Another ‘Too Big to Fail’ System in G.M.O.s
Before
the crisis that started in 2007, both of us believed that the financial
system was fragile and unsustainable, contrary to the near ubiquitous
analyses at the time.
Now,
there is something vastly riskier facing us, with risks that entail the
survival of the global ecosystem — not the financial system. This time,
the fight is against the current promotion of genetically modified
organisms, or G.M.O.s.
Our
critics held that the financial system was improved thanks to the
unwavering progress of science and technology, which had blessed finance
with more sophisticated economic insight. But the “tail risks,” or the
effect from rare but monstrously consequential events, we held, had been
increasing, owing to increasing complexity and globalization. Given
that almost nobody was paying attention to the risks, we set ourselves
and our clients to be protected from an eventual collapse of the banking
system, which subsequently happened to the benefit of those who were
prepared.
Third,
we were told that had ideas such as ours prevailed in the past, they
would have hindered risk-taking. Yet, the first rule of risk-taking is
to not cross the street blindfolded.
Fourth,
toxic financial exposures were deemed to be “safe,” according to
primitive risk models. But Fannie Mae went bust exactly because of
overconfidence in its bad models (and, incidentally, after its bailout,
appears to use the same risk models).
Fifth,
the system kept relying on “predictions,” not noticing that the past
track record of predictions by central bankers and economists can be
used to make astrologists look good. Yet the entire economic system
rested on these flimsy predictions — while we were advocating a system
that had isolated parts to withstand prediction errors.
We
were repeatedly told that there was evidence that the system was
stable, that we were in “the Great Moderation,” a common practice that
mistakes absence of evidence for evidence of absence. For the financial
system to be viable, the solution is for it to resemble the restaurant
business: decentralized, with mistakes that stay local and that cannot
bring down the entire apparatus.
As
we said, the financial system nearly collapsed, but it was only money.
We now find ourselves facing nearly the same five fallacies for our
caution against the growth in popularity of G.M.O.s.
First,
there has been a tendency to label anyone who dislikes G.M.O.s as
anti-science — and put them in the anti-antibiotics, antivaccine, even
Luddite category. There is, of course, nothing scientific about the
comparison. Nor is the scholastic invocation of a “consensus” a valid
scientific argument.
Interestingly,
there are similarities between arguments that are pro-G.M.O. and snake
oil, the latter having relied on a cosmetic definition of science. The
charge of “therapeutic nihilism” was leveled at people who contested
snake oil medicine at the turn of the 20th century. (At that time,
anything with the appearance of sophistication was considered
“progress.”)
Second,
we are told that a modified tomato is not different from a naturally
occurring tomato. That is wrong: The statistical mechanism by which a
tomato was built by nature is bottom-up, by tinkering in small steps (as
with the restaurant business, distinct from contagion-prone banks). In
nature, errors stay confined and, critically, isolated.
Third,
the technological salvation argument we faced in finance is also
present with G.M.O.s, which are intended to “save children by providing
them with vitamin-enriched rice.” The argument’s flaw is obvious: In a
complex system, we do not know the causal chain, and it is better to
solve a problem by the simplest method, and one that is unlikely to
cause a bigger problem.
Fourth,
by leading to monoculture — which is the same in finance, where all
risks became systemic — G.M.O.s threaten more than they can potentially
help. Ireland’s population was decimated by the effect of monoculture
during the potato famine. Just consider that the same can happen at a
planetary scale.
Fifth,
and what is most worrisome, is that the risk of G.M.O.s are more severe
than those of finance. They can lead to complex chains of unpredictable
changes in the ecosystem, while the methods of risk management with
G.M.O.s — unlike finance, where some effort was made — are not even
primitive.
The
G.M.O. experiment, carried out in real time and with our entire food
and ecological system as its laboratory, is perhaps the greatest case of
human hubris ever. It creates yet another systemic, “too big too fail”
enterprise — but one for which no bailouts will be possible when it
fails.
