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Is Covid-19 a black swan event?

In his book titled “The Black Swan”, author Nassim Nicholas Talib talks about events that come as a surprise and can lead to drastic shifts in the way we conduct ourselves. Omar Rahman based on long term implications of Covid-19 evaluates if we should classify it as a black swan event, or not.

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In his book titled “The Black Swan”, author Nassim Nicholas Talib talks about events that come as a surprise, usually have a major impact and are rationalized after-the-fact using the hindsight is 20-20 principle. Such events are almost never seen coming and tend to have absolutely no probabilistic value, yet can lead to drastic shifts in the way we conduct ourselves – more often than not being an impetus for global change.

One such event in recent history was the 2008 global financial crisis brought on by sub-prime lending practices in the United States of America. The 2019 SARS-CoV-2 classifies as a black swan event.

Whether you believe in conspiracy theories or are determined to stick with the facts, it is impossible to ignore the presence of the coronavirus in our world today. Millions have already been affected and hundreds of thousands of people have succumbed to this deadly virus. Yet, it shows no signs of letting up anytime soon.

Read more: Is COVID-19 a biological weapon?

As the developed world races to find a vaccine, many countries are still stuck between the tradeoff of imposing lockdowns or letting their economies – propped up by foreign aid and loans – come to a grinding halt. What then, is the way forward?

The COVID-19 outbreak has completely thrown conventional wisdom out of the window. Where the globalization of trade and interdependence of supply chains was heralded as a major achievement, that very novelty has now disappeared.

Overhaul in banking and education

Movement of goods and people has come to a standstill which translates into shortages of crucial equipment such as ventilators, medicines, masks, personal protective equipment (PPE) and face shields just to name a few of the ‘weapons’ being used to fight this invisible enemy. It is clear then, that in the short-run countries will have to improvise and prioritize local supply chains over global ones for the provision of both medical and non-medical goods and equipment.

If we apply sound logic and try to rationalize this pandemic before it is over, can we say that the SARS-CoV-2 is not such a black swan after all?

Some of the most prominent changes will perhaps take place in both the banking sector and the education sector. Most developed countries have made the shift, to some extent, towards a cashless economy with the prevalent use of debit/credit cards and contactless payment systems. The developing world, however, is far from it.

Cash reigns superior over all other modes of payment, but for how long? With cash handling now a health hazard, a greater push for the use of cashless payment systems will have to be made if the governments want to revive the economy. The Pakistan Tehreek-e-Insaaf government’s use of the Habib Bank Limited (HBL) Konnect Mobile Application to disburse payments to people is a step in the direction and can be used as a stepping stone for further development.

As for the education sector, schools and universities were among some of the earliest to close down even before the government declared a lockdown in the country. Similar patterns were seen all over the world. However, these institutions were quick to adopt new technologies enabling their students to participate in virtual classroom environments from the comforts of their homes.

Read more: Covid-19: Pakistan must redefine its national security

Remote and virtual learning, therefore offers endless possibilities. Not only does it make more commercial sense for such institutions it may even be a more effective learning tool. With students not having to worry about carrying heaving bags and wearing clean uniforms, it might result in more mentally present pupils.

The contrary also holds true, as part of a student’s education is the development of soft skills that he/she gains from physical interaction with others. Research needs to be conducted in order to ascertain the true impact of such virtual classrooms, but for the time being these offer a great alternative.

Innovation in agriculture and manufacturing sectors 

Innovation does not have to stop with the aforementioned sectors of the economy. Our agriculture and manufacturing sectors are lagging behind in their use of technology and value addition. A major chunk of our labour force is part of the shadow economy or the informal sector.

Read more: World economy shrinking amid coronavirus

Innovation can take place there as well. To make a long story short then, dealing with the Coronavirus should be our number one priority but that does not mean that we can not use this time to focus on issues and sectors that have long been in need of a rethink.

So then, if we apply sound logic and try to rationalize this pandemic before it is over, can we say that the SARS-CoV-2 is not such a black swan after all?

Mohammad Omar Rahman is a graduate of the Suleman Dawood Business School at the Lahore University of Management Sciences. He is an entrepreneur and works as a management consultant. The views expressed in this article are the author’s own and do not necessarily reflect Global Village Space’s editorial policy.

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