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

MAIN ERRORS IN UNDERSTANDING THE MESSAGE

I will briefly state some of the difficulties in understanding the message and the ideas of this book, typically perpetrated by professionals, though, surprisingly, less by the casual reader, the amateur, my friend. Here is a list.

1) Mistaking the Black Swan (capitalized) for the logical problem. (Mistake made by U.K. intellectuals—intellectuals in other countries do not know enough analytical philosophy to make that mistake.) *

2) Saying the maps we had were better than having no maps. (People who do not have experience in cartography, risk “experts,” or worse, employees of the Federal Reserve Bank of the United States.)

This is the strangest of errors. I know few people who would board a plane heading for La Guardia airport in New York City with a pilot who was using a map of Atlanta’s airport “because there is nothing else.” People with a functioning brain would rather drive, take the train, or stay home. Yet once they get involved in economics, they all prefer professionally to use in Extremistan the measures made for Mediocristan, on the ground that “we have nothing else.” The idea, well accepted by grandmothers, that one should pick a destination for which one has a good map, not travel and then find “the best” map, is foreign to PhDs in social science.

3) Thinking that a Black Swan should be a Black Swan to all observers. (Mistake made by people who have not spent a lot of time in Brooklyn and lack the street smarts and social intelligence to realize that some people are suckers.)

4) Not understanding the value of negative advice (“Don’t do”) and writing to me to ask me for something “constructive” or a “next step.” (Mistake usually made by chairmen of large companies and those who would like someday to become such chairmen.) †

5) Not understanding that doing nothing can be much more preferable to doing something potentially harmful. (Mistake made by most people who are not grandmothers.)

6) Applying to my ideas labels (skepticism, fat tails, power laws) off a supermarket shelf and equating those ideas with inadequate research traditions (or, worse, claiming it was dealt with by “modal logic,” “fuzzy logic,” or whatever the person has vaguely heard of). (Mistake made by those with graduate degrees from both coasts.)

7) Thinking that The Black Swan is about the errors of using the bell curve, which supposedly everyone knew about, and that the errors can be remedied by substituting a number from the Mandelbrotian in place of another. (Mistake made by the pseudoscientific brand of tenured finance professors, like, say, Kenneth French.)

8) Claiming that “we knew all this” and “there is nothing new” in my idea during 2008, then, of course, going bust during the crisis. (Mistake made by the same type of tenured finance professors as before, but these went to work on Wall Street, and are now broke.)

9) Mistaking my idea for Popper’s notion of falsification—or taking any of my ideas and fitting them in a prepackaged category that sounds familiar. (Mistakes mostly made by sociologists, Columbia University political science professors, and others trying to be multidisciplinary intellectuals and learning buzzwords from Wikipedia.)

10) Treating probabilities (of future states) as measurable, like the temperature or your sister’s weight. (People who did a PhD at MIT or something like that, then went to work somewhere, and now spend time reading blogs.)

11) Spending energy on the difference between ontic and epistemic randomness—true randomness, and randomness that arises from incomplete information—instead of focusing on the more consequential difference between Mediocristan and Extremistan. (People with no hobby, no personal problems, no love, and too much free time.)

12) Thinking I am saying “Do not forecast” or “Do not use models,” rather than “Do not use sterile forecasts with huge error” and “Do not use models in the Fourth Quadrant.” (Mistake made by most people who forecast for a living.)

13) Mistaking what I say for “S**t happens” rather than “this is where s**t happens.” (Many former bonus earners.) *

Indeed, the intelligent, curious, and open-minded amateur is my friend. A pleasant surprise for me was to discover that the sophisticated amateur who uses books for his own edification, and the journalist (unless, of course, he was employed by The New York Times) , could understand my idea much better than professionals. Professional readers, less genuine, either read too quickly or have an agenda. When reading for “work” or for the purpose of establishing their status (say, to write a review), rather than to satisfy a genuine curiosity, readers who have too much baggage (or perhaps not enough) tend to read rapidly and efficiently, scanning jargon terms and rapidly making associations with prepackaged ideas. This resulted early on in the squeezing of the ideas expressed in The Black Swan into a commoditized well-known framework, as if my positions could be squeezed into standard skepticism, empiricism, essentialism, pragmatism, Popperian falsificationism, Knightian uncertainty, behavioral economics, power laws, chaos theory, etc. But the amateurs saved my ideas. Thank you, reader.

As I wrote, missing a train is only painful if you are running after it. I was not looking to have a bestseller (I thought I had already had one with my previous book, and just wanted to produce a real thing), so I had to deal with a spate of harrying side effects. I watched as the book was initially treated, owing to its bestseller status, like the nonfiction “idea books,” journalistic through and through, castrated by a thorough and “competent” copy editor, and sold in airports to “thinking” businessmen. Giving these enlightened Bildungsphilister s, commonly called idea-book readers, a real book is like giving vintage Bordeaux to drinkers of Diet Coke and listening to their comments about it. Their typical complaint is that they want diet-book-style “actionable steps” or “better forecasting tools,” satisfying the profile of the eventual Black Swan victim. We will see further that, in an ailment similar to confirmation bias, charlatans provide the much demanded positive advice (what to do), as people do not value negative advice (what not to do). Now, “how not to go bust” does not appear to be valid advice, yet, given that over time only a minority of companies do not go bust, avoiding death is the best possible—and most robust—advice. (It is particularly good advice after your competitors get in trouble and you can go on legal pillages of their businesses.) *Also, many readers (say, those who work in forecasting or banking) do not often understand that the “actionable step” for them is to simply quit their profession and do something more ethical.

In addition to playing into our mental biases, and telling people what they want to hear, these “idea books” often have an abhorrent definitive and investigative tone to their messages, like the reports of management consultants trying to make you believe that they told you more than they actually did. I came up with a simple compression test using a version of what is called Kolmogorov complexity, a measure of how much a message can be reduced without losing its integrity: try to reduce a book to the shortest length possible without losing any of its intended message or aesthetic effects. My friend the novelist Rolf Dobelli (he does not seem to like to walk slowly and drags me on hikes in the Alps), an owner of a firm that abstracts books and sells the summaries to busy businesspeople, convinced me that his firm has a lofty mission, as almost all business books can be reduced to a few pages without any loss of their message and essence; novels and philosophical treatments cannot be compressed.