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Thursday 17 Aug 2017 | 05:33 | SYDNEY
Thursday 17 Aug 2017 | 05:33 | SYDNEY

Just heard on ABC Radio National: Imagining the past

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14 October 2008 12:40

Nobel Laureate Paul Krugman speaking about the financial crisis on The World Today:

In retrospect, how could we have been so blind?

That's a common lament in life generally. But although we should examine scupulously how we can easily miss signs of an impending crisis, it is equally sobering to look at how quickly we incorporate previously unthinkable events and ideas into our worldview as if they were obvious and trivial. The idea that major Western governments could, en masse, effectively nationalise their banks would have seemed impossible a month ago, yet now it is the conventional wisdom on how to at least stem the financial bleeding.

What seems impossible in prospect looks inevitable in retrospect, but that retrospective sense of inevitability is actually a barrier to clear analytic thinking, because it inhibits us from imagining future Black Swan events. Faced with an uncertain future, there is a tendency to assume that it will look much like the present. But to remain open to future strategic shocks, one must remain alive to the idea that there is nothing inevitable about how the past unfolded.

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