How the World Changed in 5 Days
It can feel like the world hasn’t changed in 20 years, only for 20 years worth of change to occur in a few days.
I write a lot about the importance of ignoring the noise. You have to be especially careful in the midst of geopolitical events when the information war is rages at full capacity. During periods of chaos, there are false reports, propaganda machines at work, and journalists (both professional and amateur) desperate for clicks and likes.
Counterintuitively, these moments also provide the most signal. Typically, news outlets have very little of consequence to report, but the non-stop news must go on, so they fill papers, airwaves, and televisions with noise. But during major events,
What is noise?
Forget the media for a second and think about a radio transmitter. When one person transmits a message to another over the radio, there are two distinct attributes on the receiving end. The first is the information that is sent and intended for the receiver. But rarely does this information come across crystal clear. There’s usually some unwanted variation in the signal. It can be a crackling sound or static — it’s irrelevant and useless. In short, the relevant information is the signal; everything else is noise.
When consuming information, we strive for more signal, less noise. One might think that more information will lead to more signal, but this isn’t the case. Nassim Taleb has made this case prevalently in his books, Fooled by Randomness, Antifragile, and Black Swan. He argues that as you consume more information, the noise-to-signal ratio increases. As a result, you know less about what is going on. He went as far as to say, “Anyone who listens to news (except when very, very significant events take place) is one step below sucker.”
Do you know someone who constantly consumes news but is clueless about what’s happening in the world? They are likely receiving far more noise than signal. Taleb’s solution to this paradox is to ignore the news media, except during significant events, saying, “The best solution is to only look at very large changes in data or conditions, never small ones.”
There have been a lot of significant changes in the last several days — it’s time to pay attention.
Let’s take a look at how the world has changed due to Russia’s invasion of Ukraine.
The world’s largest economies (minus China) have reacted swiftly to create financial devastation in Russia. This may seem like a predictable reaction, but systemic risk worries usually dominate discussions about financially punishing bad actors. These worries have been cast aside, significantly increasing the likelihood of political unrest in Russia.
China is exposed. The Xi administration has been Russia’s unconditional bestie over the last several years and seems to be standing by their friend despite their aggression towards Ukraine. While most of the world’s powers have unified to punish Russia, China has remained silent. This gamble may leave them more isolated and less powerful.
NATO is starting to feel like conference alignment in college sports. Finland and Sweden have firmly aligned themselves with the western powers, and Russia’s invasion may be the catalyst to push them to join the alliance.
Germany is arising from a slumber. Chancellor Olaf Scholz announced after the invasion that Germany would increase defense spending to upward of 2% of GDP, a major reversal of policy. Chancellor Scholz declared, “We must put a stop to warmongers like Putin…that requires a strength of our own.”
Swiss neutrality was bypassed to join the rest of Europe in sanctioning Russia. Switzerland has been so neutral it’s become a meme, but Swiss President Cassis said, “To play into the hands of an aggressor is not neutral. Having signed the Geneva convention of human rights, we are bound to humanitarian order.”
The EU has a mixed history to this point, but they are taking on a military(ish) role for the first time in its controversial history. For the first time in history, the EU will purchase weapons for a country under attack.
Civilians around the world are participating. This isn’t the 1980s or 90s. People worldwide no longer have to submit to just sending well wishes. Open-source intelligence (OSINT) allows smart folks armed with satellite imagery and social media data to contribute to the defense efforts by analyzing Russian troop movements, identifying logistics movements, and more. Even geekier smart folks are taking the fight to Russia via cyber warfare. The infamous hacker group Anonymous has declared war on Russia and has already taken credit for various successful attacks. Technology has enabled new fronts.
It may be early days in this crisis, and the possible outcomes are too numerous to count, but it’s safe to say that Russia’s aggression has generated change at a rapid pace. There’s a lot of noise out there, but right now, a lot of signal too. I don’t normally watch or read the news, it’s typically too noisy, but until this crisis is resolved, I'll be paying attention. There will continue to be major repercussions (some good, some bad), and being informed of these effects can provide actionable, relevant information.
