Ed Yardeni expands on my theme:
The political upset in Massachusetts yesterday may very well be one of those bullish Black Swans. In his 2007 book on this subject, Nassim Nicholas Taleb explained: “What we call here a Black Swan (and capitalize it) is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.”
Brown’s upset victory certainly wasn’t expected even a week ago. No one seriously expected that the Democrats would lose “Kennedy’s seat” in the Senate. This development is bound to have a major impact on the political balance in Washington. This outcome certainly makes sense after the fact. It wasn’t predictable prospectively, but it is obvious retrospectively.
Last summer, I started to project that Gridlock might win in the Congressional elections on November 2, 2010. I certainly didn’t expect that it might win at the beginning of this year, and just in time to checkmate PelosiCare. The Constitution of the United States of America was written by lawyers. They intentionally designed a political system of “checks and balances” that dispersed political power among three branches of government. We call it Gridlock, which has a negative connotation, but that was the intended outcome more often than not. Our system works best when it doesn’t work for the promoters of policies that are not in the national interest.