The Arab World- A flock of Black Swans take flight and the Think tanks fail again
A recurring visitor to this blog and a reader of Zanat0s’ articles will have realized where this author stands on some issues. More specifically economists and everybody else in the business of predicting the future have a lousy record(to save some more rude words). Economists, futurologists(for a lack of a better word- but exists), think tanks, and other research institutions . Betting on sports(with finite results) have a better track record than the aforementioned. Even when people believe a situation can develop in one out of man possible outcomes it is clear that some outcomes have not been yet contemplated yet. The set of predictable outcomes depend on past events and past behaviors. The present cannot be predicted from the fast.
The Black swan theory hits back at all those with a vengeance. The black swan theory postulates that there are those events which cannot be predicted or not anticipated. Those events then in retrospect seem so natural that they were bound to happen and then people(mostly journalists- bloggers) say: How did this not happen before? Black swans events unleash a portent of consequences that change paradigms. For more on black swans click here
The latest Black Swan event(in a global basis) took place in the end of 2010 when a young Tunisian put himself on fire to protest about his bleak future. This man became a black Swan, 2 months later 2 regimes have fallen(Egypt and Tunisia) Libya is certain to join the fray, Bahrain and Yemen are in turmoil and the rest of the Arab regimes have promised(not delivered though) financial(not political) reforms. One man’s desperation lifted the hopes of a whole sub continent. One man’s actions inspired people to try for a better tomorrow and they defied their masters for their first time and managed to accomplish what they set out for.
What’s surprising is how many articles online(and offline) make the case that change was bound to happen. Just pick a paper or search any news outlet online and check whether holds true or not. After their epic failure to anticipate the repercussions of the uprisings they make the case of how the West failed to prepare for the inevitable revolution of the masses. It will be interesting to note that the same journalists were the same extolling how stable the Middle East is(was). To be fair nobody could predict the events which happened 2 months ago and that’s exactly what makes an event a black swan event.
Most People in Egypt only learned one Leader, Mubarak, People in Libya probably don’t know(or couldn’t even imagine) life without Qaddafi( or Kaddafi). Especially the generation which revolted in their paradigms knew only their current situation but the black swan event in Tunisia proved to unleash a flock of Black Swans to take flight. An online search covering the last 2 years(2009-2010) didn’t bring up any articles which correctly predicted the revolutions. On the contrary one can find now thousands of experts sharing their 2 cents of wisdom on how the countries will end up being run. What the search uncovered was some interesting(one can say funny) articles.
The IMF(notorious in Greece) on its report for Egypt in 2010 not only did not see the revolts but commented on how stable Egypt is and how well macro economically it has been managed:
Sustained and wide-ranging reforms since 2004 had reduced fiscal, monetary and external vulnerabilities, and improved the investment climate. These bolstered the economy’s durability, and provided breathing space for appropriate policy responses”.
In the previous year, economic performance was better than expected, although headline inflation remains elevated . . . as the recovery gains strength, the focus of policies can shift back toward fiscal consolidation and other growth-oriented reforms”.
Another Homerun for the critics of futurologists(read- economists). The IMF cannot predict something that has not happened and cannot be anticipated. Economists are the only people who can explain with 100% accuracy today why their forecasts were 100% proven wrong. It is not just the IMF, the CIA the USA military all were caught napping. The USA military has an IT project ,which costs 125 million, used for predicting unrests worldwide. They better use these funds elsewhere The resources spent on think tanks and consultants can be classified as waste and waste has no economic value. An efficient free market would cut off funds to inefficient futurologists and funnel them to activities which could benefit the economy more.
The Author is not omnipotent and cannot understand the forces at play that have already made 2011 a historic year but will focus on the pundits filling the internet with gibberish . Naked capitalism, a blog, is a bit more critical on the IMF and its cohort.
This is all neoclassical trickle down twattle. People are hungry and can’t find work, and what does the IMF have in its toolkit? “Public private partnerships”. In a country with crony capitalism, that’s a prescription for further looting and redistribution of wealth to the top. Oh, and we’re gonna further liberalize financial markets, if we just give the banks more freedom, a thousand flowers will bloom! Yes Basel II did such a great job of keeping Eurobanks from blowing themselves up, it’s just what the doctor ordered. And the fact that the staffers consider getting the GDP deflator right as a way to fight poverty shows how out of touch with reality they are.
Last but not least after the events in Tunisia, publications like the Economist and the Wall Street Journal were awash with editorials saying that what happened in Tunisia couldn’t be replicated in other Arab countries. It seems one Black swan was not enough. Nomura( a japanese investment bank) focused one of the major reasons for unrest, food price inflation(which affect and punishes the poor hardest) . Nomura connected some dots(based on the events in Tunis) and still put Egypt Nr 6. INless than a month Egypt had ousted Mr. Mubarak.
Black Swans will never cease to surprise and will always remain unanticipated. Thank you for reading! for more articles by zanat0s on black swans click bellow