The “Black Swan” COVID-19 Catastrophe Proves Just How Fragile Our World

There are three characteristics of a “black swan” event – rarity, extreme impact, and retrospective predictability. With the benefit of hindsight, it is always easy to spot the warning signs of a looming catastrophe, but few see them at the time. The global financial crisis of 2008 was an example of a black swan, and COVID-19 is an even better one.

The collective failure to anticipate a variant of the coronavirus first detected in China in late 2019 suggests we should all be careful about making bold statements about what will happen next. Perhaps, as the financial markets are signaling, the mass vaccination programs now underway will allow life to return to something like normal by the middle of this year. It is possible 2020 will be recorded in the history books as a one-off, an aberration that signified nothing.

There are reasons for thinking 2021 will be different and could eventually be seen as one of those years that prove pivotal. One is that the pandemic has sped up the technological change that was already happening because social distancing and lockdowns have meant we do so many more things from home via a computer screen or a mobile phone.

People have surfed the net more; they have kept in touch with their friends remotely; they have shopped online. The result is that the digital transformation of economies has been accelerated. Companies that went into the crisis powerful enough already – Google, Amazon, Facebook – have seen their market dominance strengthened. Working from home has been terrible for some sectors of the economy but great for Zoom.

For years, there has been talking of how biotechnology would form a crucial part of a fourth industrial revolution. Its response to the pandemic has proved this is not just hype. It has been staggering how quickly vaccines were developed and produced. Genome sequencing has made it possible to identify mutations of the coronavirus

In addition, some governments have dealt better with the crisis than others. Ironically, China is poised to be the only major economy to register positive growth this year. Neighboring countries – Taiwan, South Korea, and Vietnam – were all better prepared for the pandemic than Europe or the US. Recent decades have seen a shift in the global balance of power from west to east and that trend has continued. The US emerges from 2020 relatively weaker, China relatively stronger.

The story of globalization over the past three decades has been of developed countries outsourcing production to places where wage costs were lower. Relying on China for protective personal equipment (PPE) and other medical equipment looked a lot less clever as the crisis erupted. There is now a recognition that there is a price to be paid for long and complex supply chains as there is for an economic model that pays too little heed to sustainability.

In the past, deep recessions have tended to push environmental issues down the political pecking order, but this time it has been different. Quite rightly, the thinking has been that if 2008 was a financial emergency and 2020 was a medical emergency, then next time – and the assumption is that there will be a next time – it could be a climate emergency.