Acclimatized to Risk

Here is a way to cure writer’s block. Visit a website of somebody you disagree with. If you are a climatologist, visit a climate change denier’s site, if you are a biologist visit a creationist site, if you passed kindergarten read the newsletter of the Flat Earth Society here. The boiler of your indignation will be stoked, sparks will fly from your ears. Arguments will crystallize into sentences and scream at you to type them. The resulting piece will likely be even more long winded, vacuous and pointless as whatever inspired you to write it, but your writer’s block will be cured.

So that is how I am writing this after reading Dilbert creator Scott Adams’ post here. Adams agrees with the consensus on climate change mainly because it would be sticking his neck out not to, but to his ear, both sides sound credible. He then repeats a number of rather weak arguments picking at details of climate models. As far as I know, the evidence for climate change is not based on modelling as much as on direct observation.

There is so much in his post I disagree with that I should begin with the one thing I do agree with him on. None of us are nearly as rational as we wish we were. People generally don’t see the world as it is, but as they believe it to be. Neither I nor Adams are immune from this.

So much has already been written on the subject of climate change that I doubt there is any point in my adding to it. Instead, I would like to examine another of Adams’ points,

… any danger we humans see coming far in the future we always find a way to fix. We didn’t run out of food because of population growth. We didn’t run out of oil as predicted. We didn’t have a problem with the Year 2000 bug, and so on. I refer to this phenomenon as the Adams Law of Slow-Moving Disasters. When we see a disaster coming – as we do with climate science – we have an unbroken track record of avoiding doom. In the case of climate change danger, there are a number of technologies under development that can directly scrub the atmosphere if needed.

Adams isn’t the first person I have come across to make this argument. One thing all people who have made this argument in front of me is that they all have the confidence of remarkable success (far above my level) in their chosen fields (not science) and none of them has ever backed this up with sufficient evidence.

I disagree with them, our track record for foreseeing and forestalling imminent disaster is miserable. At an individual level, I see this every day travelling to work. Almost every week, I see an accident or the remains of an accident involving a motorcycle. With ever present reminders of the risk they face it would be sensible to expect bikers to become the most cautious drivers on the road. The truth is the opposite. Having faced the same danger day after day and survived, people become contemptuous of it. Until suddenly and without warning, it kills them.

What about at the collective level? After all, there may be individual idiots, but surely the majority will act to protect itself. Remember 2008, plenty of financiers saw it coming. Even on the academic side a host of professors from Shiller to Rajan had been warning about unsustainable debt and housing as well as systemic risk for years.

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I was a fresh graduate at the time, but even I could see the imbalance in the salaries from the financial sector and the get rich quick speculation that pervaded the culture.

The financial industry has always drawn intelligent and capable people. Yet any study of its history is a sobering experience. People who really should know better repeatedly come up with ingenious ways of convincing themselves otherwise.

It is difficult to get a man to understand something, when his salary depends upon his not understanding it!                                                                                                               – Upton Sinclair

On the subject of climate change, even staunch opponents like Jared Diamond and Richard Bulliet who disagree on almost everything are unanimous in pointing out that civilizations have been wiped out due to climate changes with alarming regularity.

Easter Island

The easiest example would be a small in the South Pacific known for its massive stone carved statues, Easter Island. Another, greater oddity of the island is that it is entirely devoid of trees. Excavations show that until a few hundred years ago, the island was home to a variety of tree species including some now extinct forms of giant palm native to the South Pacific. Sometime during the island’s history, the people deforested their home.

What followed was a horror whose memory is continued to the present day. Lacking wood for making boats, the natives could no longer go far into the ocean to fish or trade. Famine, war and cannibalism followed the increased competition for scarce resources. Folk traditions describe a time when it was unsafe to sleep unguarded, for you could be murdered and eaten. The island’s population collapsed and remained a fraction of its former level till the arrival of Europeans.

The isolation of this community made the effect of even a local environmental disaster catastrophic, but the larger, well connected civilizations have also fallen. Ankor Wat in Cambodia and the Mayan ruins in Mexico are examples mighty empires that collapsed due to declining soil fertility. The decline of the Indus Valley Civilization is linked to changes in flow of rivers in North India. The remains of Viking settlements in Greenland show the collapse of one of the hardiest cultures in the world with the a few degrees change in temperature.

I wonder what the Easter Islanders thought as they saw the last of their trees disappear. Did the Mayans believe that their gods would stave off their doom if only they prayed hard and sacrificed enough?

Let me be clear, the civilization today is different. It is interconnected far better than ever before. It is not unusual to live in India while eating apples produced in the US, drink South American coffee and use Indonesian palm oil. Local disasters rarely impact world markets. A few failed crops in one part of the world can usually be offset with harvests from others. Stable and responsive governments regularly avoid obstacles that would have resulted in famines in an earlier age.

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Hyman Minsky

As with economic cycles, outstanding success plants the seeds of its own destruction. US economist Hyman Minsky believed that prolonged periods of prosperity (booming business cycles) lulled people into a false sense of security. They would then start taking increasingly heavy risks. Inevitably, sooner or later the risks would fail and things unravel. This point, at the edge of the precipice before the inevitable collapse is the Minsky Moment.

The danger we face today is not a shift in local weather patterns but a worldwide climatic shift. Such shifts have happened before (although not directly due to human intervention) and each time the consequences have been devastating. But none has occurred in the last couple of centuries, leading many people to question whether such a thing is even possible.

One more question arises from Scott Adams’ blog, why were we able to solve some problems but failed completely at others? I propose a simple solution. People solve the problems for which there is a clear immediate incentive. I would like to emphasize that the incentive must be immediate or at least relatively short term for people to start innovating seriously.

Y2K prompted corporate spending in software upgrades. Rising oil prices drove new technologies like fracking which made available previously unprofitable reserves. As for the Malthusian trap of too many people with too little food, we haven’t escaped it, we’ve postponed it thanks to Norman Borlaug and the Green Revolution. I invite anyone who disagrees with me to spend a month in India

Too often, risk is only understood when the Minsky Moment arrives. At this point, all effort is in vain. Collapse is inevitable. The world is a non-linear system. When things change, they can change fast and irreversibly.

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