Monday, December 11, 2023

Reflections on Taleb’s theory and business cycles

The theory of “black swans” proposed by philosophers, mathematicians and economists Nassim Nicholas Taleb, combined with the theory of economic historical cycles, offers us a valuable framework to analyze unpredictable events and their impact on society. Taleb considers “black swans” as low-probability but high-impact events that defy normal expectations. Similarly, the theory of business cycles describes an economy that fluctuates between expansionary and recessionary phases, and the latter can be exacerbated by “K” factors or black swans.

Historically, we have witnessed black swans changing global dynamics. A clear example is the financial crisis of 2008, which shook the global economic landscape. Taleb, in fact, has already warned about this potential instability in his work The Black Swan in 2007. However, the main purpose of this article is to examine two recent black swans and one that has emerged that is already showing worrisome signs.

Read Also:  Russia, US, Ukraine to square off at UN Security Council

Covid-19 emerged as the first black swan. Its similarity to the Spanish flu of 1918 underscores the tragedy of devastating pandemics in our history. Despite its name, the “Spanish flu” did not originate in Spain. It affected almost half of the world’s population, resulting in the deaths of between 50 and 100 million people. The effects of Covid-19 are still felt, reminding us of our vulnerability in the face of threats in which we are still excluded from others that may arise at any time.

The war between Russia and Ukraine is shaping up to be a second black swan. This conflict, in addition to its serious economic implications, if it prolongs or intensifies, could unbalance geopolitical stability on a global level. It shows a world where political and territorial tensions can lead to unexpected economic and social consequences.

Read Also:  German Police arrest one of Europe's most wanted fugitives for rape in Gran Canaria | communities

The third black swan in the making is hunger, intensified by challenges such as climate change with its consequences in the form of droughts and enhanced by the economic effects of the two previously mentioned black swans .

However, in this scenario, an additional “K” factor has emerged: Artificial Intelligence (AI). Despite its advances and promises, AI has uncertainties that can change our economy and social structure, leading us to unpredictable situations and loss of control in this globalized world.

Faced with this panorama, the capacity for anticipation, research and adaptation is essential. While the history and theories cited act as guides, they also emphasize the need for global cooperation to confront and mitigate the dangers of these terrifying black swans. Responsibility is shared, and everyone’s collaboration is essential, however difficult it may be due to the multiplicity of global interests.

Read Also:  Brickhaven workers demand the start of the plant
Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
Latest news
Related news