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Foreseeable Unforeseeables

Summary:
Contrary to what US President Donald Trump would like to believe, a pandemic like COVID-19 was predicted as recently as last year. After being caught off guard by yet another catastrophe, one wonders when political leaders, markets, and average citizens will start to take risk seriously. CAMBRIDGE – Events like the COVID-19 pandemic, the US housing-market crash of 2007-2009, and the terrorist attacks of September 11, 2001, are often called “black swans.” The term is meant to suggest that no one could have seen them coming. But, in fact, these episodes each involved known unknowns, rather than what former US Secretary of Defense Donald Rumsfeld famously called “unknown unknowns.” Insuring the

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Contrary to what US President Donald Trump would like to believe, a pandemic like COVID-19 was predicted as recently as last year. After being caught off guard by yet another catastrophe, one wonders when political leaders, markets, and average citizens will start to take risk seriously.

CAMBRIDGE – Events like the COVID-19 pandemic, the US housing-market crash of 2007-2009, and the terrorist attacks of September 11, 2001, are often called “black swans.” The term is meant to suggest that no one could have seen them coming. But, in fact, these episodes each involved known unknowns, rather than what former US Secretary of Defense Donald Rumsfeld famously called “unknown unknowns.”

After all, in each case, knowledgeable analysts were aware not only that such a thing could happen, but also that it was likely to happen eventually. Although the precise nature and timing of these events were not predictable with high probability, the severity of the consequences were. Had policymakers considered the risks and taken more preventive steps in advance, they might have averted or mitigated disaster.

In the case of COVID-19, epidemiologists and other health experts have been warning about the danger of a viral pandemic for decades, including as recently as last year. But that has not stopped US President Donald Trump from claiming that the crisis was “unforeseen,” that it is an issue that “nobody ever thought would be a problem.” Likewise, after the attacks of September 11, 2001, President George W. Bush wrongly 

Jeffrey Frankel
Jeffrey Frankel, a professor at Harvard University's Kennedy School of Government, previously served as a member of President Bill Clinton’s Council of Economic Advisers. He directs the Program in International Finance and Macroeconomics at the US National Bureau of Economic Research, where he is a member of the Business Cycle Dating Committee, the official US arbiter of recession and recovery.

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