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Three Strategies to Face a World of Uncertainty

What we can fathom and what reality holds are two different things

Bill Gates, when asked what he is most afraid of, gives a somewhat unexpected answer. He points at high-impact historical events of the 20th century that caused millions of deaths: World War I and World War II – and the Spanish Flu, a deadly influenza pandemic that spread the globe in between 1918 and 1920 and single-handedly killed more than 65 million people.

Given global connectivity and modern means of transport which today are more than 50 times as developed as back in 1918, the outbreak of a similarly aggressive and contagious pandemic today could spread very quickly to urban centers across the globe, killing millions in a very short time. While still relatively well contained, the 2014 Ebola outbreak goes to show that Bill Gates' fear is certainly not unfounded.

Ray Dalio, the founder and manager of the world's largest hedge fund, makes a similar point. Having built a considerable fortune from his ability to "read" the markets, he believes that in today's complex world it is possible to decipher patterns, cycles and re-occurrences of events, yet oftentimes in much longer historical time frames.

He holds that our analysis of events is oftentimes skewed towards the most recent past that we can still actively recall while we easily overlook events that happened before our lifetime. Even more, when unexpected events occur whether we recall previous occurrences or not – they are there, and we have to deal with them.

We did not see 9/11 coming and yet it changed the way we live, travel, engage with Islam, talk about fundamentalism, spend on national security. So just because we cannot fathom certain developments does not mean they will not occur. They may be rare and unpredictable, but their impact is heavy. Accordingly, philosopher Nassim Nicholas Taleb coined them "black swan" events.

The Spanish Flu, 9/11, the 2008 Financial Crisis and Ebola all have one thing in common – they confront us with the fact that i) we are not good at predicting the future and ii) that the present, too, holds a lot of uncertainty for us.

How to approach the world in the face of uncertainty: lessons from one week in the Middle East

As a fairly resilient species we have come up with different strategies in the face of uncertainty. Three are particularly noteworthy for us as they shed a light on some of last week's global events.

1. Know your weakness, confront it head-on and build robustness

Practical philosopher Nassim Nicholas Taleb suggests not to focus on what cannot be known (the future), but instead on what each one of us should know about her- or himself, namely one's vulnerabilities. What are the weak spots that in times of black swan events could cost us dear? Taleb recommends we build resilience. In practical terms, for a city-dweller of New York that could mean to learn from the floods that came with Hurricane Sandy and either move up higher, further away from the shore or build protective dams or other flood measures.

With the increase in extreme weather phenomena over recent years, his advice may come in handy. In the international arena, this advice may have also resonated with many over the past week. As a matter of fact, Israel did not hesitate to deal with one of its own Achilles Heels head-on. Seeing Iran caught up in the international limelight following the US' pull-out of the Nuclear Deal, Israel seized the opportunity to strike 50 alleged Iranian positions in neighboring Syria.

2. Build institutions that reflect a shared understanding of things

A second approach to reducing uncertainty looks at how we can come together in society to cushion the shock of unexpected events. Berger and Luckmann in their 1966 sociology classic "The Social Construction of Reality" reflect on how in social systems people create categories to classify each other's actions and how these categories over time solidify into roles.

Now, when other members of that social system start accepting these roles and act according to them, then institutions are born. Thus, when all agree on the meaning of a red light suspended to an intersection, then a lot of misunderstandings and traffic accidents are avoided, creating predictability and making social interactions more efficient.

More importantly, with institutions in place that reflect a group's prior agreement on the "way of doing certain things", we can afford to focus our limited attention span on other more pressing things. Jointly, members of society agreed on a set of meaningful scripts, protocols, roles and institutions – that is on a shared reality. Iconic expressions of such shared visions of reality can be found in many multilateral institutions, including the United Nations, NATO or the European Union which heavily rely on established work processes, protocols and roles.

3. Create new realities yourself

A third, highly action-oriented and much less consensual way is to create new realities – unilaterally. Abraham Lincoln said that the best way of knowing the future was to actually create it. His successor, the 45th President of the United States, does exactly that. In a complex and often messy world, his America First doctrine provides him with clear guidelines as to his political priorities. Whether withdrawing from the Paris Climate Agreement; the Iran Nuclear Deal; from international free-trade, President Trump creates faits accomplis and thus his own, new realities all the time.

While his unconventional way of "shaking the tree" has certainly set things in motion on the Korean peninsula, it is important to realise that all of these actions are highly consequential in nature. No better illustration than the surreal juxtaposition of images that reached us this week from Jerusalem and the Gaza Strip.

While Ivanka Trump in a summer dress threw a party in Jerusalem to officiate the US embassy's move from Tel Aviv to Jerusalem, about one hundred miles further South in Gaza, 40,000 Palestinians gathered in the dry and dusty border strip to protest against the US recognition of Jerusalem as the capital of Israel alone (and not as one joint capital of both Israel and a Palestinian state, as foreseen in a two-state solution to the conflict).

Israel's Prime Minister Benjamin Netanyahu, a hard-liner, was swimming on a wave of success that week already: from his visit to Moscow, he had brought home the green light necessary for his military strikes against Iran. Washington had just offered him an Iran Deal in shatters and renewed sanctions against his archenemy. As a result, Netanyahu's domestic approval ratings went up again, overshadowing the latest episode in a long history of corruption allegations against him.

Emboldened by this, Netanyahu decided to draw a red line right into the dust of the Gaza border strip. He ordered dispersing Palestinian protests along the border fence. Not with rubber bullets, water cannons or tear gas, common options when breaking up demonstrations by force. No, snipers with military training and top-notch military rifles were ordered to shoot at protesters with live ammunition. The result reads like a mass-shooting of epic proportions: 2,700 injured. 60 dead. In less than a day.

President Trump may pride himself on his own unpredictability and the headlines he makes with his escalation-style politics (recall the Week in Review two weeks ago). Very well, but what he needs to realise, is that the orders he gives in the whim of a moment from his golf course in Mar-A-Lago have very real-life consequences. More exactly, they actually cost people's lives. President Trump will have to account for these decisions and foot the bill.

What remains when things get ugly: licking your wounds and counting the damage

A lot more damage still waits to be quantified. The damage done to future generations by leaving the Paris Climate Agreement. The damage done to the moderate forces in Iran who had put their reputation on the line for a deal with the West made in good faith. And the damage done to a Middle East peace process and thousands of Palestinian families whose long-standing dream of their own state may now never materialise.

Maybe Bill Gates will have to rethink his answer to what he is most afraid of. Maybe, the worst is not to come anymore. Maybe, it is already here.

 

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