Нассим Талеб - The Black Swan. The Impact of the Highly Improbable

I was once selected to be one of a group of a hundred who went to Washington to spend two days discussing how to solve the problems of the crisis that started in 2008. Almost all the biggies were included. After an hour of meeting, and during a speech by the prime minister of Australia, I walked out of the room because my pain became intolerable. My back would start hurting upon looking at the faces of these people. The center of the problem is that none of them knew the center of the problem.

This makes me convinced that there is a unique solution for the world, to be designed along very simple lines of robustness to Black Swans—it will explode otherwise.

So now I am disengaged. I am back in my library. I am not even experiencing any frustration, I don’t even care about how forecasters can blow up society, and I am not even capable of being annoyed by fools of randomness (to the contrary), perhaps thanks to another discovery linked to a particular application of the study of complex systems, Extremistan, and that science of long walks.

* Lehman Brothers was a financial institution with great-looking offices that abruptly went bust during the crisis of 2008.

* Empiricism is not about not having theories, beliefs, and causes and effects: it is about avoiding being a sucker, having a decided and preset bias about where you want your error to be—where the default is. An empiricist facing series of facts or data defaults to suspension of belief (hence the link between empiricism and the older skeptical Pyrrhonian tradition), while others prefer to default to a characterization or a theory. The entire idea is to avoid the confirmation bias (empiricists prefer to err on the side of the disconfirmation/falsification bias, which they discovered more than fifteen hundred years before Karl Popper).

* Clearly the entire economics establishment, with about a million people on the planet involved in some aspect of economic analysis, planning, risk management, and forecasting, turned out to be turkeys owing to the simple mistake of not understanding the structure of Extremistan, complex systems, and hidden risks, while relying on idiotic risk measures and forecasts—all this in spite of past experience, as these things have never worked before.

II

WHY I DO ALL THIS WALKING, OR HOW SYSTEMS BECOME FRAGILE

Relearn to walk—Temperance, he knew not—Will I catch Bob Rubin? Extremistan and Air France travel

ANOTHER FEW BARBELLS

Again, thanks to the exposure the book has received, I was alerted to a new aspect of robustness in complex systems … by the most unlikely of sources. The idea came from two fitness authors and practitioners who integrated the notions of randomness and Extremistan (though of the Gray Swan variety) into our understanding of human diet and exercise. Curiously, the first person, Art De Vany, is the same one who studied Extremistan in the movies (in Chapter 3). The second, Doug McGuff, is a physician. And both can talk about fitness, particularly Art, who, at seventy-two, looks like what a Greek god would like to look like at forty-two. Both were referring to the ideas of The Black Swan in their works and connecting to it; and I had no clue.

I then discovered to my great shame the following. I had spent my life thinking about randomness; I had written three books on dealing with randomness (one technical); I was prancing about as the expert in the subject of randomness from mathematics to psychology. And I had missed something central: living organisms (whether the human body or the economy) need variability and randomness. What’s more, they need the Extremistan type of variability, certain extreme stressors. Otherwise they become fragile. That, I completely missed. *

Organisms need, to use the metaphor of Marcus Aurelius, to turn obstacles into fuel—just as fire does.

Brainwashed by the cultural environment and by my education, I was under the illusion that steady exercise and steady nutrition were a good thing for one’s health. I did not realize that I was falling into evil rationalistic arguments, the Platonic projection of wishes into the world. Worse, I had been brainwashed though I had all the facts in my head.

From predator-prey models (the so-called Lotka-Volterra type of population dynamics), I knew that populations will experience Extremistan-style variability, hence predators will necessarily go through periods of feast and famine. That’s us, humans—we had to have been designed to experience extreme hunger and extreme abundance. So our food intake had to have been fractal. Not a single one of those promoting the “three meals a day,” “eat in moderation” idea has tested it empirically to see whether it is healthier than intermittent fasts followed by large feasts. †

But Near Eastern religions (Judaism, Islam, and Orthodox Christianity) knew it, of course—just as they knew the need for debt avoidance—and so they had fast days.

I also knew that the size of stones and trees was, up to a point, fractal (I even wrote about that in Chapter 16). Our ancestors mostly had to face very light stones to lift, mild stressors; once or twice a decade, they encountered the need to lift a huge stone. So where on earth does this idea of “steady” exercise come from? Nobody in the Pleistocene jogged for forty-two minutes three days a week, lifted weights every Tuesday and Friday with a bullying (but otherwise nice) personal trainer, and played tennis at eleven on Saturday mornings. Not hunters. We swung between extremes: we sprinted when chased or when chasing (once in a while in an extremely exerting way), and walked about aimlessly the rest of the time. Marathon running is a modern abomination (particularly when done without emotional stimuli).

This is another application of the barbell strategy: plenty of idleness, some high intensity. The data shows that long, very long walks, combined with high-intensity exercise outperform just running.

I am not talking about “brisk walks” of the type you read about in the Health section of The New York Times . I mean walking without making any effort.

What’s more, consider the negative correlation between caloric expenditure and intake: we hunted in response to hunger; we did not eat breakfast to hunt, hunting accentuated our energy deficits.

If you deprive an organism of stressors, you affect its epigenetics and gene expression—some genes are up-regulated (or down-regulated) by contact with the environment. A person who does not face stressors will not survive should he encounter them. Just consider what happens to someone’s strength after he spends a year in bed, or someone who grows up in a sterile environment and then one day takes the Tokyo subway, where riders are squeezed like sardines.

Why am I using evolutionary arguments? Not because of the optimality of evolution, but entirely for epistemological reasons, how we should deal with a complex system with opaque causal links and complicated interactions. Mother Nature is not perfect, but has so far proven smarter than humans, certainly much smarter than biologists. So my approach is to combine evidence-based research (stripped of biological theory), with an a priori that Mother Nature has more authority than anyone.

After my “Aha!” flash, I embarked on an Extremistan barbell lifestyle under the guidance of Art De Vany: long, very long, slow, meditative (or conversational) walks in a stimulating urban setting, but with occasional (and random) very short sprints, during which I made myself angry imagining I was chasing the bankster Robert Rubin with a big stick, trying to catch him and bring him to human justice. I went to weight-lifting facilities in a random way for a completely stochastic workout—typically in hotels, when I was on the road. Like Gray Swan events, these were very, very rare, but highly consequential weight-lifting periods, after a day of semistarvation, leaving me completely exhausted. Then I would be totally sedentary for weeks and hang around cafés. Even the duration of the workouts remained random—but most often very short, less than fifteen minutes. I followed the path that minimized boredom, and remained very polite with gym employees who described my workouts as “erratic.” I put myself through thermal variability as well, exposed, on occasion, to extreme cold without a coat. Thanks to transcontinental travel and jet lag, I underwent periods of sleep deprivation followed by excessive rest. When I went to places with good restaurants, for instance Italy, I ate in quantities that would have impressed Fat Tony himself, then skipped meals for a while without suffering. Then, after two and a half years of this apparently “unhealthy” regimen, I saw significant changes in my own physique on every possible criterion—the absence of unnecessary adipose tissue, the blood pressure of a twenty-one-year-old, and so on. I also have a clearer, much more acute mind.