth because there's a conference or something - I won't do that anymore. I will reduce - myself - my travel. Zoom will not be able to replace everything. You still need to meet people face to face. 

SS: You’ve got to eat pelmeni somehow. You can't do it via Zoom. 

NT: Exactly. So on the other hand, there'll be a reduction, but I think academia is going to suffer the most in countries like the United States where the things are over-optimised. 

SS: Okay, so one of my favourite Russian neuroscientists Tatiana Chernigovskaya, I don't know, maybe you even know her, she spoke to me recently and she says that uncertainty is the most frightening thing for human psyche. And since this crisis has brought us up to like a whole new level of uncertainty, she says, these are the things that will help us through: curiosity and empathy. Do you agree? 

NT: Let me tell you what happened. There are two kinds of people. The first kind of people say, oh, things are bad, I'm gonna stay home and cry and wait for things to get better, like for example, an Uber driver can say okay, there's no Uber driving. Or another friend of mine who was an Uber driver or someone who drove me around, he converted. He decided to start a delivery service. He says, people, you know, they're buying food, they don't want to wait in line in the supermarket. He's making twice as much money. Twice! So some people are making lemonade out of lemons. I don't know how to translate it to Russian but there’ve got to be an expression like that. Life gives you lemons - you make lemonade. And other people are suffering. And the government's have been extremely helpful for citizens. Who would have thought that the first socialist president of the United States would be Donald Trump? He gave people universal basic income for a few months, and they took possession of companies. If that's not socialism, I don't know what is socialism. So, the individuals got a protective net that they didn't have before. So it is mixed. What I'm telling you is that there are bad news and good news. There is a lot of uncertainty here, maybe less here, but it is mixed. The story is never one way. When you see an event like that, the first thing - and that's anti-fragile - the first thing you’ve got to do is say, how can I make lemonade out of this lemon? So for example, a group of friends and I are starting a thing, sort of like maybe a university that's offline, giving certificates or encouraging others. And that's a product of that pandemic. So for us, it is a business creation opportunity. For many it is a business creation opportunity. But if you're an employee of a travel agency and you want to wait for things to come back, that's not the right approach. So some people are suffering and others are going to help... And anyway, the governments have been propping up people who, you know, were desperate because they had no way to pull out of this by themselves. But mark my words, if you want a headline done - “Who would have expected the COVID to run both domestic and foreign policy?”, “COVID to bring socialism to countries like the United States”. 

SS: Nicholas, it's been like a double pleasure talking to you because I was interested in what you're going to say. But now that you've inflicted me with optimism and now I'm coming out of this interview saying this is a good thing that's happening to me, pandemic is a good thing. 

NT: Tomorrow morning when you wake up say, I'm going to make lemonade out of this lemon. 

SS: That's what I'm going to say every morning when I wake up. Thank you so much. It's been such a pleasure chatting to you.  

NT: Thank you, Sophie.  

SS: Thank you. Take care of yourself and I really hope to talk to you soon. And we would like to thank Synergy Online Forum organised by The Synergy Business School for arranging this interview. Big thanks to you guys.