The flaw in our system that no one wants to fix!

17 Jan 2026 · 1 min

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Dan Novaes presents a short monologue diagnosing a systemic flaw he calls the "tragedy of the horizon": people in power (CEOs, politicians) face short decision horizons (quarterly earnings, four-year election cycles) while the largest risks to civilization (e.g., catastrophic climate change, sovereign-debt collapse) unfold over 50–100 years. He contrasts the left-side "decision horizon" (where incentives, power, and bonuses reside) with the right-side "risk horizon" (where danger accumulates), arguing current incentives prevent leaders from acting on long-term threats.

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There is a fatal flaw in our entire financial and political system. It's a concept coined by central bankers called the tragedy of the horizon. Basically it's the idea that all the incentives for the people in charge, the CEOs and the politicians are locked into extremely short time loops. A CEO lives and dies by the quarterly earnings report which is released every 90 days. A politician is obsessed with the next four year election cycle. But here's the problem. The biggest threats facing our civilization like catastrophic climate change or the collapse of sovereign debt play out over horizons of 50 to 100 years. Look at this diagram. On the left you have the decision horizon. This is where the power, the money and the bonuses are. On the right you have the risk horizon. This is where the actual danger is accumulating. The tragedy is that nobody in charge today has any financial or political incentive to solve a problem that won't explode until they are long gone.