July 10, 2020

Red Herring & Black Swan: Beware of Gray Rhinos

Despite warning signals about a pending crisis, European decision-makers repeatedly fail to invest in preparedness. Forward-looking thinking and whole-of-government approaches are required now in order to prevent cascading effects from the COVID-19 crisis.

Red Herring and Black Swan column

In September 2019, less than six months before the World Health Organization declared the COVID-19 outbreak to be a Public Health Emergency of International Concern, the Global Preparedness Monitoring Board, an independent expert group co-chaired by the former WHO director general, Gro Harlem Brundtland, had published a report in which it reviewed the international state-of-play following epidemics of previous decades.

The report made clear that states lacked the capacity to contain a global health threat. Preparedness measures were poorly implemented, if at all, and critical gaps persisted: “For too long, we have allowed a cycle of panic and neglect when it comes to pandemics: we ramp up efforts when there is a serious threat, then quickly forget about them when the threat subsides. It is well past time to act.”

The report laid out explicit policy requirements that would be necessary to cope both with the medical aspects of such a pandemic outbreak, but also with all cascading financial, societal, national, and global security impacts. International coordination and cooperation, whole-of-government, and whole-of-society approaches should be at least part of regular preparedness simulations, mobilizing political leaders, financial enterprises, and international institutions, the report recommended.

Yet, none of the above was in place, neither in China, nor in the United States, nor in Europe, when the magnitude of the COVID-19 threat was finally recognized in March 2020. The Global Preparedness Monitoring Board was not, by far, the only one to issue dire warnings. In the course of the past years, several foundations, NGOs, research institutions, including the World Bank and the International Monetary Fund, had published studies calculating the disproportional costs resulting from a pandemic outbreak. According to a Pandemic Preparedness Financing Study by the World Bank Group in 2019, the costs of containing a global influenza spread were calculated at $3 trillion, or almost 5 percent of global GDP, a hundred times more than preparedness and prevention measures would have cost.

Slow-Moving Threats

Often despite the existence of early warning signals there is a lack of proactive and concerted policy action, as both the financial crisis and the migration crisis have demonstrated in the recent past. Indications about possible spill-over and cascading crises seem to land into the blind spot of decision-makers’ strategic planning. However, the majority of disasters, much like the still unfolding coronavirus pandemic, do not fall from the sky all by sudden; they are no “Black Swans.” Rather, they resemble “Gray Rhinos”—the category of slow-moving, latent threats that policy-makers easily overlook, or prefer to downgrade, in favor of other challenges on their political agenda.

Yet, as soon as Gray Rhino-threats start to accelerate, they are hard to stop; the impact of the crash is massive and often irreversible. Unlike Black Swans, these are not unforeseeable random surprises, but, instead, cumulative, sending weak warning signals about the magnitude of the threat. They remain long underrated until it is too late to contain them. 

The real threat often lies in policy-makers not being able to recognize the threat. Unlike the “unknown unknowns”—ignorance that cannot be remedied with more knowledge—strategic surprise often results from knowledge that, despite being available, gets neglected, underrated, distracted from, or suppressed: the “unknown knowns.” This proved to be the case with COVID-19, but it applies also to a long list of other current challenges.

The coronavirus pandemic, instead of giving birth to a radically new global order, is likely to reinforce and accelerate pre-existing trends: Erosion of multilateralism, rising socio-economic inequalities, and misuse of technology for surveillance by authoritarian governments around the globe, as well as systematic disinformation on social media platforms, intensified asymmetric threats and security vulnerabilities of critical infrastructures. Failure to prioritize them here and now, and do whatever it takes to act with a view to the future at international level, will simply raise the probability of cascading crises.

Attention to those cascading gray rhinos is currently again distracted by calls in favor of preserving the status quo as prior to the crisis, that factually has been responsible for triggering the crisis. Blocking necessary reforms, changes of mindset, and learning has been unfortunately the case with past crises the EU was confronted with in recent years, from the financial to the migration one. Ironically enough, these self-imposed blinders are not exclusively reserved for autocracies and dictatorships, as liberal democracies seem particularly susceptible to them. Pluralist, participatory decision-making mechanisms apparently cannot immunize policy-makers against politically-driven agendas, or against lobbying by particularistic interests.

Besides suffering from “short-sightedness,” democracies suffer also from “short-termism,” which frequently lets policies get captured by ephemeral power politics, blocking cross-party or concerted EU-wide collaboration, and postponing urgent but contentious issues for future agendas. What is more, short-termism undermines readiness to invest attention and resources in preparedness and prevention measures, and undermines any effort to anticipate non-desirable side effects from pursued policies and developments in economy for the sake of the public interest.

New Wine in Old Bottles?

Crises always open a window of opportunity for changing the way we make sense of the world and make use of resources. History, however, reveals a different picture: As a rule, decision makers stick with familiar paradigms of the past even when coping with new problems. More often than not, they tend to practice “more-of-the-same” instead of changing the game. This has become visible once more in how efforts toward international and pan-European concerted responses have been failing in the past weeks following the outbreak of the pandemic. Going for unilateral, instead of multilateral solutions, from vaccine development, to financial support measures, is going to raise issues of fairness, solidarity, and discrimination in cost/benefit distribution, both within society, and internationally.

Recasting the notion of innovation will prove to be key for the EU at coping with the crisis and moving forward. The combination of speed and scale, due to the current extent of global interconnectivity is unprecedented. Speed is an accelerator, multiplier, and amplifier of everything, good and bad, and is increasingly throwing phenomena out of control. Innovation has become a constitutive part of national security and foreign policy, with serious geopolitical repercussions. Asymmetric dependencies of global supply chains in critical materials and other goods can undermine or boost Europe’s strategic non-dependence and capacity to act.

However, master narratives about innovation are still trapped in a narrow technological solutionism that promotes novel tech for profit at an ever faster pace, even if it is unclear whether it is fit-for-purpose to tackle complex societal problems. New technology R&D has been exacerbating socio-economic inequalities but also power relationships among states and transnational companies. Market concentration through oligopolies, particularly by tech giants is expected to have detrimental economic and political effects, as described in a recent 2019 IMF study.

Decision makers, following so many successful hackathons since the beginning of the crisis, start to realize that innovation is not merely about high tech. It is also about recombining low tech, with novel organizational procedures in order to come up with more efficient, more inclusive and more sustainable solutions. Equally, public-private collaborations need to demonstrate their commitment to public interest, unlike the  persisting profit-driven attitude of big pharma with regard to R&D. Patent-based innovation that privatizes and locks up knowledge needs to give way to public-interest driven innovation based upon Open Science. In that respect, it is not merely about how much, or how fast, but, most crucially, about direction and purpose of innovating in order to tackle the challenge.

Thinking “Outside the Tank”

The COVID-19 pandemic has unmasked a global state of fragility, caused not by a novel virus, but rather by pre-existing mindsets and established policy practices. The still unfolding crisis is manifesting the limited leverage that evidence-based, forward-looking, and public-interest-driven action have when it comes to providing early warnings and uncomfortable advice. Similar to the counter-productive tunnel vision prior to the crisis, it would be now very risky if everyone focused upon the crisis itself while neglecting “weak” signals in the horizon about pending future threats.

What should be in that context the role and responsibility of policy advice, including that from think tanks, given the repeated failures in pro-actively sensitizing for issues-turned-into-severe-problems? While proximity and close exchange between policy-makers and expert analysts fosters trustful dialogue, it has also a flip side: Irrespective of the plurality of views exchanged and dissent tolerated, most of the time policy advice remains stuck “inside the box” that is defined by powerful decision-makers. In the name of a narrowly understood “relevance” or “plausibility,” experts and advisors often avoid fundamental questioning of policy agendas themselves, for fear of being ignored. There is a difficult balance to strike here, one that goes beyond independence and non-partisanship. It is a challenging task for policy advice not to get captured by mainstream groupthink and get guided by political and economic agendas, but, instead, to guide them in an evidence-informed, inspiring, and responsible way.

Public and expert debates are currently loaded with ideological beliefs, war metaphors, emotions, and nationalist clichés, making it hard for decision makers to distinguish signal from noise. The need is as pressing as never before for think tanks to deploy their intelligence to the challenges that will arise because of today’s measures and their impacts. There is a lack of policy analyses about unavoidable trade-offs, opportunity costs, and non-intended second-order effects of measures and regulations. Uncomfortable insights and bold visions are necessary for anticipation, albeit not sufficient for creating political traction towards building future resilience into Europe. Unsettling established mindsets in policymaking, helping to minimize blind spots, are essential for offering urgently needed better alternatives for action.

Should policy advice generate real added value with its contribution in inspiring and shaping action, then it has to resist much of the mainstream bubble, and dare move outside the zone of comfort of many of its recipients. Think tanks need to show their capacity to point to gray rhinos—as “fact tanks” (working strongly evidence-based and not hesitating to deliver uncomfortable advice), “future tanks” (anticipating risks and devising alternative options for action), and “responsible tanks” (assessing the costs and benefits of policy trade-offs and making sure the advice serves the public interest).

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