Why economies should be antifragile

For anyone interested in Nassim Nicholas Taleb’s concept of antifragility, the article ‘Why Didn’t We Test Our Trade’s ‘Antifragility’ Before COVID-19?’, published in The American Conservative, is a must-read. The authors Gene Callahan and Joe Norman use powerful examples to illustrate the mechanism and effectiveness of antifragility and make a case for the idea to be applied to trade policy as well.

They recommend that governments should render their economies more antifragile by practicing disconnecting and deliberately causing random shocks and modifications to existing trade flows (say, import supply chains), thus forcing the system to become better at overcoming disruptions and to be sufficiently able to deal with events such as the coronavirus pandemic we are experiencing now. Linked to this, the article reflects on the danger of extreme specialization of economies. Extreme specialization is an end state for a system following the principle of comparative advantage, an important concept that lies at the heart of theories on international trade. While a powerful insight, Callahan and Norman argue that extremely specialized economies will collapse when faced with heavy price fluctuations or changes in supply conditions.

So what’s the take-away from the article? It certainly brings home what a well-managed company Netflix is. First and foremost, however, it is a well-argued reminder that disruptions need not be a bad thing at all, when considered from the right angle.

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