Was the Coronavirus Crisis a Black or White Swan Event?


Time and time again, experts have referred to the coronavirus (COVID-19) outbreak as a black swan event, something that essentially appears out of the blue and catches us completely off-guard. Nassim Taleb, the thinker who popularized the “black swan” concept, however, would beg to differ. Furthermore, those who have read the book through which he ended up bringing the term to the spotlight (The Black Swan: The Impact of the Highly Improbable) know that pandemics are actually considered white swans in the book in question.


To understand Taleb’s perspective, it makes sense to underline the core differences between black and white swans.

Nassim Taleb likes using the so-called turkey analogy so as to make it clear what black swans are. He recommends imagining a turkey that is fed regularly by its owners day after day, week after week. The more time passes, the more reasons the turkey has to believe that the humans in question are its friends… until one day, come Thanksgiving, where everything changes, needless to say.

In contrast, we can think of white swans as essentially slow-motion train wrecks. Or, in other words, situations that anyone with an analytical mind realizes are coming. Situations that are looming, if you will. They might not manifest themselves today, tomorrow, next week, next month or even next year… but we can be fairly close to certain that they are coming.

Can we predict when?

Realistically speaking, no.

But while we cannot predict with amazing accuracy when a white swan is likely to unfold, we are fairly certain that it WILL unfold sooner or later. The same cannot be stated about black swan events.

Simply put, Taleb has repeatedly explained that pandemics are known risks and that it is not a matter of if but rather when they will unfold. For this reason, Nassim Taleb himself and those who share his worldview would definitely not consider the COVID-19 outbreak a black swan event. On the contrary, he would roll his eyes whenever coming across an expert who uses that term to describe them.

Do we have to embrace Taleb’s way of seeing things?

Of course not.

At the end of the day, while the term was undoubtedly popularized by him, he was hardly the first thinker who came up with it and therefore, opinions with respect to what black swan events actually are differ.

The ChinaFund.com team however does tend to agree with his perspective.

In our view, it would be fairly naïve to state that nobody could have seen a pandemic coming… the thought itself seems ridiculous in light of the fact that to refer to the United States for example, Barack Obama himself created a department which was supposed to be in charge of preparing for large-scale epidemics, a department which was scrapped under President Donald Trump… but that is, perhaps, a topic for a future article.

Suffice it to say that there was and is no shortage of experts, from epidemiologists to statisticians who specialize in hedging when it comes to risks of this nature. Unfortunately, what is true is that the authorities have drastically downplayed the potential consequences of these pandemics and as such, haven’t been amazingly generous when it came to allocating capital to departments which specialize in tackling the issue or toward the accumulation of adequate stockpiles (masks, medical suits, disinfectants, etc.).

As a bit of an “easy to relate to” analogy, all we have to do is conduct a bit of research on how much capital has been allocated toward nuclear deterrent-related goals on the one hand and how much has been allocated toward fighting (potential) pandemics on the other… the numbers speak for themselves and they paint a more than obvious picture of under-preparedness when it comes to the latter.

Perhaps the main takeaway is therefore this: as intellectually stimulating as it may be to think about and prepare for black swan events, it might not be the worst idea in the world to take a close look around and try to identify white swan ones as well. Whether we are referring to medical situations that tend to be cyclical in nature such as pandemics, geopolitical tensions that keep building up, environmental issues or anything else, it is crucial to understand that blissfully ignored white swan events can be just as devastating as black swans that nobody could have possibly seen coming.

From political leaders to even renowned experts such as Anthony Fauci (who, back when the coronavirus was a strictly Chinese problem, explained why he believed that a spread to the United States was an extremely low-probability scenario), there is a robust list of people who were caught off-guard and at the end of the day, other than learning from past mistakes, there is little real-world utility associated with thinking about what happened and cannot be undone.

Instead, the rational approach always revolves around letting the scientific method prevail, a scientific method which does not revolve around the idea that scientists are flawless but rather on the exact opposite: that they frequently make mistakes and there is nothing inherently wrong with that as long as they respond in a quick and honest manner to instances where it becomes clear that a certain hypothesis has been empirically validated or invalidated.

As such, just like Anthony Fauci jumped back on his feet and focused on his work with the US task force in charge with tackling the COVID-19 problem, society as a whole needs to follow suit rather than try to play an ultimately useless blame game. Should we call it the “Chinese virus” as Donald Trump recommend? Or, on the contrary, should we suspect that the US is somehow behind all of this, as some Chinese officials suggest? Neither, as both are false problems which ultimately do little else other than keep us from tackling the true elephant in the room: the pandemic from a medical perspective and what happens next from an economic as well as geopolitical one. As always, the ChinaFund.com team is here to help readers and especially clients do just that.