Originally circulated on 29 May 2020
Hi fellow Ruminants & Groupies in Lock Down Level 4
Greetings from day 63 of lock down. Over the past week I have received no worthy submissions for Ruminant Pink Friday’s ™.
I think it is fair to say that we now live in a period of unprecedented uncertainty in our lifetimes. The world is not as we know it. I would go further and say that the group I am sending this to (myself included) are a group who place a high value on certainty. We have traded our potential ability to be an Elon Musk to be corporate soldiers who receive a regular pay check. We need that certainty that at the end of every month there will be a known amount coming into our bank accounts. Until recently we also knew that once a year we would get a bonus and a long term incentive. Although we didn’t know the exact amount we could actually calculate it within a fairly narrow range. It was like this for most of my 29 year career. Then it wasn’t. Of course, we are not unique. There is global economic carnage out there with many far worse off than us.
A possible consequence for us certainty seekers is anxiety and mental health problems. https://theconversation.com/why-inability-to-cope-with-uncertainty-may-cause-mental-health-problems-105406. A better route to follow is to understand and accept that the world is inherently uncertain. No amount of trying to create certainty in an uncertain world will help.
Perhaps the leading profit on uncertainty is Nassim Nicholas Taleb. https://en.wikipedia.org/wiki/Nassim_Nicholas_Taleb. He has written a number of books starting in 2001. His 2007 book, “The Black Swan”, introduced the black swan concept into popular discourse. He is certainly not without his deserved critics. Having read all his books the following statement resonates with me:
“Robert Lund, a mathematics professor at Clemson University, writes that in Black Swan, Taleb is “reckless at times and subject to grandiose overstatements; the professional statistician will find the book ubiquitously naive. However, Lund acknowledges that “there are many points where I agree with Taleb,” and writes that “the book is a must” for anyone “remotely interested in finance and/or philosophical probability.”
The book perhaps most relevant right now is “Antifragile: Things that gain from disorder”. https://www.amazon.com/Antifragile-Things-That-Disorder-Incerto/dp/0812979680.
Make no mistake that the fossil fuel industry is a fragile industry faced with huge uncertainty. Taleb has this to say about the (elaborate) economic models we create:
The risk management models in use today exclude the very events against which they claim to protect the businesses that employ them. These models import a veneer of technical sophistication … Quantitative analysts have lulled corporate executives and regulators into an illusory sense of security
Beware of the elaborate and spuriously sophisticated economic models for capital intensive projects based on stable forecasted prices. That is if you like regular predictable pay checks and bonuses.
Please keep the submission ideas flowing.
Regards
Bruce
Ruminant Pink Friday 