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Sam Sivarajan holds a doctorate in behavioural finance and has led wealth management teams at several of Canada’s largest financial institutions. His latest book, Making Your Money Work: The Secrets to Financial Health, has just been published. For more information, visit

In the 1970s and 1980s, the Japanese economic juggernaut was running rings around their more established North American counterparts. Once derided, Japanese management techniques were now being eagerly copied by North American car manufacturers as a quick solution to their fading fortunes.

Thus, just-in-time (JIT) production become the norm, whereby items (e.g., cars, computer chips, etc.) were created to meet actual demand and not created in advance for future demand. This pushed suppliers to be ready to deliver almost instantly when demanded by their customers. This thinking became orthodoxy and industries as diverse as retailing, pharmaceuticals, tech manufacturing and automobile manufacturing adopted JIT processes.

And, for years, companies boasted highly efficient operations, lower cost margins and higher profits and share prices. But, as the baseball player and quote master Yogi Berra said, “In theory there is no difference between theory and practice. In practice there is.”

The tightly managed JIT processes left no slack – very little flexibility in business operations. In daily life, we see examples of slack built in for our protection. Power lines have slack between towers – to account for wind and weather. Sidewalks are built in slabs, with gaps between slabs, and not as one single piece – to allow for expansion in summer heat and contraction in winter cold. Elevators and nuclear power plants are built with multiple redundancies and fail-safes – to allow for wear and tear and/or human error. This slack comes at a cost but most of us are happy to absorb that cost given the alternative.

But, in business and public policy, we are now paying the price for years of “false savings” by eliminating slack. In Canada, a once highly respected domestic vaccine industry has, through underinvestment and economies of scale arguments, been shuttered and sold off to multinational firms. So, when it came time for COVID-19 vaccine production and distribution, Canada could not get local production and had to wait in line behind other countries for vaccine fulfillment. In the U.S. and Canada, masks, and other personal protective equipment (PPE), were largely sourced from China. When COVID-19 lockdowns disrupted supply chains, these masks and PPE were hard to source domestically.

Today, hospitals find themselves overstretched and underresourced with little concerted action taken to build slack. European countries have dwindling gas stocks amidst Russian aggression in Ukraine and retaliatory Western sanctions in spite of the fact that Russia remains the biggest supplier of gas to Europe – rationing, lack of winter heating and economic shocks are only some of the unpleasant realities that Europe may be facing in the coming months.

Of course, slack comes at a cost. Idle capacity or domestic production at less than scale is expensive. But so is an economic shutdown or lack of access to emergency medical care. Now, not everything should be produced domestically in an interconnected world, and we cannot, and should not, invest for every remote eventuality. But the decision for voters everywhere in the coming months and years will be: how much are we ready to pay for slack? It is very much like home insurance – an annoying expense most of the time, but an absolute lifesaver when you really need it. In other words, people buy home insurance because they believe the cost is worth it.

In his book, Antifragile, Nassim Nicholas Taleb provides the example of the turkey who is fed by the butcher every day. Soon, the turkey believes that the future will continue in the same way – that the butcher will come and feed him, and life will go on blissfully. But just before Thanksgiving something unexpected will happen to the turkey – “it will have a revision of belief.” Already, we are seeing that the recent past is not an accurate predictor of the future – consider that COVID-19, the Russian invasion of Ukraine or the current summer travel chaos hit us “unexpectedly.”

Mr. Taleb argues that shocks and stressors strengthen antifragile systems by forcing them to build extra capacity – just like muscles in the body that, when exercised, rip and tear and then build up stronger. He also argues that to become antifragile, in other words to not just cope in an uncertain world but to benefit from it, we should manage our risks so we can benefit from unpredictable events.

For public policy, becoming antifragile will require us to invest more in infrastructure and resources to create slack. For example, government goals for electric cars are laudable – but where do we get the power to charge all those millions of electric vehicles? Keep in mind that many Canadian provinces are already struggling with meeting electricity demand. The last new big power plant project – the Muskrat Falls generating station in Newfoundland – was approved in 2012, is years overdue, will cost double what was projected and is at least a year away from full commercial operations. Building slack, in other words, requires lots of time, money and will.

For consumers, becoming antifragile might require building a rainy-day savings fund to deal with layoffs or unexpected expenses; it might require more planning and budgeting, more saving, and less spending. As with public policy, for consumers to build slack in their personal finances will require time, money and will.

There is a saying that “you don’t fix a leaky roof when it is raining.” Today, the sun is out – but a storm is coming.

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