So what if there were a highly obvious problem right in front of you? One that everyone was talking about, one that affected you directly. Would you do everything within your power to fix things before they got worse? Don't be so sure. We are all much more likely than any of us would like to admit to miss what's right in front of our eyes. And in fact, we're sometimes most likely to turn away from things precisely because of the threat that they represent to us, in business, life and the world.
So I want to give you an example from my world, economic policy. So when Alan Greenspan was head of the Federal Reserve, his entire job was to watch out for problems in the US economy and to make sure that they didn't spin out of control. So, after 2006, when real estate prices peaked, more and more and more respected leaders and institutions started to sound the alarm bells about risky lending and dangerous market bubbles. As you know, in 2008 it all came tumbling down. Banks collapsed, global stock markets lost nearly half their value, millions and millions of people lost their homes to foreclosure. And at the bottom, nearly one in 10 Americans was out of work.
So after things calmed down a little bit, Greenspan and many others came out with a postmortem and said, "Nobody could have predicted that crisis." They called it "a black swan." Something that was unimaginable, unforeseeable and completely improbable. A total surprise. Except it wasn't always such a surprise. For example, my Manhattan apartment nearly doubled in value in less than four years. I saw the writing on the wall and I sold it.
So, a lot of other people also saw the warning, spoke out publicly and they were ignored. So we didn't know exactly what the crisis was going to look like, not the exact parameters, but we could all tell that the thing coming at us was as dangerous, visible and predictable as a giant gray rhino charging right at us.
The black swan lends itself to the idea that we don't have power over our futures. And unfortunately, the less control that we think we have, the more likely we are to downplay it or ignore it entirely. And this dangerous dynamic masks another problem: that most of the problems that we're facing are so probable and obvious, they're things that we can see, but we still don't do anything about.
So I created the gray rhino metaphor to meet what I felt was an urgent need. To help us to take a fresh look, with the same passion that people had for the black swan, but this time, for the things that were highly obvious, highly probable, but still neglected. Those are the gray rhinos.
Once you start looking for gray rhinos, you see them in the headlines every day. And so what I see in the headlines is another big gray rhino, a new highly probable financial crisis. And I wonder if we've learned anything in the last 10 years.
So if you listen to Washington or Wall Street, you could almost be forgiven for thinking that only smooth sailing laid ahead. But in China, where I spend a lot of time, the conversation is totally different. The entire economic team, all the way up to president Xi Jinping himself, talk very specifically and clearly about financial risks as gray rhinos, and how they can tame them. Now, to be sure, China and the US have very, very different systems of government, which affects what they're able to do or not. And many of the root causes for their economic problems are totally different. But it's no secret that both countries have problems with debt, with inequality and with economic productivity.
So how come the conversations are so different? You could actually ask this question, not just about countries, but about just about everyone. The auto companies that put safety first and the ones that don't bother to recall their shoddy cars until after people die. The grandparents who, in preparing for the inevitable — the ones who have the eulogy written, the menu for the funeral lunch.
My grandparents did.
And everything but the final date chiseled into the gravestone. But then you have the grandparents on the other side, who don't put their final affairs in order, who don't get rid of all the junk they've been hoarding for decades and decades and leave their kids to deal with it.
So what makes the difference between one side and the other? Why do some people see things and deal with them, and the other ones just look away? So the first one has to do with culture, society, the people around you. If you think that someone around you is going to help pick you up when you fall, you're much more likely to see a danger as being smaller. And that allows us to take good chances, not just the bad ones. For example, like risking criticism when you talk about the danger that nobody wants you to talk about. Or taking the opportunities that are kind of scary, so in their own way are gray rhinos. So the US has a very individualist culture — go it alone. And paradoxically, this makes many Americans much less open to change and taking good risks. In China, by contrast, people believe that the government is going to keep problems from happening, which might not always be what happens, but people believe it. They believe they can rely on their families, so that makes them more likely to take certain risks. Like buying Beijing real estate, or like being more open about the fact that they need to change direction, and in fact, the pace of change in China is absolutely amazing.
Second of all, how much do you know about a situation, how much are you willing to learn? And are you willing to see things even when it's not what you want? So many of us are so unlikely to pay attention to the things that we just want to black out, we don't like them. We pay attention to what we want to see, what we like, what we agree with. But we have the opportunity and the ability to correct those blind spots. I spend a lot of time talking with people of all walks of life about the gray rhinos in their life and their attitudes. And you might think that the people who are more afraid of risk, who are more sensitive to them, would be the ones who would be less open to change. But the opposite is actually true. I've found that the people who are wiling to recognize the problems around them and make plans are the ones who are able to tolerate more risk, good risk, and deal with the bad risk. And it's because as we seek information, we increase our power to do something about the things that we're afraid of.
And that brings me to my third point. How much control do you feel that you have over the gray rhinos in your life? One of the reasons we don't act is that we often feel too helpless. Think of climate change, it can feel so big, that not a single one of us could make a difference. So some people go about life denying it. Other people blame everyone except themselves. Like my friend who says he's not ever going to give up his SUV until they stop building coal plants in China. But we have an opportunity to change. No two of us are the same. Every single one of us has the opportunity to change our attitudes, our own and those of people around us.
So today, I want to invite all of you to join me in helping to spark an open and honest conversation with the people around you, about the gray rhinos in our world, and be brutally honest about how well we're dealing with them. I hear so many times in the States, "Well, of course we should deal with obvious problems, but if you don't see what's in front of you, you're either dumb or ignorant." That's what they say, and I could not disagree more. If you don't see what's in front of you, you're not dumb, you're not ignorant, you're human. And once we all recognize that shared vulnerability, that gives us the power to open our eyes, to see what's in front of us and to act before we get trampled.