Tribute to Hans Rosling, Part II

In my essay on the amazing Hans Rosling, I listed his five priorities for making the world a better place. I claimed that three of those — global financial collapse, world war, and global warming — were probably much less likely than he thought. In that essay, I focused on global warming. In this short piece, I lay out the arguments for the other two.

This is based on Hans’ book, Factfulness, which I highly recommend people get and read.

You can buy this book at,,, and other bookstores.

I would call myself a rational optimist, a follower of the amazing Matt Ridley and student of the prolific Eliezer Yudkowsky — both of whom I have corresponded with. I study statistics, decision science, uncertainty. I try to think and communicate about the future. The people I read and learn from talk about complex adaptive systems, and the common refrain is, “Actually, it’s a little more complicated than that.” We know people prefer simple narratives and solutions. We know journalists don’t like complexity any more than politicians do. The simple world we all perceive masks many complex ecosystems that all interact to create the real world that’s hard to see.

Hans didn’t talk much about complexity. He liked to keep things simple. Hans mentions the economy a few times in the book. Each time, I cringed because Hans was not an economist (thank goodness); he was very much out of his field when understanding the world of business, banking, finance, and money. These worlds are extremely complex, even more complex than tracking viruses. It’s easy to be convinced by a simple narrative, but most of the time you have to look deeper.

Global Financial Collapse

To put this in perspective, I believe most people don’t understand money and the economy, and most economists don’t either. However, a few people I study do understand the world of money, and they don’t believe the world’s debt is a ticking time bomb, the banking system is a house of cards, markets are rigged, or that the world of fiat money is going to collapse.

The banking sector is definitely fragile by design. I use that phrase because anyone interested in understanding the banking system must read the book Fragile by Design.

This book shows the structural weaknesses of our banking system. It also shows that we have always had severe structural weaknesses, and the world hasn’t collapsed yet. You might say “As a matter of fact, yes it has, it did in 2008, don’t you remember?”

This is where the rabbit hole gets much deeper than the game of bank bargains described in the book. The book describes the global financial crisis as a result of overleverage and undercapitalization, combined with government subsidies, insurance (encouraging risk-taking), relaxing of anti-trust laws resulting in huge banks, and programs that encouraged banks to lend to low-income urban families.

All this is true. True to the tune of more than $5 trillion in bad loans. And the system isn’t fixed yet. Massive bank failures seem to be the norm every generation, rather than the exception. However, bank failures are just one type of economic shock, and most economies can handle bank failures (as we’ve recently seen). The bigger problem is recession.

Since 1930, the US has had, I think, four massive bank failures, and the economy keeps growing. But there are far too many recessions (gray years), which put many people out of work and reduce economic output even further after a shock. I don’t have time to go into the details, but monetary policy is at the heart of all recessions, from before the Great Depression to today. And, while monetary policy is currently a disaster, it doesn’t have to be.

It takes quite a bit of study to see that the so-called housing bubble, the banking crisis of 2008, along with an increase in global commodity prices made front-page news, while an economic downturn that began early in the year was the real elephant in the room. As usual, the Fed responded poorly. Trying to curb inflation, they didn’t stimulate the economy when stimulus was needed. The BoE and the ECB followed the Fed’s lead (as usual). This worldwide policy of tight money turned a banking crisis on the order of maybe 1–2 hundred billion dollars into a worldwide financial crisis on the order of trillions of dollars. (There was no housing bubble.)

Market monetarists believe we can stabilize the economy by creating a shock-absorber that counteracts short-term shocks like bank failures, commodity prices, terrorism, and political incompetence. While the rest of the world has experienced several recessions since the mid-1990s, Australia hasn’t. That’s because the Australian central bank doesn’t prioritize inflation the way others do. Instead, they look at the big picture.

Scott Sumner, one of the creators of market monetarism, explains that the Fed and other banks are focusing too much on inflation and not enough on stabilizing growth. When growth drops, central bankers need to stimulate the economy by printing money. When growth is too strong, central bankers need to “cool off” the economy by removing money from circulation. To do this, their proposal is to put monetary policy on “autopilot,” programming in a daily response to the projected growth of each economy. I will explain this in an upcoming talk on the future of money, which I hope you’ll watch. If you’re reading this before October 17th, you should sign up for the webinar. After that date, this link will take you to the recorded event:

For further study, I recommend the following links:

Is War Likely?

Hans Rosling also says that to avert nuclear war we need more global cooperation and less nationalism, more cultural exchange and understanding. He’s right of course, we do need these things, but the threat of another catastrophic world war is not that real.

I don’t have a strong argument that World-War III is not around the corner, nor do the Roslings have a clear argument that it is. I think they tossed it in at the end. There wasn’t really much mention of war or the building blocks of conflict in the book.

My argument is that war is, in general, decreasing as the world becomes more affluent, as shown beautifully by Our World in Data: War and Peace, compiled by Max Roser. I highly recommend clicking and reading their very convincing data-driven story of the remarkable decline in violent deaths. Here is just one:

Licensed under CC-BY-SA Max Roser via

There are many more excellent datasets on that page. My argument is simply that I expect the trend to continue — plenty of small wars but no big wars.

In other words, plenty of variance but not much skewness. It’s important to respect that skewness represents “black swan” events that can’t be forecast, and in a nuclear world with ambitious leaders it’s not something to ignore. But in this case I would expect a rational analysis of the world’s largest problems to leave large-scale war out of the top ten. Reducing the number of dictators and nationalist, political, evidence-ignorant leaders like Donald Trump is probably the best defense.

If you haven’t read my letter to Hans, please continue there now. You can read the rest of my writing at

Provocateur, professional heretic, slayer of myths, speaker of truthiness to powerfulness, and defender of the Oxford comma.