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).

Book Review: The Black Swan I -- Prologue

Actually did read a chapter of a book yesterday but I'm going to post from that book in blocks.

So today's book chapter is from The Black Swan: The Impact of the Highly Improbable, by Nassim Nicholas Taleb. It seems to me that my friend Russ Gunsalus has mentioned this book before, but I found it looking to see if anyone had written on something like what I call "the Platonic fallacy."

1. I am a strange mixture of types that anyone who follows this blog will immediately recognize. On the one hand, I make plans. I have done any number of series on this blog, ranging from my ancestry to liberal arts to ministerial leadership to book reviews to my life's story to my Dad's story and so forth. In my current work, I continue to move any number of plans forward bit by bit, little by little.

The other side of me is hyper-flexible. If a better option emerges, I don't feel the need to continue the inferior one. I like to finish what I start, but I like even more doing something better.

This is a book about the unpredictable. "Our world is dominated by the extreme, the unknown, and the very improbable" (xxxii). Consider this quote: "The payoff of a human venture is, in general, inversely proportional to what it is expected to be" (xxiv). His book reminds me of a quote from the final Harry Potter movie: "Hermione, when have any of our plans ever actually worked? We plan, we get there, all hell breaks loose."

I personally don't at all take his thesis as a reason not to plan. By all means plan. But sit somewhat loosely to your plans and, more than anything, build in space for necessary improvisation. The person/organization that is best able to pivot with the unexpected is the one most likely to prevail.

2. Here is his understanding of a black swan. For thousands of years and millions of observed swans by Europeans, it was assumed that swans were all white. Then Australia was discovered. I have said myself in philosophy class of inductive reasoning something similar to what he says, "One single observation can invalidate a general statement derived from millennia of confirmatory sightings of millions of white swans" (xxi).

A black swan is 1) an outlier, 2) with extreme impact, 3) for which our human nature leads us to concoct explanations after the fact. It is this last point that connects to Plato. Christians do this with God's will. "What was God trying to teach me by that event?" "That's just too strange a coincidence. God must be trying to tell me something." 

Maybe God was. Or maybe God built chance into the fabric of the universe as a kind of "free will" God gave the creation. Given quantum physics, I believe the later is more often the case.

3. "A small number of black swans explain almost everything in the world" (xxii). He is basically expressing chaos theory here. Any one specific fluke event is highly improbable. But it is almost certain that there will regularly be fluke events in general. "Life," he says, "is the cumulative effect of a handful of significant shocks" (xxiii).

"Black swan logic makes what you don't know far more relevant than what you do know." "The strategy for discoverers and entrepreneurs is to rely less on top-down planning and focus on maximum tinkering and recognizing opportunities when they present themselves" (xxv). "I disagree with the followers of Marx and those of Adam Smith: the reason free markets work is because they allow people to be lucky... The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can." You never know what is going to go viral. 

"Certain professionals, while believing they are experts, are in fact not. Based on their empirical record, they do not know more about their subject matter than the general population, but they are much better at narrating--or worse, at smoking you with complicated mathematical models. They are also likely to wear a tie" (xxv). The bell curve, he says, is the "great intellectual fraud" (GIF) (xxiv).

4. What he calls, "Platonicity," is the tendency to mistake the map for the territory. In my words, reality is far messier than the neat little mental constructs we come up with. The idea of a "biblical worldview," for example, is usually some kindergartenish "three point outline" that makes those of us of small IQ feel like we have mastered the infinite God. "Platonicity is what makes us think that we understand more than we actually do" (xxx). He calls the gap between messy reality and our Platonic mindsets as the "Platonic fold." That's where black swans come from.

5. A final thought from this prologue is something I have often thought of. When God prevents something from happening, we never find out about it in this life. It is the same when human events don't happen.

I mentioned this at the beginning of the year about COVID, back when New York closed down. If it works, I said, people will complain that we shut down for nothing because the virus would be stopped. Of course we are over 220,000 dead now, so it's clear it's serious.

But I did a thought experiment. What if Clinton had been elected and she had shut down the country immediately in February? Let's say the virus didn't spread like it has, and two months later the country had reopened. In my thought experiment, she would have been voted out for the nonsense of shutting down the country. In the thought experiment, we would have never known the alternative universe where we ended up with 300,000 dead under the current president.

The example Taleb uses is if a legislator had driven a law to put locked doors on the cockpits of planes that went into effect on September 10, 2001. The person might have been disgraced for all that extra expense, no one ever knowing that s/he prevented 9-11.