Has the Global Economy Finally Exhausted its Good Luck?
All of these guarantees and redundancies are as illusory as the “unsinkable” technologies of the Titanic.
The past three decades of global growth are rarely attributed to luck: it’s all the result of our brilliant fiscal, monetary and trade policies. Those in positions of wealth and power are delighted to take credit for this tremendous success, but as a general rule, the more knowledgeable you are and the higher up the food chain you are, the greater your awareness of the role of luck in any unbroken chain of success.
There are various moving parts in what we call luck. One is what we don’t know but think we know, or put another way, we know enough to be confident everything will work as intended and expected.I described how this worked in the Titanic disaster in Why Our Financial System Is Like the Titanic (March 15, 2016).
The technologies of the early 1900s enabled shipbuilders to construct enormous steel-hulled ships almost 900 feet in length capable of steaming at 24 knots, transporting passengers across the Atlantic in comfort. The technologies that made such ships and transits low risk were largely already present but in forms that were deeply flawed in ways that were not readily visible or understood.
Unbeknownst to the era’s designers and shipbuilders, the Titanic’s hull plates were brittle due to high sulfur content in the steel, especially at cold temperatures (the water was near freezing at the time of the collision with the iceberg).
Rather than deform as the iceberg scraped against the hull, the plates and rivets fractured, opening the irregular gash that sank the ship.
The watertight bulkheads appeared to make the ship “unsinkable,” but this was only true if the hull was compromised across no more than four watertight compartments. The bulkheads may have actually accelerated the sinking, as later studies found the ship would have stayed afloat an additional six hours without any watertight bulkheads, as the ship would have settled evenly rather than sinking bow-first as the forward compartments filled.
The presence of lifeboats seemed to offer a guarantee of safety, yet outdated regulations only required enough lifeboats for half the crew and passengers.
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