Monday, October 26, 2020

The Black Swan II -- The "Empirical Skeptic"

A few days ago I started reading, The Black Swan: The Impact of the Highly Improbable, by Nassim Nicholas Taleb. Here is my look at the Prologue.

Today I read chapter 1, which was semi-autobiographical: "The Apprenticeship of an Empirical Skeptic." Here are some quotes and notes: 

1. He makes an interesting comment on libraries, one that I will use on my wife to justify the fact that I buy too many books. He refers to Umberto Eco's library. "Read books are far less valuable than unread ones" (1). I think the logic is that you need reference material for the certainly-going-to-come unexpected "black swan" events. You need to be ready to find what you need. You can't necessarily plan for them.

2. Taleb was born in Lebanon. He portrays the story of Lebanon as one that successfully coexisted for thousands of years. Then suddenly in the 70s everything fell apart. He ends the chapter saying the same about 1987 when the stock market crashed. He argues that no one could have predicted it. He considers both of them black swan events.

I'm not sure I totally agree with him. Then again, he's probably exaggerating a bit too. Did you notice that the end of double Republican terms that start with significant economic restructuring can end in stock market crashes? Reagan in the 80s. Bush in the 00s. Don't know about Coolidge/Hoover in the 20s. Would it be that if Trump had a second term and we recovered from COVID, we would see a major market crash at the end of his second term?

3. In any case, Taleb talks about what he calls "the triplet of opacity":
  • Data experts think they know what is going on far more than is actually the case. I had a superior in a previous life say, "We are more on top of the data than we've ever been before." Let's just say my internal reaction was, "Right."
  • In the rearview mirror, we make unpredictable events seem like they were causally inevitable. Diaries are much more accurate portrayals of history because they aren't retrospective.
  • Thinking you know what's going on travels in packs. If a bunch of journalists are staying in the same hotel, they will gravitate toward each other.
Here are some quotes from the last part of the chapter:
  • "Our minds are wonderful explanation machines" (10).
  • "History and societies do not crawl. They make jumps" (11).
  • "We are just a great machine for looking backward, and humans are great at self-delusion" (12).
  • "Categorizing is necessary for humans, but if it becomes pathological when the category is seen as definitive" (15).
  • "The great strength of the free-market system is the fact that company executives don't need to know what's going on" (17).

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