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Thought of the month ...

October 2010: Is the U.S.A. the Turkey? Based on China's decision to make a transition to a green economy (see my October 2009 Thought of the Month), and the obvious signs of seriousness in implementing this decision very rapidly (see my August 2010 Thought of the Month), and having spent the last few days in Shanghai, I have the impression, China is in the middle of a "Great Leap Forward" (see my October 2010 Picture of the Months). It appears that this Great Leap Forward is supported by the people, which likely will make it very successful. No sign of such positive attitude supporting the necessary transition can be seen in the U.S., and the thorough change promised by the current president, which could have amounted to a Great Leap Forward for the U.S., is counteracted and blocked by the inertia of the people. It looks to me like China will continue to produce for the world, and the U.S. will continue to consume (for) the world. At least for some time to come.

In his book "The Black Swan", Nassim Nicholas Taleb addresses the problem of inductive reasoning based on experience by considering the life of turkey. Day after day, the turkey is being fed by nice humans (although today these humans have been replaced by machines, but that comment is off track) and with every day that goes by, the turkey is more convinced that this is the way it should be indefinitely. Until three days before Thanksgiving, when the slaughter happens invalidating all previous experience of the turkey. Taleb call this type of unexpected high-impact event "Black Swans"1).

Over the last few decades, the USA seems to be in the turkey's position: its consume is based on what it gets from the rest of the world, particularly from China. And the USA seems to reason like the turkey: the world is nice and will continue to feed us. China seems to be in the position of the humans in Taleb's turkey analogy: it is supplying products to the consume-hungry USA, seemingly with no real advantage (except for a somewhat fake economic stimulus and a growing dept of the USA). We may ask the question whether China is preparing the turkey for Thanksgiving. If so, the USA is in for a serious Black Swan event.


1)A Black Swan event has the following characteristics:
  1. it is an outlier, as it lies outside of the realm of regular expectations, because nothing in the past can convincingly point to its possibility;
  2. it carries an extreme impact;
  3. in spite of the outlier status, after the fact, humans try to find an explanation for its occurrence making it explainable and predictable.

If you have a story, thought, or picture worth to be considered as story, thought or picture of the month, please feel free to inform me about it by sending an e-mail to hpplag@unr.edu.