The analogy in the clip below taken from an article in the McKinsey Quarterly, expresses exactly our situation; our propensity to a reductionist approach to problems rather than a system based one.
………………Years ago, I had the chance to chat with a guy who had actually flown over Europe in the Hindenburg. And he had this wistful memory that it was a wonderful ride. He said, “It seemed so safe. It was smooth, not like the bumpy rides you get in airplanes today.” Well, the ride in the Hindenburg wassmooth, until it exploded. And the risk the passengers took wasn’t related to the bumps in the ride or to its smoothness. If you had a modern econometrician on board, no matter how hard he studied those bumps and wiggles in the ride, he wouldn’t have been able to predict the disaster. The fallacy is the idea that you can predict disaster risk by looking at the bumps and wiggles in current results.
The history of bumps and wiggles—and of GDP and prices—didn’t predict economic disaster. When people talk about Six Sigma events or tail risk or Black Swan, they’re showing that they don’t really get it. What happened to the Hindenburg that night was not a surprisingly large bump. It was a design flaw………………..