What is the Black Swan?
A Black Swan is an event that is unlikely or surprising. It's not unlike the term, “Dark Horse”, which can refer to a player or competitor, who no one thought would do well; although, black swans are a wider range of things including unexpected physical events. Lately, the usage has come to focus on catastrophic events, like the financial crisis in 2008.
Credit for the popularisation of this term can be given to Nassim Taleb, who wrote a book, also named, Black Swan. This book was credited for predicting and explaining many aspects of the financial crisis of 2008.
Black Swan – Historical Usage
In 1697 Dutch Explorers saw black swans for the first time in Western Australia. Up until that point, the term "black swan" referred to what was thought of as a non existent bird. So, to say, “its like a black swan”, meant it was something impossible.
After the sighting of actual black swans, the term transformed. It came to mean something unlikely that may later be disproved
Black Swans in Philosophy
Notable in the field of philosophy, is the "Black Swan Fallacy". As a fallacy, this has been credited to John Stuart Mill but its not clear to me if it has a single author.
As I understand it, this fallacy goes something like this: Someone claims, because something hasn't been experienced, it can not be so. Eg. Jimmy says, “We have never seen black swans therefore they do not exist.” As happened historically, many people not having witnessed black swans, didn't mean they didn't exist.
How Experts Make Things Worse
Here is how the Black Swan applies to economics, social science and therefore politics:
You have experts who, if you follow their advice, give you confidence against a bad outcome, in the field they are experts in. However, when something bad happens in that field, the confidence these experts gave you, make things worse. Why? Because the confidence they gave you made you less wary of the bad outcome.
Example from the financial crisis:
Experts gave investments a “triple A” rating they often did not deserve. Some people who bought these investments found out they were built on a completely shoddy foundation; but, by then it was too late. Now the crashing value of these investments were doubly hard on the owners because they hadn't even considered the possibility there was a problem. It was..a double gut punch, so to speak.
The Danger of Taking Black Swan Ideas Too Far
I think there is a danger of going way too far with black swan thinking. For example, I read the following idea in the Black Swan entry in Wikipedia: Every significant event in history is a black swan.
Are the only significant events in history the catastrophic or surprising ones? This is taking things too far! Those who get too deep into the lore of black swan ideology, perhaps the result of a kind of pessimism, risk going off the rails with their analysis. I guess many good ideas can be taken to extremes or applied with too much reductionism.
A counter example to illustrate what I mean: Consider a long establish system of farmers working their farms every day (and bringing their goods to market). By doing this they feed hundreds of thousands of people. The sheer ordinariness of what these farmers do, day in and day out, does not make what they do less significant than the financial crisis or the great depression. In fact, this particular pattern seems more critical than those catastrophes.
And, that, my friends is where we come full circle. For, at any time, something can come along, to take down this “established system”. And, sometimes this unexpected event is beyond our ability to predict it...