The Economist magazine’s Tom Standage interviewed Michele Wucker on The World Ahead podcast posted Monday, March 30, 2020. In the episode, focused on Covid-19 and the perils of prediction, they talked about her gray rhino theory and how it applies to the pandemic and economic crises. You can listen HERE.
The Washington Post published an op-ed by Michele Wucker, “No, the coronavirus pandemic wasn’t an ‘unforeseen problem’,” published on March 17, 2020.
“An obsession with the “unforeseeable” black swan metaphor has promoted a mentality that led us straight into the mess we’re in now: a sense of helplessness in the face of daunting threats and a sucker’s mentality that encourages people to keep throwing good money after bad. And the facile willingness to see crises as black swans has provided policymakers cover for failing to act in the face of clear and present dangers from climate change to health care to economic insecurity. This accountability vacuum has pervaded U.S. policy on financial risk and on the pandemic,” she wrote, calling for readers to use the coronavirus crisis as a catalyst for adopting a more pro-active response to the obvious risks we tend to ignore. “Let’s trade the black swan for the gray rhino: a mind-set that holds ourselves and our government accountable for heeding warnings and acting when we still have a chance to change the course of events for the better instead of waiting for a crisis to act,” she wrote. Read the full article HERE.
Ben Zimmer of The Wall Street Journal quoted the Washington Post piece in an article published March 19, 2020 online and in print in the Weekend edition: ‘Black Swan’: A Rare Disaster, Not as Rare as Once Believed [paywall], noting her challenge to the black swan trope –for unknowable, unforeseeable events– which became popular during the last financial crisis.
Why do we often neglect big problems, like the financial crisis and climate change, until it’s too late? Policy strategist Michele Wucker urges us to replace the myth of the “black swan” — that rare, unforeseeable, unavoidable catastrophe — with the reality of the “gray rhino,” the preventable danger that we choose to ignore. In this TED Talk, she shows why predictable crises catch us by surprise — and lays out some signs that there may be a charging rhino in your life right now. This talk was presented at an official TED conference February 1, 2019, and was featured by editors on the TED.com home page as a Talk of the Day May 1, 2019.
The author of “IN THE TIME OF THE BUTTERFLIES” and other beloved novels recommends WHY THE COCKS FIGHT: Dominicans, Haitians, and the Struggle for Hispaniola, alongside other classic works on the Dominican Republic and Haiti, in The New York Times‘ “By the Books” column April 11, 2019:
What books would you recommend to somebody who wants to learn more about the Dominican Republic?
I always find novels a great way to understand the character, not just the content, of a culture. Dominican-American novelists who write about the island, not just the immigration experience: Junot Díaz, Nelly Rosario, Angie Cruz. Mario Vargas Llosa’s “The Feast of the Goat” owes much to the riveting nonfiction account by Bernard Diederich, “Trujillo: The Death of the Goat.” Crassweller’s “Trujillo: The Life and Times of a Caribbean Dictator.” But how can we write about the Dominican Republic and not include Haiti? We are one island, after all, sharing a history of occupation, appropriation, slavery, dictatorship and more. Michele Wucker’s “Why the Cocks Fight” is a compact history of both countries and their relationship. I also admire Madison Smartt Bell’s “Haitian Revolution” trilogy, and “The Farming of Bones,” by one of my favorite writers, the Haitian-American Edwidge Danticat. Ditto for how can we write about Hispaniola and not include most of the southern American hemisphere, and for that, the incomparable Eduardo Galeano’s books, most saliently “Open Veins of Latin America: Five Centuries of the Pillage of a Continent,” in which Haiti and the Dominican Republic figure frequently.
Wishing you all a very Happy New Year and peaceful and prosperous 2019!
Wrapping up 2018, I’m reflecting on the books I’ve read over the past year that have made the biggest impressions. They reflect a range of interests, from ruminations on the nature of risk and uncertainty, to how we classify personalities and attitudes, to a memoir of celiac disease, to a wide-ranging list of fiction.
Risk
Before he died on New Year’s Day 2015, Ulrich Beck was as close to a cult figure as a German academic sociologist could get. In the first five years after its publication, his classic book Risk Society sold more than 60,000 copies. Yes, with four zeroes. He’s not an easy read, but amid the dense academic prose in Risk Society and the later World at Risk are flashes of brilliance.
In similar tone and style, Zygmunt Bauman’s Liquid Times: Living in an Age of Uncertainty reflects on “a society impotent, as never before, to decide its own course with any degree of certainty, and to protect the chosen itinerary once it has been selected.”
Personalities
Merve Emre tells the story of the mother-daughter team who invented the ubiquitous Myers-Briggs personality test, leading to the $500 million psychometric testing industry and the controversies that surround it, in The Personality Brokers: The Strange History of Myers-Briggs and the Birth of Personality Testing
In Rule Makers, Rule Breakers: How Tight and Loose Cultures Wire Our World, Michele Gelfand explores the cultural context of just what the title says: how wedded groups of people are to the rules they’ve set up to shape their society, and how willing they are to take risks in breaking those rules.
Celiac Disease
After she saw me put our waiter through the Celiac Inquisition as we caught up over brunch, a mutual friend of author Paul Graham recommended his memoir of learning to live with celiac disease, In Memory of Bread. His account of how he ended up in the hospital and was diagnosed is epic: an orgy of traditional bread baking (and eating) and craft beer brewing (and drinking). His baking tips are helpful. But what I really loved was how he put into words the worst part of celiac disease: the angst it causes in social meal situations. I gave it to a friend who also cannot eat wheat or other gluten products, and she loved it as much as I did before passing it on to her (also gluten-free) daughter.
Fiction
When Scott Turow spoke at a recent Authors Guild event here in Chicago, I picked up a copy of his recent international legal drama, Testimony, involving the atrocities of the collapse of the now-former Yugoslavia. I’m enjoying it as much as his earlier books, which gave me a glimpse of Chicago many years before I moved here.
Two of the year’s most celebrated novels fully deserve the praise heaped on them.
Madeline Miller’s Circe, a #1 New York Times bestseller, tells the story of the witch who turned Odysseus’ men into pigs. Since my dad has a master’s in classics and I grew up on Greek and Roman mythology, I particularly loved this fresh take on the Odyssey and related myths.
The family of “Marsh Girl” Kya, the protagonist of Delia Owens’ Where the Crawdads Sing, abandons her in their home in a swamp when she is seven years old. She raises herself, furtively interacting with the townspeople until their stories intertwine. Both a mystery and coming of age story, the book benefits from Owens’ own expertise as a naturalist.
Most of the other fiction I’ve read over the past year comes from around the world.
I cannot say enough how much I loved Turkish best-selling author Elif Safak’s The Architect’s Apprentice, the story of a boy turned elephant caregiver, architect, and man, and his interactions with royalty and ruffians in Ottoman-era Istanbul. Amazing detail, characters, and plot.
Two Chinese contemporary authors explore the nature of uncertainty through the (mis) adventures of two protagonists making their way through contemporary Beijing.
Orange Prize Finalist Xiaolu Guo’s semi-autobiographical Twenty Fragments of a Ravenous Youth is the story of a plucky would-be actress who leaves her country home for a career in Beijing.
The narrator of Xu Zechen’s Running Through Beijing has just been released from prison, and has to figure out how to make a life out of air permeated by the fine yellow dust that so often descends on Beijing. He hawks pirated DVDs and tries to make sense of old and new relationships.
After my trip to South Korea late last year (with a day trip to the DMZ), I discovered several wonderful authors. Min Jin Lee’s Pachinko, a National Book Award finalist, is an epic family saga set in the wake of the Korean War, which drives the protagonists to a complicated new life in Japan.
I picked up Han Kang’s Human Acts in Seoul on the recommendation of a Korean friend who said that it was even better than her Man Booker Prize winning novel, The Vegetarian. She tells the story of the violent student uprisings that took the lives of some of her characters, exploring people’s motivations in taking extreme risks on behalf of family members, friends, and their society.
My friend also recommended Gong Ji-Young’s Our Happy Time, perhaps an odd title for a book about a suicidal young woman and a death row inmate. But it works. The subject interested me in part because I’d heard about Korea’s high suicide rate, but what made the book work was the portrayal of the struggles of the main characters.
And from Japan, Keiko Furukura, the title character of Sayaka Murata’s Convenience Store Woman, is a singular personality, probably somewhere on the spectrum. An unlikely but welcome heroine, she breaks with social expectations and makes her own way through life in Tokyo.
I’ll be continuing my literary tour of the world in 2019 and am looking for books to add to my list. What books have moved you recently?
This article is part of my new weekly series, “Around My Mind” – a regular walk through the ideas, events, people, and places that kick my synapses into action, sparking sometimes surprising or counter-intuitive connections.
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Michele Wucker spoke at Bronx Community College December 4, 2018 in a “Meet the Author” event with students and faculty. Bronx Community College reported on the event HERE.
Michele’s first book, WHY THE COCKS FIGHT: Dominicans, Haitians, and the Struggle for Hispaniola is a 2018 Bronx Community College One Book, One College, One Community selection. The One Book program invites the entire campus to read one book and join together in events and projects exploring and celebrating the themes of the work.
BCC chose WHY THE COCKS FIGHT “because of the many opportunities it provides to examine the complexities of citizenship and race, imperialism and identity, which have particular relevance in today’s global political climate.”
BCC created a study guide for the book. This year’s events included an essay contest whose winners were announced at the December 4th event, a workshop and musical performance with Yasser Tejeda and Palotré, and an art project in which students designed alternative versions of the book cover.
Washington’s devil-may-care attitude has become Beijing’s top priority
Michele Wucker published this op-ed on the Financial Times beyondbrics blog November 13, 2018.
In its new annual financial stability report, China’s central bank has again sounded the alarm that “grey rhino” risks — clear and present dangers that are often neglected — continue to threaten the economy.
The report focused on China’s real estate market and high levels of local government, household and corporate debt, consistent with the concerns of Chinese and international observers.
Indeed, a popular narrative among western analysts is that China’s debt is a likely trigger for the next financial crisis. But the finger on that trigger is US complacency about risk.
President Xi Jinping has made containing financial risk a top priority and top officials have been vocal and active in addressing the danger areas they have identified.
By contrast, you could be forgiven for thinking that US officials had forgotten about the financial crisis that exploded a decade ago, not to mention the global dangers posed by 10 years of extremely loose monetary policy.
Washington’s approach appears to be to ignore warning signs and count on being able to frame the inevitable crash as a surprise “black swan” that “nobody saw coming”.
Yet many smart people do see trouble coming and are sounding urgent warnings for the US and the global economy. The International Monetary Fund warned in April that global debt had hit a new record high of $164tn, or 225 per cent of GDP. The US, it noted, is the only advanced economy where debt is outpacing economic growth.
Albert Edwards of SocGen forecast that financial winter is on the way, George F Will wrote of the giant sucking sound of a debt spiral, and Bridgewater’s Ray Dalio predicted a looming new debt crisis. Dozens of other smart analysts are sounding the alarm.
Well aware of the looming challenges, by contrast, China has been trying to gradually let the air out of credit bubbles without bursting them and to guide the economy to “quality growth” that may be slower but is more evenly distributed and less volatile.
Neither feat would be easy, even without having to wrangle external shocks caused by the US administration either not knowing or not caring about the global impact of its policies. China’s officials have been open about the real risks facing its economy, and made no secret of their intentions to cool off overheated sectors.
Using a combination of regulations, increased enforcement and liquidity controls, China has targeted the grey rhino risks that senior officials raised in a key five-year policy-setting meeting in July 2017: high corporate debt, excessive liquidity, shadow banking, capital market vulnerabilities, real estate bubbles, and emerging online financial products and services.
Regulators have cracked down on wealth management products marketed as “less risky” while promising higher yields. With corporate bond defaults up 40 per cent in the first half of 2018 and thousands of peer-to-peer lending platforms allowed to fail, China’s government has sent a message that people cannot count on it to fix every problem.
By contrast, Trump and senior officials have trumpeted US economic strength and downplayed risks and weaknesses.
Until the market volatility of the past few weeks, Trump had repeatedly bragged about how US shares were hitting record after record high, while China’s market indices were down more than 20 per cent for the year.
But a recent Council on Foreign Relations analysis shows how Chinese shares closely track a slowdown in credit growth over the past year or so. This suggests that much of the drop was the direct result of China’s efforts to let the air out of asset bubbles.
The Trump administration’s cavalier approach to financial risk increasingly suggests that its economic policies will not end well.
As the US Congress was preparing to pass a massive tax cut in December 2017, senior Chinese officials called the US tax plan a grey rhino, citing its potential impact on capital flows and financial stability. Responding quickly, Beijing developed a contingency plan involving higher interest rates, tighter capital controls and more active currency intervention.
The new Trump-supported tax cuts are widening the budget deficit while pushing up the cost of interest on the deficit. Even as financial risks increase, Washington has been chipping away at safeguards and emergency powers that could help contain the next crisis.
To be sure, the US Federal Reserve has been gradually increasing interest rates and shrinking its balance sheet, in a delayed attempt at normalising monetary policy. But this has created new global instabilities as money rushes out of emerging markets.
In contrast to China’s more surgical approach to specific vulnerabilities, the US relying mainly on interest rates as a broad-brush economic lever threatens to bring all boats down with it.
China is so concerned about this devil-may-care approach to financial risk that its politburo recently announced that dealing with US-generated economic shocks was an even higher priority than de-risking.
Paradoxically, current US-China policy threatens to slow down reforms that investors would like to see, such as reducing overcapacity at state-owned enterprises and intervening less in currency markets.
Trump’s bellicose rhetoric has ignored that China has been gradually opening its economy: easing foreign investment rules on 15 industries, particularly financial services, and evidence of some progress on intellectual property issues. Both of these are in China’s interest: it sees the benefit of increasing equity financing compared with debt, and it wants to encourage homegrown technological advances.
To counter the economic drag that trade war-related fears were creating, China has loosened its monetary policy in recent months. Its earlier belt-tightening gave it some wriggle room to do so.
But were China to completely abandon its de-risking strategy, it would resume heading towards a feared “Minsky moment” when the country’s ability to support debt collapses.
If the US paid as much attention as China does to the dangers lurking in the global economy and markets, it wouldn’t let itself appear to be so intent on throwing a monkey wrench into China’s sensible efforts to reduce financial risk.
Recall that demand from China for western goods, combined with China’s aggressive fiscal policy, played a big part in getting the world out of the 2008 crisis.
At one point, hopes that China would bail out Europe were dashed when Chinese officials rightly chided western governments for irresponsible economic policies.
Smart US policy would be to pay as much attention as China to heading off the grey rhino risks facing the global economy, and the role each country can play. An agreement ending the trade war would be a start. But unless the US takes financial risk more seriously, the threat to the global economy will remain — and China won’t be the main culprit.
Emerging markets guest forum beyondbrics is a forum on emerging markets for contributors from the worlds of business, finance, politics, academia and the third sector.
BuzzFeed reporter Emily Tamkin interviewed Michele Wucker and quoted her in Trump Wants To Cancel Birthright Citizenship. The US Has Already Helped One Country Do That, a November 12, 2018 article about the Dominican Republic’s stripping of citizenship to Dominicans of Haitian descent.
Donald Trump’s plan to end birthright citizenship by executive order was immediately denounced by legal scholars as an illegal intrusion on the Constitution’s 14th Amendment. But the United States knows something about ending birthright citizenship because it played an active role in helping another country bring it to a close — the Dominican Republic.
That role, which was unfolding before Trump became president, has long been the subject of criticism — from the Organization of American States, the Inter-American Commission on Human Rights, and former Peace Corps volunteers who served in Haiti, which shares the island of Hispaniola with the Dominican Republic. Trump’s criticism of birthright citizenship and call for a wall on the US–Mexico border have renewed concerns that the US is inflaming the Dominican Republic’s already hostile xenophobic attitudes toward its Haitian minority.
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“US human rights organizations were very vocal against the court ruling in 2013, and were very vocal in documenting some of the problems, particularly as it came into force in 2015,” Michele Wucker, author of Why the Cocks Fight: Dominicans, Haitians, and the Struggle for Hispaniola, said.