In the last few months, there have been a series of global financial disruptions and warning signs. In the UK, some pension funds almost fell over as a result of their extreme levels of leverage due to proposed changes – which were never even implemented! – when Liz Truss was PM. In the USA, two banks have failed, a third is being liquidated, because they were vulnerable to changes in interest rates and some degree of contagion connected with cryptocurrencies (to varying degrees). In Switzerland, a giant old bank, Credit Suisse, has been taken over by UBS for almost nothing.
In each of these cases, the normal wisdom of crowds has been disrupted because the crowds are not acting independently of each other. Mobs have formed, causing risks to materialise into big problems.
Each of these situations has some degree of risk for the Isle of Man.
Meanwhile – I kid you not – our national parliament literally spent time yesterday debating the number of people using public toilets in Castletown.
It is certainly possible that we will miss the iceberg of the next big problem. But at the very least, the captains of our ship should be looking out for where the icebergs are in the Isle of Man’s future, and mitigate their risk.
This is especially important because – as I published last week – the Isle of Man is unusually vulnerable to disruption. We have a greater degree of economic concentration than a normal place on a normal landmass. If something breaks in Chester, people can travel to Liverpool or Manchester if needed. If something breaks in Luxembourg, people can trade with other nations nearby. That redundancy does not exist on our island.
If something breaks in the Isle of Man, we do not have the same degree of redundancy and safety because of the obvious geographic constraints that apply to us. Maybe, when Nobles Hospital gets disabled, we will be able to call a Royal Navy ship to come and serve in the crisis. Maybe, when our banking system is placed under extreme stress, they’ll be absorbed/saved by their UK banking consortiums. Maybe, when the Steam Packet breaks due to a cyber attack, the Government will scramble to impose paper ticketing systems.
Maybe the disruption will come due to the Ukrainian front moving westward. Maybe China’s engagement and supply with Russia will increase, changing the balance of power in Ukraine or elsewhere. Maybe Iran’s increased alliance to China and Russian powers will lead to disruption in the Middle East. Maybe commercial real estate will come to terms with the fact that less people are attending offices and reprice accordingly. Maybe there’ll be a tragic accident of some nature. Maybe there’ll be a new and awful terrorist attack in the Isle of Man or elsewhere. Maybe bird flu will jump to humans.
Of course, each of these events are, individually, a low probability. But any one of these events are high risk because of the likely severity caused by them. Thus, they should be considered to be big and important issues. Low probability events become big risks if the severity is high.
But instead, our parliament wastes times on internal fights, dumb attacks on straw man arguments, and assorted trivia. These aren’t the proper priorities of a mature polity.