Book Review: The Black Swan
The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb is an interesting perspective that seeks to prove much of what we know (or think we know) is a lie. Perhaps lie isn’t wholly accurate, but rather much of what we know isn’t nearly as certain as we think.
A Black Swan is an event that is marked by unpredictability and extreme consequences. Furthermore, Black Swans may seem explainable in retrospect. Some Black Swans include 9/11, the stock market crash of 1987, the global financial crisis of 2008/2009, and the recent slow news week swine flu pandemic. Taleb argues that history is littered with Black Swans, their consequences are potent and long-lasting, and we largely ignore them in our predictions. Ahh, predictions are Taleb’s arch nemesis. He uses convincing evidence to show that not only are humans inept at predicting the future, but we are invariably arrogant about our ability to do so!
Taleb’s primary scientific vendetta deals with the Gaussian distribution a.k.a. the “normal distribution” or “bell curve.” He argues that most of reality is completely incompatible with the bell curve and its standard deviation. For instance, the probability of an event three standard deviations from the mean (a three-sigma event) is 0.26%. Taleb uses some interesting facts to show that these events are much more common than we predict. Furthermore, whenever they occur they kick our collective asses, so we should stop pretending their probabilities are so low. Taleb does make a distinction between areas of life where the bell curve is applicable, a land he dubs “Mediocristan,” and the preponderance of areas where it is not, “Extremistan.”
I found the book both insightful and entertaining. I think Taleb makes some great points about the true unpredictability of our world. I learned many things from his book and plan to incorporate them into my daily decision-making. However, I may be one of the people that Taleb professes to despise most: those that buy some of his argument but not all of it.
One of his primary points is epistemological: you cannot know for certain. However, just like when I encounter progressives who tell me I cannot know my principles are correct, I reply, “If none of us can know anything, then why isn’t your idea that I can’t know anything equally fallible?” I’ve yet to get a straight answer. Oh, I get answers. But all of a sudden the crowd that wants to dismiss my Platonic reasoning and ideals drops their use of “practical reality” as a guide for life and starts reasoning back at me. Bottom line: if we’re all clueless then you are too. However, if some ideas are more correct than others then you must determine their correctness. For this you’ll need knowledge and reasoning, and for that we assume that we can know things. A flawed assumption—perhaps. An assumption that has put us on the moon, invented vaccinations, and created unprecedented wealth – absolutely.
Taleb also attributes an astonishing number of things to luck such as the growth of cities and Microsoft’s marketshare of operating systems compared to Apple. When you look at all of history as a single continuous event then I agree that the growth of Huntsville, Alabama as compared to a neighboring city such as Moulton is random. However, sometimes causality does exist. Huntsville grew as a result of the space race and cold war. Moulton did not grow because of its location in the axis of ignorance (Lawrence, Morgan, and Cullman counties). Compared to Apple, Microsoft owns the corporate operating system market because of strategic decisions. Compared to Microsoft, Apple owns the electronic devices market because of strategic decisions. Perhaps more of life takes place in Mediocristan than Taleb admits.
Finally, in his exposition of why he loathes those of my thinking (who accept part of his theory but not all) Taleb exposes the statement we make that he hates the most, “It’s the best we have.” Unfortunately, I never found a rebuttal I consider acceptable. I’m sorry that it is so offensive to him, but I think pressing forward with imperfect models and assumptions is superior to stagnation. I’m open to re-writing all of the rules with better ones, but not being able to know or predict anything is a hell of a place from which to start.
I don’t mean any of this to detract from Taleb’s work, which I consider brilliant and worthwhile. I have probably focused too much on the epistemological consequences of his work and ignored too much of the mathematical consequences, which I think are quite sound. I extracted many lessons from his text that I will keep for life. However, we mostly disagree on the application of his ideas and not their validity. Yes, acknowledge the weakness and fragility of your knowledge– acknowledge your ignorance. We live most of life in Extremistan, and Black Swans abound. However, if we don’t try to know or predict anything then we all might as well spend our days sitting around a campfire eating gummy bears and playing Yahtzee. I tend to think life is more meaningful.
I’m glad you liked this book. I enjoyed both “The Black Swan” and “Fooled by Randomness”.
“If none of us can know anything, then why isn’t your idea that I can’t know anything equally fallible?…However, if some ideas are more correct than others then you must determine their correctness. For this you’ll need knowledge and reasoning, and for that we assume that we can know things.”
It is not that you can’t know anything. It is you can’t verify anything completely. Let me quote Karl Popper to help explain.
“The root of this problem is the apparent contradiction between what may be called ‘the fundamental thesis of empiricism’– the thesis that experience alone can decide upon the truth of falsity of scientific statements–and Hume’s realization of the inadmissibility of inductive arguments. This contradiction arises only if it is assumed that all empirical scientific statements must be ‘conclusively decidable’, i.e. that their verification and their falsification must both in principle be possible. If we renounce this requirement and admit as empirical also statements which are decidable in one sense only–unilaterally decidable and, more especially, falsifiable–and which may be tested by systematic attempts to falsify them, the contradiction disappears.” –Karl Popper, “The Logic of Science”
In other words, the important part is not verification rather falsification or the ability to be falsified that gives a theory its power.
You mentioned “Platonic reasoning”, let me try and explain the meaning of that term. Plato felt learning was the recovery or recollection of what the soul had forgotten from birth. He believed our souls know the true Form or Idea of things, it was simply our job to remember them. With this metaphysics in place, Plato believed knowledge comes from the recollection of our soul and can only be gained through reason. Practical knowledge, on the other hand, would simply be tainted by our senses. Now whether agreeing with Plato’s metaphysics or not, I don’t think anyone has to go far to witness this so called Platonic reasoning, just open up the newspaper, the op-ed page, or turn on the news.
Karl Popper argues this reasoning lead Plato in “The Repubic” to define “What is justice?” as a collectivist, totalitarian state. Something our modern culture with its respect of democracy and individualism would disagree with Plato on. But I ask, do we think Plato was wrong because of our superior reasoning skills or our 2500 years of greater experience?
Quoting Popper again, “[Plato held] that it is the task of pure knowledge or ‘science’ to discover and to describe the true nature of things”. Popper calls this view “methodological essentialism”.
Popper says further, “methodological essentialism, i.e. the theory that it is the aim of science to reveal essences and to describe them by means of definition, can be better understood when contrasted with its opposite, methodological nominalism. Instead of aiming at finding out what a thing really is, and at defining its true nature, methodological nominalism aims at describing how a thing behaves in various circumstance, and especially, whether there are any regularities in its behavior. In other words, methodological nominalism sees the aim of science in the description of the things and events of our experience, and in an ‘explanation’ of these events, i.e. their description with the help of universal laws. And it sees in our language, and especially in those of its rules which distinguish properly constructed sentences and inferences from mere heap of words, the great instrument of scientific description; words it considers rather as subsidiary tools for this task, and not as names of essences. The methodological nominalist will never think that question like ‘What is energy?’ or ‘What is movement?’ or ‘What is an atom?’ is an important question for physics; but he will attach importance to a question like: ‘How can the energy of the sun be made useful?’ or ‘How does a planet move?’ or ‘Under what condition does an atom radiate light?’ And to those philosophers who tell him that before having answered the ‘what is’ question he cannot hope to give exact answers to any of the ‘how’ questions, he will reply, if at all, by pointing out that he much prefers that modest degree of exactness which he can achieve by his methods to the pretentious muddle which they have achieved by theirs.
“As indicated by our example, methodological nominalism is nowadays fairly generally accepted in the natural sciences. The problems of the social sciences, on the other hand, are still for the most part treated by the essentialist methods. This is, in my opinion, one of the main reasons for their backwardness” –Karl Popper “The Open Society and Its Enemies: Part 1”
By the way, I’d highly recommend everyone read “The Open Society and Its Enemies”.
One quick note about Microsoft and “Extremistan”. As a 12 year old Bill Gates and his friend Paul Allen had access to a timeshare computer at school. Is this a coincidence?–two of the most successful people in the computer industry having access to essentially unlimited computer access as children. At the time, timeshare computing was something few university professors would have had access to.
What about there timing in the industry? Do you think Microsoft would have been successful if Bill Gates was simply born a year later? There are other “Extremistanish” questions which could be asked: “How did IBM find Microsoft?” or “How did Microsoft obtain DOS?”, etc.