The Ultimate Hidden Black Swan Risk (w/ Mark Blyth & Adam Tooze)

Video Transcription:

  The Ultimate Hidden Black Swan Risk (w/ Mark Blyth & Adam Tooze)

MARK BLYTH: I want to start off with the piece you wrote on foreign policy, which was one of those pieces which really made me sit up and pay attention because in a sense, you pointed out something bloody obvious-- that if you thought about it for five minutes was bloody obvious and no one was really picking it up. And that is essentially that we really are in unprecedented territory. There is no mean reversion to a sense of normality that we really understand coming down the road from this. What brought you to that conclusion and walk us through why you got to that conclusion? ADAM TOOZE: It was the unemployment numbers. There's no doubt. I mean, that string, and we're still in the middle of it presumably, of numbers that just-- well, they just bust the charts. You map them logarithmically, it's still a right angle. We've never, never even seen anything remotely like it. It's order of magnitude worse than anything in the previous economic record. And as a historian, I'm really impatient with folks in my discipline who are continuously trying to insist that, you know, hold the horses, calm down, whatever is happening in the present has got some deep historical antecedent, we've seen it all before. And there are moments when that's just clearly not true. I guess I was primed anyway because I'm increasingly a climate change guy. And in the climate change discussion, the hockey stick-- the dramatic acceleration of growth and change since 1945 is, you know, what that starts from that debate really, I think the serious debate. And what I was looking for was that kind of discontinuity in that moment. It was the unemployment numbers that did it. I mean, you know now that this week, we've had negative oil, but that's a little bit more of a freakish technical result, but the unemployment numbers are bona fide. We're just seeing a collective shutdown. And then the ILO put this figure out recently 2.7 billion people worldwide, 81% of the global workforce under one or other type of restriction. We have just never ever seen anything quite like that before. And you know, sometimes, it's the job of the historian, I think, to say that according to our understanding of previous history, there's nothing been quite like that. So then, of course, the question is, well, first, how does one navigate in terrain like that? In a sense then, you do end up recurring to more standard of thinking about modernity because after all, you know, a [INAUDIBLE] way of looking at modern history is it's an endless series of breaks like this, just some are more radical than others and the ones we're living through right now are particularly so. And so then you end up with this trope of radical uncertainty as one of the kind of historical conditions that we live in in modernity. And that poses fundamental problems for rational decision-making, whether you think of that in terms of narrow calculus of cost benefits rational choice or just more generally how do we orientate ourselves to reality. That becomes absolutely fundamental concern. And in a quaint seeming kind of way, we were posing that question last year, you know, because of the geopolitical complex with China. But all of a sudden, it's taken on dimensions that we haven't-- like you were saying, at the beginning of this year, no one would have imagined that we would be in this moment. MARK BLYTH: So maybe one way of thinking about it is we need to change the way that we think about institutions. So let's think about an economy as a series of particular institutions constructed at a particular historical moment. And what is it that all these institutions do, whether they are even beyond economic institutions? Let's think social institutions-- everything from bar mitzvahs to bond markets, right? What they do is set down rules and basically help us to reduce the uncertainty, which is there all the time. In a sense, what we do as humans is construct social institutions that allow us to some way control the uncertainty that is the essential part of our lives. And what this shock seems to have done-- I'm not even sure if we should call it a shock-- is to basically demand that we think about if it's possible to tame that uncertainty with the institutions we have. Now, I've just got one very simple example of this. In the United States, as you know, there's the figure that gets quoted all the time in the media because it's true that 40% of Americans would have trouble getting $400 together for an emergency. Well, the emergency started a month ago, so they've blown through those $400 and a lot of the anti-lockdown protests is absolutely legitimately anger over the fact of this sort of economic chasm that we call an economy. But the paradox, of course, is even if you open it all up tomorrow, are you going to go back to a restaurant? Is that the first thing on your mind? Are you going to go to a shopping mall where you can literally shop till you drop? Our behavioral response has got to be changed coming out of this, right? ADAM TOOZE: Absolutely. I mean, I think that's one of the real puzzles for thinking about the whole process because if you look back, I've been looking back, scanning back recently over the auto industry shutdown, I mean, organized labor was a key driver of the shutdown in the auto sector globally, in Europe and in the United States. And you know, we think of it now as a difficult decision made by politicians. And ultimately, they have to make decisions, but I think we really have to think of that as ratifying decisions that were being made by very powerful collective actors on the one hand and also by individuals, and in a sense, what politics comes along afterwards. And so you see it in the school strike in New York as well. Effectively, teachers were calling in sick, and parents weren't sending their kids to school, and the schools were becoming increasingly dysfunctional. And so the question is when does politics sign off on the fact that, yes, this is in fact a national shutdown. And to that extent likewise, the exit from this period of uncertainty can't simply be a matter of government fiat either. It needs to be a series of procedures, a series of practices, and expectations that we all feel comfortable with. And that has to start in the hospital sector. I mean, the most fundamental one of these, I think, to take up your analogy is basically the mechanisms, and institutions, and expectations we have about dying. And in a sense, the thing that drove this entire crisis after all was not the deaths per se or even horrendously high probability of dying because neither of those two things are all that remarkable about this disease. It's the sense that it completely overwhelmed the mechanisms that we have for dealing with that ultimate existential uncertainty. You know, how do I pop off? How does this end? And it's supposed to end in an orderly fashion with known diseases in settings that we're, broadly speaking, familiar with, which don't look like some sort of hellish charnel house, that look like a conventional hospital ward. And each one of those moments is going to be terrible for those involved, but it isn't going to be a collective nightmare. And what COVID-19 did was to disrupt that. So I think from my point of view as it were, an orderly restoration of the mechanism of our regular dying is where it all has to-- that's where it has to start from. Once that's in place, you know, once I know that my chances of getting seriously sick are X, but then I've got a very good chance of getting intensive care bed, and then if I really needed a ventilator, ultimately I'll feel better about going back to or going to a restaurant. MARK BLYTH: You go to the restaurant, that's it exactly. ADAM TOOZE: It's hilarious, but I never previously thought about it, but it was, of course, literally true. And then a European traveling to the US-- this is true-- you're very ill advised to visit the United States unless you can get bombproof, gold-plated travelers health insurance because if you were en route to a restaurant from your hotel to absentmindedly step into the street and get run over, you could be bankrupt the next second. And so that existential risk and its financial implications are there, but as you're saying, we have all of these conventional mechanisms for managing that and this virus is disrupted those. And until we've got those back and eat, like the government, the politicians can wave their hands as much as they like and the economy won't restart.