A three part interview with Nassim Taleb can be found here.
It is very tempting to declare that The Black Swan(subtitled The Impact of the Highly Improbable) by Nassim Nicholas Taleb is the most important book of the century so far. I might say this for the bibliography alone. But the flaw in such a statement, which the book makes clear, is that I could not possibly know this without having read all the books that have been published to date. Even more challenging is the fact that, even if I were an accomplished speed reader, I would not be able to inwardly digest all the unpublished works, which are legion. This raises the problem of the “unknown unknowns”, an expression coined by Taleb and (in)famously adopted by Donald Rumsfeld, but from which Taleb understandably prefers to distance himself.
Black swans can be positive or negative, a blockbuster book like Harry Potter or a stock market crash. They are defined as rare events with an extreme impact, which are only retrospectively predictable. That last bit is crucial. Overestimating one’s own knowledge (what Taleb describes as “epistemic arrogance”) is central to our inability to handle and anticipate black swan events. Whether it is 9/11 or Virginia Tech, we retrofit a narrative to tell ourselves that someone should have seen it coming because we ourselves could not have been that stupid. And yet, we are no better prepared for the next one.
Why call these things “black swans”? It was Karl Popper’s notion that no amount of sightings of white swans can prove that all swans are white. It is falsifiable with just one observation of a black swan. Just because you have not seen it before does not mean it can’t or won’t exist.
Taleb’s subject matter is complex. Indeed, he is talking about complex systems a lot of the time. He attacks what he calls the “narrative fallacy” – that retrofitting of stories we create to explain events, because our brains are not computers, and stories make things memorable. It’s ironic, then, that he quite self-consciously uses narrative to help us understand what a more technical delivery will not carry outside an academic arena. This makes the book as much a literary event as a scientific, business or philosophical one. Taleb-the-narrator is mischievous, funny, subversive and utopian. But you also sense that he is in deadly earnest, wishing that society should stop larking around and get real with its black swan problem. What we have seen so far is just the tip of an iceberg. A more complex society produces more black swans. His bottom line is: be prepared.
So how do we rid ourselves of this epistemic arrogance that leaves us so vulnerable? Taleb provides the example of Umberto Eco’s library, and the two types of people who visit the professor and notice his thirty thousand volumes. The majority assume that all the books have been read, and are impressed by this knowledge status symbol. But they miss the point. A very small minority realise that the professor’s collection of books is, in fact, an “antilibrary”, a research tool to find things, with Eco as “antischolar” focusing on the unread books, and being humble about what he knows. Taleb’s point is that we all, but particularly our paid experts, wear our knowledge on our sleeve while we sleepwalk into the future of unpredictability.
Today, all knowledge is available to us, or so it seems. My own fear is that we teach our kids to go to Google or Wikipedia, but, unlike a library, the browser hides the trillions of bits of information we can never know. The blogosphere is, at its worst, a
Meanwhile, anyone without money or space enough for an entire library might do better to pick up The Black Swan every day before work and look at Taleb’s bibliography. For while we may have read his book, we are just looking at the tip of another iceberg: the knowledge of uncertainty that built it. And this is perhaps Taleb’s great service to scholarship and practice. The packaging is new – and particularly striking with its black and white origami swan jacket design – but a lot of the ideas are not. These ideas are ones that have struggled to survive the growth of the knowledge/expert culture over the centuries. Taleb constantly reminds us of those who said what he said, but whose ideas did not proliferate. They weren’t exactly ahead of their time: often later thinkers have taken us backward, he maintains.
The biggest crime for Taleb has been the inexorable rise of the Gaussian bell curve in statistics that underpins so much of the modern social studies, economics and finance. This so-called normal distribution belongs to a world Taleb refers to as “Mediocristan”. Mediocristan is constrained by gravity. There is an upper limit, say on the weight of an individual, which the law of large numbers will prevent from distorting the average in any meaningful sense. Not so, the world of “Extremistan”. This is the world of stock market bubbles and crashes, pop culture, publishing, technology, wars, the distribution of wealth: all human constructs. You can become fabulously wealthy or impoverished in a single day, but the best diet in the world, or biggest meal will not meaningfully change your weight in 24 hours. They belong to different domains, and yet the proponents of the bell curve want to own them both.
Taleb’s previous book, Fooled by Randomness (subtitled The Hidden Role of Chance in Life and in the Markets), was one of the other books I’ve read this century. But I had to read it three times from start to finish, and then probably a further couple of times, dipping in and out. It was not the writing; it was the shift in cognitive perspective that it requires and that continues to elude me. Except that I’m now a lot more sceptical of my own knowledge and that of others than I ever was before. I spend my time trying to consider situations more than people. I try to construct alternative histories, to counter the narrative fallacy that The Black Swan rails against. As a journalist, and within this blog, I’d like to write all too often “but I’m not sure” in parentheses, but that would become unreadable. I wince when I hear broadcast journalists end their every report with the cliche “one thing is certain…”.
The great problem, though, is that suspending judgement can be exhausting. As Taleb says, we’re not designed for it: theorising is our default behaviour. Man has always needed to be able to predict, to see patterns in the world around. That way, he could die within those conjectures and hopefully not in real life. But in the world of human social constructs such theorising is not always so helpful. There are just too many variables. New species of danger appear all the time for which our experience is no help. I’m more likely to die in a car crash than a terrorist attack; collectively, we don’t shun driving, but we will alter our travel plans en masse because of the distorted impression of terrorism risk that modern media elicit.
A superficial reading of Fooled by Randomness might hold that Taleb was suggesting everything comes down to luck. There is an equal danger that a superficial reading of The Black Swan will overlook the positive message that Taleb is straining to convey to us – more, perhaps, than in Fooled by Randomness. How do we expose ourselves to good black swans? How do we create our own luck?
One answer, and the reason for my blogging on Scott Page’s lecture this week, is to seek diversity in our activities and relationships. As Taleb says, “maximise the serendipity around you” that produces positive outcomes. Like Page (whom he cites), he advocates living in big cities. Go to lots of cocktail parties, where a loose-tongued academic may share an insight that puts you on the path to a unique research idea that alters the course of your discipline, and maybe the course of history.
Back to the question of books. Picking winners in this environment is impossible, as experienced publishers know. That is why a Bertelsmann owns so many imprints, notes Taleb. His US publisher, appropriately, is Random House. Creating a blockbuster requires an exposure to a wide range of failures.
In some respects, we are all part of a collective project of this tinkering. And there is better news for the small operator, in Taleb’s view. The little guy can now more easily hide out in the long-tail of demand for his off-the-wall ideas until a tipping point is reached.
When I started writing this entry, The Black Swan was down at number 26 in the New York Times Bestseller List – not so much the long tail, it’s true. By next week, Taleb told me over lunch yesterday, it will be number 5. Somehow, I don’t think that is a prediction. I think he knows.
So, one thing is certain: Taleb has another massive bestseller on his hands.
The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb is published by
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